tag:blogger.com,1999:blog-8702840202604739302.post1333009074429621796..comments2024-03-28T03:38:53.734-07:00Comments on MacroMania: AIG Repays the FedDavid Andolfattohttp://www.blogger.com/profile/12138572028306561024noreply@blogger.comBlogger21125tag:blogger.com,1999:blog-8702840202604739302.post-50565354751185513582012-08-28T07:36:22.996-07:002012-08-28T07:36:22.996-07:00If you want to get more materials that related to ...If you want to get more materials that related to this topic, you can visit: <a href="http://www.humanresources.hrvinet.com/american-international-group-interview-questions/" rel="nofollow">American International Group interview questions</a><br />Best regards.<br />Carloshttps://www.blogger.com/profile/07335969930744742481noreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-30930952827167316002012-08-14T01:32:26.240-07:002012-08-14T01:32:26.240-07:00Hi
I read this post two times.
I like it so much...Hi<br /><br />I read this post two times.<br /><br />I like it so much, please try to keep posting.<br /><br />Let me introduce other material that may be good for our community.<br /><br />Source: <a href="http://interviewquestionstoask.info/american-international-group-interview-questions/" rel="nofollow">American International Group interview questions<br /></a><br /><br /><br />Best regards<br />Henry<br />torreshttps://www.blogger.com/profile/10451369854442606583noreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-48267480108992163772011-01-21T07:44:32.672-08:002011-01-21T07:44:32.672-08:00JP:
I do not make a distinction between collatera...<b>JP:</b><br /><br />I do not make a distinction between collateralized lending and a purchase (followed by subsequent sale) of an asset. It is conceptually the same thing.<br /><br />But maybe I'm wrong. So, yes, pls send me material. I will be happy to look at it.<br />david.andolfatto@stls.frb.org<br /><br />Thanks!David Andolfattohttps://www.blogger.com/profile/12138572028306561024noreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-35529909203671018172011-01-21T07:40:55.968-08:002011-01-21T07:40:55.968-08:00Hint: 13(3) is about lending, not purchases. Like ...Hint: 13(3) is about lending, not purchases. Like I said, get a hold of me if you want more info. Cheerio, gotta go make a buck.JP Koninghttps://www.blogger.com/profile/02559687323828006535noreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-67417423085852566072011-01-20T18:53:15.993-08:002011-01-20T18:53:15.993-08:00lol...exactly.lol...exactly.David Andolfattohttps://www.blogger.com/profile/12138572028306561024noreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-59999776371047885752011-01-20T18:24:12.423-08:002011-01-20T18:24:12.423-08:00David,
I absolutely do not want a gold standard.
...David,<br /><br />I absolutely do not want a gold standard.<br /><br />I want competitive government and free banking.<br /><br />And while I'm creating a wish list, I'd like my own airplane.Prof Jhttps://www.blogger.com/profile/16539902592080231165noreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-76937523525602255362011-01-20T16:21:24.055-08:002011-01-20T16:21:24.055-08:00Prof J:
Yes, you are absolutely correct about th...<b>Prof J:</b> <br /><br />Yes, you are absolutely correct about the history of crown/state intervention in the business of money creation for the purpose of state finance. This is why the Fed wants to remain as independent as possible from Congressional pressure. People counter that the Fed is monetizing all sorts of debt; but all commonly employed measures of price inflation remain very low. <br /><br />Moreover, if we replace the Fed with something else, this something else will necessarily be a creation of Congress (just like the Fed). You likely want Congress to legislate a gold standard. Fine. What's to prevent Congress from reneging on this when times get tough? Is it easier to dismantle an independent Fed, or abandon a gold standard?<br /><br /><b>JP Koning:</b> I disagree with you. I'm pretty sure that section 13(3) of the FRA pretty much lets the Fed do whatever it feels is necessary in an emergency situation. There was not "shutout" of Congress. Congress expected the Fed to act quickly in such a situation--that's the whole purpose of 13(3). <br /><br />Moreover, it's not like everyone in the Fed likes the powers of 13(3). As you read in Plosser's speech, he wants Congress to repeal that section. <br /><br />These were not cheap tricks. This was the outcome of policymakers acting in real time during a period of dizzying turmoil. It is easy to play the Monday morning quarterback. But look...the Fed has basically done OK in my view...they did not lose money...they are trying to unwind these positions...it's not like the Fed is revelling in the power it exercised. In fact, quite the opposite.David Andolfattohttps://www.blogger.com/profile/12138572028306561024noreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-61573117577481075212011-01-20T16:03:32.407-08:002011-01-20T16:03:32.407-08:00David, I'm speculating here but I think that t...David, I'm speculating here but I think that the 3 Maiden Lanes could one day represent one of the largest changes in the Federal Reserve's "portfolio allocation" powers since the 1930s. That was when Congress decreed that government bonds could finally serve as eligible collateral for Federal Reserve notes. If you follow the link behind my name towards my home page and on towards the historical chart of the Fed I created, you'll see what I mean when I say this change was dramatic (look at the rise in the blue part of the chart around 1934).<br /><br />Unlike the 1934 change, the new powers that have been ushered in by the 3 Maiden Lanes were not the result of a democratic process. Congress was shutout. The Federal Reserve came up with a legal "hack" around the Federal Reserve Act in order to legitimate these new tools. If you want to know what this hack is you'll have to email me directly; I wrote about it for my firm and it's rather complex. To make a long story short, just as I have little trust in firms that find cheap tricks to skirt their own governing codes, I have little trust in the Fed for hacking theirs. So much for rule of law.JP Koninghttps://www.blogger.com/profile/02559687323828006535noreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-8691629973304791542011-01-20T10:34:29.203-08:002011-01-20T10:34:29.203-08:00David,
I see where you are coming from here: &quo...David,<br /><br />I see where you are coming from here: "We have a central bank because we live in a second-best world."<br /><br />The history of banking is replete with examples of the crown (and now the state) interfering in the banking system to finance its own endeavors. Historically, this was warfare. At any rate, this is what killed the Medici family. So the "second best" factor here, I would say, is the presence of the state and its separate interests from society. The exogeneity of the state might be a strong statement to some, and so that could be discussed further elsewhere.<br /><br />Now, regarding your last paragraph, I think there are two separate factors that must be dealt with. One is the ex-ante declaration that non-Treasury assets will be purchased by the Fed. The second is the ex-post disclosure of profits. <br /><br />I have to give this issue more thought. Right now I'm having difficulty separating bailouts from preventing monetary deflation in a realistic way.Prof Jhttps://www.blogger.com/profile/16539902592080231165noreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-88624563744295309082011-01-20T09:19:22.419-08:002011-01-20T09:19:22.419-08:00Prof J:
We don't disagree on many things, but...<b>Prof J:</b><br /><br />We don't disagree on many things, but I think this is one place where we might. <br /><br />Yes, we live in a second-best world. But not because (as you suggest) we have a central bank. <br /><br />We have a central bank because we live in a second-best world. Institutions are the response to the information and commitment problems that inflict efficient implementation of resources. The central bank can be viewed as a solution to this implementation problem in a second-best world.<br /><br />Your concluding paragraph makes little sense to me. How do you define a "bailout?" I define it as a situation where (say) the Fed transfers purchasing power away from the broader citizenry to specific private interests. This is NOT what happened here! The Fed actually made a profit for the general citizenry on its activities. So how is this encouraging more bailouts?David Andolfattohttps://www.blogger.com/profile/12138572028306561024noreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-84214733363221244032011-01-19T19:11:38.807-08:002011-01-19T19:11:38.807-08:00David,
I was impressed with Plosser moreso becaus...David,<br /><br />I was impressed with Plosser moreso because of his comments regarding recalculation. I think we're in a second best world, (we have a central bank) and given that we have a central bank, there's certainly an argument for inflation targeting. Although that's not the only reasonable argument to make.<br /><br />I personally wish there hadn't been any profit made. The fact that the positions have been profitable makes such acts likely again in the future. Moreover, it raises the expectation of bailouts, reducing the potential loss on and encouraging overly risky behavior. Essentially, the profit has encouraged moral hazard. I think it was a bad move all 'round, no matter the profit/loss consequences.Prof Jhttps://www.blogger.com/profile/16539902592080231165noreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-52130109484564854462011-01-19T18:37:57.545-08:002011-01-19T18:37:57.545-08:00westslope: Nobody listens to me in my own country ...<b>westslope:</b> Nobody listens to me in my own country either! lol. And yes, I am in favor of an inflation-targeting regime for the US (abandoning the foolish dual mandate with one instrument idea).<br /><br /><b>Prof J:</b> I like Plosser; and I liked his speech. Note, however, he does not criticize the Fed's role as lender of last resort; he simply labels it (incorrectly, in my view) as "fiscal policy." Collateralized lending is practically the definition of banking. Printing money and distributing it helicopter drop style is fiscal policy--but this is not what the Fed did. <br /><br /><b>JP Koning:</b> Why are you so down on Maiden Lane? See here: <br />http://www.ny.frb.org/markets/maidenlane.html#<br /><br />In any case, this is only a tiny fraction of the Fed's portfolio.<br /><br />What to make of this post? For crying out loud, people...ask yourself (honestly) what your reaction would have been if the Fed reported that it lost all of its investment in AIG.David Andolfattohttps://www.blogger.com/profile/12138572028306561024noreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-27081127215706767912011-01-19T10:55:52.037-08:002011-01-19T10:55:52.037-08:00Prof J: Thanks for pointing out Plosser's spe...Prof J: Thanks for pointing out Plosser's speech. Reads like an argument in favouring of inflation targeting (or average price level targeting).<br /><br />We know Andolfatto is in favour but he's a guest worker so nobody will listen to him. Nevertheless, I would guess that the whole cabal of Fed economists is in favour of inflation targeting. Surprisingly, nobody is seekng to purge these subversives from their office or employment. Fed economists must be even more impotent previously imagined.<br /><br />And yes, I am not sure that the success of all this discretionary heroism bodes well for the USA and many other economies.Erik Poolehttps://www.blogger.com/profile/02442592238782846163noreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-91432209926564206012011-01-18T14:29:34.153-08:002011-01-18T14:29:34.153-08:00David,
Would be interested in your thoughts on Pl...David,<br /><br />Would be interested in your thoughts on Plosser's recent speech: http://www.philadelphiafed.org/publications/speeches/plosser/2011/01-17-11_central-bank-of-chile.cfmProf Jhttps://www.blogger.com/profile/16539902592080231165noreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-35040764230233871612011-01-16T07:09:15.981-08:002011-01-16T07:09:15.981-08:00You haven't even started to see me go! Just wa...You haven't even started to see me go! Just wait until I get my own blog ;)JP Koninghttps://www.blogger.com/profile/02559687323828006535noreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-35128285729885426352011-01-15T17:55:10.609-08:002011-01-15T17:55:10.609-08:00But Koning, your facts are so micro!
:)But Koning, your facts are so <i>micro</i>!<br /> :)The Arthurianhttps://www.blogger.com/profile/16501331051089400601noreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-15491272993430618492011-01-15T12:31:06.069-08:002011-01-15T12:31:06.069-08:00AIA and ALICO were never the issue, these are good...AIA and ALICO were never the issue, these are good assets. Solid insurers. As for the balance of the loan, it's fortunate that it was paid off. <br /><br />The most pressing issue regarding AIG's relationship with the Fed is Maiden Lane II and III. All of AIG's drek was offloaded from AIG into these 2 entities. Wait to see that these are recovered before rejoicing.JP Koninghttps://www.blogger.com/profile/02559687323828006535noreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-32783805695642072772011-01-15T10:39:01.805-08:002011-01-15T10:39:01.805-08:00Yes, Prof. Accumulating total debt has followed a ...Yes, Prof. Accumulating total debt has followed a very nice exponential curve since the end of WWII. QE and friends are the natural conclusion.<br /><br />I think, since we waited until QEs and bailouts were necessary, that QEs and bailouts were (at that point) necessary. It would have been nice to cap the growth of finance 30 or 40 years ago when things were less precarious.The Arthurianhttps://www.blogger.com/profile/16501331051089400601noreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-9991074491290595332011-01-15T05:46:27.955-08:002011-01-15T05:46:27.955-08:00Arthurian,
I think the entire financial industry ...Arthurian,<br /><br />I think the entire financial industry has become bloated and inflated over the past several years, and QE, QE2, and the bailout culture are only going to make it worse.Prof Jhttps://www.blogger.com/profile/16539902592080231165noreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-47273676071173472932011-01-15T02:30:07.734-08:002011-01-15T02:30:07.734-08:00It really was a "panic" wasn't it --...It really was a "panic" wasn't it -- a momentary weakness, as Pink Floyd might say.<br /><br />I have underlying concerns that the whole financial system has been propped up or inflated up by QE, and also that if AIG continues to exist then the problem may soon recur. Just a gut feel.The Arthurianhttps://www.blogger.com/profile/16501331051089400601noreply@blogger.comtag:blogger.com,1999:blog-8702840202604739302.post-53326106929804944632011-01-14T17:54:43.100-08:002011-01-14T17:54:43.100-08:00Um... I'm not sure what to make of this.Um... I'm not sure what to make of this.Prof Jhttps://www.blogger.com/profile/16539902592080231165noreply@blogger.com