We are seeing a bottom in housing sales. People are coming in as bargain hunters. This is a good time to be buying a house.
—David Wyss, chief economist with Standard & Poor’s
For Asian countries, however, the key agenda issue is the safety of their assets denominated in dollars, as they look ahead to a devalued dollar from rising US sovereign debt.
—Yu Qiao, Tsinghua University, Beijing
As Mr Zhou says, a reserve supercurrency could be created through further issuance of the International Monetary Fund’s Special Drawing Rights – the IMF’s in-house reserve asset. To enable and encourage take-up, he proposes wider uses for the SDR and giving some surplus countries’ reserves to the IMF for it to manage. Married with other necessary reforms, this plan would also empower the IMF to act more flexibly. Good.
But China’s dollar-heavy reserve accumulation was not just insurance – it supported an aggressive, mercantilist trade policy. Beijing kept its currency weak to bolster exports and measured success in terms of how export-dependent it became. Mr Zhou’s proposal is useful and constructive – but China should still raise domestic consumption. It must not just replace its mountain of dollar assets with heaps of other currencies.
—FT: Comment
===========================================================
—- Amounts (Billions)—-
Limit Current
===========================================================
Total $12,798.14 $4,169.71
—————————————————————————————-
Federal Reserve Total $7,765.64 $1,678.71
Primary Credit Discount $110.74 $61.31
Secondary Credit $0.19 $1.00
Primary dealer and others $147.00 $20.18
ABCP Liquidity $152.11 $6.85
AIG Credit $60.00 $43.19
Net Portfolio CP Funding $1,800.00 $241.31
Maiden Lane (Bear Stearns) $29.50 $28.82
Maiden Lane II (AIG) $22.50 $18.54
Maiden Lane III (AIG) $30.00 $24.04
Term Securities Lending $250.00 $88.55
Term Auction Facility $900.00 $468.59
Securities lending overnight $10.00 $4.41
Term Asset-Backed Loan Facility $900.00 $4.71
Currency Swaps/Other Assets $606.00 $377.87
MMIFF $540.00 $0.00
GSE Debt Purchases $600.00 $50.39
GSE Mortgage-Backed Securities $1,000.00 $236.16
Citigroup Bailout Fed Portion $220.40 $0.00
Bank of America Bailout $87.20 $0.00
Commitment to Buy Treasuries $300.00 $7.50
—————————————————————————————-
FDIC Total $2,038.50 $357.50
Public-Private Investment* $500.00 0.00
FDIC Liquidity Guarantees $1,400.00 $316.50
GE $126.00 $41.00
Citigroup Bailout FDIC $10.00 $0.00
Bank of America Bailout FDIC $2.50 $0.00
—————————————————————————————-
Treasury Total $2,694.00 $1,833.50
TARP $700.00 $599.50
Tax Break for Banks $29.00 $29.00
Stimulus Package (Bush) $168.00 $168.00
Stimulus II (Obama) $787.00 $787.00
Treasury Exchange Stabilization $50.00 $50.00
Student Loan Purchases $60.00 $0.00
Support for Fannie/Freddie $400.00 $200.00
Line of Credit for FDIC* $500.00 $0.00
—————————————————————————————-
HUD Total $300.00 $300.00
Hope for Homeowners FHA $300.00 $300.00
—————————————————————————————-
he FDIC’s commitment to guarantee lending under the
Legacy Loan Program and the Legacy Asset Program includes a $500
billion line of credit from the U.S. Treasury.
- Case Shiller Composite Ten passes 30% decline from peak
- 19% YoY decline in Composite 20, a 29% decline from the peak
- Phoenix inches toward 50% decline from peak, at 49%
- NY YoY decline hits 10%, with a 16% decline from the peak
At this point it doesn’t look great for the near term…[but prices] can’t keep declining at this rate forever.
—Robert Shiller: Bloomberg Radio
There are very few bright spots that one can see in the data. Most of the nation appears to remain on a downward path.
—David Blitzer, chairman of the index committee at S&P
Resumption of growth should not be too far off. Once under way, the pace of expansion is likely to be subdued for some time.
—Minneapolis Fed President Gary Stern, March 26
[Glenn Beck’s success] is a product of the collapse of conservatism as an organized political force, and the rise of conservatism as an alienated cultural sensibility.
—David Frum, quoted in the NYT
We call on the WTO, together with the IMF and other international bodies as appropriate, to report on our adherence to these undertakings on a quarterly basis.
—Draft Communique for G20 Summit
The substitution of sovereign credit for private credit has helped to fend off some of the extremes of the solvency crisis. However, when we look back on this period, I very much suspect that the force that will be seen to have been most instrumental to global economic recovery will be a partial reversal of the $35,000bn global loss in corporate equity values that has so devastated financial intermediation.
What is undeniable is that stock market prices today are being suppressed by a degree of fear not experienced since the early 20th century (1907 and 1932 come to mind). But history tells us that there is a limit to how deep, and for how long, fear can paralyse market participants. The pace of economic deterioration cannot persist indefinitely.
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