Secondary Sources: Fed Watch, Fisher, Capital Gains
WSJ ECONOMICS
A roundup of economic news from around the Web.
# Fed Watch: In his latest column on the Economist's View blog, Tim Duy says an eerie calm is setting in around the Fed. "The Fed's hesitation to continue lowering interest rates, and instead shifting its entire focus to reliquifying credit markets, looks sustainable as the economy slides into economic stagnation. This is especially the case as still rising commodity prices — particularly oil — keep sufficient fear of inflation alive at the FOMC to offset the weak job market and as the Fed waits to see the impact of the stimulus checks. I would not become complacent, however. The US position remains precarious, with a delicate combination of monetary and fiscal policy, combined with substantial external support, keeping the train on the tracks. It is simply far too easy to envision a scenario — excessive US stimulus coupled with a loss of foreign support — that switches the train to a broken track."
# Fisher on Rates: Market News International interviewed Dallas Fed President Richard Fisher, who said it would take another serious bout of economic turmoil to convince him that the Fed should cut rates further. The view isn't necessarily surprising. Fisher has dissented from three consecutive interest-rate cuts, preferring no change. "Personally, for me to change course, given that I stopped [supporting rate cuts] at 3.5%, I'd have to see a very dramatic economic slowdown going on beyond what I'm already discounting," said Fisher. "I'm already discounting significant anemia."
# Capital Gains: Pete Davis writes on the Capital Gains and Games blog that capital gains jumped under Bill Clinton and fell under George W. Bush for reasons that had little to do with either. "The conclusion I have drawn as a longtime tax economist is that capital gains revenues fluctuate wildly without regard to short run tax policy or to who is president. Two earlier Congressional Budget Office capital gains studies in 2006 and in 2002 make this point. CBO concluded in the 2006 study that about half of the 2004 surge in capital gains realizations remained unexplained. CBO concluded in the 2002 study that 'the relationship of realizations and receipts to gains tax rates is neither predictable or obvious.'"
Compiled by Phil Izzo blogs.wsj.com |
