Executive Edge

RIP: 'Most extreme monetary policy in a century'

Jeff Brown, Special to CNBC.com

Recapping the day's news and newsmakers through the lens of CNBC.


The drumroll has finally ended: the Fed's taper is starting. The Federal Open Market Committee announced this afternoon that it is trimming its $85 billion-per-month bond-buying program to $75 billion.

The program, meant to keep long-term interest rates low to stimulate the economy, had been expected to begin winding down in September, but at that point the FOMC felt conditions were still not quite good enough.

Now that the taper is beginning, though slowly, all eyes will be on the reaction of the financial markets. Some experts have attributed much of the stock market's dramatic gains in recent years to the Fed's easy-money policy, and they have warned stock could dive with this prop removed. Others say the strengthening economy would continue to support stocks after the taper started.


"I think...logically, this is what they had to do. ... In this economy, you have to pull back from the most extreme monetary policy in a century. So I think it's overdue. I'm glad to see it."— David Kelly, managing director at JPMorgan Funds

The People's Bank of Bitcoin


The second shoe dropped on bitcoin owners today, with the price plummeting to below $600, from a high over $1,200 in November, after the People's Bank of China barred third-party payment outfits from using the virtual currency. The central bank had earlier warned about volatility and potential fraud.

The third-party agencies provide clearing services for bitcoin exchanges. Without them, trading in China will be much more difficult, undermining what is believed to be the largest market for the currency. Chinese bitcoin exchanges said they expect to continue operating.


"Bitcoin exchanges are legal ... so our business model is still valid but we're under some pressure in terms of being able to work with third-party payment companies. So we're looking for alternatives."—Bobby Lee, the CEO of BTC China, the world's largest bitcoin exchange

JPMorgan's victim complex


Tired of being vilified over failed mortgage securities, JPMorgan Chase is with a lawsuit that says, essentially, "The government made us do it." The suit, filed Tuesday against the Federal Deposit Insurance Corp., seeks upwards of $1 billion to compensate for legal claims that followed JPM's takeover of Washington Mutual in 2008.

The FDIC arranged the deal at the height of the financial crisis, and JPM later faced numerous lawsuits over WaMu mortgage-backed securities that went bad. In the suit, JPM says the FDIC broke a promise to indemnify the bank from damages arising from the acquisition. The FDIC has yet to respond. In effect, JPM wants to get back money from events like settlements with Fannie Mae and Freddie Mac over bad loans they bought from WaMu.

The 99 percent solution


Why aren't your customers spending more? There may be various reasons, of course, but now you can add this to the list: growing income inequality leaves them with less to spend.

A majority of more than three dozen economists surveyed last week said income inequity is undermining the U.S. economy. They note that wealthier people, who are benefiting from healthy raises and big stock market returns, spend less of their additional wealth than do low- and middle-income folk, who account for most consumer spending.


"What you want is a broader spending base. You want more people spending money."—Scott Brown, chief economist at Raymond James

Google's blind spot


Getting blindsided is a fact of life in business, but who saw this coming? Some e-commerce marketers complain that seemingly subtle changes in Gmail have hurt their sales.

One recent change segregates retailers' emails to a separate inbox, resulting in fewer advertising emails being opened. Another puts images in those emails on Google's servers instead of leaving them on the senders' servers, where retailers can get more data about users. Google touted that change as a way to allow recipients to see advertisers' images immediately, without requiring the extra click needed before as a security measure.


"Everyone knows their best customers are at Gmail, so that's a problem. It's less clicks from the most affluent portion of society, so it has a disproportionate impact on the bottom line for retailers."—Quinn Jalli, senior vice president of digital marketing services at Epsilon, a digital marketing firm

By Jeff Brown, Special to CNBC.com