This is correct. I never said it was about $, but it was about selling books, which, I guarentee you, Paulson wants to do. Let's not forget that the publisher of the book DOES want to make money. Thus, it is in their interest to have Paulson play up the 'inside baseball' and cloak and dagger stuff. I heard a snippet of Paulson's softball interview w/Liesman (what a tool of a gov't mouthpiece that guy is) on CNBC. Liesman asked him about receiving a home phone call from Blankfein over the weekend before Bear was sold, and how it reinforced the whole "Gov't Sachs" conspiracy theorists. Paulson's response was that he thought it was important that he know what was going on in the markets, and that's why it was important that he took the call. Then, in his next sentence, he quickly said "that's the only time I had any contact w/Goldman during the entirety of the remainder of his time in office". Well, Hank, which is it? If you needed to be kept abreast of what was happneing, why would you cease contact w/a major player like Goldman? He's clearly caught in a lie here. Of course, Liesman didn't point it out.
Bullard says economy no longer in deflation risk ... http://www.ft.com/cms/s/0/8f6a0622-0e94-11df-bd79-00144feabdc0.html US deflation no longer seen as a risk By Tom Braithwaite in Washington The US has escaped the danger of a Japanese-style deflationary trap, according to James Bullard, a voting member of the Federal Reserveâs key policy-setting committee. Mr Bullard, president of the Federal Reserve Bank of St Louis, told the Financial Times in an interview that his preoccupation throughout 2009 had been deflation, but the risk had âpassedâ. Last weekâs Fed meeting produced a dissenting vote for the first time in a year when Thomas Hoenig, president of the Kansas City Fed and a rate hawk, argued that financial conditions no longer warranted a policy of holding rates at âexceptionally low levels . . . for an extended periodâ. Other members of the Federal Open Markets Committee voted to preserve the âextended periodâ phrase, generally taken to mean near-zero interest rates will continue for at least six months. But they are also working on an exit strategy from the exceptionally loose policy used to fight the financial crisis. Mr Bullard, who is considered a centrist member of the FOMC, said he was happy to continue with the current guidance, but he did have some sympathy for Mr Hoenigâs argument that âif you come off zero and you move up a little bit, itâs still a very easy policy. Youâve still got a very large balance sheet and youâre still at very low interest rates.â He added that, although it was not time to tighten policy, members of the committee would weigh in their decisions factors other than inflation and unemployment. Factors to consider would include asset bubbles. âI think theyâre gaining weight with many people because of the bad experience we had in the aftermath of the last recession, the housing bubble and how that really has blown up and caused so many problems,â he said. When the Fed does come to raise rates it may have to switch from its traditional benchmark of targeting the federal funds rate to targeting a repurchase rate because of the upheaval in the two markets over the last two years. âI think what the operating regime will really look like going forward is an open question and one that the committee is working on,â said Mr Bullard, who said the Fed could consider using interest it paid on reserves as the main rate but that it might prefer a market measure such as the repo rate. One move that could be made before a change in the main interest rate â whichever the Fed decides to target â is an increase in the discount rate at which it lends to banks, which was kept unusually low as part of the central bankâs extraordinary package of measures to shore up the financial system and stimulate lending. Mr Bullard emphasised that an end to the unusually low spread of 25 basis points between the discount rate and the interest rate paid on reserves held at the Fed should not be seen as an immediate precursor to a general tightening of monetary policy. âI think it makes sense today to think about it in terms of a liquidity context,â he said. âThe reason itâs so low is exactly because weâre trying to address a huge crisis and a very special situation.â The broader post-crisis economy was âon trackâ with its recovery, he said. âItâs not a real strong recovery but thatâs what we had predicted anyway. But it will be above-average growth for the first half of 2010 and weâll probably see some positive jobs growth in the first part of 2010 here.â He âhopedâ that improvement in the labour market would come in the first quarter. Following harsh criticism of Ben Bernanke in the Senate ahead of his reconfirmation as Fed chairman last week, Mr Bullard warned that political interference with the Fed would be dangerous and he strongly opposed plans to strip banking supervision from the central bankâs roster of duties. âI think itâs dangerous for America and dangerous for a global economy to try to divorce this central bank from true understanding of financial markets, and I think that thatâs the direction weâll be going in if we separated out the central bank from regulation,â he said. âWhat this crisis has shown is that our understanding of financial mediation and how it can impact on macro economy was not good enough. So what you want is to force the central bank to get better understanding and more information about financial markets as theyâre making monetary policy decisions.â Asked about congressional proposals to impose sweeping audits of the Fed, Mr Bullard said he was open to ideas that would increase transparency, but only if they did not lead to politicisation of Fed decision-making.
So you are substituting one conspiracy for another. Furthermore Paulson lied many times while in office, politicians do all the time, now that he is out he is more likely to tell the truth
The tide of bearishness on US gov't bonds is absolutely overwhelming. Here's a couple of pieces I've read in just a quick 15 minute sit-down at my computer ... http://www.ritholtz.com/blog/2010/02/wheres-the-bubble-stocks-or-bonds/ http://www.bloomberg.com/apps/news?pid=20601109&sid=aM.IPx7G5hAw&pos=13 http://www.marketfolly.com/2010/02/jeremy-siegel-2010-good-for-stocks-bad.html Don't forget Bullard's belief (posted above) that the deflation threat is a thing of the past. Yet for some reason, the bond bears feel like they are the contrarians here. Other than the godfathers of the deflation scenario - Hendry, Rosie, Hoisington - I can think of very few public figures bullish on bonds. Gary Kaminsky has been strutting around Fast Money like he's the next Bernard Baruch for his 'wildly contrarian' belief that rates are going higher this year. All of these guys seem to forget that the 10 year rate is 165 basis points higher than it stood at the start of 2009. The price for 10 year swaptions on higher rates are through the roof (i.e. everyone wants protection against higher rates). Bonds have already had a significant bear market. Were these guys bearish on bonds at the start of last year? Just curious.
Look more deeply in the FY2011 Budget http://www.whitehouse.gov/omb/budget/fy2011/assets/econ_analyses.pdf It appears that the net decrease in the fiscal deficit planned by the WH is $300b from 2010($1.5T plus change to $1.2T plus change) to 2011, so this would be the degree of expected fiscal tightening(These WH projections and the $300b figure already include the bush tax cuts expiring for those who earn more then $250,000, for less they will be extended), some of that wont be tightening at all as it will arise from higher government tax receipts(due rising nominal GDP). 2% of GDP appears to be number of expected fiscal tightening for next year. All it takes is for the WH to ask for a 2008 like fiscal stimulus($150b mostly composed of tax cuts) and this will decrease the tightening significantly I do not know if the $300b expected decline in the fiscal deficit already includes the $100b proposed 'jobs bill', if it doesnt the bill will help decrease the fiscal shock. Furthermore I view as likely as some kind of stimulus coming down the pipe in 2010 before the elections, which will cushion the fiscal shock for 2011 some more. So I dont understand John Mauldin concern about a double dip arising from fiscal policy, the government is run by Kenesyans after all
There might be a Barro style argument that if the government substitutes tax cuts for stimulus spending(keep the deficit stable by letting Bush cuts expire and build brigdes/other stuff with the money) this would hurt GDP(in the long-run) Ok, Summers and co dont agree with the Barro argument so they might just spend the cash instead. However there will still be tax cuts/credits involved as the WH has shown willingness to do that(for those earning less than $250,000, Obama even cheered tax cuts in the State of the Union speech) So I dont know, I have a hard time seeing a government engineered double dip, maybe congress will mess things up and it could happen
Rogoff on soverign defaults: 'We do not anticipate outright defaults in the largest crisis-hit countries, certainly nothing like the dramatic de facto defaults of the 1930s when the US and Britain abandoned the gold standard.' He also accepts that the IMF makes things different this time 'One factor that is different is the huge expansion of the International Monetary Fund initiated last April. IMF programmes can mitigate outright panics and will help those countries that genuinely make an effort to adjust.' http://www.ft.com/cms/s/0/f4630910-0b7a-11df-8232-00144feabdc0.html
"White House Budget Office Director Peter Orszag said the administration is wary of cutting the deficit too quickly for fear of tipping the economy back into recession." http://www.bloomberg.com/apps/news?pid=20601087&sid=aZnNekhkN0cY&pos=8
Looks to me that the administration is doubling down on stimulus stuff, Geithner has survived, and the Volcker plan is dead on arrival. All of this is good news for stocks and we'll hope that the short end doesn't read the newspapers. All of this talk about fin'l regulation is just talk. The administration understands that if they can improve the employment situation and keep equities high, then everything else falls into place.