Friday, November 20, 2009

The conundrum that no one seems to see

Fed and treaury officials are examining banks, once again, to see if capital levels are high enough to deal with an asset bubble. Further restrictions may be required.

It is an obvious wisdom that by holding rates so absolutely low the Fed could be causing an asset bubble in securities ranging from U.S. corporate debt to emerging markets equities.

Treasury officials, the Obama admin, and other politicians accuse U.S. banks of not lending enough to build their credit book and expand their capital needs, therefore impeding a recovery.

A conundrum is, of course, a riddle.


Post a Comment

<< Home