Money & Macro

Moody's Cuts G.M.'s Credit Rating Again - New York Times: "Moody's lowered G.M.'s $30 billion in debt one level, to B2 from B1, five rungs below investment grade. It also assigned the company a negative outlook, actions that will make it more expensive for the company to borrow money."

Lewis S. Ranieri: Your Mortgage Was His Bond

WSJ.com - Bernanke Says Growth Is Strong But Inflation Threat Remains: "Mr. Bernanke sought to hammer home a message of continuity with Mr. Greenspan's 18-1/2 year tenure. He warned, as Mr. Greenspan often did, about relying too much on models of the economy and underlined the importance of 'keeping an open mind about the many factors … at play in a dynamic modern economy.'

Stylistically, however, Mr. Bernanke did break with the Greenspan years with succinct and often blunt answers to – or refusals to answer – questions from the House Financial Services Committee.

For example, when Mr. Greenspan was asked last year whether an inverted yield curve -- when long-term interest rates are below short-term rates -- could foreshadow a recession, he replied: 'History suggests that that is usually or has been a forward indicator for softening economic activity… I suspect, however, that we have changed the structure of the flow of funds and the relationships amongst the various interest rate tranches by maturity such that I'm not sure what such a configuration …would mean.'

Asked the same question yesterday, Mr. Bernanke replied, 'The yield curve is not now signaling a slowdown.'

Congressmen, accustomed to Mr. Greenspan's willingness to comment on numerous non-monetary policy issues, peppered Mr. Bernanke with questions ranging from how to index social security for inflation to the wisdom of extending President Bush's tax cuts. But Mr. Bernanke said responding to many such questions was not appropriate for the central bank chief. Asked by Artur Davis (D., Ala.) whether tax cuts ought to take into consideration the impact on income inequality, Mr. Bernanke answered: 'These are value judgments. There is no scientific way of answering your questions. It's what people have elected you to do. Clearly it's your responsibility.'"

WSJ.com - Return of Long Bond Hits All the High Notes: "Return of Long Bond
Hits All the High Notes
Investors React Strongly
To Auction of New 30-Year;
Pension Demand a Driver
By MICHAEL MACKENZIE and STEVEN C. JOHNSON
February 10, 2006

Long bond, you don't know how much we missed you.

That was the cheer in the Treasury market after a stunning reception to the first sale of 30-year Treasury debt since August 2001 sent government debt securities higher."

The Big Picture: The Best Writings of Ben S. Bernanke: "Now that Greenspan has ridden off into the sunset, what do we know about his successor, Dr. Ben Bernanke? His temperment, economic views, stylistic approaches?

Actually, quite a lot. Fed Chair Bernanke (first time I wrote that) has been a prolific economic author. For the economic policy wonks out there, the following can be considered Bernanke's Greatest Hits:"