dagblog - Comments for "Richard fisher, dallas Fed: a "pretty ugly" dissenter?"

Fisher was interviewed for

Oxy Mora — Mon, 03 Oct 2011 19:41:27 +0000

In reply to Richard fisher, dallas Fed: a "pretty ugly" dissenter?

Fisher was interviewed for an hour on Bloomberg Radio today and he is a rare bird (Renaissance Hawk). If either the Republican or Democratic conventions ever become deadlocked, I would proffer this man in a heart beat.

Essentially Fisher reinforced many of the comments I have already included in the blog. His dissent on the FOMC goes mostly to "efficacy". The bank has provided liquidity. The fiscal authorities have to provide the transmission system to the community banks and out to the small businesses.

While he is a hawk he surprisingly doesn't think, as conventional wisdom has it, that the Fed is "out of bullets". IOW if we really started to tank in severe deflation, the Fed would, yes, print money and more.

Bernanke just stuffed

Oxy Mora — Wed, 21 Sep 2011 18:56:27 +0000

In reply to Richard fisher, dallas Fed: a "pretty ugly" dissenter?

Bernanke just stuffed Boehner, The Tea Party and Rick Perry.

Operation Twist--rolling short maturity treasuries over to longer term maturities--is indeed going to happen. $400 Billion between now and June, 2012.

Most analysts were projecting a total twist of $300 Billion. It's unscientific of course, but I'm going to call the extra $100 Billion the "Perry stuff." I think the letter from McConnell, etc., bought an extra $100 Billion of "stimulus".

THe actual stimulus is expected to be small since there are not new purchases, just a shift in maturity dates. In effect the Fed will purchase most of the Treasury's issuance of 30 year bonds between now and June 2013. The ideas behind all of this are to nudge investors into higher risk investments, and to lower long rates as much as possible to encourage mortgage and business borrowing. I think where Fisher is on all of this is that without corresponding assisting from the fiscal policy makers in Wash, there is no method to push liquidity out to the ultimate consumer.

As happened in the last FOMC, there were three dissenters, including Richard Fisher of the Dallas Fed.

In addition to the maturity twist the Fed will re-invest principal from Agency mortgage debt back into Agency debt.

The pretty ugly Fed

Oxy Mora — Wed, 21 Sep 2011 14:25:58 +0000

In reply to Richard fisher, dallas Fed: a "pretty ugly" dissenter?

The pretty ugly Fed Dissenters include McConnell, Kyl, Boehner and Cantor who ahead of the FOMC meeting report due out in a few hours sent Bernanke a letter with the intimidating tone of Rick Perry and, in effect, a not so veiled threat directly related to Perry's pretty ugly threats.

"The American people have reason to be skeptical of the Federal Reserve vastly increasing its role in the economy."

In other words, we do not want stimulus which would help the economy and thus re-elect Obama.

Even the Peterson Institute weighed in. According to senior fellow Joseph Gagnon, the letter is "outrageous".

What's clear is the extent the Tea Party continues to call the shots with the Republican Party. The pinnacle of the Eastern Establishment, the Peterson Institute, is calling out the Congressional Republican leadership. IMO the letter and the Institute's response confirms the depth of the divisions within the Republican party between the Tea Party and what remains of its "establishment" component--represented by the Perry-Romney divide.

I assume the Fed will come up with a $300-600 Billion Twist, plus perhaps reducing the interest banks receive on excess reserves at the Fed. It will be interesting to see if Dallas President, Fisher, will again dissent.

I would fall off my chair if the Fed comes up with any new "tools" which would actually funnel all of the new liquidity into small business loans and mortgage refinance instead of commodity price increases. I do think Twist will help the stock market and if mortgage rates get any lower I'm going to refinance my mortgage because I can't help myself.

Mostly I agree with Fisher's

Oxy Mora — Wed, 14 Sep 2011 14:55:05 +0000

In reply to Thanks Artsy, good article

Mostly I agree with Fisher's speech, but beyond the typical complaint of too much regulatory burden upon regional and community banks, actual fixes go begging.

So we are left with a traditional banking system and Fed monetary tradition which is now in the context of fewer small banks and larger large banks. Basel III may prevent the same kind of banking crisis from happening again, but the essential questions which go begging are:

Aside from the assertion that this time is no different except that recessions from banking crises take longer, particularly now that it is again a world banking crisis, what has been missed about structural changes. How can a monolithic central bank which hasn't changed react to a world which has?

Are there aspects of the new normal in the U.S.--the new distribution of wealth, the aging population, the out of date skills of workers--all of this in the context of globalization--do these aspects command new fixes by the central bank?

I don't care whether or not it's in the charter of the Fed but someone has to get serious about the actual mechanics--in the leaky pipes, or the transmission, or whatever metaphor one wants. There has to be a new mechanism of pumping liquidity into a "bank" which will in turn hard pipe it to small businesses.

I don't care what you call it, "infrastructure bank" is a start. But why don't we position it as it actually is:"Mega banks and mega corporations form a new bank to provide third world style micro lending to small businesses in the U.S."

Thanks Artsy, good article

Oxy Mora — Tue, 13 Sep 2011 22:01:10 +0000

In reply to I thought this was a good

Thanks Artsy, good article referencing Texas' high population growth. And in fact, Texas actual unemployment rate right now is 8.4% compared to 9.1% for the nation. The key point is that the 8.4% is the highest the unemployment rate has been since the oil recession in the late '80's. And right now energy prices are extremely favorable to Texas, so according to historical standards employment should be a lot better. In fact, as your article suggests, Texas is barely keeping up.

I thought this was a good

artappraiser — Tue, 13 Sep 2011 18:43:17 +0000

In reply to Of course, in Texas we have a

I thought this was a good title when I ran across it a couple days back:

Is Texas A Ponzi Scheme?

By Matthew Yglesias on Sep 8, 2011

Points made are interesting, too.

Hot shite, managed to embed

Oxy Mora — Tue, 13 Sep 2011 14:47:56 +0000

In reply to Of course, in Texas we have a

Hot shite, managed to embed Fisher's quote.

The entire speech can be found at www.dallasfed.org.

Of course, in Texas we have a

Oxy Mora — Tue, 13 Sep 2011 14:45:44 +0000

In reply to Richard fisher, dallas Fed: a "pretty ugly" dissenter?

Of course, in Texas we have a long tradition of outperforming the nation—a tradition matched only by our long-standing reputation for modesty. The 1.1 percentage-point gap we’ve seen between Texas and national job growth over the current recovery corresponds almost exactly to the long-run (40-year) historical gap between our growth rate and the nation’s