Sunday , December 22 2024
Home / Mike Norman Economics / Barkley Rosser — The Minsky Moment Ten Years After

Barkley Rosser — The Minsky Moment Ten Years After

Summary:
… as Neil Schirmer in The Alchemists (especially Chap. 11) documented, the crucial move that halted the collapse of the euro and the threat of a fullout global collapse was a set of swaps the Fed pulled off that led to it taking about 0 billion of Eurojunk from the distressed European banks through the ECB onto the Fed balance sheet. These troubled assets were gradually and very quietly rolled off the Fed balance sheet over the next six months to be replaced by mortgage backed securities. This was the save the Fed pulled off at the worst moment of the Minsky Moment. The Fed policymakers can be criticized for not seeing what was coming (although several people there had spotted it earlier and issued warnings, including Janet Yellen in 2005 and Geithner in a prescient speech in Hong

Topics:
Mike Norman considers the following as important: , ,

This could be interesting, too:

Merijn T. Knibbe writes Monetary developments in the Euro Area, september 2024. Quiet.

Sergio Cesaratto writes Di nuovo su TARGET2

NewDealdemocrat writes Inflation is decelerating substantially towards the Fed target ADDENDUM: the huge impact of shelter

NewDealdemocrat writes Interest rates, the yield curve, and the Fed chasing a Phantom (lagging) Menace

… as Neil Schirmer in The Alchemists (especially Chap. 11) documented, the crucial move that halted the collapse of the euro and the threat of a fullout global collapse was a set of swaps the Fed pulled off that led to it taking about $600 billion of Eurojunk from the distressed European banks through the ECB onto the Fed balance sheet. These troubled assets were gradually and very quietly rolled off the Fed balance sheet over the next six months to be replaced by mortgage backed securities. This was the save the Fed pulled off at the worst moment of the Minsky Moment. The Fed policymakers can be criticized for not seeing what was coming (although several people there had spotted it earlier and issued warnings, including Janet Yellen in 2005 and Geithner in a prescient speech in Hong Kong in September, 2006, in which he recognized that the housing related financial markets were highly opaque and fragile). But this particular move was an absolute save, even though it remains today very little known, even to well-informed observers.
I did not know this, did you?

Econospeak
The Minsky Moment Ten Years After
J. Barkley Rosser | Professor of Economics and Business Administration James Madison University

Mike Norman
Mike Norman is an economist and veteran trader whose career has spanned over 30 years on Wall Street. He is a former member and trader on the CME, NYMEX, COMEX and NYFE and he managed money for one of the largest hedge funds and ran a prop trading desk for Credit Suisse.

Leave a Reply

Your email address will not be published. Required fields are marked *