Henry Paulson is not following the sage counsel of TS Eliot and is instead going out with a bang rather than Eliot’s whimper. The Treasury announced today that they will auction $30 billion 3 year notes on Wednesday. The increase in issuance here is stunning. The 3 year was reintroduced in November at $25 billion. In its previous reincarnation it was a quarterly issue. The US government has a desperate need for cash and in ...

Nearly everyone is hopping on the Keynesian bandwagon as the urge to try something, anything, to halt this economic slide is simply overpowering.Please consider Fed’s Yellen Supports ‘Substantial’ Economic Stimulus.The U.S. economy faces a “serious risk” of stagnating for an extended period of time and “it’s worth pulling out all the stops” on fiscal stimulus, said Federal Reserve Bank of San Francisco President Janet Yellen.“The current downturn is likely to be far longer and deeper ...

For this year.The company said it won’t finance “higher-risk transactions,” instead concentrating on prime customers who are more likely to repay using “responsible credit standards.” The relaxed policy “will allow us to return to more normal levels of financing volume, and should help in efforts to stabilize the U.S. auto industry,” GMAC President Bill Muir said in today’s statement.Ok.What constitutes a prime customer? This means that only the best credit risks will get financed at ...

A useful piece at the Wall Street Journal discusses the poor prospects for the US banking industry, which will in aggregate post a fourth quarter loss despite heroic interventions by the Fed and Treasury. The article makes much of recent and almost-certain-to-get-worse bank credit losses as the economy continues to deteriorate. Commercial real estate vacancies, particularly of retail space, are starting to mount. Construction loans were an important business for local and regional banks; a ...

That has gone just below 1.0.What is this?I could go through the derivation of how money supply works in a fractional reserve monetary system (any), but won't, because most readers would have their eyes glaze over.The important part of this graph is what it denotes. Bernanke has lost control of N (or velocity), which is the actual knob that he is trying to diddle when borrowing rates are changed (and in fact its the market ...