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Boom and then bust? | Michael Roberts Blog
Central bank policy, along with the prospect of the US-China trade deal (still not realised), has given new encouragement to financial institutions to invest in stock markets.  But the biggest driver of the US stock market has been the major companies using this cheap finance to buy back their own shares to drive up the price and increase the ‘market value’ of the company.  In 2018, buybacks reached $1.18trn, twice as much as was invested (after covering for worn out equipment) in productive capacity (plant, offices, equipment, software etc).

Thus the financial markets boom, but the ‘real’ economy struggles.
federal_reserve  central_banks  stock_buybacks  stock_market  long_depression  michael_roberts 
11 weeks ago by perich
The Bank of England future-proofs itself – MainStreetEcon
June 26, 2018 | Financial Times | by mainstreetecon 14 hours ago14 hours ago

[Future-proofing is the process of anticipating the future and developing methods of minimizing the effects of shocks and stresses of future events. ]
anticipating  Bank_of_England  central_banks  frameworks  future-proofing  monetary_policy  policymakers 
june 2018 by jerryking
On the money: a history of the Bank of England
SEPTEMBER 1, 2017 by: John Plende, the FT columnist and author of ‘Capitalism: Money, Morals and Markets’ (Biteback)

Till Time’s Last Sand: A History of the Bank of England 1694-2013, by David Kynaston, Bloomsbury £35, 896 pages
An enduring theme is the friction that existed from the outset between the Bank and its main client, the government. The Bank’s original charter was granted so that it could provide finance for the Nine Years’ War against France. On each renewal, the terms were the subject of much haggling and in the interim the Bank was constantly pressed to advance more money than it felt prudent. ....Another constant theme is forgery and fraud, with some of the Bank’s most senior employees being caught with their fingers in the till. In marked contrast to today’s post-crisis financial world, punishment was harsh. Many miscreants were hanged at Tyburn while the lucky ones were condemned to transportation.

As the 19th century progresses, Kynaston’s story turns increasingly on the issue that preoccupied great Victorian writers on monetary policy such as Henry Thornton and Walter Bagehot: how to reconcile adherence to the gold standard with financial stability. Numerous financial crises, including those surrounding the rescue of Barings and the collapse of Overend Gurney and the City of Glasgow Bank, are retold here with panache.
Bank_of_England  history  central_banks  book_reviews  books  monetary_policy  Victorian  slavery  Walter_Bagehot  financial_history  19th_century  financial_crises 
september 2017 by jerryking
Robocalypse Now? Central Bankers Argue Whether Automation Will Kill Jobs - The New York Times

artificial intelligence threatens broad categories of jobs previously seen as safe from automation, such as legal assistants, corporate auditors and investment managers. Large groups of people could become obsolete, suffering the same fate as plow horses after the invention of the tractor.

“More and more, we are seeing economists saying, ‘This time could be different,’”......among the economists in Sintra there was plenty of skepticism about whether the Robocalypse is nigh......Robocalypse advocates underestimate the power of scientific advances to beget more scientific advances, said Joel Mokyr, a professor at Northwestern University who studies the history of economics.....Hal Varian, the chief economist at Google — whose self-driving technology may someday make taxi drivers unnecessary — said that the plunging cost of information technology “has virtually eliminated the fixed cost of entering a business.” Companies can rent software and computing power over the internet..... disruptions caused by technology help account for rampant pessimism among working-class and middle-class people across the developed world.
automation  artificial_intelligence  Hal_Varian  central_banks  David_Autor  Joel_Mokyr  pessimism  economists  Benjamin_Bernanke  fixed_costs  developing_countries 
june 2017 by jerryking
Yale to Build Tool Offering Real-Time Lessons on Financial Crises -
May 9, 2017 | WSJ | By Gabriel T. Rubin.

Yale University will launch an online platform to provide real-time support to policy makers dealing with financial crises, with the help of a $10 million gift from business leaders and philanthropists Bill Gates, Jeff Bezos, Bloomberg Philanthropies and the Peter G. Peterson Foundation.

The gift represents a major expansion of the Yale Program on Financial Stability, a degree-granting program in the university’s school of management that aims to train early- and midcareer financial regulators from around the globe.

The new resources will support a small staff of researchers, led by Professor Andrew Metrick, as they build a database of “lessons from hundreds of interventions from past crises,” the university said. The effort is the first of its kind, according to Yale, and reflects a need for more research on “wartime” situations, rather than the preventive sort of regulatory research done by central banks around the world. Central banks often avoid extensive crisis preparations out of reluctance to promote moral hazard, leaving policy makers to reinvent the wheel each time a new crisis arises.....Mr. Geithner, who serves as the chairman of the Program on Financial Stability, said that he and other policy makers would have been able to act faster and with greater confidence during the financial crisis with access to the tools that Mr. Metrick’s team will build.

“There were probably four or five periods when the crisis was escalating, the panic was spreading, sitting on the phone for 20 hours a day trying to figure out how to do things,” Mr. Geithner recalled. “And we hadn’t had to do some of those things since the Great Depression. That took us a lot of time, and that can be costly.”

The open online platform will include descriptions of specific interventions—for example, the use of a “bad bank” to hold distressed assets—and will detail what did and didn’t work well in each case.
Yale  Colleges_&_Universities  crisis  regulators  Walter_Bagehot  central_banks  real-time  databases  lessons_learned  policy_tools  Peter_Peterson  reinventing_the_wheel  policymakers  confidence  economic_downturn  decision_making  speed  the_Great_Depression  crisis_management  crisis_response  Tim_Geithner  moral_hazards  financial_crises 
may 2017 by jerryking
Reading: Barry Eichengreen (2011): Economic History and Economic Policy via Brad DeLong
Barry Eichengreen (2011): Economic History and Economic Policy - EHA Presidential Address 2011
As you read, formulate your answers to the following questions:
1. What does Eichengreen think are the uses of history, as shown in the use of history in trying to understand the macroeconomic crisis that began in 2008?
2.What does Eichengreen think are the abuses of history, as shown in the use of history in trying to understand the macroeconomic crisis that began in 2008?
3.What rules and approaches does Eichengreen arrive it for future people trying to use history better?
Downloaded via iPhone to DBOX
monetary_policy  historiography-postWWII  QE  fiscal_policy  unemployment  historiography-19thC  economic_history  economic_policy  Keynesianism  speech  FX-rate_management  downloaded  central_banks  Great_Depression  historiography  FX  austerity  financial_system  financial_crisis  financial_regulation  Minsky  historiography-20thC  FX-misalignment  Great_Recession  inflation 
january 2017 by dunnettreader
Central banks worldwide need more tools to co-ordinate policy -
Dec. 24, 2016 | The Globe and Mail | JAMES DEAN Special to The Globe and Mail

Modern central bankers worry about unemployment, income inequality, growth, inflation housing and asset bubbles, household debt, and fear of financial instability. Typically, central banks have had to rely on a single tool, their ability to raise or lower short-term interest rates. But is is an an axiom of policy making that for each additional goal, an additional instrument is necessary. Central banks worldwide agonize about their frustration with trying to target a plethora of goals.... With but a single instrument, they cannot simultaneously pursue the multiplicity of goals that today’s electorate expects of them....The answer is either to give central bankers more tools, or to co-ordinate their policy choices with those of other agencies.

For example, an ability to dictate both down payments on housing mortgages and margin requirements on borrowing to buy financial assets; setting reserve and capital requirements on banks; adjusted the lending mix of commercial bank portfolios, with preferences for export industries, or infrastructure like highways, airports and ports. Or for agriculture or labour-intensive industry or high-tech industry....The room for this kind of expanded mandate for central banks is relatively wide in some countries but very limited in others, the United States in particular.
central_banks  tools  interest_rates  Bank_of_Canada  U.S._Federal_Reserve  policy  coordination  policy_tools 
december 2016 by jerryking
Central Banks Consider Bitcoin’s Technology, if Not Bitcoin - The New York Times
Continue reading the main storyShare This Page
central_banks  blockchain  Bitcoin 
october 2016 by jerryking
At BlackRock, a Wall Street Rock Star’s $5 Trillion Comeback - The New York Times
SEPT. 15, 2016 | NYT | By LANDON THOMAS Jr.

(1) Laurence Fink: “If you think you know everything about our business, you are kidding yourself,” he said. “The biggest question we have to answer is: ‘Are we developing the right leaders?’” “Are you,” he asked, “prepared to be one of those leaders?”

(2) BlackRock was thriving because of its focus on low-risk, low-cost funds and the all-seeing wonders of Aladdin. BlackRock sees the future of finance as being rules-based, data-driven, systematic investment styles such as exchange-traded funds, which track a variety of stock and bond indexes or adhere to a set of financial rules. Fink believes that his algorithmic driven style will, over time, grow faster than the costlier “active investing” model in which individuals, not algorithms, make stock, bond and asset allocation decisions.

Most money management firms highlight their investment returns first, and risk controls second. BlackRock has taken a reverse approach: It believes that risk analysis, such as gauging how a security will trade if interest rates go up or down, improves investment results.

(3) BlackRock, along with central banks, sovereign wealth funds — have become the new arbiters of "flow.“ It is not about the flow of securities anymore, it is about the flow of information and indications of interest.”

(4) Asset Liability and Debt and Derivatives Investment Network (Aladdin), is BlackRock's big data-mining, risk-mitigation platform/framework. Aladdin is a network of code, trades, chat, algorithms and predictive models that on any given day can highlight vulnerabilities and opportunities connected to the trillions that BlackRock firm tracks — including the portion which belongs to outside firms that pay BlackRock a fee to have access to the platform. Aladdin stress-tests how securities will respond to certain situations (e.g. a sudden rise in interest rates or what happens in the event of a political surprise, like Donald J. Trump being elected president.)

In San Francisco, a team of equity analysts deploys data analysis to study the language that CEOs use during an earnings call. Unusually bearish this quarter, compared with last? If so, maybe the stock is a sell. “We have more information than anyone,” Mr. Fink said.
systematic_approaches  ETFs  Wall_Street  BlackRock  Laurence_Fink  asset_management  traders  complacency  future  finance  Aladdin  risk-management  financiers  financial_services  central_banks  money_management  information_flows  volatility  economic_downturn  liquidity  bonds  platforms  frameworks  stress-tests  monitoring  CEOs  succession  risk-analysis  leadership  order_management_system  sovereign_wealth_funds  market_intelligence  intentionality  data_mining  collective_intelligence  risk-mitigation  rules-based  risks  asset_values  scaling  scenario-planning  databases 
september 2016 by jerryking

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