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My guess is that while a poor balancesheet might cause restless sleep, it’s the thought of an incorrectly reported balancesheet that brings on night terrors. I’m not against benchmarking and norming. While benchmarks are useful inputs for compensation decisions, they shouldn’t be a straitjacket.
In addition to holding its benchmark rate at 0.25%, the ECB also left the rate it pays on bank deposits unchanged at zero. The ECB balancesheet has plummeted to 23pc of eurozone GDP from a peak of 32pc in July 2012. And of course the US must avoid a rise in the dollar, and Japan must avoid a rise in the Yen. in December.
Historical evidence shows that this rarely happens following a balancesheet recession. Such episodes often coincide with banking crises, which in turn tend to go hand in hand with much deeper recessions – balancesheet recessions – than those that characterise the average business cycle.
While the benchmark deposit rate was officially lowered from 3.00% to 2.75%, the upper limit that banks can pay for deposits remained unchanged at 3.30%. It may seem strange to have both a benchmark rate and a “floating range” that establishes a cap, instead of just setting a cap, as was the case until very recently.
With its balancesheet totalling nearly 1.6 and Bank of England Governor Mark Carney said he could now cut the benchmark rate below the current 0.5 Economic Distortions That's actually a balanced synopsis by Bloomberg as far as it went. The big Swiss banks passed on some of the pain from the Swiss central bank’s -0.75
Had I suggested in 2007 that the Fed balancesheet expansion of $75 billion a month would have been considered "tightening" people would have thought I was nuts. Total credit in the economy (total social financing) showed a 40 per cent rise in November over the prior month and is on course for growth this year of almost 20 per cent.
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