Trans-Atlantic Inflation Fears

Sam Sherraden — Mon, 19 May 2008 14:39:00 -0400

Food and energy prices are rising and inputs for producers grow more expensive by the day, putting enormous pressure on central bankers to keep inflation low. This is pressure is particularly acute for Mervyn King and Jean Claude Trichet, the heads of the Bank of England and European Central Bank, who promise their governments to keep inflation around 2%. With no sign of a break in energy prices, the Bernanke Fed has also been warned by former Fed Chairman Paul Volker to keep inflation low. Volker said last week that there is a resemblance between today and the 1970s and that the Fed already introduced enough liquidity into the market.

Snapshot asks, are central bankers recklessly abandoning their inflation targets?

Martin Wolf - Britain Must not cut loose its anchor
Financial Times - Higher inflation stems from official neglect
Paul Volker - Act now to avoid inflation
Janet Yellen Federal Reserve Bank of San Francisco - Combination of Risks

Any Levers Left?

Sam Sherraden — Tue, 04 Mar 2008 19:39:00 -0500

It is unclear what response, if any, will right the U.S. economy. Chairman of the Federal Reserve, Ben Bernanke, gave a speech today calling for "a vigorous response" to the mortgage crisis and suggested reinvigorating government-sponsored enterprises, like Fannie Mae and Freddie Mac, with increased regulation and possibly writing down the principal on home mortgages. Treasury Secretary Henry Paulson said in a speech yesterday, "Let me be clear: I oppose any bailout." It appears policy makers, officials, and economists still cannot agree on appropriate solutions to the mortgage crisis.

Snapshot asks, what policy will get the U.S. economy out of its current slump and not threaten long run growth?

Bloomberg - U.S. Stocks Fall on Bernanke Plan
Ben Bernanke - Reducing Preventable Mortgage Foreclosures
Morgan Stanley - If Monetary Policy Can’t Do the Job, Then What?
David Greenlaw - Leveraged Losses: Lessons from the Mortgage Market Meltdown
Henry Paulson - U.S. Housing and Mortgage Market Update before the National Association of Business Economists