Today Treasury auctioned $37 billion in 5 yr securities at a 3.06 bid-to-cover resulting in a yield of 1.79%. Yesterday AT&T came to market with a $2.5 billion 5 yr offering with a 2.5% coupon representing a scant 77 bps above the comparative Treasury. The tea leaves tell a variety of interesting stories. We'll save [...]
Founded in 1975 and based in Valley Forge, PA The Vanguard Group has grown into a mutual fund giant with a loyal following. Known for rock bottom fees and investor focus the outfit offers over 200 funds and manages about $1.5 trillion. Its ubiquity aside Vanguard like all firms has strengths and weaknesses. Economic research [...]
As a classically trained economist with reverence for John Maynard Keynes - the father of Macroeconomics - it pains me to write this. On second thought it's not Keynesian theory that's flawed but its application by President Obama and the Democratic Congressional "leadership." Keynes theorized that in a robust economy fiscal policy ought to promote [...]
Lost in the hoopla surrounding Greece's self-created financial mess is a simple fact. Greece, like most southern European countries, is far from a political or economic powerhouse. Its GDP contributes a scant 2% of the EU's total. Then why all the noise? Why the excitement surrounding an economic player that amounts to not much more [...]
What happens to wealth when there's a financial meltdown? One economist tries to address the issue here.
Not much. As expected yesterday's Fed announcement reiterated that the benchmark interest rate will remain low "for an extended period of time." That key phrase remained unchanged from the previous statement keeping intact the 0.00% - 0.25% target for Fed Funds. The statement nonetheless contained some useful information. Most of the language was unchanged from [...]
In a largely symbolic move The Fed yesterday increased the Discount Rate from 0.50% to 0.75%. Historically the Discount Rate is one of three main policy tools used to manipulate monetary policy. The move is considered symbolic as it's an indicator of things to come. In and of itself the move has no meaningful economic [...]
On the heels of "Cash for Clunkers" comes "Cash for Appliances" - a program funded with $300 million from the American Recovery and Reinvestment Act of 2009. The plan is straightforward - give taxpayers a rebate for upgrading to energy efficient equipment. Although funded with Federal money each state sets the rules for qualifying equipment, [...]
News reports of the last couple of weeks touted the financial troubles of Greece. As their debt to GDP ratio rises to historic and worrisome levels there's a real chance of default on sovereign debt. While pundits opine the implications on the global economic and political landscape one can't help but notice the similarities of [...]
Holiday cheer? "Bah, humbug!" Here’s some coal for your stocking... In a paper entitled "The Age of Reason: Financial Decisions over the Life-Cycle with Implications for Regulation" authors Sumit Agarwal, John C. Driscoll, Xavier Gabaix, and David Laibson argue that when it comes to money our accumulated experience and wisdom are lost to our declining [...]