The slightest rise in rates here in the US could devastate federal, state, and municipal budgets nationwide. All of which goes a long way to explaining the Fed’s brute determination to keep interest rates miniscule.
In normal markets, investors would find the suggestion of raising interest rates in a weak economy about as daft as holding a TV antenna in a thunderstorm. Yet, after five years of “stimulative” monetary policy, this week's survey results suggest that investors are ready for a radical departure from economics orthodoxy.
Germany may well be experiencing a real-estate bubble — and the explanation is straightforward: the European Central Bank has lowered rates in response to the global financial crisis that began in 2008, and then dropped rates dramatically in response to the euro crisis, which didn't gain steam until late 2009, and then pushed rates near zero in late 2011 — where they have remained.
In a poll conducted earlier this week in the CFA Institute Financial NewsBrief, we asked subscribers what they thought would be the most likely impact of QE3.
What do you think will… READ MORE ›
In this comprehensive historical analysis of several decades’ worth of decisions to bail out troubled banking firms, the author suggests that the 2008–09 interventions were ill conceived and inadequately justified. He argues that misguided government policies were largely responsible for the financial crises that necessitated such bailouts.
Yesterday, U.S. Federal Reserve Chairman Ben Bernanke removed all doubt about whether or not the Fed would proceed with QE3. What will be the impact? A careful study of the long-running U.S. current account deficit provides some answers.
Federal Reserve policy has substantial effects that are important for investors to understand, and future policy direction may be different than expected.
Being riskless (by that I mean holding government securities) simply doesn’t pay anymore, and markets are starting to… READ MORE ›
Finance professor Amir Sufi of the University of Chicago Booth School of Business argues that the severe U.S. recession and Europe's ongoing economic woes can best be explained as aggregate demand and leverage problems that cannot be effectively treated through monetary policy initiatives alone.
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