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from randall forsyth's column in barron's online today:
[emphasis added-jk]
translating this to itulip terms, the ft is reporting that the fed prefers ej's kind of debt deflation to mish's kind of debt deflation. and it will do whatever is necessary toward that end.
Originally posted by randall forsyth
In Thursday's edition of the Financial Times, the lead story declares: "The U.S. will avoid a serious slump similar to the Japanese recession in 1990s because U.S. policy makers will do whatever it takes to avert such an outcome, the Federal Reserve believes."
Let us agree at the outset that nothing happens for no reason. Then consider this extraordinary sentence from my perspective, one with 35 years in financial journalism as a reporter and an editor.
This is an extraordinary assertion, that America will avoid a prolonged recession comparable to what Japan experienced in the last decade, and indeed continues to be mired in. Moreover, U.S. policy makers will take any and all steps to prevent that outcome.
Firstly, the FT declares that U.S. economic policy makers have decided what is the clear and present danger facing the American economy—a debt deflation similar to what beset Japan in the previous decade. (Debt deflation occurs when liquidation of declining assets to meet debt obligations creates a vicious circle of price declines.)
That is remarkable because as readers take this in, the dollar continued its slide, to below 100 yen to the dollar; oil continued to soar, to over $110 for a barrel of crude; and gold commanded $1,000 an ounce, if only for a short time. There is a clear fork in the road for the economy—between rising prices of tradable goods and a falling value of the dollar, and the asset-price deflation being felt in American homes. And as Yogi Berra advised, when you reach that fork in the road, take it. And the Fed has opted for the latter, to focus on the falling prices of Americans' major asset, the Britsh paper claims.
Even more remarkable is that the FT offers no substantiation about the source of the knowledge about the Fed's purported belief.
There are no references to "sources close to the Fed" or "people familiar with the Fed's thinking." Indeed, the story was, to use the current argot of turning noun into a verb, poorly sourced.
So much so, in fact, that I do not doubt its veracity for a moment.
As an editor, I would never let a story run were I not fully confident in the reporter's sources on the story. As a reporter, I can't imagine getting my story past an editor without convincing her or him that it was solid in its sources, even if they weren't named.
Finally, as an editor, I can't imagine running a story that purports to reveal the Fed's thinking, without citing a source, as the leader on page one were I not fully confident about its veracity in its facts, and also in its interpretation of those facts?.
Indeed, from the standpoint of an editor and a reporter, I can only infer the facts of the FT story were indeed correct or else it would not have run in the form it did, lacking the most rudimentary citation of sources for its assertion. After all, the story did not run under the byline of Jayson Blair; neither was it in a newspaper known for playing fast and loose with the facts.
.....
The key conclusion to be taken away is that the Fed sees its No. 1 problem as debt deflation and will pull out all the stops to counter it. Whether you agree or not, that's apparently the way it is. And the Bear Stearns bailout bears this out.
Let us agree at the outset that nothing happens for no reason. Then consider this extraordinary sentence from my perspective, one with 35 years in financial journalism as a reporter and an editor.
This is an extraordinary assertion, that America will avoid a prolonged recession comparable to what Japan experienced in the last decade, and indeed continues to be mired in. Moreover, U.S. policy makers will take any and all steps to prevent that outcome.
Firstly, the FT declares that U.S. economic policy makers have decided what is the clear and present danger facing the American economy—a debt deflation similar to what beset Japan in the previous decade. (Debt deflation occurs when liquidation of declining assets to meet debt obligations creates a vicious circle of price declines.)
That is remarkable because as readers take this in, the dollar continued its slide, to below 100 yen to the dollar; oil continued to soar, to over $110 for a barrel of crude; and gold commanded $1,000 an ounce, if only for a short time. There is a clear fork in the road for the economy—between rising prices of tradable goods and a falling value of the dollar, and the asset-price deflation being felt in American homes. And as Yogi Berra advised, when you reach that fork in the road, take it. And the Fed has opted for the latter, to focus on the falling prices of Americans' major asset, the Britsh paper claims.
Even more remarkable is that the FT offers no substantiation about the source of the knowledge about the Fed's purported belief.
There are no references to "sources close to the Fed" or "people familiar with the Fed's thinking." Indeed, the story was, to use the current argot of turning noun into a verb, poorly sourced.
So much so, in fact, that I do not doubt its veracity for a moment.
As an editor, I would never let a story run were I not fully confident in the reporter's sources on the story. As a reporter, I can't imagine getting my story past an editor without convincing her or him that it was solid in its sources, even if they weren't named.
Finally, as an editor, I can't imagine running a story that purports to reveal the Fed's thinking, without citing a source, as the leader on page one were I not fully confident about its veracity in its facts, and also in its interpretation of those facts?.
Indeed, from the standpoint of an editor and a reporter, I can only infer the facts of the FT story were indeed correct or else it would not have run in the form it did, lacking the most rudimentary citation of sources for its assertion. After all, the story did not run under the byline of Jayson Blair; neither was it in a newspaper known for playing fast and loose with the facts.
.....
The key conclusion to be taken away is that the Fed sees its No. 1 problem as debt deflation and will pull out all the stops to counter it. Whether you agree or not, that's apparently the way it is. And the Bear Stearns bailout bears this out.
translating this to itulip terms, the ft is reporting that the fed prefers ej's kind of debt deflation to mish's kind of debt deflation. and it will do whatever is necessary toward that end.
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