December 2010
15 posts
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NYT on finding a new economic model after the... →
Not straightforward when most current models haven’t exactly come out of the crisis unscathed…
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Asia tries to tame global capital flows →
Asian countries intervene in currency markets to counter the fall of the dollar.
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Annals of deleveraging, UK edition →
U.K. households continued to pay back equity into their homes in the third quarter of 2010, the Bank of England said Wednesday, reducing the amount available for homeowners to spend.
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Observations on PDA and smartphone innovations →
Contains this gem:
[…] consumers have been happy to trade up to technology that offers more option value.
Finance people are familiar with optionality adding value to financial instruments, but it is indeed an interesting framework to think about product-related proposals as well.
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Banks as Payment Utilities →
This NYT editorial articulates one of several good arguments for regulating the payments processing part of a bank as a utility, like the local water company.
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"The Fed Learned From All That"
The WSJ takes Japan’s BoJ to task for not dealing properly with deflation and the anemic growth of the Japanese economy, although it fails to make any argument with real impact. The article contains this gem though:
The Bank of Japan, with the benefit of hindsight, made some mistakes. It kept rates too low too long, helping to fuel a bubble. It failed to act before deflation infected its...
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Greece Implements Austerity Measures Imposed by EU... →
Adding to the roundup of sovereign debt news, the Greek government managed to pass the budget containing the measures imposed by EU and IMF as a condition to the bail-out loans agreed earlier. The projected budget deficit for 2011 will be 7.4% of GDP, if the government holds its nerve that is, since the Greek unions are already agitating for more strikes and demonstrations against the austerity...
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Dexia May Fail EU Stress Tests →
The turmoil in public finances in some Eurozone countries has a knock-on effect for Eurozone banks like Dexia, who has a large book of public authority financing. The Belgian caretaker government is taking into account that Dexia may fail capital stress tests if some of the PIGS countries default, and is currently assessing how broad its powers are to recapitalise the bank should that event occur.
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Sovereign Funding Gap Recap
Lots of news on government finances today. The Spanish Finance ministry is confident it will meet its 2010 budget deficit target of 6.7% of GDP, and its debt agency easily sold almost €4 billion in bills. This batch of Spanish good news follows closely on Moody’s statement last week that it put Spanish debt ratings on review (login needed), so we can perhaps expect a similar batch of good...
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Blackstone raises $15 billion buy-out fund →
Following on from Monday, Exhibit B that good times are returning to the PE industry (even if they’re not quite there yet.) Again of note:
China and East Asia represented nearly 20% of the new fund’s commitments.
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Bankers' Remuneration Open Season
With the end of the year in sight, bankers’ bonuses are becoming a fashionable topic. Despite the scrutiny, even RBS is trying to persuade UKFI to let it pay cash bonuses again. In all the hubbub, The WSJ was probably not the first place I’d look for a sensible commentary on remuneration levels in the sector, but I found myself largely agreeing with this editorial, unless it was ironic...
Daily Review: Embers of the Financial Crisis
Guardian: Heathrow admits chaos will carry on for days as more snow is forecast
Entering the fourth day of chaos, I reckon that this practical, seemingly almost trivial thing has a greater impact on the attractiveness of London as a pre-eminent financial centre than tax rates and Financial Services regulation. Just ask the French bankers queueing around the block at St Pancras…
Guardian:...
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Daily Review: Mixed Messages
FT: Demand for convertibles set to rebound
After high-yield, the hunt for yield benefits another instrument class, this time convertible bonds.
FT: Apax plans for €11bn buy-out fund
It seems good times are returning for the PE industry. Interesting to note also that some of the biggest investors in the Apax funds are CIC and Singapore’s GIC.
WSJ: Lloyds sees more souring Irish loans...
WikiLeaks cables: RBS chairman said directors... →
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Economists’ Grail - A Post-Crash Model →
Looking beyond the rational agent to explain markets and the economy.