tag:blogger.com,1999:blog-6616959642391988608.post2960431546300013444..comments2024-03-28T00:18:25.641-07:00Comments on Calafia Beach Pundit: The crisis is passing (7)Scott Grannishttp://www.blogger.com/profile/14028519647946868684noreply@blogger.comBlogger10125tag:blogger.com,1999:blog-6616959642391988608.post-84335161277566257062009-02-06T10:07:00.000-08:002009-02-06T10:07:00.000-08:00Scott,I more or less agree with your assessment bu...Scott,<BR/>I more or less agree with your assessment but I'm still skeptical about how much the Fed can accomplish with quantitative easing when we have a financial sector populated with zombie institutions. So far I don't have much confidence in how TARP has been handled. I'm curious what Geithner is going to announce on Monday.Mark A. Sadowskihttps://www.blogger.com/profile/13147923641894915172noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-64923918584849519752009-02-05T11:11:00.000-08:002009-02-05T11:11:00.000-08:00Mark: just because rates are at zero doesn't mean ...Mark: just because rates are at zero doesn't mean the Fed can't ease further. Of course they can. They can buy things all day long and expand the money supply. If they do that enough, they will push inflation up and that will steepen the yield curve. But perhaps you're saying that the yield curve doesn't tell the whole story and if so, then I agree with you. I think you always have to take Scott Grannishttps://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-80072197343360254762009-02-04T20:49:00.000-08:002009-02-04T20:49:00.000-08:00Scott,The Federal Reserve can’t reduce interest ra...Scott,<BR/>The Federal Reserve can’t reduce interest rates any lower, because they’re already zero. It can, however, raise rates. The long-term rate has to be above the short-term rate, because given the current conditions it’s like an option price in that short rates may move up, but they can’t go down.<BR/><BR/>In fact, if we look at Japan we find that the yield curve was positively sloped Mark A. Sadowskihttps://www.blogger.com/profile/13147923641894915172noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-17271920044193737982009-02-04T20:05:00.000-08:002009-02-04T20:05:00.000-08:00Mark: I am ashamed that I dismissed the yield curv...Mark: I am ashamed that I dismissed the yield curve signal in 2007. But now you're telling me you feel comfortable doing the same?Scott Grannishttps://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-55049987692314489372009-02-04T18:15:00.000-08:002009-02-04T18:15:00.000-08:00Scott,You should be ashamed for not following the ...Scott,<BR/>You should be ashamed for not following the yield curve. If you had you would have noticed that it was inverted from mid 2006 through mid 2007. It's one reason why I started forecasting a recession in the summer of 2006. <BR/><BR/>The problem with using the Federal Reserve model now is that it is based on empirical data collected since 1980. This is the only time in Federal Reserve Mark A. Sadowskihttps://www.blogger.com/profile/13147923641894915172noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-80324368303738797622009-02-04T09:48:00.000-08:002009-02-04T09:48:00.000-08:00For those interested in judging the robustness of ...For those interested in judging the robustness of the term structure of rates with respect to economic forecasting I encourgage a reading of "Financial Market Perceptions of Recession Risk" available at the Federal Reserve's Finance and Economic Discussion Series. It will reaffirm one's use of the yield curve.theshoehttps://www.blogger.com/profile/08452289345871447975noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-1681681835770386112009-02-03T19:02:00.000-08:002009-02-03T19:02:00.000-08:00...and by intra-day lows I mean the markets' reces......and by intra-day lows I mean the markets' recession intra-day lows that came in October of 1990.Chadhttps://www.blogger.com/profile/14267717686164259220noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-12853508454745626252009-02-03T14:47:00.000-08:002009-02-03T14:47:00.000-08:00If you want to see just how slow the media are to ...If you want to see just how slow the media are to recognize the end of a recession, go to www.time.com and check out the "Why We're So Gloomy" article in the January 13, 1992 issue.<BR/><BR/>For those who don't remember, the 1990-91 recession ended fully 10 months before that issue came out. Yet what was the blaring headline on the cover? "THE RECESSION: HOW BAD IS IT?&Chadhttps://www.blogger.com/profile/14267717686164259220noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-70996787708947886692009-02-03T13:22:00.000-08:002009-02-03T13:22:00.000-08:00Good question. The man on the street and the mains...Good question. The man on the street and the mainstream media likely won't figure out the recession has ended until well after the fact. Financial markets will figure it out first. Traditional indicators to look for would be a peaking in unemployment claims, a bottoming in payroll employment, a bottoming in industrial production, and a peaking in the unemployment rate.<BR/><BR/>Check this post Scott Grannishttps://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-86727453404642971992009-02-03T13:04:00.000-08:002009-02-03T13:04:00.000-08:00Scott: Is it fair to assume that when the recessi...Scott: Is it fair to assume that when the recession "officially" ends (as defined by the NBER, when we begin to ascend from the trough), that most of us likely won't even be aware of it? For example, for all we know, six months from now, NBER may call this month (February) as the end of the recession. Or are there signs economists such as yourself will recognize? -Joe McKendrickjoemckendrickhttps://www.blogger.com/profile/02280059500900988435noreply@blogger.com