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Posts Tagged ‘Derivatives’

Pat Garofalo – Republicans Lay Out Plan To Slow Walk Derivatives Reform

December 16, 2010 Leave a comment

From the Wonk Room:

Republicans Lay Out Plan To Slow Walk Derivatives Reform

By Pat Garofalo

Incoming House Financial Services Chairman Spencer Bachus (R-AL) told the Birmingham News this week that “in Washington, the view is that the banks are to be regulated, and my view is that Washington and the regulators are there to serve the banks.” And Bachus plans to provide that service by trying to slow down a whole host of measures being implemented under the Dodd-Frank financial reform law.

One of the targets that Bachus has in his sights is derivatives reform, the title of the Dodd-Frank law that aims to bring some prudent regulation to the currently unregulated derivatives market, which played a significant role in the 2008 financial meltdown. During the debate over Dodd-Frank, Bachus had an utterly incoherent position on derivatives reform, but that hasn’t stopped him from saying that derivatives reform is “one of the job-killing provisions of Dodd-Frank that needs to be addressed.”

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Seeking Alpha – Derivatives: The Real Reason Bernanke Is Maintaining Low Interest Rates

November 11, 2010 Leave a comment

From Seeking Alpha:

Derivatives: The Real Reason Bernanke Is Maintaining Low Interest Rates

Debt Bubble Chronicles:

Sometimes it’s worth putting things in context.

The world, particularly the US, has been in a bond bull market for roughly 30 years. During that time, bond prices (black line) rose almost continuously, while interest rates (blue line) dropped.

gpc 11-10-1

So here we are, interest rates are the lowest they’ve been in 30 years, and Ben Bernanke wants to make them fall even lower. His public reasoning is he wants to maintain the housing market and spur investment in business.

But does it?

Interest rates have been at 0% for nearly two years. Despite this, as well as a massive home-buyers tax credit, housing prices have at best stabilized a bit…but any claim that low interest rates have stimulated a housing recovery is flat out bogus.

gpc 11-10-3 housing with zirp

As for low interest rates spurring investment in business, this claim is also nonsense. I don’t remember seeing any headlines about companies increasing their capital expenditures or hiring employees? Instead, big business is putting its excess cash to work with buyback programs.

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