Tag Archives: Interest rates

Germany's Finance Minister Wolfgang Schaueble has long been critical of ECB monetary policy,. But now, as Reuters says, the gloves are off. In a speech at a prizegiving for an ordoliberal economics foundation last Friday, Dr. Schaeuble demanded that the ECB raise interest rates.The justification? Very low interest rates hurt Germany's savers, which are the bedrock of its economy.There is a political dimension to this. Dr. Schaueble's party, the CDU, is losing popularity and desperate for...

From Joe Sarling's blog comes this a lovely chart showing housing affordability by cohort since 1955: As can be seen, the current generation of young people - Generation Y - faces paying a far higher proportion of their incomes in mortgages or rent than any previous cohort. This does not, of course, take into account the considerable price difference between London and everywhere else: if London were excluded, I suspect their position would not look quite so dire. Nonetheless, this chart is...

Bill appeared on CCTV America discussing the American economy with Rachelle Akuffo. You can view it here. [Translate]

In-depth analysis on Credit Writedowns Pro. By Frances Coppola originally posted at Coppola Comment Japan has just introduced negative rates on reserves, following the example of the Riksbank, the Danish National Bank, the ECB and the Swiss National Bank. The Bank of Japan has of course been doing QE in very large amounts for quite some time now, and interest rates have been close to zero for a long time. But this is its first experiment with negative rates. The new negative rate...

Courtesy of Dr. George Selgin comes this chart from FRED: Dr. Selgin has added a vertical line to indicate when the Fed imposed interest on excess reserves. I don't propose to discuss that here, since I have engaged in an interesting and spirited discussion with Dr. Selgin and others about it on both Forbes and Twitter. I am more interested in what else this chart shows. It is truly fascinating.The first thing to note is the fast rise in bank reserves from the latter part of 2008 onwards...

At the ICAEW's conference "Do Banks Work?" last week, there was a fascinating interchange between Ian Gorham of Hargreaves Lansdowne and RBS's Ross McEwan. Apparently RBS had refused a large deposit from Hargreaves Lansdowne, to the irritation of the asset manager. "There is a problem placing client money", said Gorham. And he went on: "Banks don't need people's savings, because they now have much more capital to support lending. This means that savers receive much lower interest rates on...

Yes, they were up, but there is a ‘seasonal’ aspect to it, including an air show, so the year over year chart is a bit more indicative of what’s going on and it’s still in negative territory. Also, vehicle orders declined, and inventories remained at levels that beg continuing production cuts. Factory OrdersHighlightsFactory orders bounced sharply higher in October and, together with the bounce higher for manufacturing in the industrial production report, confirm what was a very solid month...

In my last post, I warned about "siren voices" calling for tighter monetary policy while the Eurozone economy is stuck in a toxic equilibrium of low growth, zero inflation and intractably high unemployment. Specifically, the so-called "German Council of Economic Experts (GCEE)" has called for the ECB to reduce or unwind QE: ...the European Central Bank should slow down the expansion of its balance sheet or even phase it out earlier than announced. Of course, the GCEE is only concerned...

In-depth analysis on Credit Writedowns Pro. Editor’s note: This was originally published by Absolute Return Partners in late August. So we are a little late in releasing it. Apologies. It is still good reading. The Absolute Return Letter, August/September 2015: Doodles from an eventful summer “There is something deeply troubling when the unthinkable threatens to become routine.” Bank for International Settlements Incidents of the summer 2015 This month’s Absolute Return Letter is a...

When a former Bank of England deputy governor gives a presentation entitled "Are Low Interest Rates Natural?" to a extraordinarily high-powered audience of academics and monetary policymakers, you can bet he will come up with some great charts. Charlie Bean's historical analysis of long-term real and nominal yields in the UK is amazing: It is very evident that for most of the last 200 years, nominal and real consol yields have been pretty much pinned together. Charlie said that the gold...