The Greenspan Episode

By: Doug Noland | Fri, Apr 11, 2008
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For the week, the Dow declined 2.3% (down 7.1% y-t-d) and the S&P500 fell 2.7% (down 9.2%). Economically-sensitive sectors were weak. The Transports (up 5.3%) and the Morgan Stanley Cyclicals (down 6.1%) both were hit for 3.3%. The Utilities were unchanged (down 7.7%), and the Morgan Stanley Consumer index declined 2.0% (down 6.7%). The small cap Russell 2000 fell 3.6% (down 10.2%), and the S&P400 Mid-Cap index declined 1.9% (down 6.9%). The NASDAQ100 was hit for 3.6% (down 13.7%) and the Morgan Stanley High Tech index 3.4% (down 13.8%). The Semiconductors fell 2.8% (down 12.1%), the Internet Index 3.5% (down 11.9%), and the NASDAQ Telecommunications index 3.8% (down 11.8%). The Biotechs slipped 0.5% (down 2.3%). Financial stocks again found themselves under heavy selling pressure. The Broker/Dealers were hit for 7.4% (down 26%), and the Banks dropped 4.2% (down 10.9%). Although Bullion rose $11.50, the HUI Gold index declined 1.6% (up 8.3%).

One-month Treasury bill rates sank 58 bps this past week to 0.90%, and 3-month yields fell 19 bps to 1.19%. Two-year government yields declined 7 bps to 1.74%. Five-year T-note yields dipped 4 bps to 2.57%, while ten-year yields were little changed at 3.47%. Long-bond yields dipped one basis point to 4.30%. The 2yr/10yr spread ended the week at 170 bps. The implied yield on 3-month December '08 Eurodollars increased 3 bps to 2.345%. Benchmark Fannie MBS yields rose 3 bps to 5.20%. The spread between benchmark MBS and Treasuries widened 3 to 173 bps. The spread on Fannie's 5% 2017 note widened 3 to 67 bps and the spread on Freddie's 5% 2017 note widened 4 to 67 bps. The 10-year dollar swap spread increased 1.75 to 64.5. Corporate bond spreads were wider. An index of investment grade bond spreads widened 18 to 129 bps. An index of junk bond spreads widened 8 to 639 bps.

Investment grade issuance included Citigroup $4.75bn, Wal-Mart $2.5bn, WEA Finance $1.1bn, Duke Energy $900 million, Monsanto $550 million, Pacific Life $500 million, Public Service E&G $400 million, and National Fuel Gas $300 million.

Junk issuers included Markwest Energy $400 million, Nielsen $220 million, and Polyone $80 million.

Convert issuance this week included Virgin Media $1.0bn, LKD Solar $400 million, Endo Pharmaceutical $380 million, and Globalstar $135 million.

International dollar bond issuance included HSBK $500 million, Videotron $455 million, and Odebrecht Finance $400 million.

German 10-year bund yields declined 4 bps to 3.91%, as the DAX equities index fell 2.4% (down 18.1% y-t-d). Japanese 10-year "JGB" yields rose 4 bps to 1.37%. The Nikkei 225 posted a slight gain (down 13% y-t-d and 24.6% y-o-y). Emerging debt markets were strong and equities mostly held their own. Brazil's benchmark dollar bond yields dropped another 9 bps to 6.09%. Brazil's Bovespa equities index dropped 2.9% (down 2.0% y-t-d). The Mexican Bolsa dipped 0.8% (up 6.0% y-t-d). Mexico's 10-year $ yields sank 13 bps to 4.67%. Russia's RTS equities index rallied 2.6% (down 7.8% y-t-d). India's Sensex equities index gained 3.0%, reducing y-t-d losses to 22.1%. China's Shanghai Exchange actually mustered a 1.4% gain, with 2008 losses at 33.6%.

Freddie Mac 30-year fixed mortgage rates were unchanged at 5.88% (down 34bps y-o-y). Fifteen-year fixed rates were unchanged at 5.42% (down 48 bps y-o-y). One-year adjustable rates dipped one basis point to 5.18% (down 29bps y-o-y).

Bank Credit dropped (an unusual and perhaps explainable) $103bn (week of 4/2) to $9.433 TN. This reduced y-t-d Bank Credit growth to $50.8bn, or 8.9% annualized. Bank Credit posted a 37-week surge of $790bn (12.8% annualized) and a 52-week rise of $1.115 TN, or 12.1%. For the week, Securities Credit dropped $41bn. Loans & Leases sank $61bn to $6.871 TN (37-wk gain of $546bn). C&I loans declined $14bn, with one-year growth of 21%. Real Estate loans dropped $25.6bn. Consumer loans dipped $1.2bn, while Securities loans added $0.4bn. Other loans fell $20.7bn. Examining the liability side, Deposits dropped $65.7bn, "Net Due to Foreign" declined $36.3bn, and "Other Liabilities" fell $42.4bn.

M2 (narrow) "money" supply dropped $30.3bn to $7.670 TN (week of 3/31). Narrow "money" has expanded $208bn y-t-d, or 11.1% annualized, with a y-o-y rise of $479bn, or 7.7%. For the week, Currency dipped $1.9bn, while Demand & Checkable Deposits increased $10.1bn. Savings Deposits dropped $42.3bn, and Small Denominated Deposits declined $3.6bn. Retail Money Fund assets grew $7.5bn.

Total Money Market Fund assets (from Invest Co Inst) jumped $38bn last week to a record $3.536 TN, posting a y-t-d gain of $423bn, or 50.5% annualized. Money Fund assets have posted a 37-week rise of $953bn (51.8% annualized) and a one-year increase of $1.086 TN (44.3%).

Total Commercial Paper declined $10.8bn to $1.817 TN. CP has declined $407bn over the past 35 weeks. Asset-backed CP fell $5.2bn (35-wk drop of $414bn) to $781bn. Over the past year, total CP has contracted $234bn, or 11.4%, with ABCP down $305bn, or 28.1%.

Fed Foreign Holdings of Treasury, Agency Debt last week (ended 4/9) increased $12.5bn to a record $2.219 TN. "Custody holdings" were up $162bn y-t-d, or 27.3% annualized, and $307bn year-over-year (16.1%). Federal Reserve Credit dropped $8.7bn to $867bn. Fed Credit has contracted $6.7bn y-t-d, while having increased $17.4bn y-o-y (2.1%).

International reserve assets (excluding gold) - as accumulated by Bloomberg's Alex Tanzi - were up $1.419 TN y-o-y, or 27.1%, to a record $6.652 TN.

Global Credit Market Dislocation Watch:

April 8 - Bloomberg (Christopher Swann): "The International Monetary Fund said losses stemming from the U.S. mortgage crisis may approach $1 trillion, citing a 'collective failure' to predict the breadth of the crisis. Falling U.S. house prices and rising delinquencies may lead to $565 billion in residential mortgage-market losses, the IMF said... Total losses, including those tied to commercial real estate, may reach $945 billion, the fund said. The fund also saw as much as $90 billion in further losses from potential downgrades of bond insurance companies."

April 10 - Financial Times (Krishna Guha and Chris Giles): "The world's leading banks yesterday publicly accepted much of the blame for the credit crisis, as the International Monetary Fund slashed its estimates for global growth and warned that the US downturn would last longer than most people expect. The IMF said the US would suffer a recession this year, recovery would not begin until next year, and growth would remain well below trend even in 2009. The Institute of International Finance, meanwhile, representing more than 375 of the world's largest financial companies, acknowledged 'major points of weaknesses in business practices', including bankers' pay and the management of risk. But it said it would be 'completely wrong' for the authorities to impose much greater regulation on the industry."

April 9 - Bloomberg (Jody Shenn and Pierre Paulden): "Wall Street firms may be bundling high-yield, high-risk corporate loans into securities to use as collateral to borrow from the U.S. government, according to a report by Morgan Stanley analysts. Securities firms can borrow against collateralized loan obligations at the Federal Reserve's Primary Dealer Credit Facility... The Fed set up the facility last month, its first extension of credit to non-banks since the Great Depression."

April 11 - The Wall Street Journal (Serena Ng and Susanne Craig): "Financial engineering helped get Wall Street into its current credit-market problems. Now, Wall Street's Lehman using a little engineering -- and some help from the U.S. Federal Reserve -- to bolster its finances. In recent weeks, Lehman moved $2.8 billion in loans, including some risky leveraged-buyout debt that has been difficult to sell, into a newly created investment vehicle it named 'Freedom,' which in turn issued debt securities backed by the loans. About $2.26 billion of the securities received investment-grade credit ratings from Moody's... and S&P. Lehman then pledged some of the securities as collateral for a low-interest, short-term cash loan from the Federal Reserve... One person familiar with the matter said the vehicle was named Freedom because it was designed to give Lehman freedom to tap as much cash as possible if needed. The size of the borrowing from the Fed wasn't known, but the person said it wasn't 'material' and was meant as a test of what the Fed would accept."

April 11 - Financial Times (Paul J Davies): "Banks involved in lending to riskier companies, such as those bought out in debt-funded private equity deals, could face a new drain on their balance sheets from borrowers drawing down extra funding. There is a growing trend of highly leveraged companies taking extra debt by drawing on so-called revolver facilities, which are prearranged guarantees to lend. These facilities are granted by banks for a fee... Analysts said that these companies were increasingly concerned about their ability to refinance debt and the fact that banks might try to walk away from such facilities. 'The easy conclusion to make . . . is that a lot of companies may now draw on their revolvers because they are concerned about counterparty risk and the implications of banks' trying to walk away from the [Clear Channel] deal,' said Bradley Rogoff, analyst at Lehman Brothers..."

April 8 - Bloomberg (Neil Unmack and Sree Vidya Bhaktavatsalam): "Gordian Knot Ltd. founders Stephen Partridge-Hicks and Nicholas Sossidis, who started the $400 billion market for structured investment vehicles that crashed last year, are fighting for the survival of their flagship fund. Gordian's Sigma Finance Corp. must refinance $20 billion of debt by September in a market where even the biggest banks are struggling to borrow, according to Moody's..."

April 10 - Bloomberg (Yalman Onaran and Joyce Moullakis): "Lehman Brothers Holdings Inc. bailed out five of its short-term debt funds... Lehman took $1.8 billion of assets from the funds onto its books... The company recorded a $300 million loss from the bailout in the first-quarter, according to a person familiar with the writedown. Credit Suisse Group took a $780 million charge in February when it bought assets from its money-market funds. Legg Mason Inc. agreed last month to provide as much as $400 million to help a similar fund. General Electric Co.'s GE Asset Management liquidated a short-term bond fund in November after it lost about $225 million."

April 10 - Bloomberg (William Selway and Martin Z. Braun): "Financial advisers for Jefferson County, Alabama, met yesterday with Bush administration and Federal Reserve officials as the county contends with rising borrowing costs that have pushed it close to bankruptcy... Jefferson County, home to Birmingham, is reeling from interest rates on its variable rate bonds that jumped as high as 10% when the auction-rate securities market collapsed and the county's bonds, backed by ailing insurers FGIC Corp. and XL Capital Assurance, were shunned by investors... Jefferson County's financial problems have been compounded by $5.4 billion of interest-rate swaps with JPMorgan..., Bank of America..., Bear Stearns Cos. and Lehman Brothers...that were intended to shield it from higher borrowing costs."

April 8 - The Wall Street Journal (Keith J. Winstein): "Education Resources Institute Inc., a Boston nonprofit that insures more than $17 billion in privately issued student loans, filed for bankruptcy-court protection, beset by defaults, delinquencies and shrinking revenue... The filing... adds more tumult to the shaky student-loan market, where some lenders have been taking write-downs and dropping or curbing their lending programs amid broader problems in the credit markets."

April 9 - Financial Times (Michael Mackenzie): "A key driver of the bull run in US and UK stock markets in the years before the credit crunch is being reversed. A wave of corporate share buybacks and a surge in private equity takeovers of listed companies helped propel stock prices higher before the turmoil in credit markets. The trend, fuelled by cheap debt, became known by the ugly name of 'deequitisation' as the equity base of stock markets shrunk. That shift, however, has turned as financial companies raise equity capital to repair balance sheets, private equity deals slow to a trickle and the cost of raising corporate debt rises sharply as its availability dries up. Companies are increasingly looking to raise funds through equity issues instead of debt and conserve cash by scaling down on share buybacks... Already in the first quarter, stock buybacks in the US dropped to their lowest in five quarters to $136.3bn, according to...TrimTabs."

April 10 - Bloomberg (Jody Shenn): "The Federal Home Loan Bank of Chicago's counterparty credit ratings may be cut by S&P, which cited the end of merger talks with the bank's Dallas counterpart. The deal's collapse 'heightens our concerns regarding the strategic direction and financial condition' of the government- chartered cooperative, S&P analyst Daniel Teclaw...said...."

April 10 - Bloomberg (Patricia Kuo and Bei Hu): "Billionaire George Soros said the seizure in global credit markets caused by the subprime collapse will get worse before it gets better. Lack of oversight is partly responsible for problems in the financial markets, Soros told reporters... He said regulators and the U.S. administration 'failed to perform their job' in a crisis that began in the U.S. housing market... 'This is a man-made crisis and it's made by this false belief that markets correct their own excesses,' Soros, 77, said. 'It will take much longer for the full effect of the decline in the housing market to be felt.'"

April 9 - Dow Jones: "The bailout of Northern Rock PLC, the nationalized U.K. mortgage lender, has increased demand for gold as investors, worried that increased liquidity will erode the pound, look to conserve value by investing in gold, BlackRock fund manager Graham Birch said... 'The Northern Rock bailout has given the impression that there is an infinite supply of money...while gold is not in infinite supply,' said Birch, who manages $3.2 billion in funds."

April 7 - Bloomberg (Sarah Shannon): "Office rentals in the City, London's financial district, fell by 40% in the six months ended of March as companies reduced employee levels and stopped looking for additional office space, the Financial Times said."

Currency Watch:

April 11 - Bloomberg (Nipa Piboontanasawat): "China's foreign-exchange reserves, the world's largest, surged to $1.68 trillion at the end of March, adding pressure on the government to prevent money inflows from fueling inflation already at an 11-year high. Currency holdings expanded 40% from a year earlier..."

The dollar index declined 0.3%, ending the week at 71.81. For the week on the upside, the Singapore dollar increased 1.7%, the Japanese yen 1.4%, the Swiss franc 1.2%, the Brazilian real 1.0%, the Danish krone 0.6%, and the Euro 0.6%. On the downside, the British pound declined 1.0%, the Canadian dollar 0.9%, the South Korean won 0.4%, and the New Zealand dollar 0.3%.

Commodities Watch:

April 10 - Financial Times (Javier Blas and Chris Flood): "Oil prices jumped to above $112 a barrel yesterday, a fresh record high that threatens to stoke inflation further as the Federal Reserve faces pressure to cut interest rates again to counter the risk of recession... The [Energy] department said this year's soaring prices had led it to revise its estimate for Opec's revenues to almost $1,000bn, nearly as much as the financial sector is expected to lose because of the credit crisis."

April 11 - Financial Times (Javier Blas): "Governments are racing to strike secretive barter and bilateral agreements with food-exporting countries to secure scarce supplies as the price of agricultural commodities jump to record highs, diplomats and cereal traders say. The moves coincide with a significant tightening of the global food market as leading exporters of agricultural commodities ban foreign sales. The government-to-government contracts could bypass those restrictions, diplomats say."

April 8 - Bloomberg (Terry Barrett): "Global food prices rose 57% in March from a year earlier, according to the UN Food and Agriculture organization. From a month earlier prices rose 1.4%."

April 10 - Financial Times (Javier Blas): "For the past 40 years, consumers have had the upper-hand in the global rice market, which has witnessed a steady decline in prices, interrupted only by the brief spike in 1973-74 triggered by the first oil crisis. The structural decline in prices was the result of the Green Revolution, the agronomics movement that spread the use of irrigation, fertiliser and high-yielding varieties of rice in Asia in the late 1960s and led to bumper crops. Rice production per hectare jumped in developing countries from 1.7 tonnes in 1961 to 4 tonnes in 2006. This 'buyers' market', however, has flipped abruptly this year into a 'sellers' market' because of a fundamental change in the balance between supply and demand. This is likely to keep prices in the medium-term well above historical levels, analysts and traders say. The price of Thai medium-quality rice, a global benchmark, traded on Wednesday at a record high of $854 a tonne... It has more than doubled since the end of last year."

April 7 - Bloomberg (Marianne Stigset and Tony Dreibus): "From Cairo to New Delhi to Shanghai, the run on rice is threatening to disrupt worldwide food supplies as much as the scarcity of confidence on Wall Street earlier this year roiled credit markets. China, Egypt, Vietnam and India, representing more than a third of global rice exports, curbed sales this year, and Indonesia says it may do the same... The World Bank in Washington says 33 nations from Mexico to Yemen may face 'social unrest' after food and energy costs increased for six straight years. Rice, the staple food for half the world, rose 2.4 percent to a record $20.985 per 100 pounds in Chicago today, double the price a year ago and a fivefold increase from 2001."

April 11 - Bloomberg (Clarissa Batino and William Bi): "The Philippines said China turned down a request to supply wheat, adding to concern that the world faces a worsening shortage of staple foods that has already driven grain prices to records. 'China politely turned us down, saying they also need to stock up,' Trade Secretary Peter Favila said... 'We've alerted all our trade attaches to find out where we can source wheat, so as not to cause shortages.'"

April 9 - Bloomberg (Abeer Allam and Daniel Williams): "Atyat Musa Bakri, a Cairo mother of nine children, was waiting in line to buy subsidized bread for the third time in one day. 'The more cheap bread I can get, the better,' she said as a crowd of about 30 women jostled at a bakery in the Boulaq district. 'The price of everything is going up and up, so I save on this. I spend all morning buying cheap bread.'"

April 10 - Bloomberg (Feiwen Rong): "Billionaire investor George Soros said rising world food costs are 'of grave concern,' especially to importing nations who also have to buy high-priced fuel. Those countries will face increased inflationary pressure that may lead to 'social and political disruptions,' Soros...said..."

April 9 - Associated Press: "BHP Billiton Ltd. said Wednesday that prices this year for metallurgical coking coal products were expected cost more than three times what they did last year. The estimate was based on the settlement of contracts so far by the BHP Billiton Mitsubishi Alliance... 'Prices for Peak Down and other similar BMA metallurgical coking coal products are expected to increase within the range of 206-240% over 2007 levels,' BHP Billiton said..."

Gold rallied 1.3% to $924.30, while Silver dipped 0.4% to $17.69. May Copper slipped 0.3%. May Crude jumped $3.91 to $110.14. May Gasoline rose 1.8%, and May Natural Gas surged 6.2% (up 32% y-t-d). May Wheat dropped 8.0%. The CRB index jumped 3.1% (up 13.6% y-t-d). The Goldman Sachs Commodities Index (GSCI) increased 2.9% (up 16.2% y-t-d and 48.3% y-o-y).

China Watch:

April 11 - Bloomberg (Nipa Piboontanasawat): "China's money supply grew at the slowest pace in more than a year, suggesting government measures to tame liquidity are working. M2...rose 16.3% in March from a year earlier..."

April 8 - Bloomberg (Tian Ying): "China's March passenger car sales rose 24%, the fastest pace in seven months... Chinese drivers bought 700,500 cars last month... First-quarter sales climbed 20 percent to 1.85 million."

Japan Watch:

April 11 - Bloomberg (Keiko Ujikane): "Japan's wholesale prices rose at the fastest pace since February 1981, highlighting concern higher fuel and food costs will fan inflation even as the economy slows. Producer prices climbed 3.9% in March from a year earlier..."

India Watch:

April 11 - Bloomberg (Kartik Goyal): "India's inflation accelerated to the fastest pace in more than three years, raising concern the central bank may increase borrowing costs as soon as this month. Wholesale prices rose 7.41%..."

April 11 - Bloomberg (Cherian Thomas and Kartik Goyal): "India scrapped export incentives for rice, steel and cement to boost local supplies and tame runaway inflation, which is damping consumer demand for manufactured products."

April 10 - Bloomberg (Kartik Goyal): "India's passenger car sales rose for a sixth consecutive year to a record... Car sales gained 12% to 1.2 million in the year ended March 31..."

Asia Bubble Watch:

April 8 - Bloomberg (James Peng): "Taiwan's export growth unexpectedly accelerated in March, rising at the fastest pace in two years as customers in China, Southeast Asia and India bought more of the island's electronics. Overseas shipments rose 22.8% from a year earlier after gaining 18.5% in February..."

April 9 - Bloomberg (Yu-huay Sun): "Taiwan's energy use rose for the eighth straight month in February on increased demand from manufacturers... Energy consumption climbed 10.1% to the equivalent of 8.83 million kiloliters of oil, or about 1.92 million barrels a day..."

April 10 - Bloomberg (Shamim Adam): "Singapore's economy rebounded in the first quarter... Gross domestic product grew an annualized 16.9% in the three months ended March..."

April 8 - Bloomberg (Francisco Alcuaz Jr.): "Philippine President Gloria Arroyo vowed to crack down on hoarding of rice and announced plans to import another 1 million metric tons of the grain to bolster government stockpiles and prevent social tension as prices rise. 'I am leading the charge' against any officials and businessmen who divert supplies or distort the price of the staple food, Arroyo said... 'Anyone stealing rice from the people we will seek to throw in jail.'"

April 9 - Bloomberg (Clarissa Batino): "The Philippine government plans to initiate wage increases to help workers cope with rising food and fuel costs, Economic Planning Secretary Augusto Santos said. 'The wage board will ask the regions to consider wage increases so that workers' pay would catch up with prices,' Santos said..."

Unbalanced Global Economy Watch:

April 11 - Bloomberg (Courtney Schlisserman): "Confidence among U.S. consumers sank to a 26-year low in April as the labor market continued to weaken and gasoline prices rose. The Reuters/University of Michigan preliminary index of consumer sentiment decreased to 63.2 from 69.5 in March."

April 10 - The Wall Street Journal (Andrew Batson): "After several years of relative stability, a wave of rising prices is washing over the world economy. It comes at a most inconvenient time. The Federal Reserve is sharply cutting U.S interest prevent the housing bust and credit crisis from causing a deep, prolonged recession. That's making the global response to inflation more complicated... In the U.S., consumer prices in February were 4% above year-ago levels. The 15 countries that share the euro currently see inflation of 3.5%, a decade high and well above the European Central Bank's preferred range. Even seeing modest inflation. Rising prices for food, energy and other raw materials account for much of the pickup in inflation rates... On Wednesday, the World Bank estimated global food prices have risen 83% over the past three years... The IMF forecast consumer prices in emerging and developing countries will rise 7.4% this year, the most inflation since 2001..."

April 8 - Bloomberg (Svenja O'Donnell and Brian Swint): "U.K. house prices fell by the most since 1992 in March, a sign banks' restrictions on loans are curbing demand for residential property, HBOS Plc said. The average cost of a home in Britain declined 2.5% to 191,556 pounds ($379,000) from February..."

April 10 - Bloomberg (Jennifer Ryan): "U.K. companies' pricing intentions reached the highest in more than a decade, presenting the Bank of England with 'difficult choices'...the British Chambers of Commerce said."

April 10 - Bloomberg (Fergal O'Brien): "Irish inflation accelerated in March to the highest in more than four years as energy and food costs rose. The inflation rate...rose to 3.7% from 3.5% in February..."

April 9 - Bloomberg (Fergal O'Brien): "European economic growth cooled in the last three months of 2007, as tighter credit conditions and the euro's gains began to weigh on the region's expansion. Gross domestic product increased 0.4% from the previous three months, when it grew 0.7%... Consumer spending, which accounts for almost 60% of the economy, and government spending both declined."

April 9 - Financial Times (Ralph Atkins): "Europe's economic 'weather map' is showing widening divergences, complicating the task of policymakers as global financial market turmoil sends storm warning signals. Economic confidence indicators, as well as other recent data, have pointed to startling differences in performance across the 15-country eurozone and beyond..."

April 9 - Bloomberg (Gabi Thesing): "The turmoil on financial markets resulting from the U.S. mortgage crisis will cost the German state 10 billion euros ($16 billion) in lost revenue, Financial Times Deutschland said, citing unidentified tax appraisers."

April 10 - Bloomberg (Tasneem Brogger): "Denmark's March inflation rate stayed at the highest in seven and a half years... Inflation held at 3.1%..."

April 11 - Associated Press: "Spain's inflation rate continued to accelerate in March, with consumer prices up at an annual rate of 4.5%..."

April 8 - Bloomberg (Aaron Eglitis): "Latvia's March inflation rate rose to the highest level in 11 1/2 years as prices for food, heating, and clothing advanced, adding to concern the economy is overheating. The rate, the highest in the 27-nation European Union, rose to 16.8%..."

April 7 - Bloomberg (Daryna Krasnolutska): "Ukraine's inflation rate rose to 26.2% in March, the fastest in eight years, as global food prices surged and the government repaid people who lost savings when the Soviet Union collapsed."

April 10 - Bloomberg (Maria Levitov): "The Russian government's budget surplus accounted for 6.6% of gross domestic product in the first quarter, the Finance Ministry said... The surplus rose to 548.94 billion rubles ($23.41 billion)..."

April 10 - Bloomberg (Abeer Allam and Abdel Latif Wahba): "Egyptian inflation accelerated to 15.8% in March... The rate rose from 12.1% in February..."

April 10 - Bloomberg (Farhan Sharif): "Pakistan's inflation accelerated at the fastest pace in at least five years in March... Consumer prices jumped 14.1% from a year earlier after gaining 11.3% in February..."

April 10 - Bloomberg (Nasreen Seria and Vernon Wessels): "South Africa's central bank raised its benchmark interest rate by a half point, the fifth increase in 10 months, forecasting that rising energy costs would keep inflation outside the target range until the end of next year."

April 9 - Bloomberg (Jacob Greber): "Australian consumer confidence fell in April to the lowest since 1993, reinforcing the central bank's view that the highest interest rates in 12 years will slow the $1 trillion economy."

April 11 - Bloomberg (Tracy Withers): "New Zealand house sales slumped to a seven-year low in March... The number of homes sold dropped 53% to 5,129 last month..."

Bursting Bubble Economy Watch:

April 8 - New York Times (Keith Bradsher): "The free ride for American consumers is ending. For two generations, Americans have imported goods produced ever more cheaply from a succession of low-wage countries -- first Japan and Korea, then China, and now increasingly places like Vietnam and India. But mounting inflation in the developing world, especially Asia, is threatening that arrangement, and not just in China, where rising energy and labor costs have already made exports to the United States more expensive... 'Inflation is the major threat to Asian countries,' said Jong-Wha Lee, the head of the Asian Development Bank's office of regional economic integration. It is also a threat to Western consumers because Asian exporters, even in very poor countries, are passing their rising costs on to customers. Developing countries have had bouts of inflation before. Indeed, some are famous for them, like Brazil, which experienced triple-digit inflation in the late 1980s and early 1990s. But two things make this time different, and together promise to send prices higher at Wal-Mart and supermarkets alike in the United States, just as the possibility of recession looms. First, developing countries now produce nearly half of all American imports. Second, inflation in these countries is coming at the same time that many of their currencies are rising against the dollar. That puts American consumers in a double bind, paying at least some of producers' higher costs for making their goods, and higher prices on top of that because the dollar buys less in those countries. Asian businessmen say they do not have a choice about charging more."

April 8 - Financial Times (John Plender): "Income inequality in the US is at its highest since that most doom-laden of years: 1929. Throughout the main English-speaking economies, earnings disparities have reached extremes not seen since the age of The Great Gatsby. Much like this decade, the 1920s were a period of strong corporate profits growth and increasing household debt. Awash with easy money, Wall Street became hooked on what the economist J.K. Galbraith in that subsequent seminal work on the period - The Great Crash- called 'the magic of leverage': the ability to increase returns through borrowing. Investment trusts provided the vehicle for this financial merry-go-round, in which one investment trust would 'sponsor' another investment trust, which would in turn sponsor a further investment trust. This paper-shuffling multiplication of risk bears a remarkable resemblance to the slicing and dicing of risk in highly leveraged structured credit markets today. In the 1930s, it ended with bank failures and the Great Depression. Now, after decades of 'financialisation' in the US and other Anglophone economies, whereby financial services have increased their share of gross domestic product, banks are being bailed out - using public money - in an effort to ensure the same does not happen again. From a political perspective the notable feature of the inegalitarian, free-market era that began in the 1980s is how little backlash there has been against the stagnation of ordinary people's earnings... Yet there are signs that the mix of policies and economic circumstances that gave a protracted laisser-passer to the rich and to business is coming to an end. This is potentially dangerous territory."

April 9 - Bloomberg (Courtney Schlisserman): "The difference in incomes between the richest and poorest U.S. families has widened since 1998 as unemployment failed to decline to prior lows and tax cuts benefited the wealthy, a private study showed. Average incomes for the bottom fifth, adjusted for inflation, dropped 2.5% in the eight years that ended in 2006, compared with a 9.1% gain for the top group, according to...the Economic Policy Institute..."

April 10 - The Wall Street Journal (Jane J. Kim): "The credit crunch has made it harder for Americans to indulge in their love affair with debt. So what are they doing? Borrowing more. While tighter lending standards have cut off all but the most credit-worthy borrowers from auto loans and home loans, many people are turning to credit cards and tapping more of their home-equity lines of credit to dig themselves in deeper. And lenders, once eager to lend to those with even spotty credit records, are trying to rein in borrowing by cutting consumers' available credit lines. Average balances on credit cards and home-equity lines of credit are growing rapidly, rising 9.5% and 8.1%, respectively, in the first quarter from a year earlier, according...Equifax Inc. and Moody's"

April 8 - Bloomberg (Lauren Coleman-Lochner): "U.S. retail sales advanced at the slowest pace in five years last week as shoppers facing rising gasoline prices and the worst housing market in a quarter century curbed spending, an industry group said. Sales at stores open at least a year advanced 0.3% last week from a year earlier... 'It's pretty bad out there,' Britt Beemer, chairman of America's Research Group...said... 'There is no area where the consumer is getting any relief.'"

April 9 - Bloomberg (Bill Koenig and Greg Bensinger): "U.S. auto sales will fall to 14.9 million this year, the lowest since 1995, as rising fuel costs and a seize-up in lending erode demand, S&P said. We expect car sales to keep sliding,' Standard & Poor's chief economist David Wyss said... Sales of cars and light trucks totaled 16.1 million in 2007, the lowest in a decade."

April 9 - Bloomberg (Chris Burritt): "Las Vegas Strip casino gambling revenue fell 3.1% to $556.6 million in February, the second consecutive monthly drop, as higher gasoline prices and shrinking home values crimped consumer spending. Gambling revenue for all of Nevada dropped 3.9% to $1.01 billion in February from a year earlier..."

Central Banker Watch:

April 8 - Bloomberg (Lily Nonomiya and Scott Lanman): "Former Federal Reserve Chairman Alan Greenspan said the current credit crisis is the worst in at least 50 years. 'The current credit crisis is the most wrenching in the last half century and possibly more,' Greenspan told a conference in Tokyo..."

April 9 - Dow Jones: "Former Federal Reserve Chairman Alan Greenspan continued to defend his legacy Tuesday, saying he has 'no regrets' over Fed policy conducted during his tenure. He added that there was little the central bank or regulators could've done to avert the U.S. housing crisis. 'I have said to many questions of this nature that I have no regrets on any of the Federal Reserve policies that we initiated back then because I think they were very professionally done,' Greenspan said..."

April 10 - Financial Times (Ralph Atkins and Krishna Guha): "Rarely have the world's two main central banks appeared to act in such a contradictory fashion. Making growth its top concern, the US Federal Reserve has slashed its main interest rate by 3 percentage points to 2.25% since global financial turmoil erupted last August. But when the European Central Bank meets today...leaving rates at 4 per cent, as it has every month since last June, and em-phasising instead the risks to inflation. At a time when globalisation has interlinked the world's economies, such a divergence looks at first glance incomprehensible - and raises the question of whether one or other institution has got its strategy wrong. Could Ben Bernanke, the Fed chairman, be risking an inflationary spiral in the US and sowing the seeds of the next bubble in financial markets? Is Jean-Claude Trichet, ECB president, underestimating the impact of the crisis and risking killing off a eurozone recovery that could have helped balance a US recession? Or are they both acting judiciously in response to a different mix of economic risks? The most immediate risk, says Thomas Mayer, chief European economist at Deutsche Bank, is that the central banks' competing strategies result in a currency shock... While policymakers at both the Fed and the ECB would say differences in the economic situation in the US and the 15-country eurozone account for the divergent policies, some private-sector economists point to something deeper. 'There is a different way of thinking,' says Jim O'Neill, chief economist at Goldman Sachs, adding that this reflects the banks' histories and legal mandates."

April 10 - Bloomberg (Christian Vits): "ECB President Jean- Claude Trichet signaled he's still not ready to cut interest rates even as the credit squeeze poses a greater threat to economic growth than policy makers anticipated. 'We are experiencing a rather protracted period of temporarily high annual rates of inflation,' Trichet said... While financial-market tension may have 'a broader than currently expected impact on the real economy.'"

April 10 - Bloomberg (John Fraher): "European Central Bank President Jean-Claude Trichet said policy makers have no plans to purchase mortgage-backed securities to ease tensions in money markets. 'We don't envisage at all this solution,' Trichet told a press conference... 'We consider that we have all the instruments that are necessary. At this stage we are reasonably satisfied with the present framework.'"

MBS/ABS/CDO/CP/Money Funds and Derivatives Watch:

April 7 - Bloomberg (Jody Shenn): "Four collateralized debt obligations composed mainly of home-loan bonds were liquidated, and proceeds probably won't be enough to pay off the most senior classes in full, according to S&P. The unwinding of Ansley Park ABS CDO Ltd., Arca Funding 2006-II Ltd., Kefton CDO I Ltd. and Markov CDO I Ltd. most likely will result in no payments at all to securities junior to the 'super-senior' classes... Some of the securities were originally rated AAA."

Real Estate Bubble Watch:

April 10 - (Gary Rosenberger): "Housing took another bad turn in March as the realities of recession dawned on buyers - and no amount of discounting could get things up-righted for the launch of the spring selling season, residential builders say. The best intentions from the Fed and Congress to restore confidence in banking and housing came to naught... Indeed, government moves to fix the housing mess may have set off even more alarms, opening more sinkholes on the path toward recovery. Any glimmerings of a bottoming in January and February dissipated in March, leaving builders to extend their recovery window further out - by as much as two years into the future. Buyers are not responding to lower home prices... Average 30-year fixed-rate mortgages dropped below 6.00% for the second time this year...but aggrieved builders see banks lathering on 'risk premiums' that in reality raise the cost of a loan. The only improved markets are those tied to the boom in energy and agricultural commodities, with Texas and Iowa among the markets that appear to be inoculated."

GSE Watch:

April 8 - Bloomberg (Adam Haigh): "Fannie Mae and Freddie Mac, the two largest sources of U.S. home loans, will have their credit losses 'increase rapidly,' according to analysts at Goldman Sachs... Credit losses this year should exceed a previous peak in the early 1990s, analysts including James Fotheringham wrote... 'Losses this cycle should be higher than those reported for previous cycles given the riskier portfolio mix and a broader national housing predicament,' they wrote."

Fiscal Watch:

April 10 - Financial Times (James Politi): "A plan by senior Democratic lawmakers to offer federal guarantees for between $300bn and $400bn of refinanced mortgages was largely endorsed by a panel of US banking regulators at a congressional hearing yesterday... 'Current circumstances may dictate that the federal government take a more direct role in facilitating solutions for many thousands of troubled mortgages to avoid more dire consequences for all Americans,' said Sheila Bair, chairman of the Federal Insurance Deposit Corporation... The White House has resisted calls for more direct use of public funds in the troubled US housing market, saying it could amount to bailing out speculators. Amid growing pressure for Congress to tackle the mortgage crisis...Barney Frank, the committee chairman, and Chris Dodd, chairman of the Senate banking committee, last month proposed allowing the Federal Housing Administration to guarantee the refinancing of mortgages for struggling borrowers at a lower price agreed by the lender."

Muni Watch:

April 7 - Bloomberg (Jeremy R. Cooke): "U.S. state and local borrowers from Denver to Atlanta, battered by rising interest costs from the collapse of the auction-rate bond market, now face rising fees to replace the debt. Denver found only five banks willing to provide backing for new variable debt to replace $208 million of auction bonds, down from 30 five months ago... The cost to line up a buyer of last resort in case such bonds, variable-rate demand obligations, go unsold when yields are reset jumped as much as fourfold to $400,000 on $100 million of securities a year, borrowers say."

Speculator Watch:

April 10 - The Wall Street Journal (Jenny Strasburg and Cassell Bryan-Low): "Stock picker Charles Jobson has sailed through past bear-market tempests, quietly amassing $2.4 billion in assets and reinvesting millions of dollars in personal profit into his Boston hedge funds. The recent stock-market turbulence has turned out to be the test of his career. His biggest funds, called Prism, which started the quarter with assets of more than $2 billion, had losses of 24% to 29% last quarter... Credit-market unrest and stock volatility have hurt big funds managed by such names as Farallon Capital Management LLC, the $36 billion San Francisco hedge-fund firm, and Ivy Asset Management of New York, which has $15 billion in client money farmed out to hedge funds. Managers who focus their bets on rising and falling stocks collectively had their worst quarter since 2001, sliding an average of 5.8%, according to Hedge Fund Research... Moreover, these so-called long/short stock pickers, who control more assets than any other strategy, fared worse overall than their peers. Hedge funds world-wide across all investment styles posted losses of 2.8% on average, after fees, last quarter."

April 10 - Reuters (Jeffrey Hodgson): "Asian hedge fund managers will likely close down or be bought out in growing numbers this year in a painful bout of consolidation triggered by financial market turmoil. Combined with tougher barriers for potential start ups, the number of Asian hedge funds could actually shrink in the near term...industry executives told the Reuters Hedge Funds and Private Equity Summit this week."

Crude Liquidity Watch:

April 11 - Financial Times (Andrew England): "What started as an ambitious dream, for a desert nation bereft of rivers and lakes to become self-sufficient in wheat, became a reality with the aid of billions of dollars from the first oil boom in the 1970s. Today, however, Saudi Arabia is preparing to phase out production by 2016. The volte face could make the Gulf nation one of the world's top 15 importers of the cereal - even as countries across the globe grapple with high wheat prices. Officials say they had few options - it was wheat or water, the most precious of resources in Saudi Arabia. Now that the kingdom is enjoying a second oil boom, they say, the government has the financial clout to ensure it meets its cereal requirements from international markets."

The Greenspan Episode:

April 8 - Dow Jones (Charlene Lee): "Former Federal Reserve Chairman Alan Greenspan continued to defend his legacy Tuesday, saying he has 'no regrets' over Fed policy conducted during his tenure. He added that there was little the central bank or regulators could've done to avert the U.S. housing crisis. 'I have said to many questions of this nature that I have no regrets on any of the Federal Reserve policies that we initiated back then because I think they were very professionally done,' Greenspan said in an interview on CNBC."

Well, Alan Greenspan is not going to be of much help when it comes to the critical issue of exploring what went terribly wrong with monetary policy and the financial system. Interestingly, some are rallying to his defense. From the Financial Times' Martin Wolf: "Mr. Greenspan remains the most successful central banker of modern times. More important, blame distracts from the challenge, which is to understand what happened, why it happened and what we should do."

We do not want to get distracted. But "the most successful banker of modern times"? While the scope of the unfolding disaster has yet to be recognized by Mr. Wolf or others, Mr. Greenspan was the undisputed governor, architect - the promulgator of what will be recognized as an epic failure in central banking. After all, he was for almost 18 years the appointed guardian over a financial system that perpetrated the greatest Credit and speculative excess in history. He dominated monetary policy like no other central banker in history. Chairman Greenspan not only negligently failed to act to reign in dangerous excesses, he became a vocal proponent for virtually all aspects of "Wall Street finance."

Anyone that has read history related to central banking appreciates that Alan Greenspan conveniently made up new rules as he went along. He evolved into the absolute "maestro" at concocting sophisticated rationale for seemingly every troubling development that took root in contemporary ("wildcat") finance. Greenspan was an outspoken proponent of securities-based finance; of models-based risk management; of the great benefits provided by derivatives markets; of the liquidity benefits of leveraged speculation; of "telegraphed baby-step" monetary management; and a proponent of "risk management"-based monetary management (i.e. ease aggressively to forestall even a low probability of "deflation"). He trumpeted the profound benefits emanating from the capacity for contemporary finance to better quantify, manage and disburse risk - in the process creating a more stable financial sector. Most importantly, he championed the notion that it was preferable for the system to let Credit booms and asset Bubbles run their course - and then to treat their busts aggressively with monetary stimulus to ensure little negative impact the real economy. He claimed Bubbles were only recognizable after the fact.

He evolved into the ultimate activist and micromanaging central banker, wrapped bizarrely in the cloth of a free market ideologue. It was a most precarious amalgamation. On his watch transpired historic ballooning of the government-sponsored enterprises, of Wall Street balance sheets, and of the size, power and influence of the leveraged speculating community. Worse yet, it's my view that he used these sectors as key inflationary mechanisms. The Greenspan Episode will be seen from a historical perspective as central banking lunacy. It was the exact intoxicant for market participants and politicians to wallow in during a spectacular boom.

The inherent instability of money and Credit was the dominant focus from the earliest thinking on matters of monetary management and central banking. The U.S. Federal Reserve was (belatedly) created specifically to reign in the recurring boom and bust cycles, of which it failed spectacularly during the 1920s. Even today, the ECB and other central banks (read pronouncements from the Reserve Bank of New Zealand!) remain steadfast in their focus on money and Credit analysis as a fundamental pillar in their mandate to maintaining system stability. Somehow, the Greenspan 'New Age" doctrine was to completely disregard Credit - and disregard it they did during a period of unprecedented innovation, experimentation, and gross issuance of contemporary electronic and market-based "money" and Credit. In their distorted view, monetary instability is a dynamic of the bust and not the preceding boom.

It was a policymaking regime destined for failure. Go back and read some of the speeches by ECB officials - Bundesbank and ECB executive Otmar Issing, in particular. It has been for awhile somewhat a battle of central banking philosophies- the well-grounded and traditionalist ECB vs. the "New Age" Greenspan Fed. The ECB is clearly the victor, and "euroland" citizens (with their valuable euros) are winning in the process.

Excerpting from Dr. Issing's February 2004 Wall Street Journal op-ed piece (highlighted in the 2/19/2004 CBB, "Issing v. Greenspan"): "Huge swings in asset valuations can imply significant misallocations of resources in the economy and furthermore create problems for monetary policy. Not every strong decline in asset prices causes deflation, but all major deflations in the world were related to a sudden, continuing and substantial fall in values of assets. The consequences for banks, companies and households can be tremendous... Prevention is the best way to minimize costs for society from a longer-term perspective. Central banks are confronted with this responsibility, but there is no easy answer to this challenge. So far, only some tentative conclusions can be drawn. First, in their communication, central banks should certainly avoid contributing to unsustainable collective euphoria and might even signal concerns about developments in the valuation of assets. Second, the argument that monetary policy should consider a rather long horizon is strengthened by the need to take into account movements of asset prices. Finally, it should not be overlooked that most exceptional increases in prices for stocks and real estate in history were accompanied by strong expansions of money and/or credit. Just as consumer-price inflation is often described as a situation of 'too much money chasing too few goods,' asset-price inflation could similarly be characterized as 'too much money chasing too few assets.'"

This was the focal point of an historic debate. Dr. Issing and the ECB had history and sound analysis firmly on their side. The Fed had hope. And I do believe that as runaway Credit excess and asset Bubbles gained only further momentum - and as the consequences of dealing with these Bubbles became increasingly more problematic for our central bankers, the financial sector, and real economy - the Greenspan Fed became only more intransigent with respect to their flawed doctrine. They would not act; Wall Street knew they would not take the punch bowl away; and the Credit Bubble's "terminal phase" was let to run its own fateful course. While decisions at the Fed may have been made "professionally," they were nonetheless made from a deeply flawed analytical framework with predictable results.

Even today, Greenspan chooses to avoid a meaningful discussion about Credit. From his op-ed piece in Monday's Financial Times ("The Fed is blameless on the property Bubble"): "I am puzzled why the remarkably similar housing bubbles that emerged in more than two dozen countries between 2001 and 2006 are not seen to have a common cause. The dramatic fall in real long-term interest rates statistically explains, and is the most likely major cause..." He goes on refute those that place blame on the Fed for the housing Bubble, including arguing against the claim that the Fed's 1% funds rate triggered "a massive Credit...expansion." Greenspan wrote: "Both the monetary base and the M2 indicator rose less than 5 per cent in the subsequent year, scarcely tinder for a massive Credit expansion."

Tinder or no tinder, what transpired was unprecedented Credit expansion. The Greenspan Fed cut rates aggressively in 2001, and Total Mortgage Debt (TMD) growth accelerated to a rate of 10.4%. With rates dropping to as low as 1.25% in 2002, TMD expanded 12.1%. With rates dropping to 1.0% in 2003, TMD increased another 11.9%. Despite TMD increasing by a stunning 38% in three years, Fed funds remained at 1% through the first half of 2004. TMD growth surged to 13.5% in 2004, followed by 13.4% in 2005, and 11.6% in 2006. The Greenspan Fed sat idly as mortgage Credit doubled in just six years.

Meanwhile, "massive Credit expansion" led, characteristically, to ballooning Current Account Deficits. After averaging a large $122bn annually during the nineties, the Deficit swelled to more than one-half Trillion during 2003. It then jumped to $640bn in 2004, $755bn in 2005, $811bn in 2006, and $739bn in 2007. As a consequence (and in combination with speculative dollar outflows to play attendant dollar devaluation), Rest of World (ROW) holdings of U.S. Financial Assets - after increasing on average $374bn annually during the nineties - expanded $788bn (10.6% growth) in 2003, $1.518 TN (18.5%) in 2004, $2.263 TN (23.3%) in 2005, $1.868 TN (15.6%) in 2006, and $1.573 TN (11.4%) in 2007. ROW holdings surged $8.0 TN, doubling in just five years.

This data is from the Federal Reserve's Z.1 "flow of funds," a report I can only assume Dr. Greenspan is intimately familiar with (yet never addresses). That he can today cite moderate growth in the monetary base and M2 and imply the Fed was not culpable for the Credit Bubble is beyond me. Greenspan blames the worldwide "dramatic fall in real long-term rates." Even the FT's Martin Wolf concurs: "So what might explain these bubbles? I would point to four causes: very low long-term real interest rates, because of the global savings glut; low nominal interest rates, because of both low real rates and the benign inflationary environment; the lengthy experience of economic stability; and, above all, the liberalisation of mortgage finance in many countries."

First, I am surprised the "global savings glut" thesis is still being bandied about. This was a notion of Greenspan/Bernanke "New Age" central banking that was happily adopted by Wall Street. And Greenspan still refers to the interest-rate "conundrum." There was none, but instead a Global Liquidity Glut that was foremost a product of the massive Credit Bubble-induced dollar outflows (represented well enough by the Rest of World accumulation of our financial claims). Not only did this massive dollar "recycling" exercise put significant pressure on our long-term rates and currency, the unrelenting accumulation of dollar reserves globally proved a major impetus for overheated domestic Credit systems the world over - creating even more liquidity in the process. I find it repulsive today that Mr. Greenspan claims global forces were at work. In reality, the Federal Reserves disregard for Credit excess, Current Account Deficits, and the dollar's role as the "world's reserve currency" rest at the heart of what remains today escalating Global Monetary Disorder.

Not surprisingly, Greenspan is content to frame the debate in an "academic" context - ensuring no clear resolution (proof) is possible. The Wall Street Journal article (Greg Ip's) highlighted a disagreement between Greenspan and John Taylor on the "global savings glut thesis." Taylor says his data show the global investment equaled savings, thus there's no "glut." Greenspan counters that Taylor uses actual investment when it should be "expected" - that is anyway unquantifiable. Please note the clear language used by Otmar Issing above to communicate clear thinking to the interested laymen.

Fundamentally, the Federal Reserve "pegged" short-term interest rates, inviting leveraged speculation. I am not of the view that there is a specific interest-rate that is "right" for the system. But exceptionally low rates telegraphed to the leveraged speculating for the purposes of stimulating the acquisition of risk assets and reinflating asset markets is nefarious central banking. And never combine telegraphed "pegged" low interest rates with assurances that the Fed will always be there to sustain marketplace liquidity (underwrite securities prices), while cutting rates aggressively to mitigate bursting Bubbles. Once that path is taken there is no turning back; the central bank is held hostage by the fragility associated with escalating system leverage, speculative excess, and an increasingly maladjusted and vulnerable real economy.

Greenspan now warns against over-zealous regulation and the intrusion of governments into the competitive marketplace. Well, he should have considered these inevitable consequences when he disregarded Credit and asset Bubbles. And to admit to such mistakes to ensure a sounder monetary policy regime going forward would be statesmanlike - which he apparently is not. And while the focus these days is on government programs and regulatory reform, it is my hope that meaningful discussion emerges with regard to a sound "analytical framework" for our central bank. Unfortunately, he was lionized. It now becomes difficult to separate the cult of Greenspan - an individual I view as single-handedly more responsible for Credit and asset Bubbles than anyone else in history - from the Federal Reserve policymaking "analytical framework." Chairman Bernanke has referred to the understanding of the Great Depression as the "holy grail" of economics. The pursuit of the "grail" will now be assessing and interpreting the Greenspan Episode.



Doug Noland

Author: Doug Noland

Doug Noland
The Credit Bubble Bulletin

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