MAHALANOBIS & INDIAN ECONOMIC PLANS

March 18, 2008 at 9:43 pm | Posted in Economics, Financial, History, India, Research, Science & Technology, Third World | Leave a comment

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Prasanta Chandra Mahalanobis

Indian Statistical Institute

The Indian Statistical Institute publishes Sankhya, the Indian Journal of Statistics founded by Prasanta Chandra Mahalanobis in 1933. He was its editor till his death.

The journal is now published in two series: A and B. The current Editorial Board of Sankhya consists of:

Editor-in-Chief: P.K. Sen
Series A Editors: K.B. Athreya, Alok Goswami, Soumendra Nath Lahiri
Series B Editors: Malay Ghosh, Bimal K. Sinha, Ayanendranath Basu.

Sankhya publishes research articles in the broad areas of Theoretical Statistics, Probability and Applied Statistics. Series A primarily covers Theoretical Statistics and Probability (including Stochastic Processes). Series B primarily covers all areas of Applied Statistics (including Applied Probability, Applied Stochastic Processes, Econometrics and Statistical Computing). Reviews and discussion articles in areas of current research activity are also published. Each volume has four parts – two in Series A and two in Series B. Series A issues come out in February and August while Series B issues come out in May and November.

Contact:

Address:

Sankhya
Indian Statistical Institute
203, B.T.Road,
Kolkata-700108,
India

Fax:
91 33 2577 6035
91 33 2577 3071

Email:
sankhya_a@isical.ac.in sankhya (For Submission to Series A)
sankhya_b@isical.ac.in sankhya (For Submission to Series B)
sank_pub@isical.ac.in sankhya (Post acceptance)

Indian Statistical Institute (ISI), a unique institution devoted to the research, teaching and application of statistics, natural sciences and social sciences, was founded by Professor P.C. Mahalanobis in Kolkata on 17th December, 1931, the institute gained the status of an Institution of National Importance by an act of the Indian Parliament in 1959.

The Headquarters of ISI is located in the northern fringe of the metropolis of Kolkata. Additionally, there are two Centres located in Delhi and Bangalore. Research in Statistics and related disciplines is the primary activity of the Institute. Teaching activities are undertaken mainly in Kolkata, Delhi and Bangalore. Offices of the Institute located in several other cities in India are primarily engaged in projects and consultancy in Statistical Quality Control and Operations Research.

KOLKATAhttp://www.isical.ac.in/

HEADQUARTERS

Indian Statistical Institute

203 Barrackpore Trunk Road,
Kolkata 700108,
India

033-25752001 (Operator)

25752500 (Admissions)
2575-3304 (Director’s Office)
25778597 (Guest House)

033-25776680 (General)
25776925 (Director’s Office)

postmaster(at)

Prasanta Chandra Mahalanobis

Prasanta Chandra Mahalanobis

June 29, 1893June 28, 1972

Prasanta Chandra Mahalanobis (June 29, 1893June 28, 1972) was an Indian scientist and applied statistician. He is best known for the Mahalanobis distance, a statistical measure. He did pioneering work on anthropometric variation in India. He founded the Indian Statistical Institute, and contributed to large scale sample surveys.

Biography

His father, Prabodh Chandra, was an active member of the Sadharan Brahmo Samaj. His mother, Nirodbasini, belonged to a family of considerable academic achievements. He graduated in physics in 1912 from the Presidency College, Kolkata and completed Tripos at King’s College, Cambridge. He then returned to Calcutta.

Inspired by Biometrika and mentored by Acharya Brajendra Nath Seal he started his statistical work. Initially he worked on analyzing university exam results, anthropometric measurements on Anglo-Indians of Calcutta and some metrological problems. He also worked as a meteorologist for some time. In 1924, when he was working on the probable error of results of agricultural experiments, he met Ronald Fisher, with whom he established a life-long friendship. He also worked on schemes to prevent floods.

His most important contributions are related to large scale sample surveys. He introduced the concept of pilot surveys and advocated the usefulness of sampling methods. His name is also associated with the scale free multivariate distance measure, the Mahalanobis distance. He founded the Indian Statistical Institute on 17 December, 1931.

In later life, he contributed prominently to newly independent India’s five-year plans starting from the second. His variant of Wassily Leontief‘s Input-output model, the Mahalanobis model, was employed in the Second Five Year Plan, which worked towards the rapid industrialization of India and with other colleagues at his institute, he played a key role in the development of a statistical infrastructure.

He also had an abiding interest in cultural pursuits and served as secretary to Rabindranath Tagore, particularly during the latter’s foreign travels, and also worked at his Visva-Bharati University, for some time. He received one of the highest civilian awards, the Padma Vibhushan from the Government of India for his contribution to science and services to the country.

He died on 28 June, 1972, a day before his seventy-ninth birthday. Even at this age, he was still active doing research work and discharging his duties as the Secretary and Director of the Indian Statistical Institute and as the Honorary Statistical Advisor to the Cabinet of the Government of India.

The government of India has decided to celebrate his birthday, 29 June, as National Statistical Day. [1]

Awards

Biographies

  • Rao, C.R. (1973), Prasanta Chandra Mahalanobis, 1893-1972. Biographical Memoirs of Fellows of The Royal Society, 19, 455-492.

  • Rudra, A. (1996), Prasanta Chandra Mahalanobis: A Biography. Oxford University

Prasanta Chandra Mahalanobis

June 29, 1893June 28, 1972

    REAL ESTATE LOGISTICS FORUM: JUNE 25 2008 CHICAGO

    March 18, 2008 at 6:51 pm | Posted in Economics, Financial, Globalization, Research, USA, World-system | Leave a comment

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    Invitation to the 2nd Annual

    Real Estate Logistics Forum

    JoC Conferences (events@joc.com)

    Tue 3/18/08

    events@joc.com

    Discover the key global logistics and import trends that leading national industrial real estate developers and REITs are following to gain a strategic advantage and identify the next growth markets. Join industry experts for a two-day forum in Chicago, Illinois to examine every element of the international supply chain, including transportation global logistics and the port side of the international trade industry, and how it all impacts your real estate decisions.

    2008 TOPICS INCLUDE:

    • Are East Coast Ports Rising to the Challenge? – Port Focus Panel

    • Bigger Ships, Bigger Loads – Are the U.S. Ports Ready?

    • Intermodal Terminals and Rail Corridors Under Development – Who, What, When, Where, and Why?

    • Goods Movement; the Fundamentals Are Changing – Supply Chain 1.01

    • Congestion Plagues Chicago Infrastructure – Is Short-line Rail the Answer?

    • What Constitutes a “Prime” Distribution Location?

    • Reconsidering a Distribution Strategy: Case Studies

    • Outsourcing Transportation and Distribution Services – A Growing Trend

    • The Role of Air Cargo and its Impact on Distribution and Logistics Services

    Official Show Website: www.joc.com/conferences/relf/

    Invitation to the 2nd Annual Real Estate

    Logistics Forum

    JoC Conferences (events@joc.com)

    events@joc.com

    Tue 3/18/08

    Please contact Julie Wallner at (209) 369-0133 or jwallner@joc.com for more information.

    WHEN:

    June 25, 2008 7:30 AM-

    June 26, 2008 5:00 PM

    Central Time Zone

    WHERE:

    The Westin Lombard Yorktown Center

    70 Yorktown Center

    Lombard, IL 60148

    The Journal of Commerce Conferences

    Tue 3/18/08

    PHILADELPHIA FED INDEXES

    March 18, 2008 at 6:11 pm | Posted in Economics, Financial, Research, USA | Leave a comment

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    Coincident Indexes Released – FRB Philadelphia

    Federal Reserve Bank of Philadelphia

    Phil.Webmaster@philadelphiafed.org

    Tue 3/18/08

    Dear Subscriber:

    The following information is now available on the Philadelphia Fed’s website:

    Coincident Indexes Released

    The Federal Reserve Bank of Philadelphia released the coincident indexes for the 50 states.

    http://www.philadelphiafed.org/econ/indexes/coincident/

    Your comments, questions, and suggestions:

    Please e-mail us at Phil.Webmaster@phil.frb.org.

    Coincident Indexes Released – FRB Philadelphia

    Phil.Webmaster@philadelphiafed.org

    Tue 3/18/08

     


    AHMAD CHALABI & THE NEOCON WAR IN IRAQ : ARAM ROSTON BOOK

    March 18, 2008 at 5:27 am | Posted in Arabs, Books, History, Iraq, Israel, Middle East, Military, Zionism | Leave a comment

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    The Man Who Pushed America

    to War: The Extraordinary

    Life, Adventures and Obsessions of

    Ahmad Chalabi

    Aram Roston (Author)

    Editorial Reviews

    Book Description

    From an Emmy award-winning investigative reporter–an explosive biography that tells the untold story of the man most responsible for the war in Iraq.

    Ahmad Chalabi literally changed the world. If anyone were to get the most credit for pushing the United States to war in Iraq, Chalabi, a wealthy exile who spent most of his life out of Iraq, would certainly be a leading contender.

    A convicted felon and a fugitive from justice in Jordan, Chalabi managed to charm and influence the top leaders of the United States. Those leaders gave him United States government money, which he would, in turn, use to lobby them. He then rode America’s immense power, harnessing it to his interests. More so than President George W. Bush or Vice President Richard Cheney, Chalabi and his followers steered the United States toward its fateful position in Iraq.

    This is an extraordinary investigative biography, by a brilliant young Emmy award-winning journalist who works for NBC’s Investigative Unit, telling the story of Chalabi as a gifted MIT mathematician, to his misadventures in the Middle East, to the invasion of Iraq, which he himself took part in the most theatrical way, posing in the desert with a rag-tag army of Iraqis.

    About the Author
    Aram Roston is a journalist who has covered Iraq, Chalabi, and the reconstruction of Iraq for NBC “Nightly News.” An award-winning investigative reporter based in Washington, D.C., he has also written for GQ, Mother Jones, the New York Times Magazine, Washington Monthly, The Nation, Maclean’s, and the Walrus. He has reported internationally from Iraq, Iran, Afghanistan, Colombia, and Liberia. This is his first book.

    Product Details:

    • Hardcover: 369 pages

    • Publisher: Nation Books (March 3, 2008)

    • Language: English

    • ISBN-10: 1568583532

    • ISBN-13: 978-1568583532

    Marc Zell Douglas Feith & Chalabi Family

    L. Marc Zell (born February 24, 1953) is a Washington, DC born attorney, currently based in Israel.

    Graduated with an AB from Princeton University (1974) in Germanic Languages and Literatures with a concentration in theoretical linguistics and a JD with honors from University of Maryland at Baltimore (1977). After clerking at the Maryland Court of Appeals for a year (19771978), Zell joined Fried, Frank, Harris, Shriver & Kampelman as an associate (19781981).

    In 1986 he formed the law firm Feith & Zell, P.C. with Douglas Feith, who served later as Undersecretary of Defense for Policy from 2001-2005.

    In the 1980s Zell developed an interest in Zionism and after a series of visits to Israel, moved his family to the Jewish settlement Alon Shevut in the West Bank in 1988. [1]

    After Douglas Feith left law practice to work at the Pentagon in 2001, Zell partnered with Bernel Goldberg to form Zell, Goldberg & Co with offices in Jerusalem and Tel Aviv and affiliate offices in Washington, DC, Russia and Europe.

    In 2003 he joined the Iraqi International Law Group, the first international law firm in Iraq since the founding of the Republic, as Partner for International Marketing. [2][3]

    Iraqi International Law Group (IILG)

    IILG is surprisingly modest about the family connections of its founder, Salem Chalabi. The website doesn’t mention that he is a nephew of Ahmed Chalabi, who just happened to be the leader of the US-backed Iraqi National Congress (INC), a member of the governing council and one-time president of Iraq. Uncle Ahmed, a former banker in Jordan, fled the country in 1989 before he could be arrested in connection with a $200 million financial scandal. He was later tried in his absence and sentenced by a Jordanian court to 22 years in prison on 31 charges of embezzlement, theft, misuse of depositor funds and currency speculation.

    Ahmed Chalabi found strong support in the Pentagon and US Congress, which generously provided funds in support of his opposition to Saddam Hussein through the INC.

    One of Ahmed Chalabi’s staunchest supporters in Washington is Douglas Feith, a former lawyer who was third in the Pentagon pecking order. The pair worked closely together in the run-up to war, with Chalabi providing “intelligence” about Iraqi weapons of mass destruction (much of which proved to be wrong) and boasting that he had a secret network inside Iraq which could be harnessed to help run the country once the US invaded.

    In the event, the network did not materialise and consequently, Feith and Chalabi share a large part of the blame for the present mess.

    Feith, meanwhile, has close links to the Israeli Likud party and the country’s prime minister, Ariel Sharon. He was one of the authors of the famous Clean Break document, published in 1996, which proposed overthrowing Saddam Hussein as the first step towards reshaping Israel’s “strategic environment” in the Middle East

    Feith has also argued that Jewish settlements on occupied Palestinian land are lawful – contrary to the overwhelming majority of legal opinion around the world – and has latterly been promoting the idea of supplying Iraqi oil to Israel via a pipeline.

    Ahmed Chalabi’s nephew, Salem, was a peripheral figure in the political machinations over Iraq.

    Shortly before the war, Salem Chalabi took part in a conference on bringing democracy to Iraq and pushed for a post-war truth and reconciliation commission on the South African model.

    Later, during the invasion, the Pentagon sought to appoint him as adviser to the ministry of justice, working in Jay Garner’s ill-fated project to take over the administration of Iraq.

    Salem’s dynamic new law firm is currently operating from suites 1632-1634 of Baghdad’s Palestine Hotel. This, according to the website, is a temporary arrangement “while we renovate and restore our permanent office building in the centrally situated Harthiyya district”.

    Although none of the “largest corporations and institutions on the planet” have yet identified themselves as Salem Chalabi’s clients, IILG appears to be part of a carefully-constructed network aimed at channelling business into Iraq.

    Interestingly, the firm’s website is not registered in Salem Chalabi’s name but in the name of Marc Zell, whose address is given as Suite 716, 1800 K Street, Washington. That is the address of the Washington office of Zell, Goldberg &Co, which claims to be “one of Israel’s fastest-growing business-oriented law firms”, and the related FANDZ International Law Group.

    The unusual name “FANDZ” was concocted from “F and Z”, the Z being Marc Zell and the F being Douglas Feith. The two men were law partners until 2001, when Feith took up his Pentagon post as undersecretary of defence for policy.

    According to Salem Chalabi, quoted in the National Journal, Mr Zell is IILG’s “marketing consultant” and has been contacting US law firms in Washington and New York to ask if they have clients interested in doing business in Iraq.

    This ties in with a announcements by Zell, Goldberg & Co that it set up a “task force” dealing with issues and opportunities relating to the “recently ended” war in Iraq.

    One of its activities, the announcement said, was to assist US companies “in their relations with the United States government in connection with Iraqi reconstruction projects as prime contractors and consultants”.

    Zell Goldberg & Co made no mention of a connection with Salem Chalabi or IILG in Iraq, but said it was working in the US with the Federal Market Group. This organisation – whose website is adorned with a “God bless America” logo – specialises in helping companies to win US government contracts and claims a 90 per cent success rate. With friends like these, it will not be surprising to find Salem Chalabi moving out of the Palestine Hotel and into his newly restored headquarters in Harthiyya district sooner than expected.

    The neocon idea represented by Feith was to “mayhemize” the Middle East with Iraq as the “sweet spot” in this neocon/Zionist engineered turmoil.

    The Chalabis would gain wealth and power and would recognize Israel, and construct a Mosul-Haifa oil pipeline.

    Feith’s “other Chalabi” was to be Manucher Ghorbanifar from Iran, a global supercrook.

    Thus Feith and Zell and the neocons were looking for a “trifecta” where Israel and wealth and power would be fused as Richard Perle and the other American Israeli agents have been doing for decades.

    NEW YORK FED RESEARCH

    March 18, 2008 at 12:44 am | Posted in Economics, Financial, Globalization, Research, USA, World-system | Leave a comment

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    New Research from the New York Fed: 3/17/08

    Federal Reserve Bank of NY

    Research Publications

    (frbnyrmag1@peach.ease.lsoft.com)

    on behalf of Karen Carter

    (Karen.Carter@NY.FRB.ORG)

    Federal Reserve Bank of New

    York

    Electronic Research Alert

    March 17, 2008

    Mon 3/17/08

    Karen.Carter@NY.FRB.ORG

    FRBNYRMAG1@PEACH.EASE.LSOFT.COM

    Featured Research:
    ——————————————–
    1) “Understanding the Securitization of Subprime Mortgage Credit,” by Adam B. Ashcraft and Til Schuermann (Staff Report no. 318, March 2008)
    2) “Settlement Delays in the Money Market,” by Leonardo Bartolini, Spence Hilton, and James McAndrews (Staff Report no. 319, March 2008)

    1) “Understanding the Securitization of Subprime Mortgage Credit,” by Adam B. Ashcraft and Til Schuermann
    The authors provide an overview of the subprime mortgage securitization process and the seven key informational frictions that arise. Ashcraft and Schuermann discuss the ways that market participants work to minimize these frictions and speculate on how this process broke down. They continue with a complete picture of the subprime borrower and the subprime loan, discussing both predatory borrowing and predatory lending. The authors present the key structural features of a typical subprime securitization, document how rating agencies assign credit ratings to mortgage-backed securities, and outline how these agencies monitor the performance of mortgage pools over time. Throughout the paper, Ashcraft and Schuermann draw upon the example of a mortgage pool securitized by New Century Financial during 2006.
    Read the full report:
    http://www.newyorkfed.org/research/staff_reports/sr318.html

    Adam B. Ashcraft’s web page:
    http://www.newyorkfed.org/research/economists/ashcraft/index.html

    Til Schuermann’s web page
    http://www.newyorkfed.org/research/economists/schuermann/index.html

    Other Research by Adam B. Ashcraft
    ——————————————–
    “The Bankruptcy Abuse Prevention and Consumer Protection Act: Means-Testing or Mean Spirited?” with Astrid A. Dick and Donald P. Morgan (Staff Report no. 279, March 2007)
    Thousands of U.S. households filed for bankruptcy just before the bankruptcy law changed in 2005. That rush-to-file was more pronounced, the authors find, in states with more generous bankruptcy exemptions and lower credit scores. Ashcraft, Dick, and Morgan take that finding as evidence that the new law effectively reduces exemptions, which in turn should reduce the “demand” for bankruptcy and the resulting losses to suppliers of consumer credit. They expect the savings to suppliers will be shared with borrowers by way of lower credit card rates, although credit card spreads have not yet fallen. If cheaper credit is the upside of the new law, the downside is reduced bankruptcy “insurance” against bad luck. The overall impact of the new law on the average household depends on how one weighs those two sides.
    Read the full report:
    http://www.newyorkfed.org/research/staff_reports/sr279.html

    Other Research by Til Schuermann
    ———————————————
    “Visible and Hidden Risk Factors for Banks,” with Kevin J. Stiroh (Staff Report no. 252, May 2006)
    This paper examines the common factors that drive the returns of U.S. bank holding companies from 1997 to 2005. The authors compare a range of market models from a basic one-factor model to a nine-factor model that includes the standard Fama-French factors and additional factors thought to be particularly relevant for banks such as interest and credit variables. Schuermann and Stiroh show that the market factor clearly dominates in explaining bank returns, followed by the Fama-French factors. The bank-specific factors are not informative, particularly for the largest banks, which take advantage of protection in the form of interest rate and credit derivatives. Even in their broadest model, however, considerable residual variation remains, with the mean pairwise correlation of residuals for the largest banks near 0.25. This finding suggests that important hidden factors remain. A principal component analysis shows that this residual variance is relatively diffuse, although the largest banks do tend to load in the same direction on the first component. Relative to the returns of large firms in other sectors, bank returns are relatively well explained with standard risk factors, and both the residual correlation and degree of factor loading agreement are not particularly large. These results have clear implications both for public policymakers seeking to quantify those shared bank exposures that create systemic risk and to portfolio managers seeking to devise optimal diversification strategies.
    Read the full report:
    http://www.newyorkfed.org/research/staff_reports/sr252.html

    2) “Settlement Delays in the Money Market,” by Leonardo Bartolini, Spence Hilton, and James McAndrews
    The authors track 38,000 money market trades from execution to delivery and return to provide a first empirical analysis of settlement delays in financial markets. In line with predictions from recent models showing that financial claims are settled strategically, they document a tendency by lenders to delay delivery of loaned funds until the afternoon hours. Bartolini, Hilton, and McAndrews find that banks follow a simple strategy to manage the risk of account overdrafts–delaying the settlement of large payments relative to that of small payments. More sophisticated strategies, such as increasing settlement delays when own liquid balances are low and when dealing with small trading partners, play a marginal role. The authors also find evidence of strategic delay in the return of borrowed funds, although they can explain a smaller fraction of the dispersion in delays in the return than in the delivery leg of money market lending.
    Read the full report:
    http://www.newyorkfed.org/research/staff_reports/sr319.html

    Leonardo Bartolini’s web page:
    http://www.newyorkfed.org/research/economists/bartolini/index.html

    James McAndrews’ web page:
    http://www.newyorkfed.org/research/economists/mcandrews/index.html

    Other Research by Leonardo Bartolini
    ——————————————–­­­­­­­­­­­­­­—–
    “Money Market Integration,” with Spence Hilton and Alessandro Prati (Staff Report no. 227, October 2005)
    The authors use transaction-level data and detailed modeling of the high-frequency behavior of federal funds-Eurodollar yield spreads to provide evidence of strong integration between the federal funds and Eurodollar markets, the two core components of the dollar money market. Their results contrast with previous research indicating that these two markets are segmented, showing them to be well integrated even at high (intraday) frequency. Bartolini, Hilton, and Prati document several patterns in the behavior of federal funds-Eurodollar spreads, including liquidity effects from trading volume on yield spreads’ volatility. Their analysis supports the view that targeting federal funds rates alone is sufficient to stabilize rates in the (much larger) dollar money market as a whole.
    Read the full report:
    http://www.newyorkfed.org/research/staff_reports/sr227.html

    Other Research by James McAndrews
    ——————————————–­­­­­­­­­­­­­­—–
    “Alternative Arrangements for the Distribution of Intraday Liquidity” (Current Issues in Economics and Finance, April 2006)
    In July 2006, the Federal Reserve will end its provision of free daylight credit to government-sponsored enterprises (GSEs), financial services corporations created by Congress to establish a secondary market in mortgages and other consumer loans. To meet their payments to investors, the GSEs can use a wide variety of alternative funding arrangements. While such arrangements can in theory distribute liquidity efficiently, a decline in the intraday funds in circulation following the Fed’s move may lead to some slowing in payments by both the GSEs and commercial banks.
    Read the full article:
    http://www.newyorkfed.org/research/current_issues/ci12-3.html

    Back issues of Staff Reports:
    http://www.newyorkfed.org/research/staff_reports/index.html

    Related Information
    ——————————————–
    U.S. and Global Economies Charts, updated every Wednesday:
    http://www.newyorkfed.org/research/national_economy/nationalindicators.html
    http://www.newyorkfed.org/research/global_economy/globalindicators.html

    Research Home Page
    ——————————————–
    http://www.newyorkfed.org/research/index.html

    About This E-Mail
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    By subscribing to the service and providing your e-mail address, you agree to waive any claim against the Federal Reserve Bank of New York for any messages that you may receive by reason of your subscription to this service and/or any resultant harm to you and/or your computer from receipt of such messages. The Federal Reserve Bank of New York assumes no responsibility for any inaccuracies in any messages you may receive as a result of your subscription to this service.

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    FEDERAL RESERVE: TERM AUCTION FACILITY

    March 18, 2008 at 12:19 am | Posted in Economics, Financial, Globalization, Research, USA, World-system | Leave a comment

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    Term auction facility

    Federal Reserve

    The Term Auction Facility is an instrument of monetary policy, introduced by the Federal Reserve to increase liquidity in United States financial markets. Although first instated as a temporary policy, as of 21 December 2007, the Fed will continue to hold bi-weekly auctions through the TAF.[1]

    Credit Crunch

    Early in August, 2007, subprime crisis began to show in international finance. Two banks in Europe were the first to go into crisis and many more both in the US and abroad were presenting subprime lending on their balance sheets. The ECB began distributing funds through a fine-tuning operation. By August 9th, the ECB lent €95 billion ($112 billion in the days conversion) to EU banks, and the Fed distributed $12 billion through repo operations.[2][3]

    Creation of Facility

    On December 11th, 2007, the Fed lowered its discount rate to 4.75%, but due to the lack of borrowing from the discount window in the previous weeks, and a lack of liquidity after the 2007 credit crunch, the Federal Reserve and several other central banks opened their short term lending windows, hoping to alleviate the strain on interbank lending markets. In the Federal Funds market the Fed, along with the Bank of Canada, Bank of England, the ECB and the Swiss National Bank, decided to implement a new monetary instrument the following day. This program, known in the US as the Term Auction Facility, enables the Fed to auction a set amount of funds to depository institutions, against a wide range of collateral. Auctions held on December 17th and December 20th released $20 billion each in the form of 28- and 35-day loans, respectively.[4] On the December 17th Auction, bids began at 4.17% and ended with a rate of 4.65%, substantially below the discount rate. The Fed received over $63 billion in bids and released the full $20 billion to 93 different institutions.[5]

    As part of an effort to increase dollar liquidity around the world, the Fed coordinated with other central banks to lend simultaneously to depository institutions outside of its jurisdiction, which it cannot lend to directly. On December 11th, the ECB held a simultaneous auction, in dollars, and awarded $10 billion at the rate determined by the Fed’s auction.[6] To facilitate the provision of U.S.-dollar liquidity by these other central banks, the Fed arranged currency swap lines with the ECB and the SNB in amounts of $20 billion and $4 billion, respectively.

    The Fed is using the TAF as a trial of this type of monetary tool. Depending on its success and usefulness, the Fed may begin to use it as part of a more permanent program.

    Sources

    1. Federal Reserve Press Release

    2. The Street 9 August 2007

    3. International Herald Tribune 10 August 2007

    4. [FRB: Press Release Dec 12th http://www.federalreserve.gov/newsevents/press/monetary/20071212a.htm]

    5. [FRB: Press Release Dec 19th http://www.federalreserve.gov/newsevents/press/monetary/20071219c.htm]

    6. [ECB: Tender operation allotment http://www.ecb.int/mopo/implement/omo/html/TAF07001_all.en.html]

    Term auction facility

    Federal Reserve

     


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