All Articles Finance Modern Money While You Were Working - July 7

While You Were Working – July 7

Trump gets an Econ 101 lecture, Where renewable power might literally replacing nuclear, the OCC states the obvious, and should anyone really worry about bond market liquidity?

3 min read

Modern Money

Jean-Claude Juncker

Jean-Claude Juncker, president of the European Commission and economics professor. (Thierry Monasse/Getty Images)

The Fed continued to send mixed signals regarding regulation and bond market liquidity

The Federal Reserve released a study that says post-crisis regulations might have had a negative impact on bond market liquidity … but only a teeny, tiny bit:

“A series of changes, including regulatory reforms, since the global financial crisis have likely altered financial institutions’ incentives to provide liquidity. … However, the available evidence does not point to any substantial impairment in liquidity in major financial markets.”

Full disclosure: Whenever I hear people whine about liquidity, I generally have the same reaction as Michael Lewis. That’s because I have been hearing people cry about how regulations are killing bond market liquidity since those rules were first conceived. But the question those same people are always utterly hesitant to answer is this: Is less bond market liquidity a bad thing for Main Street?

Small business lending has recovered since the crisis. Unemployment is less than half of what it was at the height of the crisis. Housing prices in many markets have surpassed their pre-crisis levels (uh-oh!).

Even on Wall Street, less liquidity didn’t stop banks from reporting record profits in 2016.

So yeah, maybe responsible rules (aka: taxpayers protections) have had a tiny impact on bond market liquidity. But maybe that impact equates to a fly on the windscreen that is the overall US economy.

The OCC stated the obvious

The US Office of the Comptroller of the Currency issued this oh-so-insightful analysis of risks facing US banks:

“The U.S. Office of the Comptroller of the Currency found that risks to banks lurk in competition from nonfinancial lenders, their reliance on third-party service providers for cyber security and regulatory compliance, and in the rapid evolution of money laundering and terrorism financing methods.”

Wow. I guess I am just left wondering how long it took the OCC to compile a report that so hilariously states the obvious.

Trump got an Econ 101 lesson from Jean-Claude Juncker

Any time a global leader feels the need to lecture the President of the United States on some of the basic principles of economics, it is not good thing.

Making the best of a nuclear disaster

This is a great idea that would probably work in Japan too. The funny thing is that 1,000 square miles is probably enough land for renewables to generate enough power to literally replace the power that was generated by the preceding nuclear plants. Just don’t ask me to go install it!

WYWW Appetizers