Wednesday, October 29, 2008

Roundup: October 29


The Fed Open Market Committee has cut rates by 50bp to 1%. The People's Bank of China cut rates by 27bp, to 6.66%. Libor has continued to ease, with 3-month dollars posting down 5bp yesterday at 3.42%. Bob McTeer, a former president of the Dallas Fed, tells the NYT's Economix what it's like to attend an FOMC meeting.

The Treasury is reportedly meeting with bankers to discuss extending the TARP to privately held banks. And Reuters reports that the FDIC and Treasury are working on a foreclosure prevention plan to the tune of $600bn.

Hungary has received a $15.7bn loan program from the IMF, while Brussels has prepared another $8.1bn and the World Bank another $1.3bn to support the nation's economy. The policy prescriptions from the IMF for Hungary and Iceland look orthodox: straight Washington consensus measures involving tight fiscal and monetary policy. As Hungary and Iceland both have large liabilities denominated in forex, stabilizing their currencies will be key to an orderly resolution of their crises, but austerity won't be kind to their citizens. Belarus says it is also prepared to liberalize its economy in exchange for a $2bn loan package from the IMF. Willem Buiter and Anne Sibert publish a paper, originally commissioned by Landsbanki, on the policy failures that led to the Icelandic collapse.

The Atlanta Fed's excellent Macroblog posts an introduction to the new Commercial Paper Funding Facility. And Calculated Risk looks at signs that credit card issuers are beginning to tighten credit.

GMAC is reportedly seeking to become a bank holding company in order to receive government support. And the White House is impatient with banks that have received Federal funds and have not expanded lending, as the bailout starts to look like a handout (and cheap funding for the National City deal). Meanwhile, Henry Waxman has written to nine banks to demand information about employee compensation.


The MDC says Morgan Tsvangirai will not attend multiparty talks over Zimbabwe's deadlocked power-sharing agreement if they are held outside Zimbabwe and he is not issued a passport. The Telegraph reports Thabo Mbeki has been unwilling to stand up to Robert Mugabe to drive a deal, but the MDC says the situation is more complex than reported -- disputes aren't restricted to the Ministry of Home Affairs, which controls Zimbabwe's police, as the Telegraph reports.

Poland's government yesterday approved a roadmap for EMU by 2012, but the Kaczynski brothers favor a referendum on the replacement of the zloty by the Euro. Poland is obliged under the terms of its accession to the EU to join EMU, but will have to amend its constitution and peg its currency to the Euro first (under ERM II).

Rebels led by Laurent Nkunda have seized the town of Rutshuru in the Democratic Republic of Congo, near the border with Uganda. Rwanda is denying it is involved. The UN's special envoy to the DRC, Alan Goss, says UN troops are determined to repulse any attack on the provincial capital, Goma. UN troops were unable to extract about 50 aid workers from Rutshuru yesterday. Time reports on protests against the UN mission in Goma on Monday.

A Hong Kong group has written a Firefox add-in which simulates the internet experience behind the Great Firewall.

Did Administration insiders trade on their knowledge of pending CIA-led coups during the Cold War?

An earthquake in Baluchistan killed at least 150 this morning, even as Pakistan is on the brink of running out of foreign exchange.

A Mexican drug cartel may have infiltrated the US embassy in Mexico City.

Alex de Waal continues his series on "How Genocides End," looking at the historical record.


The China Beat runs a great roundup of readings on the melamine scandal in China and the switch from breast-feeding to infant formula that made it possible. China Media Project brings us up to date on domestic media coverage of mainland eggs tainted with melamine originally detected by Hong Kong authorities.

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