A Scene from the Old Hood
Posted on April 16th, 2013 in Uncategorized | 32 Comments »
(The Brooklyn Academic of Music)
My guess: right-wing domestic terrorism. The Boston Marathon just doesn’t seem like something that Al Qaeda or a related group would consider as a devastating target. No—I think it’s a Timothy McVeigh-type, like the person/people who has/have been killing prosecutors in Texas.
Obviously, I base this on no information at all. Just years of growing concern about the crucible of a black president, gun control, gay marriage, immigration reform and a bunch of gun-toting nuts.
My bias, obviously. We’ll see.
32 Responses
4/16/2013 5:58 am
Nice!
4/16/2013 11:45 am
This is totally unrelated to the horrible events at yesterday’s marathon, but since I know Sam Spektor and others who comment here take Reinhart-Rogoff seriously on debt, I thought people might be interested in this new paper that finds serious problems with their data: http://www.nextnewdeal.net/researchers-finally-replicated-reinhart-rogoff-and-there-are-serious-problems
And, for what it’s worth, I tend to agree that the attack was probably home-grown, in part simply because the international groups would be quick to take credit and so far, there has been nothing.
4/16/2013 12:28 pm
@mad@er
Why would you say that I took Reinhart-Rogoff seriously on debt?
Have you ever spoken to me about it? My goodness, you’re too afraid to even identify yourself and yet you tell me what I think.
I don’t know what R-R think on debt. I had not read the paper (nor do I intend to read it).
What I have said is that their book, This Time It’s Diffferent, is a brilliant (and highly readable book) book on the history of debt.
I’ve also said that, our country has a real problem with debt. It will end badly. The Fed is buying almost everything the Treasury issues. Eventually, as history shows us (and as R-R write about), there become insurmountable problems.
Meanwhile you have things like this said by the very person who was one of the most (if not the most) responsible for the sub-prime mess. This man has no shame.
http://www.huffingtonpost.com/2013/04/16/barney-frank-boston-marathon_n_3091193.html
4/16/2013 12:35 pm
To be fair, Sam, I could see how mad@er might interpret you saying that This Time It’s Different is a “brilliant” book about the history of debt to mean that you “took Reinhart-Rogoff seriously on debt.
I don’t think there was any disrespect intended, just an attempt to share some intellectual debate.
4/16/2013 12:57 pm
Thanks, RB. Maybe the context of this post was the wrong place to share the info, but you definitely capture the spirit in which I intended to share it.
4/16/2013 2:06 pm
Also, Sam, for what it’s worth, Matt Yglesias suggests that this does also affect the data in This Time It’s Different, so it might be worth taking a look at: http://www.slate.com/blogs/moneybox/2013/04/16/reinhart_rogoff_coding_error_austerity_policies_founded_on_bad_coding.html
4/16/2013 2:48 pm
We’ll see how R-R respond.
As for Matthew Yglesias, what he says is not worth much. Has always been just another (know nothing) journalist who happens to write on economics and financial matters. If you have read his material over a period of time, he has little substantive knowledge of either subject.
On the other hand, in a certain way (i.e. many mistakes) he joins the company of exalted men such as my wife’s friend Larry (I see green shoots) Summers, and Paul (never saw a buck that the government shouldn’t spend) Krugman.
4/16/2013 6:08 pm
The Fed is buying almost everything the Treasury issues.
I believe the Federal Reserve Banks buy in the secondary market. In any case, the consolidated balance sheets of the Federal Reserve banks show an addition of $911 bn in Treasury securities and federal agency issues since the end of the 2009/10 fiscal year. If I am not mistaken, total federal debt issues since then have been in the range of $3,500 bn.
4/16/2013 6:10 pm
Just years of growing concern
Whose concern?
about the crucible of a black president, gun control, gay marriage, immigration reform
Free associate much?
and a bunch of gun-toting nuts.
You mean like Jared Loughner?
4/16/2013 11:45 pm
The FBI must not agree with you-a Saudi student near the bombing was questioned and his house in Revere searched. Racial profiling is alive and well.
4/17/2013 12:29 am
Continuing on Reinhart-Rogoff, here’s a summary of their response: http://www.latimes.com/business/money/la-fi-mo-rr-respond-20130416,0,3211351.story
4/17/2013 3:56 am
@ Art Deco 6:08
The Fed can only buy in the secondary market. That, of course, gives the primary dealers a pretty much guaranteed profit; but then all The College graduates at Goldman turn around and give it to Harvard when the development people call … so it must be a good thing
Look back over the last year and you’ll see numerous times when the Treasury issues on, let’s say, Thursday and The Fed, buys on Friday. Same piece of paper.
Your numbers were from 2009/2010. That was bad enough. They changed dramatically in the past year. Don’t hold me to this exactly, but in March, The Fed POMO was in operation for all but two days. Same in February. Big Ben means business, both in Treasuries and agencies.
Big Ben means business, but he’s been very wrong for the last four plus years in turning the economy around with his purchases (he did turn Wall Street around, however, and that means more money for Harvard). Of course, before that, he was totally wrong on the housing market. Hey, but why quibble!
We’ll have to see how this plays out. Bernanke says he has a viable exit strategy. Some very smart people think he does not. I’m not smart, but I don’t think he’ll be able to get out of this mess without major dislocations.
I’m of the R-R school (This Time It’s Different). If financial history teaches us anything, it’s that it’s never different. Even forgetting about long ago history, I’ve seen it happen over and over in the 48 years since I got out of Wharton.
Unfortunately, people are confusing what is happening in the stock market (all good) with the state of the American economy (not very good).
Buckle up real tight, it’s going to be a very bumpy ride.
4/17/2013 6:33 am
You are misunderstanding me. The net addition to the Federal Reserve Banks’ portfolio of Treasury and agency securities since 30 September 2024 is $911. The net addition to the stock of federal public debt during that period was around $3,500. The Federal Reserve has purchased just north of a quarter of the additional increment to public debt, not, as you stated, all of it.
The ‘quantitative easing’ programs have been accomplished for the most part by purchasing mortgage backed securities (also on the secondary market), not the issues of the Treasury or other public agencies.
4/17/2013 7:55 am
“The Brooklyn Academy of Music”.
4/17/2013 8:02 am
@ Art Deco
With all due respect, I do understand you.
Since 2009, SOMA has bought 41% of the long bonds The Treasury issued. In February of this year it bought 75%. I should have used the phrase, a large majority of the debt rather than “almost everything.” My apologies. You on the other hand said that I said The Treasury purchased “all of it.”
The fact of the matter is that if you look, as I do, at the Public Debt News published by The U.S. Treasury, you will see what is going on. For instance, on February 14th. of this year, The Treasury issued paper. Three business days later, The Fed bought it all (with the vig going to the primary dealers, so that Harvard’s development office would be happy).
We can quibble about how much The Fed is buying, but now it appears to be a great amount of the supply issued. It’s not monetization, but it is damn close. This will end badly. Always has, as R-R have said in their brilliant book.
ps A far worse case, of course, is Japan which is bust. Fools are buying the paper even when Abe is going to double the money supply. One day the music will stop… and it is not that there will be one chair short, but there will be no chairs.
We see the same thing here in Italy. The banks and the Italian people are almost the only buyers of government paper. They think it is safe. It’s not. One way or other, a haircut, inflation, or wealth confiscation, will devalue it substantially.
4/17/2013 10:24 am
2008 q4 575,579,797,484.50 4508000000 0.78%
2009 q1 427,136,621,101.20 50317000000 11.78%
2009 q2 418,333,860,718.00 2.15352E+11 51.48%
2009 q3 364,553,657,080.40 1.39038E+11 38.14%
2009 q4 401,520,674,000.30 36130000000 9.00%
2010 q1 461,773,418,627.40 9227000000 2.00%
2010 q2 430,350,657,828.70 -3942000000 -0.92%
2010 q3 358,149,276,923.60 24023000000 6.71%
2010 q4 463,592,187,816.80 1.97788E+11 42.66%
2011 q1 244,899,312,091.80 3.02378E+11 123.47%
2011 q2 72,973,109,208.10 2.67824E+11 367.02%
2011 q3 447,252,688,548.70 39159000000 8.76%
2011 q4 432,599,716,893.90 3163000000 0.73%
2012 q1 359,138,635,737.60 -14697000000 -4.09%
2012 q2 274,288,533,135.80 -3375000000 -1.23%
2012 q3 209,874,193,061.40 -26206000000 -12.49%
2012 q4 366,488,643,183.30 11093000000 3.02%
2013 q1 338,648,956,191.20 1.23981E+11 36.61%
Here are three columns of figures. The first column is the net addition to the public debt of the United States during the quarter in question. The second column is the net addition to the Federal Reserve Banks’ portfolio of Treasury and agency securities during the quarter in question. The third is the ratio of the net increase in the size of the Federal Reserve Banks’ porfolios to the net addition to total outstanding debt. You will remark that there are 3 quarters - the 2d quarter of 2009, the 1st quarter of 2011, and the 2d quarter of 2011 - in which the net addition to the Federal Reserve portfolio exceeded half the net addition to total public debt. Over the entire period running from 1 October 2024 to 29 March 2013, that ratio averaged 22.67%. It is difficult to see a general trend as regards the value of these proportions when examining the interstitial figures.
4/17/2013 10:26 am
0.78% 2008 q4
11.78% 2009 q1
51.48% 2009 q2
38.14% 2009 q3
9.00% 2009 q4
2.00% 2010 q1
-0.92% 2010 q2
6.71% 2010 q3
42.66% 2010 q4
123.47% 2011 q1
367.02% 2011 q2
8.76% 2011 q3
0.73% 2011 q4
-4.09% 2012 q1
-1.23% 2012 q2
-12.49% 2012 q3
3.02% 2012 q4
36.61% 2013 q1
Here are the interstitial ratios reformatted.
4/17/2013 11:37 am
What’s your point?
4/17/2013 12:45 pm
Just to remind you, you said:
The Fed is buying almost everything the Treasury issues.
It is not. The Federal Reserves have been purchasing about 22.67% of net issues. There have been two (of 18) quarters when what you said was accurate. Otherwise, it is false.
4/17/2013 1:01 pm
Let’s just end this. You’re right, I’m wrong. That should make you happy.
4/17/2013 1:57 pm
But Bloomberg will be unhappy if we do because they too will be wrong in quoting J P Morgan in december 2012.
“At the same time, the Fed, in its efforts to boost growth, will add about $45 billion of Treasuries a month to the $40 billion in mortgage debt it’s purchasing, effectively absorbing about 90 percent of net new dollar-denominated fixed-income assets, according to JPMorgan Chase & Co.”
4/17/2013 2:55 pm
effectively absorbing about 90 percent of net new dollar-denominated fixed-income assets, according to JPMorgan Chase & Co.”
I do not know for which time period they wish to project, but additions to U.S. Treasury and agency debt have averaged $122 bn a month since September of 2008. This statement by Bloomberg would appear to include not only that but municipal bond issues, corporate bond issues, mortgage backed securities, asset backed securities, and perhaps commercial and municipal paper as well. I do not think that the Federal Reserves $85 bn purchase will comprehend 90% of all that.
4/17/2013 3:15 pm
2013.
You can argue with J P Morgan.
4/17/2013 6:31 pm
You mean you think I think the chap from Bloomberg accurately transcribed what he was told by his source at JP Morgan. I tend to doubt it, but we will see by the end of the year.
4/17/2013 10:17 pm
Hey Sam and Art Deco,
How about a bottom line for those out there, let’s say w. 10 years or so before retirement, ahem, in terms of TIAA-CREF equity/bond;growth/value balance etc.
4/18/2013 2:15 am
@ Art Deco
Look this is very simple. I said at the beginning, “The Fed is buying almost everything the Treasury issues.” The key word, as a former President said, is how do we define “is.” My “is” means now, in the recent past, in the immediate future. POMO, complete capture of certain CUSIPS ( a day, two days, three days after issue), show The Treasury as the overwhelming buyer. You talk about numbers from 2008, 2009 etc. That’s not what I’m talking about. Bernanke is buying hand over first to push rates down and get people to take a lot more risk. This enriches Wall Street, severely penalizes Main Street, and will end badly. And now, most definitively, I’ll leave it at that.
@RT
There is no easy answer. My best would be, first, no bonds. Bonds might do okay in the next year or two (see above), but you’re not getting paid to take the risk during the next ten years. Stocks are pricey, but might offer the best risk/return (and by risk I mean loss of capital, not volatility) over the next ten years. As a value guy all my investing life, if I had to invest in stocks, value wins out because there is more value in value. Would be happy to help you if I can. Let’s do it off line. Best, Sam
Richard, you keep asking difficult questions
4/18/2013 8:54 am
Sam Spektor, if you look at my figures provided (about which you asked “what’s your point”), it includes every quarter since September 2008, including the most recent one. There are two quarters (the 1st and 2d quarters of 2011) where the Federal Reserve banks went on a buying gorge of the sort you described. The Federal Reserve’s holdings of Treasury and agency issues declined during three of the four quarters of 2012. During the 1st quarter of 2013, additions to Federal Reserve holdings amounted to 36.6% of the net increase in outstanding debt. Other than the 1st two quarters of 2011, there has been no time in the last four and a half years when your statement was anywhere near correct, nor is there some sort of secular trend in the pattern of Fed purchases which would lead an ordinary observer to believe it would be correct in the near future.
4/18/2013 9:38 am
Funny thing is, NY really doesn’t love Boston.
4/18/2013 4:53 pm
Published images of bombing suspect do not reveal white,
Timothy McVeigh types I’m afraid…..
4/19/2013 9:38 pm
http://www.theonion.com/articles/study-majority-of-americans-not-informed-enough-to,32124/
4/21/2013 1:24 am
Shockingly the suspects are not Timothy McVeigh-types, but good old fashioned Muslim jihadists. Oh well, maybe next time…
4/21/2013 6:49 am
No question, I was wrong on this one….