Martin Wolf’s chart of the week: consensus forecasts for 2010

June 19, 2009 3:00pm

by FT

This chart shows what the consensus of forecasts thinks of the green shoots argument.

Consensus forecasts for 2010

COLOMBIA: RECESION TECNICA

La Fed mantiene las tasas en casi cero,

pero indica mejora del panorma econ

Dow Jones Newswires

WASHINGTON (Dow Jones)--La Reserva Federal de Estados Unidos mantuvo el miércoles las tasas de interés cerca de cero, a la vez que destacó las nuevas señales de estabilidad económica.

"La información recibida desde que el Comité de Mercados Abiertos de la Fed se reunió en abril sugiere que el ritmo de la contracción económica se está desacelerando", sostuvo el FOMC en un comunicado emitido tras su reunión de política monetaria de dos días.

"Las condiciones en los mercados financieros han, en general, mejorado en los meses recientes", agregó.

El FOMC votó 10 a 0 a favor de mantener la meta para la tasa interbancaria federal entre cero y el 0,25%, un rango mínimo histórico.

Además, el comité reiteró que probablemente mantendrá las tasas en niveles bajos durante un período prolongado.

La tasa de descuento para los bancos comerciales y de inversión también permaneció en su nivel previo, del 0,5%.

La decisión sobre las tasas coincidió con las expectativas de los economistas en Wall Street.

Por otra parte, las autoridades reiteraron que planean comprar para el final del año hasta US$1,25 billones en valores respaldados por hipotecas de empresas auspiciadas por el Gobierno y hasta US$200.000 millones en deuda de ese tipo de empresas. Como se había anunciado previamente, el banco central prevé comprar además hasta US$300.000 millones en títulos del Tesoro estadounidense para el otoño.

El FOMC no expresó preocupación hacia un posible aumento en la tasa de inflación. "Los precios de la energía y otros bienes básicos han aumentado en los últimos tiempos. Sin embargo, es probable que la sustancial cantidad de recursos desocupados sofoque las presiones sobre los costos, y el Comité espera que la inflación permanezca moderada durante algún tiempo".

Pese a ello, los miembros del banco central eliminaron referencias previas al riesgo de que la inflación podría permanecer por debajo de niveles deseados, un indicio de que no ven la deflación como un riesgo.

Fed deja tasas estables, suaviza temor a deflación

miércoles 24 de junio de 2009 15:30 GYT

Por Alister Bull y Mark Felsenthal

WASHINGTON (Reuters) - La Reserva Federal dejó el miércoles estable su política monetaria y dijo que la recesión en Estados Unidos se estaba moderando, al tiempo que dejó entrever un menor temor a que se produzca una espiral deflacionaria.

Al término de su encuentro mensual, la Fed anunció que las tasas de interés se mantienen estables en el rango de entre cero a 0,25 por ciento alcanzado en diciembre y reiteró que quedarían en esos niveles inusualmente bajos por algún tiempo más.

Ante los bajos niveles en las tasas, la Fed se ha concentrado en hacer bajar los costos de financiamiento mediante compras de bonos del Tesoro y de deuda de agencias.

En un comunicado, la Fed dijo que su compromiso para comprar 1,45 billones de dólares en deuda de agencias hacia fin de año y otros 300.000 millones de dólares en bonos del Tesoro se mantenía sin cambios, tal como esperaban los mercados.

"La información recibida desde que el Comité de Mercado Abierto de la Reserva Federal se reunió en abril sugiere que el ritmo de la contracción económica se está moderando. Las condiciones en los mercados financieros han mejorado a nivel general en los meses recientes", dijo la Fed en el comunicado.

Las acciones cayeron tras el anuncio, mientras que el dólar subió.

"Resultó exactamente como esperábamos que fuera. Fue ciertamente más sutil de lo que muchos esperaban, pero sin embargo enviaron un mensaje claro de que la inflación y la economía se mantendrán moderadas por algún tiempo", dijo Michael Woolfolk, estratega de Bank of New York-Mellon en Nueva York.

La Fed retiró de su comunicado una frase que había usado en su último comunicado de abril, en el cual había advertido que la inflación podría ubicarse debajo de los niveles deseados por un tiempo. La eliminación de esa frase sugirió una menor preocupación por el riesgo de deflación.

Si bien se mostraron algo más cómodos con el panorama sobre los precios, los funcionarios dejaron claro que la inflación aún no era una preocupación.

"Los precios de la energía y otras materias primas han subido recientemente. Sin embargo, la falta sustancial de recursos podría amortiguar las presiones en los costos, y el Comité espera que la inflación se mantenga moderada por algún tiempo", afirmó la Fed.

La Fed bajó las tasas a su actual nivel cercano a cero a fines del año pasado, dentro de su estrategia para calmar las turbulencias financieras y sacar a la economía estadounidense de la recesión en la que se encuentra desde diciembre del 2007.

Además, en marzo anunció que compraría bonos del Tesoro para hacer bajar las tasas de largo plazo y reactivar el mercado hipotecario, clave para una recuperación de la economía.

© Thomson Reuters 2009 All rights reserved.

USA:The Next Inflation: When, Why and So What?

June 24, 2009, 7:13 am

By Casey B. Mulligan

Casey B. Mulligan is an economics professor at the University of Chicago.

Significant inflation is on the horizon. However, this inflation will have some large benefits and, in any case, cannot be blamed on the Obama administration’s deficit spending.

Many economists and bond market commentators complain that inflation is on the horizon. One of the culprits, they say, is the large amount spent by the Obama administration on the fiscal stimulus, and potentially to be spent on health care reform. They claim that federal spending increases demand and thereby increases prices.

Even if it were true that stimulating demand would create inflation, this blame is misplaced because the fiscal stimulus has not, and health care reform will not, significantly stimulate demand. Even before the “stimulus” spending started, it was clear to me that the larger effect of the fiscal stimulus would be to reduce private demand and raise public demand, without much effect on total demand.

The recent evidence has already begun to confirm the minimal aggregate impact of the fiscal stimulus: The unemployment rate in May was nowhere near as low as what the Obama administration had claimed it would be as a result of a passing a stimulus bill.

Despite some notable exceptions — such as interwar Germany — there is little or no correlation between government spending and inflation rates. Thus, even if the stimulus law and forthcoming health care laws increased total demand, there is still no guarantee that inflation would result.

The second purported culprit is the dramatic increase in the quantity of money.

The red line in the chart below illustrates this perspective — it measures the monetary base (that is, the value of currency, coin and Federal Reserve deposits) in each month through July 1930, normalized so that October 1929 is 100 (for example, the value of 98 in April 1930 means that the monetary base was 98 percent of what it was in October 1929). The blue line measures the monetary base for 2008-9. Unlike 1929, the monetary base surged in October, November and December, for a cumulative increase of about 50 percent.

Source: St. Louis Fed; Casey B. Mulligan

With a couple of caveats, such a large expansion of the monetary base should increase prices in the economy — that is, create inflation.

Close

One caveat is that, although the monetary base surged more than six months ago, the inflation has not happened yet. Part of the reason for the weak short-run link between inflation and the monetary base is that, these days, banks seem willing to hold excess reserves at the Fed. Second, it is conceivable that the Federal Reserve could contract the monetary base before inflation resulted.

But that begs the question: Will the Federal Reserve contract the monetary base enough — and with the right timing — to prevent inflation?

Some argue that the Federal Reserve does not have the political fortitude to endure the high interest rates that would supposedly result from such a contraction. I doubt that much endurance would be required, though, because the low interest rates that were created by the base expansion were so short-lived — such would be the length of time that a monetary base contraction would raise interest rates.

“Inflation will likely be a deliberate choice to reduce the housing market’s drag on the wider economy.”

More importantly, the Federal Reserve, and bankers more generally, recognize that some inflation would alleviate, although not fully erase, some of the damage done by the housing market to the wider economy.

Specifically, inflation would raise the prices of a great many commodities, goods and services, among which would be the price of housing. Higher housing prices would pull a number of mortgages out from under water — the case when more is owed on a mortgage that the market value of the house that collateralizes it — and thereby reduce the number of foreclosures.

The positive effects of inflation are why it is unlikely that there will be enough support at the Fed for reducing the monetary base in a way that would be consistent with low inflation. The inflation we will likely see in the coming months and years will not be an accidental by-product of big government spending, or an inability of the Federal Reserve to appreciate that money growth creates inflation.

Rather, inflation will likely be a deliberate choice to reduce the housing market’s drag on the wider economy.

G8: NUEVA Regulacion FINANCIERA

Regulatory Reforms in G7 Financial Centers As decided at the latest G20 meeting, authorities around the world are devising micro- and macro-prudential reforms in order to strengthen the resilience not only of single financial institutions but of the entire financial system by extending oversight to all important financial institutions, products, and activities. The United States In the U.S., the Obama administration introduced its widely anticipated regulatory reform proposal on June 17. Its five main components include: The establishment of the Fed as systemic risk regulator and supervisor of "too-big-to-fail" institutions in return for Treasury permission requirement for extraordinary liquidity programs. The plan proposes creation of a "Council of Regulators" (formerly the President's Working Group) chaired by Treasury but with advisory powers only; The creation for the first time of a regulatory regime for all financial derivatives, as well as a requirement that the originator, sponsor or broker of a securitized vehicle retain "skin in the game" – i.e., a financial interest of at least 5% in its performance; The creation of a new Consumer Financial Protection Agency with rules against predatory lending and transparency standards at the retail level; A new resolution mechanism that allows for the orderly divestiture of any non-bank financial holding company whose failure might threaten the stability of the financial system, including investment banks, large hedge funds and major insurers such as AIG; Adopting a leadership role in the effort to improve and coordinate global regulation and supervision. The main points of contention in Congress are likely to include the scope of the new regulatory powers conveyed to the Federal Reserve in view of the arguably minimal use it made of its already existing regulatory powers in the run-up to the crisis. Equally controversial are the need and the powers of the new Consumer Financial Protection Agency. Furthermore, some policymakers and market participants are equally worried about the potentially stifling effect of too much regulation on financial innovation. The European Union and Switzerland Two days after the Obama plan's introduction, on June 19, EU leaders reached agreement on a new framework for coordinated (rather than unified at EU-level) macro- and micro-prudential supervision along the lines proposed by Jacques de Larosiere and endorsed by the European Commission on June 9. Regarding the macro-prudential authority, the new European Systematic Risk Council (ESRC) will comprise EU central bank governors and will most likely be chaired by the ECB president. The Council will issue financial stability risk warnings and macro-prudential recommendations for action to supervisors and monitor their implementation. In contrast to the U.S. Federal Reserve, however, EU central bankers will not oversee and regulate systemic cross-border institutions directly. ECB vice president Lorenzo Bini Smaghi, in a June 19 speech, deplored this discrepancy. The EU agreement also establishes a new micro-prudential authority at EU-level. In particular, the European System of Financial Supervisors, comprising three new European Supervisory Authorities, will help ensure consistency of national supervision and strengthen oversight of cross border entities. This will be accomplished by setting up supervisory colleges and establishing "a European single rule book applicable to all financial institutions in the Single Market." Importantly, the new EU-level supervisory authority will have binding decision powers in the case of disagreement between the home and host state supervisors, including within colleges of supervisors. EurActiv cites the following example: "If Italian and Polish supervisory authorities disagree regarding recapitalization of an Italian bank operating in Poland, for example, it would be the new EU-level authority that would settle the issue with binding decisions." However, EU leaders are clear in their agreement that "decisions taken by the European Supervisory Authorities should not impinge in any way on the fiscal responsibilities of Member States." This precludes any ex ante burden-sharing provision, a very controversial issue. As EurActiv explains: "Should a major financial institution fail, there will be no European competence to establish which countries will have to foot the bill and by what means. National interests are likely to prevail again on this issue." Up until now, then, an EU-wide resolution regime for cross-border banks remains unaddressed. While this is welcome news for Britain, which worked hard to confine any EU interference to a minimum, smaller EU countries as well as non-EU countries with large banking sectors have a problem. Not by coincidence, Philipp Hildebrand, vice president of the Swiss National Bank, noted on a June 18 speech: "The lack of any clearly defined and internationally coordinated wind-down procedure contributes to a de facto obligation on the part of the state to provide assistance to these institutions." Small countries, in particular, will need to develop wind-down rules for crisis situations. One possible consideration, according to Hildebrand is to "split off those units of a bank that are important for the functioning of the economy and wind down the rest." 'The rest,' of course, might include foreign EU operations in need of domestic backing. In terms of pro-active regulatory interventions, the Swiss have been at the forefront with an overall leverage cap for their large institutions, an innovative ring-fencing framework for bad assets at UBS, and a risk-adjusted remuneration scheme at Credit Suisse (i.e., to pay top bankers based on the performance of the toxic waste they originated or acquired on behalf of the bank). The UK established new resolution powers for national institutions in the Banking Act 2009 in the aftermath of Northern Rock. Large and complex financial institutions, however, still await a comprehensive solution, a fact noted in Mervyn King's June 17 speech. He noted that "one important practical step would be to require any regulated bank itself to produce a plan for an orderly wind down of its activities," i.e. akin to making a will. That kind of information would also be a valuable input for the new EU cross-border regulators. Alternative Investment and Derivatives Regulation In the U.S., the President's plan requires all advisers to hedge funds and other private pools of capital, including private equity funds and venture capital funds whose assets under management exceed some modest threshold, to register with the SEC under the Investment Advisers Act and provide sufficient information for effective systemic risk supervision. Similarly, under the EU Commission draft regulation, managers of hedge funds and similar 'alternative investment funds' that handle at least €500m (€100m for those using borrowed money) would have to be registered in trade repositories and provide information about leverage. For now, the draft law applies only to managers, rather than funds, because many funds are based offshore. After three years, the rules will get tougher for funds based outside the EU. Although the EU plan was under heavy attack by the industry, the latest U.S. backing should put any hope of a reversal to self-regulation to rest. New rules in major financial centers also require all financial derivatives to be brought under the regulatory umbrella. As part of the U.S. plan, standardized credit default swaps (CDS) and other over-the-counter (OTC) derivatives will be required to clear through a central counterparty and trade on exchanges and other transparent trading venues. More customized products will be required to register with a central registry that makes aggregate data available to the public and detailed positions for regulators. In the European framework, the UK secured that the new EU supervision will not cover clearing houses for derivatives – an important objective for the City of London who is global leader in terms of trading volumes of derivatives.