Angels trusts you are all keeping up with Professor Buiter on Maverecon (see Links and Latest Rockets). A striking point from this morning's lesson: there is deliberate obfuscation of what is going on with qualitative easing -
"Today, central banks and Treasuries appear to be conspiring to hide from the public the magnitude of the credit risk exposure they are taking on. In the UK, for instance, the SLS (the special liquidity scheme that swaps private securities like mortgage- backed securities for Treasury bills of less than one year maturity) is, as far as I can tell, neither on the balance sheet of the Bank of England nor on that of the Treasury..".
But put aside your Sunday papers and read the whole. This will improve the grasp on known knowns, widen awareness of known unknowns, and sets the mind thinking about what unknown unknowns are out there, not least the uncovered risk taken on by the European Central Bank in its qualitative easing.
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8 comments:
QED should = Quantitative Easing Discredited.
I don't keep up with Buiter et al. - any more than in a war zone, I need to count every bullet and shell going past. We now know the situation, and the only thing that matters is self-preservation and esacpe.
Beneath the lucid exposition and setting out of technical problems in the clearest of language, is a devastating critique of New Labour's economic and financial ignorance. And its results.
Self preservation we can try for. Escape is not on offer, S. But I am convinced that the worst is yet to come, and that it will be a terrible exposure in the United Kingdom. With fools and knaves immovably making it worse.
I think Buiter still has it wrong.
Things like this...
"The Fed is doing so already, and with gusto. It can do so without fear for its balance sheet, despite taking on a lot of private credit risk (default risk), because the Treasury explicitly guarantees the Fed’s outright purchases of private securities and other non-standard taking on of private default risk."
The Fed is just passing the risk onto the US Taxpayer! He seems to assume that taxpayer losses somehow don't count in the real economy. There are other similar errors peppered through his text.
No, I get the drift but cannot follow the details (despite my 'B' in 'A' level Economics - but that was in 1968).
I do however agree with you HG that the UK is in serious shit, and that we haven't seen anything yet.
Me - well, I have some cash in the form of savings which I need to find a safe haven for before Vampire Brown sucks it out of my bank account.
Why can't he just drop dead? Then he would at least - and at last - have performed a public service.
True, AntiC, the tax payer pays eventually for any liabilities taken by the state or any of its agencies. It remains true, relevant and important, though, that the public should have no doubts about the solvency of the central bank.
Rarely do we wholly agree with the arguments of someone we think worth listening too. What we're after, or I am after, is a coherent world view that illuminates my own understanding. At least the level of discourse isn't the insult offered by New Labour.
Savings, eh, E? You'll be wanting habeas corpus and freedom of speech next.
There are ways to deal with unhelpful people in New Labour's New Britain.
Another Problem I have with Buiter is that he assumes the Central Bank should recapitalise existing institutions rather than wind-down bankrupt ones and encourage new ones.
The article is a quality one (compared to most of the MSM) but he still needs to work on his economic paradigms, and reduce his assumptions.
I know. I await the knock on the door from the Savings Police. Meanwhile, if anyone has any bright ideas what to do with a small 5 figure sum in sterling, I'd be most grateful.
No time wasters :-)
Anyone know how much a good hit man costs these days? :->
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