Whatever It Takes – The Fed Version

Back in July in a London investment conference, ECB President Mario Draghi pledged to do “whatever it takes” to protect the Eurozone from collapsing. Though he mildly disappointed the market in ECB’s August meeting, President Draghi delivered on his pledge is September. One of the observers was Federal Reserve Chairman Ben Bernanke who hinted of…

Fed Washes Its Hands Off Unemployment Mandate

The monetary policy objective of Federal Reserve Board is to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates. But, if after seeing Fed’s economic projections you find it hard to believe in its commitment to these objectives then you would be forgiven. Fed is projecting very high unemployment rate for the…

The Sky Is Falling But It Is Still ‘Credibility Shredibility’

The villagers of indomitable Gauls had superhuman powers thanks to the magic potion brewed by their druid, Getafix. Those Gauls were supremely confident in resisting the mighty Roman Empire and repeatedly trouncing its powerful armies. Their biggest fear was that the sky will fall on their heads. The country of USA also has ‘super-economic’ powers.…

Is Economy Closer To Max Employment?

Minneapolis Federal Reserve Bank President Narayana Kocherlakota is an inflation hawk, who thinks that the US economy is close to maximum employment. Kocherlakota said that, for him, the inflation rate is key to determining how close the Fed is to the maximum achievable level of employment or the minimum achievable level of unemployment. And the signals are…

Financial Crisis Timeline and S&P500

Here is the financial crisis of 2007-2008 timeline mapped on the S&P500 chart. Only major events and announcements leading upto endof Sept ’08 are included. After Sept. ’08, Federal Reserve, US Treasury, IMF and major central banks took a number of steps to quell the storm and stabilize the market. Majority of these steps were taken in…

QE1, QE2 and S&P 500

Start of Quantitative Easing. On Tue November 25, 2008 Federal Reserve announced the purchase of direct obligations of housing-related government-sponsored enterprises. The program included the purchase of up to $100 billion in GSE direct obligations and purchase of up to $500 in MBS. The S&P500 closed at 851.81 on Nov 24, 2008 (the low was…