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Finance | Banking | Monetary Policy

Is it Fannie and Freddie’s Turn to Bailout the U.S. Treasury?
e21 Staff Editorial | 2013-04-03

As e21 first pointed out last October, Fannie Mae and Freddie Mac are extremely profitable. The cash flow relationship between the government-sponsored enterprises (GSEs) and the Federal Government has now reversed: instead of receiving bailout funds from the Treasury in the form of senior preferred stock purchases, the GSEs now send billions of dollars in dividend payments to Treasury to fund unrelated government spending.

New Fed Data: Economy Drowning in Federal Debt
e21 Staff Editorial | 2013-03-11

Each quarter, the Federal Reserve publishes the “Flow of Funds” accounts, which provide a summary of the conditions of the consolidated balance sheet of the United States and its constituent parts: households, nonfinancial businesses, financial intermediaries, and government. The U.S. national balance sheet continues to deteriorate, with a record $56.3 trillion in gross debt outstanding relative to $15.8 trillion in national income (GDP).

Are We Underestimating the Social Security Shortfall?
Charles Blahous | 2013-02-14

Last month the New York Times printed an op-ed piece (“Social Security: It’s Worse than You Think”) by professors Gary King of Harvard and Samir Soneji of Dartmouth. Their piece asserted that the Social Security actuaries’ methods for projecting mortality are “antiquated,” prone to “interference from political appointees,” and result in projections that underestimate the Social Security financing shortfall.

A Misleading Financial Outlook
e21 Staff Editorial | 2013-02-11

In Saturday’s weekly radio address, President Obama repeated the assertion that the federal government is “more than halfway” to the required cumulative deficit reduction to stabilize debt ratios.

Ten Things the Latest CBO Report Tells Us about Federal Finances
Charles Blahous | 2013-02-07

Earlier this week the Congressional Budget Office (CBO) released its updated outlook for the federal budget. Here are ten lessons it teaches us about the troubled state of federal finances.

Upping the Dosage Would Kill the Patient
e21 Staff Editorial | 2013-02-04

As former Council of Economics Advisers (CEA) Chair Greg Mankiw has analogized, the Obama Administration’s policy response to the Great Recession is like medicine offered to a sick patient. The ineffectiveness of the treatment is obvious given the economy’s continued illness, as most recently evidenced by the fourth quarter GDP report. The question is whether the ineffectiveness of the treatment is the result of an insufficient dose of the right medicine, or whether the problem is the wrong treatment altogether.

Fed Launches Contractionary QE4; Continues Unlimited Expansion
David Malpass | 2012-12-13

As expected, the Fed announced today that QE4 bond buying will start in January.  We think Fed policy is contractionary. The announcement of more bond buying doesn’t improve the outlook.  Equities and gold rose following the announcement but then closed flat on the day.  Even though we disagree with the Fed’s decision to buy more bonds, we welcome the openness of the Fed’s discussion about its monetary policy vision.  In today’s press conference, Fed Chairman Ben Bernanke answered many detailed questions from financial reporters on Fed policy and on the fiscal cliff, creating a sharp contrast with the lack of openness and vision for U.S. fiscal policy. 

Key Variables in the Global Outlook
David Malpass | 2012-11-27

We expect superficial positives in coming weeks including deal-talk in Washington, a disbursement to Greece, a Spanish request for European aid, fewer rocket launches from Gaza into Israel, Fed movement toward QE4, and more monetary easing and infrastructure spending in China.

Let’s Talk Specifics on Itemized Deductions Limitations in Fiscal Cliff Negotiations
e21 Staff Editorial | 2012-11-21

During the upcoming fiscal cliff negotiations, most of the attention is likely to be paid to two threshold questions: (1) whether or not Congress should agree to new tax revenue, period; and (2) what magnitude of spending cuts should be required for Congress to accept new revenue. Nearly as important, however, is how the revenue is to be collected.

e21 Presents the Shadow Open Market Committee Symposium, November 20, 2012
e21 Team | 2012-11-20

On November 20, 2012, e21 presents the Shadow Open Market Committee Symposium, Federal Reserve Policy Adrift, with keynote speaker Jeffrey M. Lacker. See the agenda and read excerpts from the papers here to learn more about the event. 


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