Random Thoughts

Prof. Hamilton has argued that converting bank's preferred stock to common equity is never going to work since interest payments were never a problem for banks anyway. a better option is to restructure the economy i.e. erase equity value, sell the assets, and payoff the debtors.

doing so might be economically prudent, but is not politically feasible considering the stake of sovereign funds in the banks. this is the argument Brad Setser presents , quoting Wang Qishan

“We hope the US side will . . . guarantee the safety of China’s assets and investments in the US”

links : http://blogs.cfr.org/setser/2009/02/25/unintened-irony/
http://www.econbrowser.com/archives/2009/02/the_bernanke_ra.html

excellent post from Macro Man, about how jpy trade deficit follows usdjpy, and how this relationship has broken down in recent days (implying weaker yen).

sombody argued that now that all the interest differentials are zero, currencies will weaken/strengthen based on the expected period of time a particular economy will spend in QE. time to buy dollars ?

from Brad Setser's blog

From naked capitalism (http://www.nakedcapitalism.com/2009/02/goldman-china-tax-receipts-show-marked.html)

"

“Tax data show much sharper deceleration in income and consumption in the past few months than suggested by official retail sales or income growth figures,” Goldman Sachs analysts Joshua Lu, Caroline Li and Fiona Lau wrote in a note today.

Value-added tax has “de-linked sharply” from retail sales figures, the analysts wrote. VAT rose 1 percent in the fourth quarter from a year earlier, while retail sales gained 21 percent, according to the note....

Growth in China’s individual income-tax receipts “slowed down significantly” in the second half and shrank in December and January, the Goldman Sachs analysts wrote. This compares with nominal wage growth of 21 percent in the third quarter, the report said.

"