Testing of the “exit” at the Federal Reserve

The Federal Reserve awarded $334.714 billion 213 billion pounds of eight-day term deposits to banks, a record amount, at a test auction held on Monday, it said in a statement on Tuesday.  The U.S. central bank allotted them to 90 banks which will receive an interest rate of 0.29 percent.  This was higher than the $316.020 billion in seven-day deposits awarded a week earlier to 85 banks which received an interest rate of 0.28 percent.  [.01% of $300b is $30m at an annual rate, or about $1 m for the 8 days.]  The Fed has ramped up testing of its term deposit facility after the 2008 financial crisis to help policymakers drain cash from the banking system when they decide to tighten monetary policy.On Sept. 4, the Fed said it plans to conduct a series of eight seven-day TDF operations starting in October. These tests will have an early withdrawal feature in which banks can enter the TDF and pull the money out before the maturity date if they pay a charge.

via Fed Awards $335 Billion of Term Deposits in Test Auction – NYTimes.com.

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Ethics of everyday life

Will David Carr tell his readers how much money he made for his puff piece on Bill Cosby, and give that to a good charity?

I was one of those who looked away. Having read the Philadelphia magazine story when it came out, I knew when the editors of the airline magazine called that they would have no interest in pursuing those allegations in a short interview in a magazine meant to occupy fliers.  My job as a journalist was to turn that assignment down. If I was not going to do the work to tell the truth about the guy, I should not have let him prattle on about his new book at the time.

via Calling Out Bill Cosby’s Media Enablers, Including Myself – NYTimes.com.

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Paul Krugman on the Zero Lower Bound

What do I mean by saying that everything changes [at the so-called zero lower bound]? As I wrote way back when, in a rock-bottom economy “the usual rules of economic policy no longer apply: virtue becomes vice, caution is risky and prudence is folly.” Government spending doesn’t compete with private investment — it actually promotes business spending. Central bankers, who normally cultivate an image as stern inflation-fighters, need to do the exact opposite, convincing markets and investors that they will push inflation up. “Structural reform,” which usually means making it easier to cut wages, is more likely to destroy jobs than create them.This may all sound wild and radical, but it isn’t. In fact, it’s what mainstream economic analysis says will happen once interest rates hit zero. And it’s also what history tells us. If you paid attention to the lessons of post-bubble Japan, or for that matter the U.S. economy in the 1930s, you were more or less ready for the looking-glass world of economic policy we’ve lived in since 2008.

via The Inflation and Rising Interest Rates That Never Showed Up – NYTimes.com.

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Bad newspaper writing: NY Times on Texas textbooks

The article headline and first paragraph  tease us: Texas has approved textbooks for use in public school that say negative things about Muslims…

Texas’ State Board of Education has approved new history textbooks, but only after defeating six and seeing a top publisher withdraw a seventh — capping months of outcry over lessons that some academics say exaggerate the influence of Moses in American democracy and negatively portray Muslims.

But then in the article, not a single quote from one of the disputed textbooks, so that the reader could evaluate whether “some academics” (who are not cited) are reasonable or not.  So we should decide: Stop reading the New York Times.

via Texas Approves Disputed History Texts for Schools – NYTimes.com.

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Beautiful words from Michel Kafando new President of Burkina Faso, but they ring hollow

These words sound so true and heartfelt, but they are coming from a man who chose not to go into exile and fight the terrible system he now decries.  Instead, he chose to represent that very same system and regime as ambassador to the United Nations.  And the man he just selected to be Prime Minister, just three weeks ago was the number two man in that terrible system’s presidential guard.  In college we used to call this a “snow job.”

Le message du peuple est clair et nous l’avons entendu. Plus jamais d’injustice, plus jamais de gabegies. Plus jamais de corruption. Tout nous conduit donc à prendre nos responsabilités pour répondre à cet appel.  C’est dire que les actions que nous engageons dès l’entame de notre mandat, seront essentiellement centrées sur ce que nous considérons comme un mandat impératif. Toute ma vie, je me suis toujours fait une idée du respect du bien public, de militer pour l’avènement d’une vraie justice sociale. L’on comprendra pourquoi, avec ceux qui ont méprisé cette justice et qui pensent qu’ils peuvent impunément dilapider les deniers publics, nous règlerons bientôt les comptes.

via Le discours de prise de fonction de Michel Kafando.

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E.C.B. sees significant risk of deflation in eurozone

Mario Draghi, the European Central Bank president, strongly signaled on Friday that he and his colleagues were preparing a new round of powerful monetary stimulus to jolt the flagging eurozone economy at a time when the risk of deflation is growing.  Speaking at a conference in Frankfurt, Mr. Draghi said the central bank would “do what we must to raise inflation and inflation expectations as fast as possible, as our price stability mandate requires of us.”If the bank’s current policy did not end the threat, Mr. Draghi added, “we would step up the pressure and broaden even more the channels through which we intervene, by altering accordingly the size, pace and composition of our purchases… While Mr. Draghi on Friday did not actually say much that was different from previous utterances, there was a significant new emphasis on the risk of deflation in the eurozone.

via Mario Draghi Says E.C.B. Will ‘Do What We Must’ to Stoke Inflation – NYTimes.com.

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Goldman Sachs say: We want to make a lot more money and do not care about the risk to the macroeconomy

A report released this week by the Senate Permanent Subcommittee on Investigations found that banks had built up enormous holdings of commodities and infrastructure that allowed the banks to monitor and influence the price of these materials.One potential danger for banks holding commodities infrastructure, like coal mines, is that the infrastructure could be involved in environmental disasters that would expose the banks to significant legal liability.Mr. Tarullo, the Fed governor who oversees regulatory policies, is expected to testify that “physical commodities activities can pose unique risks to the safety and soundness of financial holding companies.”

via Federal Reserve Set to Propose Stricter Rules for Banks in Commodities Markets – NYTimes.com.

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