Monetary News Nov 29 - Dec 3

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News
FRIDAY
Republicans to Fed: Forget about jobs
For more than 30 years, the Fed has been tasked with a so-called dual mandate, which outlines two important goals: keep prices stable and maximize U.S. employment. But some critics are sick and tired of the Fed prioritizing job creation at the risk of rising prices.
The future of the euro
The euro is proving horribly costly for some. A break-up would be even worse.
Fed Created Conflicts in Improvising Financial System Rescue
This week’s disclosures of data from the Fed’s rescue efforts during the 2007-2008 financial crisis show how the central bank employed companies to help design or run programs they could use to their benefit.
China's risky inflation offensive
One central bank is sticking to its exit strategy, but hang on tight: Even optimists don't expect the ride to be silky smooth.
Cross Section of Rich Invested With the Fed
The investors, whose identities were disclosed as part of a trove of 21,000 records released on Wednesday at the direction of Congress, are a cross-section of America’s wealthy — investors who, in the midst of the worst financial crisis since the Great Depression, heard about an opportunity and weighed the risk.
Monetary Policy: Fed Critic Ron Paul's Power Play
The Fed critic and gold bug could chair the House panel on monetary policy.

THURSDAY
Euro to struggle vs dollar and pound: Reuters poll
The battered euro will fail in the coming year to recoup its recent sharp losses as the debt crisis in the bloc rumbles on and fears over the economic stability of periphery members weighs on minds, a Reuters poll found.
Fed aid in financial crisis went beyond U.S. banks to industry, foreign firms
The financial crisis stretched even farther across the economy than many had realized, as new disclosures show the Federal Reserve rushed trillions of dollars in emergency aid not just to Wall Street but also to motorcycle makers, telecom firms and foreign-owned banks in 2008 and 2009.
Fed ID's companies that used crisis aid programs
The Federal Reserve revealed details Wednesday of trillions of dollars in emergency aid it provided to U.S. and foreign banks during the financial crisis.
Suddenly, Bernanke's Fed is a favorite punching bag. Why the pounding?
Ben Bernanke and the Fed are being lambasted, especially by GOP lawmakers, over policies to stimulate the economy. Some worry the criticism will sap the Fed's effectiveness.
Fed May Be `Central Bank of the World' After UBS, Barclays Aid
Federal Reserve data showing UBS AG and Barclays Plc ranked among the top users of $3.3 trillion from emergency programs is stoking debate on whether U.S. regulators bear responsibility for aiding other nations’ banks.
Fed Officials Push Fiscal Stimulus
Top Federal Reserve officials are pressing lawmakers to pair a long-term plan for deficit reduction with new short-term fiscal stimulus to boost an economy that the central bank admits needs more help than it can provide.

WEDNESDAY
Volcker Says Dollar's Role in Danger as U.S. Influence Declines
Former Federal Reserve Chairman Paul Volcker, who is chairman of President Barack Obama’s Economic Recovery Advisory Board, said the U.S. dollar is in danger of losing its role as a global benchmark currency.
Fed's Bernanke worries slow economy limiting job growth
The economy isn't growing fast enough to significantly reduce unemployment and low consumer confidence remains a barrier to a faster recovery, Federal Reserve Chairman Ben Bernanke said.

Economists Comments
FRIDAY
Why Do We Have a Central Bank?
Why do nations have central banks? Countries have developed without one, and sophisticated financial systems have evolved in their absence. Some countries with a central bank have suffered for having one. Zimbabwe comes to mind.
Sunlight shows cracks in crisis rescue story
It took two years, a hard-fought lawsuit, and an act of Congress, but finally on Wednesday, the Federal Reserve disclosed the details of its financial crisis lending programs.

THURSDAY
Too Big to Succeed
The Treasury and the Federal Reserve took actions that saved businesses and jobs and may very well have saved the economy itself from ruin. Still, the public seems ungrateful, expressing anger at these institutions that saved the day.
There Is Nothing in QE2 Worth Conserving
David Beckworth has offered a thoughtful, but I believe ultimately flawed, "conservative case" for the Federal Reserve's latest round of quantitative easing.
Why Quantitative Easing and Fiscal Stimulus Are Unnecessary
The Fed and the government should immediately stop what they're doing and get out of the way of a recovery.
Fed Was Buying Debt Issued by McDonald's and the Republic of Korea -- Why?
The long-awaited Fed bailout data was released today and details from the Commercial Paper Funding Facility are particularly interesting.
Fearing The Reaper: QE2, The 1970s And Rerunning The 1930s
Slaying the dangerous myth that money creation is economically stimulative.

WEDNESDAY
Is This the End of the Money-Printing Era?
If monetary stimulus ends and we start recognizing losses rather than trying to roll them forward, we can lay the foundation for a new era of prosperity.
What Ben Bernanke May Be Thinking
The Fed's easy money could help banks reset underwater mortgages and start lending again.

TUESDAY
QE2: It's About Debt, Not The Economy
Chairman Bernanke also downplays evidence that 12 months of a 1% Federal funds rate in 2003-2004 contributed to the housing bubble and subsequent collapse. Now, after maintaining a 0% Federal funds rate for nearly two years, he shows no inclination to raise short-term interest rates.
Beg, Borrow, Zeal: Gorging on America’s Liquid Diet
While you were eating turkey and trying to find a parking place at the mall late last week, those supposedly feckless Europeans were actually pretty hard at work. Of course, they had to be — the alternative was to see their financial system collapse. Here’s what they were up to:
What is Ben Bernanke thinking?
One counterintuitive theory is that the Fed chairman realizes that the policy has little chance of dramatic success. The U.S. economy suffers from excess capacity, Bernanke argues, a situation that is unlikely to correct itself any time soon given consistently high levels of unemployment.
The Phillips Curve Does Not Work
At this point, inflation won't solve the problems of low output and high unemployment.

MONDAY
QE2: Can It Be Anything But Disaster for Europe?
And the bigger problem: It won't be possible to contain contagion to Europe alone.

Blogs
THURSDAY
Can Europe's economic system survive its debt crisis?
As contagion spreads in Europe, political and economic leaders continue to struggle to find a real solution.
Default, departures or denial?
Mr Lachman argues that the euro zone has a solvency problem not a liquidity problem.
Why Quantitative Easing And Fiscal Stimulus Are Unnecessary
The government’s response to this crisis has been almost entirely wrong and has served to only delay the recovery by thwarting the liquidation process and reallocation of capital from bad deals to profitable ones.

WEDNESDAY
The market is falling! The market is falling! And it has a long way down to go.
Real prosperity doesn't come from printing new money, and as long as the Fed thinks it does, it just delays the inevitable crash.
A Mono Mandate for the Fed?
If the Fed's mandate were different, monetary policy today might well be the same. That is, with inflation now below its target, the Fed could be pursuing QE2 even if it were operating under the proposed mono mandate.
QE2: Beware the Perils of Its Success
The Fed's plan is like a prescription that comes with a list of side effects that are often worse than the disease it was supposed to cure. Unintended consequnces could include stagflation and higher interest rates.

MONDAY
David Wessel’s Curious Defense of the Fed’s Ambiguous Mandate
Instead of looking ahead, Wessel looks back.   He writes, “prices rose at only a 1% annual rate in the third quarter, the Commerce Department said Tuesday.” The implicit price deflator for GDP rose by less than 1% in 2009, then at a 1.1% rate in the first quarter, 1.9% in the second and 2.3% in the third.  That is insufficient evidence of a worrisome trend.
Why I don’t believe in liquidity traps
There may be some cases where central banks are limited by laws regulating the sorts of assets they are allowed to purchase, but I know of no real world cases where that was a determining factor.  Indeed I know of no case where a central bank that wished to boost inflation and/or NGDP was unable to do so.  Nor do I think we need ever worry about that scenario actually occurring.
Secondary Sources: QE2 Criticism, China, Deficit Reduction
A roundup of economic news from around the Web.

Reports
FRIDAY
Can the Euro Survive?
The Euro confronts an existential challenge as a sovereign debt crisis rages across
Greece, Ireland, Portugal, and Spain. In May 2010, this crisis forced the European
Commission to abandon its earlier “no bail out” policy and to establish, together with the IMF, a massive safety net for the European periphery. Despite this safety net, by end-November 2010 markets demanded record high interest rates on the European periphery’s sovereign debt

WEDNESDAY
What’s Missing from the QE2 Debate
Unprecedented policy risks—both monetary and fiscal—abound as we move toward 2011. Deficit-reduction measures in the new Congress and pressure to scale back the second round of quantitative easing (QE2) could stunt U.S. economic growth and further dampen the global recovery.