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Wednesday, May 28, 2014
Zero Hedge — PIMCO Rehires Paul McCulley As Its "100 Days Per Year" Chief Economist
He was into examining 'shadow banks' role leading into the crisis...
Now everything seems to be going thru the GSEs and then back to the Treasury either thru the Fed as Fed "earnings" on the MBS portfolio or as "dividends" paid directly to Treasury....
This is not a good scenario as much more balances are leaving the non-govt sector via your typical home mortgage payments now that the Fed has $1.65T MBS and Treasury directly owns the former GSEs...
I'd like to see him look into the future effects of this current "shadow" setup.... it would seem to me that eventually this will not end well, but perhaps not for a while yet...
as via this current setup, and in our current fiscal environment of flat to slightly negative YoY growth in leading govt spending flow, eventually all the current savings is going to have to be returned to the govt... though again it will take a while and there is some expectation of YoY growth in leading govt spending flow for next FY which would help to mitigate the effects of the current setup...
I saw a video of this guy speak not long ago where he spewed a lot of political nonsense: raising taxes on the rich like himself, being an "Obama Man," and a bunch of other non-MMT comments. After seeing these articles, it's clear that it was all politically-motivated so he could get a seat on the Fed. I can't blame the guy, but it does raise some concern.
McCulley gets a new "gig"...
ReplyDeleteHe was into examining 'shadow banks' role leading into the crisis...
Now everything seems to be going thru the GSEs and then back to the Treasury either thru the Fed as Fed "earnings" on the MBS portfolio or as "dividends" paid directly to Treasury....
This is not a good scenario as much more balances are leaving the non-govt sector via your typical home mortgage payments now that the Fed has $1.65T MBS and Treasury directly owns the former GSEs...
I'd like to see him look into the future effects of this current "shadow" setup.... it would seem to me that eventually this will not end well, but perhaps not for a while yet...
as via this current setup, and in our current fiscal environment of flat to slightly negative YoY growth in leading govt spending flow, eventually all the current savings is going to have to be returned to the govt... though again it will take a while and there is some expectation of YoY growth in leading govt spending flow for next FY which would help to mitigate the effects of the current setup...
rsp,
I saw a video of this guy speak not long ago where he spewed a lot of political nonsense: raising taxes on the rich like himself, being an "Obama Man," and a bunch of other non-MMT comments. After seeing these articles, it's clear that it was all politically-motivated so he could get a seat on the Fed. I can't blame the guy, but it does raise some concern.
ReplyDelete