Wednesday, September 29, 2004
Tuesday, September 21, 2004
FRB: Monetary Policy, Open Market OperationsProvides a history of rate changes dating back to 1990.
WSJ.com - As Fed Ponders Another Rate Rise, Bonds Aren't Moving as Expected: "As Fed Ponders Another Rate Rise,
Bonds Aren't Moving as Expected
By AARON LUCCHETTI
Staff Reporter of THE WALL STREET JOURNAL
September 21, 2004; Page A1
Since Federal Reserve policy makers started raising rates, the interest rates that consumers actually live by have barely budged. In fact, some have come down from midsummer levels.
That unusual disconnect between the direction set by the Fed and the direction of market-set interest rates points to a widening belief in the bond market that there is still softness in the economy, and that the pressure for a rapid march toward higher rates is limited.
Since hitting 4.87% in mid-June, the yield on the closely watched 10-year Treasury note -- a benchmark for all long-term rates, including home mortgages -- has dropped -- to 4.06% yesterday. Traders, many of whom braced for a bear market in bonds that hasn't yet come, now chatter about whether the yield will end the day below 4% for the first time since April Fools' Day."
Bonds Aren't Moving as Expected
By AARON LUCCHETTI
Staff Reporter of THE WALL STREET JOURNAL
September 21, 2004; Page A1
Since Federal Reserve policy makers started raising rates, the interest rates that consumers actually live by have barely budged. In fact, some have come down from midsummer levels.
That unusual disconnect between the direction set by the Fed and the direction of market-set interest rates points to a widening belief in the bond market that there is still softness in the economy, and that the pressure for a rapid march toward higher rates is limited.
Since hitting 4.87% in mid-June, the yield on the closely watched 10-year Treasury note -- a benchmark for all long-term rates, including home mortgages -- has dropped -- to 4.06% yesterday. Traders, many of whom braced for a bear market in bonds that hasn't yet come, now chatter about whether the yield will end the day below 4% for the first time since April Fools' Day."
Bloomberg.com: Bloomberg Columnists: "How does the Fed do when it tries to broaden its sphere of influence to include long-term rates?
OK, it turns out. In a new paper entitled, ``Monetary Policy Alternatives at the Zero Bound: An Empirical Assessment,'' by Fed governor Ben Bernanke, Fed economist Vincent Reinhart and Brian Sack of Macroeconomic Advisers in St. Louis, the authors conclude the central bank can shape expectations about future interest rates, and hence affect current rates, thereby providing added stimulus to the economy.
On one level, the observation is a statement of the obvious. If the central bank promised to hold the overnight funds rate at 1 percent for five years and the bank was credible, the yield curve would be flat out to five years.
On another level, unconventional policy options were a real possibility last year when the Fed was confronted with short-term rates near zero and low and falling inflation. Those options included quantitative easing (buying more government securities); buying long-term bonds outright to lower their yields; and using communication policy to alter interest-rate expectations, and hence current rates."
OK, it turns out. In a new paper entitled, ``Monetary Policy Alternatives at the Zero Bound: An Empirical Assessment,'' by Fed governor Ben Bernanke, Fed economist Vincent Reinhart and Brian Sack of Macroeconomic Advisers in St. Louis, the authors conclude the central bank can shape expectations about future interest rates, and hence affect current rates, thereby providing added stimulus to the economy.
On one level, the observation is a statement of the obvious. If the central bank promised to hold the overnight funds rate at 1 percent for five years and the bank was credible, the yield curve would be flat out to five years.
On another level, unconventional policy options were a real possibility last year when the Fed was confronted with short-term rates near zero and low and falling inflation. Those options included quantitative easing (buying more government securities); buying long-term bonds outright to lower their yields; and using communication policy to alter interest-rate expectations, and hence current rates."
Saturday, September 18, 2004
Understanding the Time Value of Money: "Understanding the Time Value of Money" For some M&B students, a quick refresher on present value.
Thursday, September 16, 2004
WSJ.com - Fed Says Straight Talk on Rates Helped the U.S. Avert Deflation: "Fed Says Straight Talk on Rates
Helped the U.S. Avert Deflation
By GREG IP
Staff Reporter of THE WALL STREET JOURNAL
September 17, 2004
WASHINGTON -- The Federal Reserve concluded that its new policy of talking more clearly about its interest-rate plans had a sizable impact on bond markets last year, helping to avert deflation when the Fed's main interest-rate target approached zero.
The Fed's new study is likely to embolden the central bank to be even more explicit in the future in talking about its interest-rate plans. It may also make the Fed a bit less worried about the risk of deflation and a bit more confident in its current campaign to raise interest rates from last year's deflation-scare lows.
But the study may fuel fears that U.S. interest rates could be driven up if foreign central banks stop buying Treasurys."
Helped the U.S. Avert Deflation
By GREG IP
Staff Reporter of THE WALL STREET JOURNAL
September 17, 2004
WASHINGTON -- The Federal Reserve concluded that its new policy of talking more clearly about its interest-rate plans had a sizable impact on bond markets last year, helping to avert deflation when the Fed's main interest-rate target approached zero.
The Fed's new study is likely to embolden the central bank to be even more explicit in the future in talking about its interest-rate plans. It may also make the Fed a bit less worried about the risk of deflation and a bit more confident in its current campaign to raise interest rates from last year's deflation-scare lows.
But the study may fuel fears that U.S. interest rates could be driven up if foreign central banks stop buying Treasurys."
Thursday, September 09, 2004
The Monetary Economics of Thurston Howell III: "The Monetary Economics of Thurston Howell III
by B.K. Marcus
[Posted August 31, 2004]
Gilligan's Island is now out on DVD, reawakening the unanswered questions of childhood: why does the Skipper let Gilligan help with anything when he knows he'll just screw it up? Why did the movie star take a day cruise in an evening gown? Why did two of the richest people in the world board a dinky boat with the hoi polloi instead of leasing a private yacht? And why do any of the other stranded castaways treat the millionaire's government money as valuable while stuck on an island where no such government can enforce its value?"
by B.K. Marcus
[Posted August 31, 2004]
Gilligan's Island is now out on DVD, reawakening the unanswered questions of childhood: why does the Skipper let Gilligan help with anything when he knows he'll just screw it up? Why did the movie star take a day cruise in an evening gown? Why did two of the richest people in the world board a dinky boat with the hoi polloi instead of leasing a private yacht? And why do any of the other stranded castaways treat the millionaire's government money as valuable while stuck on an island where no such government can enforce its value?"
The New York Times > Business > World Business > An Elder Challenges Outsourcing's Orthodoxy: "At 89, Paul A. Samuelson, the Nobel Prize-winning economist and professor emeritus at the Massachusetts Institute of Technology, still seems to have plenty of intellectual edge and the ability to antagonize and amuse.
His dissent from the mainstream economic consensus about outsourcing and globalization will appear later this month in a distinguished journal, cloaked in clever phrases and theoretical equations, but clearly aimed at the orthodoxy within his profession: Alan Greenspan, chairman of the Federal Reserve; N. Gregory Mankiw, chairman of the White House Council of Economic Advisers; and Jagdish N. Bhagwati, a leading international economist and professor at Columbia University.
These heavyweights, among others, are perpetrators of what Mr. Samuelson terms 'the popular polemical untruth.
...
His article, Mr. Samuelson added, is not a refutation of David Ricardo's 1817 theory of comparative advantage, the Magna Carta of international economics that says free trade allows economies to benefit from the efficiencies of global specialization. Mr. Samuelson said he was merely "interpreting fully and correctly Ricardoian comparative advantage theory." That interpretation, he insists, includes some "important qualifications" to the arguments of globalization's cheerleaders.'"
His dissent from the mainstream economic consensus about outsourcing and globalization will appear later this month in a distinguished journal, cloaked in clever phrases and theoretical equations, but clearly aimed at the orthodoxy within his profession: Alan Greenspan, chairman of the Federal Reserve; N. Gregory Mankiw, chairman of the White House Council of Economic Advisers; and Jagdish N. Bhagwati, a leading international economist and professor at Columbia University.
These heavyweights, among others, are perpetrators of what Mr. Samuelson terms 'the popular polemical untruth.
...
His article, Mr. Samuelson added, is not a refutation of David Ricardo's 1817 theory of comparative advantage, the Magna Carta of international economics that says free trade allows economies to benefit from the efficiencies of global specialization. Mr. Samuelson said he was merely "interpreting fully and correctly Ricardoian comparative advantage theory." That interpretation, he insists, includes some "important qualifications" to the arguments of globalization's cheerleaders.'"
Wednesday, September 08, 2004
WSJ.com - Quattrone Gets Prison Sentence Of 18 Months: "Quattrone Gets
Prison Sentence
Of 18 Months
Citing Perjury, U.S. Judge Imposes
More-Than-Recommended Term
For Obstruction of IPO Probe
By KARA SCANNELL
Staff Reporter of THE WALL STREET JOURNAL
September 9, 2004
NEW YORK -- Frank Quattrone, the former Silicon Valley investment banker whose success epitomized the Internet-stock boom, was sentenced to 18 months in prison for obstructing a probe of how IPO stocks were doled out.
The sentencing follows his obstruction conviction in May, which was based on an e-mail he sent underlings that 'strongly advised' them to obey document-management procedures that prosecutors said would have destroyed evidence sought by government investigators."
Prison Sentence
Of 18 Months
Citing Perjury, U.S. Judge Imposes
More-Than-Recommended Term
For Obstruction of IPO Probe
By KARA SCANNELL
Staff Reporter of THE WALL STREET JOURNAL
September 9, 2004
NEW YORK -- Frank Quattrone, the former Silicon Valley investment banker whose success epitomized the Internet-stock boom, was sentenced to 18 months in prison for obstructing a probe of how IPO stocks were doled out.
The sentencing follows his obstruction conviction in May, which was based on an e-mail he sent underlings that 'strongly advised' them to obey document-management procedures that prosecutors said would have destroyed evidence sought by government investigators."
Guardian Unlimited | Special reports | Greenspan's upbeat comments may signal US rates rise: "Greenspan's upbeat comments may signal US rates rise
Ashley Seager
Thursday September 9, 2004
The Guardian
Federal Reserve chairman Alan Greenspan appeared to clear the path for another rise in US interest rates yesterday when he delivered a moderately upbeat assessment of the country's economy which has slowed in recent months because of high oil prices.
Testifying before the House of Representatives Budget Committee, Greenspan said: 'The most recent data suggest that, on the whole, the expansion has regained some traction. We still have problems ... but I think I agree with you in general that the economy is doing reasonably well.'"
Ashley Seager
Thursday September 9, 2004
The Guardian
Federal Reserve chairman Alan Greenspan appeared to clear the path for another rise in US interest rates yesterday when he delivered a moderately upbeat assessment of the country's economy which has slowed in recent months because of high oil prices.
Testifying before the House of Representatives Budget Committee, Greenspan said: 'The most recent data suggest that, on the whole, the expansion has regained some traction. We still have problems ... but I think I agree with you in general that the economy is doing reasonably well.'"
Monday, September 06, 2004
The Corporation - Trailers & Clips - Yahoo! Movies: "�'Price Of Gold' -- Commodities Broker Carlton Brown says there was one thing on the mind of traders when the World Trade Center fell."
Thursday, September 02, 2004
WSJ.com - On the One Hand...: "On the One Hand...
By RHEA WESSEL
Staff Reporter of THE WALL STREET JOURNAL
September 3, 2004
Take your pick: The U.S. economy is in great shape and could use even more tax cuts. Or the tax cuts are creating giant deficits and are undermining American economic health.
No, this is not the latest spin from the Bush and Kerry campaigns. These strikingly different conclusions come from a rarefied group: some Nobel laureates in economics. Some say President Bush's tax cuts will create more savings and investment and power economic growth. Others, though, say large deficits are putting the economy at risk and tax cuts have had little or no effect as a stimulus.
In separate interviews, Milton Friedman and Vernon L. Smith played down the risks of the deficit and welcomed even more tax cuts. The deficit 'is not a problem if the government holds down spending,' Mr. Friedman says. 'The economy will grow and develop, and the deficit will decline.'
However, George A. Akerlof, Lawrence R. Klein, Robert M. Solow and Joseph E. Stiglitz criticized the Bush administration's economic policies. Indeed, they are among 10 Nobel laureates in economics who recently endorsed Sen. John Kerry for president. With the change from a budget surplus under former President Clinton to record budget deficits, Mr. Bush's economic policy represents 'a major risk to the American economy,' Mr. Stiglitz says"
By RHEA WESSEL
Staff Reporter of THE WALL STREET JOURNAL
September 3, 2004
Take your pick: The U.S. economy is in great shape and could use even more tax cuts. Or the tax cuts are creating giant deficits and are undermining American economic health.
No, this is not the latest spin from the Bush and Kerry campaigns. These strikingly different conclusions come from a rarefied group: some Nobel laureates in economics. Some say President Bush's tax cuts will create more savings and investment and power economic growth. Others, though, say large deficits are putting the economy at risk and tax cuts have had little or no effect as a stimulus.
In separate interviews, Milton Friedman and Vernon L. Smith played down the risks of the deficit and welcomed even more tax cuts. The deficit 'is not a problem if the government holds down spending,' Mr. Friedman says. 'The economy will grow and develop, and the deficit will decline.'
However, George A. Akerlof, Lawrence R. Klein, Robert M. Solow and Joseph E. Stiglitz criticized the Bush administration's economic policies. Indeed, they are among 10 Nobel laureates in economics who recently endorsed Sen. John Kerry for president. With the change from a budget surplus under former President Clinton to record budget deficits, Mr. Bush's economic policy represents 'a major risk to the American economy,' Mr. Stiglitz says"
EconLog: Library of Economics and Liberty: "September 01, 2004
Should Pacey Teach Economics?
I have started teaching a class at George Mason called Economics and the Citizen
It's been over 20 years since I taught at a college level, and I feel like Rip Van Winkle. After the first class, I was given quick tutorial on the technology in the room. I was struck by the sound coming from the computer through the speakers.
I decided to type my lecture notes (the stuff I might scribble on the board) onto a web page, and then record what I would say using an Olympus DS-330 digital recorder, which I bought a while back because Zack Lynch said it was cool.
I put the audio onto the web page. At that point it occurred to me that if I put the web page up and played the audio, then anybody could stand up in class, move their lips, and pretend to give the lecture. I put up a graphic of Pacey from Dawson's Creek on the page, so now it sort of looks like he's giving the lecture.
In addition to being better-looking than I am, Pacey has neater handwriting--he doesn't scrawl all over the board. Also, Pacey will come into the student's room and give the lecture on the student's computer. If the student spaces out for a minute, he or she can rewind Pacey, and Pacey will repeat himself.
Pacey will not get stuck in traffic, or sick, or snowbound. Shouldn't Pacey teach the course instead of me?
Go to this page and let me know what you think. It's a bit of a process getting Pacey to work, because the proprietary format of the digital voice recorder seems to confuse Internet Explorer unless you're very careful about things. But other file formats are cumbersome (e.g., the huge .wav file at the bottom, which only gets about 1/4 of the way through the lecture)."
Should Pacey Teach Economics?
I have started teaching a class at George Mason called Economics and the Citizen
It's been over 20 years since I taught at a college level, and I feel like Rip Van Winkle. After the first class, I was given quick tutorial on the technology in the room. I was struck by the sound coming from the computer through the speakers.
I decided to type my lecture notes (the stuff I might scribble on the board) onto a web page, and then record what I would say using an Olympus DS-330 digital recorder, which I bought a while back because Zack Lynch said it was cool.
I put the audio onto the web page. At that point it occurred to me that if I put the web page up and played the audio, then anybody could stand up in class, move their lips, and pretend to give the lecture. I put up a graphic of Pacey from Dawson's Creek on the page, so now it sort of looks like he's giving the lecture.
In addition to being better-looking than I am, Pacey has neater handwriting--he doesn't scrawl all over the board. Also, Pacey will come into the student's room and give the lecture on the student's computer. If the student spaces out for a minute, he or she can rewind Pacey, and Pacey will repeat himself.
Pacey will not get stuck in traffic, or sick, or snowbound. Shouldn't Pacey teach the course instead of me?
Go to this page and let me know what you think. It's a bit of a process getting Pacey to work, because the proprietary format of the digital voice recorder seems to confuse Internet Explorer unless you're very careful about things. But other file formats are cumbersome (e.g., the huge .wav file at the bottom, which only gets about 1/4 of the way through the lecture)."
Barron's Online - Not Just Academic: "Not Just Academic
Our college investing contest offers cash prizes, a New York trip and even lunch with us
By ROBIN GOLDWYN BLUMENTHAL
SO, JOE AND JANE COLLEGE -- you think you're so smart? Well, here's a chance to prove it, and maybe even teach a lesson to those instructors whose fondness for tests, reading assignments and research papers seriously eats into your party time.
This fall, students and teachers at accredited two- and four-year undergraduate U.S. colleges and universities and accredited U.S. graduate schools can participate in the Barron's Challenge, an online-investing contest. There's no fee to participate, and contestants can start signing up Sept. 1 by going to www.barrons.com, home of our Internet edition, to gain access to the contest site.
Here's how our Challenge works:
During the registration period, from Sept. 1 through Oct. 1, participants will set up a hypothetical portfolio. Whoever racks up the biggest percentage gain by the contest's conclusion on Dec. 15 is the winner. Results will be judged on the basis of total return -- price appreciation and dividend yield. (To be counted, a dividend must amount to at least 10 cents a year per share.)"
Our college investing contest offers cash prizes, a New York trip and even lunch with us
By ROBIN GOLDWYN BLUMENTHAL
SO, JOE AND JANE COLLEGE -- you think you're so smart? Well, here's a chance to prove it, and maybe even teach a lesson to those instructors whose fondness for tests, reading assignments and research papers seriously eats into your party time.
This fall, students and teachers at accredited two- and four-year undergraduate U.S. colleges and universities and accredited U.S. graduate schools can participate in the Barron's Challenge, an online-investing contest. There's no fee to participate, and contestants can start signing up Sept. 1 by going to www.barrons.com, home of our Internet edition, to gain access to the contest site.
Here's how our Challenge works:
During the registration period, from Sept. 1 through Oct. 1, participants will set up a hypothetical portfolio. Whoever racks up the biggest percentage gain by the contest's conclusion on Dec. 15 is the winner. Results will be judged on the basis of total return -- price appreciation and dividend yield. (To be counted, a dividend must amount to at least 10 cents a year per share.)"
