Tag Archives | US Federal Reserve

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US junk bond issue hits record as GDP slows

As noted by a blog reader last week, retail investors are throwing caution to the winds. Unwilling, or unable, to adjust their lifestyles to cope with lower interest rates on government bonds, they have rushed to instead buy higher-yielding ‘junk bonds’. These are less than normal ‘investment’ grade, and offer increased yield in exchange for […]

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Deflation a real risk for the 2011 Budget period

The blog is a great fan of Pimco, the world’s largest bond fund managers. They were the first people to spot the housing bust developing in the USA, and to suggest the scale of the damage it might cause. More recently, they have pioneered the concept of the ‘new normal’. Thus a new analysis by […]

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Fed, American Chemistry Council, worry about US economy

The US Federal Reserve and the American Chemistry Council (ACC) have joined the blog in expressing concern about the outlook for the US economy. And as the chart above of the US S&P 500 shows, financial markets have continued to weaken since the blog’s advice on 8 May to “sell in May and go away“. […]

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Volcker calls for meaningful financial reform

Paul Volcker was the last US Federal Reserve chairman who believed that a key part of its role was “to take away the punchbowl just when the party starts getting interesting“. He successfully brought inflation back to single figures during the 1980′s downturn, setting the scene for the major economic recovery that followed. Now head […]

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US unemployment rate now 10.2%

The US accounts for 23% of global GDP. Its economy is 3 times larger than the No 2 country, Japan. And most critically for the chemical industry, 70% of US GDP is consumer-based. Developments in US housing/construction, auto and electronics industries are therefore the biggest single influence on global chemical sales. In turn, the level […]

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Housing markets to be slow next year, US Fed

In 2006, there were 2.2 million US housing starts. These were worth $35bn of chemical sales. Currently, and even with the support of an $8k tax credit, they are running at an annual rate of just 600k, worth $10bn. This is the lowest level since records began in 1960. Even in 1975, 1981 and 1981, […]

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Germany attacks central bank policy

During the growth years, it became fashionable for politicians to claim that central banks were “independent”. But as the current crisis has grown, this has been increasingly exposed as a myth. As the blog noted back in September 2007, Alan Greenspan (former US Federal Reserve Chairman), revealed that ‘the presumption that we were fully independent […]

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25% of US sub-prime loans “seriously delinquent”

Speaking today, Federal Reserve Governor Elizabeth Duke produced some doleful figures about the current state of the US housing market. She noted that 25% of sub-prime loans, and 13% of near-prime loans, are now “seriously delinquent” – either 90 days overdue, or in foreclosure. The serious delinquency rate for prime mortgages is now over 3%, […]

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A final push on the piece of string

Yesterday the US Fed cut interest rates to an all-time low of 0% – 0.25%. Once again, Wall Street celebrated with a major rally, even though the move had more symbolic than practical purpose. It made it appear that the authorities were “doing something”, even though the evidence of previous rate cuts indicates they have […]

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AIG becomes a “zombie” company

2 months ago the blog raised 5 key questions about the $700bn US bailout. Yesterday’s news about additional government funding for insurance giant AIG confirms its concerns. Originally, the US Treasury had insisted it would only support “healthy” firms. Now, this fiction has been abandoned. After AIG announced its 4th straight quarterly loss ($24.5bn), its […]

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