Daniel H. Neilson's blog

When $3 trillion is not enough

I interviewed Victor Shih, political scientist at Northwestern, at INET's Bretton Woods conference earlier this year. The interview, his presentation, and the paper have since become one of my key reference points for understanding the state of China's financial system. Read more

Wanted to buy: $2T in safe assets

Two FT pieces by Tracy Alloway caught my eye this week: this article from Tuesday's print edition, and this post on Alphaville today. The phrase "collateral upgrades" from the former caught my eye: this is the latest of several—quite diverse—variations on a theme that have played out in recent years.

The first variation comes from the global supply of savings. On this topic I think of Martin Wolf's Fixing Global Finance. For the issue at hand, Anton Brender and Florence Pisani's Globalised Finance and its Collapse (especially chapter 4) is even more relevant. Both note that the economic policies of developing countries, especially China, led them to generate a large supply of savings. Holders of these savings sought to minimize credit and liquidity risk, and as emphasized by Brender and Pisani, financial innovation allowed them to do so. Read more

A PBoC balance sheet primer

Chinese property: a money view

The Chinese property market may finally be boiling over; there are certainly enough signs that the bubble is ready to burst. I won't try to call the peak. What's more useful is to try to understand all of the moving parts, and a money view of the problem lets us do exactly that. Read more

Single-tranche open market operations: there's a bigger picture

We continue to learn about what the Fed did during the crisis. Read more

International money, take 1

As a matter of accounting, if the U.S. as a whole buys from the rest of the world more than it sells to the rest of the world, then it must, on net, also be borrowing from the rest of the world. Perry has previously put this into a money-view context. Read more

Shadow money, still contracting

These days, one hears worries of impending inflation. Read more

Desperately seeking collateral

The Term Securities Lending Facility (TSLF) was one of the bigger (in dollar terms) emergency programs implemented by the Fed during the crisis of 2008. With increasing data available about how the programs were run, we are learning more about how about the financial system worked before the crisis, and how exactly it broke.

My last post gave some context for TSLF; this one uncovers more of the details. Read more

TSLF and the price of good collateral

In my last post I argued that if we want a Fed that is ready for the next crisis, we had better understand what happened to it during the last one. Perry, Dave Grad and I have just wrapped up a paper on the subject. Now I'm using the liquidity program transaction data, released in December 2010, to flesh out that work. I will post interim results here.

TSLF is a good place to start. Read more

The Future of the Fed

The Fed changed over the course of the global financial crisis. This graph tells a big part of the story. It's the asset side of the Federal Reserve's balance sheet, from just before the crisis through the present. Read more