The author has been described by News Ltd as an "iconoclast", "Svengali", a pollie's "economist muse", and "pungently accurate". Fairfax says he is a "Renaissance man" and "one of Australia’s most respected analysts." Stephen Koukoulas concludes that he is "85% right", and "would make a great Opposition leader." Terry McCrann claims the author thinks "‘nuance’ is a trendy village in the south of France", but can be "scintillating" when he thinks "clearly". The ACTU reckons he’s "an enigma wrapped in a Bloomberg terminal, wrapped in some apparently well-honed abs."

Monday, September 27, 2010

Uncertainty not illiquidity killing US economy

In meeting US fund managers, I am regularly told that the problem is not a lack of funding--corporates and banks have bucketloads of cash--but rather uncertainty. That is, banks don't know who they will be regulated by, and how the finance they extend will be treated by regulators. This suggests that the answer to the US's problems is not another US$1 trillion of 'quantitative easing' (see below) by the Fed to reduce already low reinterest rates, but rather regulatory certainty that will give banks and companies the confidence to lend and invest. This thesis was rather anecdotal until I read an article in The Economist that says something very similar, albeit with an interesting focus on corporate America as opposed to the banking system.
at 12:16 PM