RSS FeedYesterday I did an interview on the Jim Blasingame show called Which Direction is the Economy Moving? We spent a significant amount of time discussing Mark to Market and the banking crisis.
Archive for April, 2009
Comments (0)04 29th, 2009 3:33:42 PM
Lately, I've gotten a lot of time on CNBC's Kudlow Report. Here's my latest from April 28 on whether bank stress tests will reveal Bank of America needs more capital.
04 28th, 2009 8:00:18 AM
As a new CNBC Contributor, here's my new bio page: Bob McTeer's Profile. It contains selected recent articles and videos. You may also see my April 24 interview on Kudlow Reports, below.
04 27th, 2009 10:25:19 AM
Commonsense Economics
Several years ago the public affairs staff at the Dallas Fed undertook a project to create a little booklet with the title above containing what they regarded as nuggets of economic wisdom they found in combing through some of my speeches and writings. That project was never finished. However, in digging up bones recently, I came across some of the quotes they had selected as a beginning. Here they are in case you are interested.
04 25th, 2009 9:00:42 AM
Two More Toxic Words
It would be funny how words seem to change their meaning were it not for possible serious consequences. For some years now, various American officials and others have accused China of currency manipulation. Treasury officials have not gone that far officially, but their rhetoric comes close. My friend, the new Secretary of the Treasury, has come too close on a couple of occasions, in my opinion.
I suppose you could define the term, "manipulation" to suit your argument, but that's not the cowboy way. We believe that words should keep their value and meaning as much as currencies. The simple, plain fact is that what some are now calling currency manipulation by China was considered official sound policy back when we did the same thing. Let me repeat: when they do it, some call it manipulation; when we did it, it was sound policy.
04 24th, 2009 1:53:48 PM
I will be discussing the bank stress tests on CNBC's Kudlow Report tonight at 7 PM Eastern. [Here's the video of Bob McTeer on Kudlow]
04 22nd, 2009 10:55:36 AM
Good question. Many have received injections of capital (purchases of preferred stock) through the Troubled Asset Relief Program (TARP), yet many large banks announced large profits this week. If this week's announcements were all I knew about it, I'd be very confused.
But, my answer is…
04 20th, 2009 1:55:33 PM
(A Tiger by the Tail)*
I wrote on February 25 that the newly-announced bank stress tests were mostly window dressing since bank examiners stay in constant touch with the financial condition of the banks they regulate, even having their own offices in the largest banks. I cautioned that the publicity given to this charade could backfire on the regulators by triggering calls for transparency. I believe I may have stumbled upon something.
(See my poem about transparency at the end of this piece.)
04 18th, 2009 8:00:20 AM
A Week-End Special
What do you do when your well runs dry, your muse gets an unlisted telephone number, and your hits fall like a stone?
I dig up bones. Now, strictly speaking, Digging Up Bones, as defined by country music legend, Randy Travis, involves rummaging through the old home place and finding tangible memories of a lost and long gone love, which activity is not necessarily confined to country. City folks can also get those "Gone, but not Forgotten Blues."
Of course, everything, it seems, has its generic version. I seek the elusive muse while standing in front of my book cases staring at the titles hoping to rekindle a lost thought or two. It's almost as productive as panning for gold, which is to say not very, but at least you can keep your socks dry.
[You will find a treat at the end, so hang in there.]
04 16th, 2009 9:32:08 AM
A Primer
The balance of payments always balances. That's why they call it the balance of payments.
Constant balance (not to be confused with equilibrium) results from double entry accounting where total debits always equals total credits. Each international transaction results in a new debit and a matching new credit; an equal reduction in debits and credits; or offsetting debits (one plus; one minus) or offsetting credits (one plus; one minus). This in itself is no great revelation, but it does impose a useful discipline in thinking about international transactions. It keeps you honest, so to speak.
04 14th, 2009 9:57:05 AM
Ye'gast!
During the 1980s when I ran the Baltimore Branch of the Richmond Fed, I also taught a Money and Banking course in the graduate evening program of The Johns Hopkins University. As in all such courses, I showed the students how banks create money when they make new loans and how the Fed influences that process with the tools of monetary policy, especially open market operations. I went into the multiple expansion process, showed how the impact of fiscal policy depends largely on how deficits are financed-with newly created money or existing money-and so forth. It was standard stuff using standard textbooks.
In the context of a classroom and textbooks, students readily accepted the fact that central banks can create money out of thin air and they accepted that the exercise of that process can be helpful in promoting economic stability or can be disastrous if abused.
04 12th, 2009 7:50:48 AM
I don't quite have the answer to that question, but I would argue that the question itself reflects some common confusion.
If all exchange rates are free to adjust to market forces, they would tend to produce a balance between each country's trade with the rest of the world. Strictly speaking, that assumes no unruly capital flows to complicate matters. But while market forces tend to promote trade balance with all other countries combined, there is no reason to expect the market to balance trade on a bilateral, country-by-country, basis.
04 10th, 2009 9:43:14 AM
The Good, the Bad, and the Ugly
The Good: The Trade Deficit is shrinking.
The Bad: Trade is shrinking.
The Ugly: Protectionism is growing.
The deficit in U.S. trade in goods and services shrank to $26 billion in February, from a revised $36.2 billion in January. This is good news. On the other hand, the total value of imports and exports has been shrinking for several months because of reduced aggregate demand at home and abroad. In February, our exports rose slightly, by $2 billion, while our imports declined $8.2 billion. Other things equal, our small uptick in exports in February along with a more substantial decline in imports, suggests that our trading partners are experiencing more demand weakness than we are.
.jpg)
Source: U.S. Commerce Department, U.S. International Trade in Goods and Services February 2009
04 8th, 2009 4:57:50 PM
Back when they called me The Lonesome Dove and some of my best friends were inflation hawks, I wrote a couple of poems to clarify the situation. If interested, you might want to check out some other Rhymes with No Reason on my web site, http://www.bobmcteer.com/.
A Dove with Attitude
Presented at a meeting of the Rotary Club of Dallas, July 21, 2004
Lately, I've had second thoughts
About doves and hawks.I wonder what justifies the magnitude
Of the typical hawkish attitude.Are hawks the magnificent seven
With the keys to central banker heaven?Can't doves put their wing tips
on their hips
And also shoot from the lip?And give hawks the evil eye
As they fly high in the sky?I don't want hawkish platitudes;
I greatly prefer a dove with attitude.
04 6th, 2009 3:57:55 PM
toxic L toxicum, a poison; Gr toxicon, a poison, orig., poison in which arrows were dipped. 1. of, affected by, or caused by a toxin, or poison. 2. acting as a poison; poisonous n. a toxic substance; also, something contaminated by a toxic substance.
Many of the words being newly used these days are as toxic as the toxic assets we hear so much about.
Nationalization
This term was in vogue for a while, but it seems to be waning. That's good because it was being used to describe a common practice in the resolution of troubled banks that had never been called nationalization, with all its implication of socialism. Most financial TV commentators are too young to remember the banking or S&L crises of the late 1980s.
9:43:30 AM
Here is the video of my interview with Becky Quick on CNBC's Squawk Box on Thursday, April 2. [CNBC Toxic Assets Interview]