CFE Analysis | Finance

Financial-Stability QE Can Appreciate the Exchange Rate

By Alessandro Rebucci and Sinem Yagmur Toraman Johns Hopkins Carey Business School, CEPR and NBER Johns Hopkins University, Economics Department On Wednesday September 28, 2022 the Bank of England announced a short-term Gilt purchase program to bail out the UK pension system. The 30-year yield tanked, UK pension funds were rescued, and, quite surprisingly, the […]

CFE | CFE Analysis | Finance

Market Volatility

Get ready for another crazy month on Wall Street. Months like March tend to come in pairs, at least as far as volatility goes. Daily moves of 4% or more are usually rare for the S&P 500; there were only ten of them in the entire decade of 2010 through 2019. In March, there were […]

CFE | CFE Analysis | Finance | Macro

Trump stocks

President Trump has frequently pointed to the performance of the stock market in praising his own performance, although not in the past week when markets worldwide came down with (fears of) the coronavirus. Even at the end of the market’s worst week since 2008, the S&P 500 has still risen at a compound rate of […]

CFE Analysis | Finance

A Happy New Year for Bitcoin?

The future of Bitcoin and other cryptocurrencies does not depend on whether digital currency is a good idea—digital currency or some equivalent is clearly a good idea. What will matter is whether cryptocurrencies are as good as other approaches to digital currency. From this perspective, cryptocurrencies look a bit ridiculous. A digital currency is nothing […]

CFE Analysis | Finance

While visions of Bitcoins danced in their heads

Nothing is but branding makes it so.Hamlet, Act 2, Scene 2, sort of Bitcoin has been branded a currency, and some analysts—even some Fed economists—seem to have fallen for it, arguing that Bitcoin’s value as a transactions vehicle explains why this intrinsically useless item has market value. The trouble is that there is no evidence […]

CFE Analysis | Finance

2016 Starts with a Bang–Or was that a Pop?

When last we posted, we were making the case that a 25 basis point rise in the federal funds rate, paired with a sufficiently gradual tightening thereafter, was a reasonable hawk/dove compromise for the FOMC. Under our outlook, sufficiently gradual was likely to be a good deal more gradual than the FOMC was predicting, however. […]

CFE Analysis | Finance

Exit Keynes, the Friedmanite, Enter Minsky’s Keynes

Last week Brad Delong reposted his 1996 review of A Tract on Monetary Reform. Delong makes the case, quite compellingly, that Keynes, in this book, provides us with the best monetarist monograph ever written. Delong leads, however, with a sentence that, in 2013 as contrasted to 2006, I think he might want to alter. “This […]

CFE Analysis | Finance

Another Minsky Moment?

Bloomberg Magazine asked CFE Co-Director Bob Barbera if the current low level of the VIX and high hedge fund leverage meant that the economy was on the brink of another Minsky moment.  Here is his reply. The late economist Hyman Minsky brilliantly documented that attitudes toward risk taking evolve in a predictable pattern over the […]

CFE Analysis | Finance

Pulitzer for the Really Big Short

Jesse Eisinger and Jake Bernstein of the website just won the first ProPublica recently won the first Pulitzer prize given for a story that never appeared in hardcopy press. The award was for their story about how the hedge fund Magnetar made a bundle by promoting the creation of toxic CDOs, buying the riskiest tranches, […]

CFE Analysis | Finance

Yellow Hats and Eating Crow

Colorful news week. For those of you who didn’t keep up: Bernanke wore a red tie to the press conference and informed us that he can’t beat Ken Rogoff at chess; QE2 (which will be completed) wore a yellow hat at the wedding; and Warren Buffett isn’t keen on gold. In food news, Buffett—used to […]

CFE Analysis | Finance

Market reaction to potential U.S. rating downgrade

Standard and Poor’s Monday released analysis Monday revising the outlook on U.S. debt to negative. “Our negative outlook on our rating on the U.S. sovereign signals that we believe there is at least a one-in-three likelihood that we could lower our long-term rating on the U.S. within two years,” Mr. Swann said. “The outlook reflects […]