Education, education, education
Consider three recent news items. We begin with France:
Sarkozy unveils €35bn ‘big loan’ boost for French universities and museums
Then two from the UK. First
Peter Mandelson cuts higher education funding by £500M and proposes shorter, cheaper ‘degrees’.
(The original letter can be found here.) And –
Call for universities to charge well-off students £30,000 a [...]
Choosing Rita
There were some treats from the BBC this Christmas: one of my favourites was a delightful production of Willy Russell’s Educating Rita on Radio 4, with Bill Nighy and Laura Dos Santos. Much of the dialogue is great, but one section particularly resonated with me. Rita is talking about her husband:
He thinks we’ve [...]
How much for that Coco in the window?
An interesting observation from Financial Crookery about the Lloyds Cocos:
the 15% ECNs were indicated at 122/123 on minimal volumes, compared to 110/112 for the previous 13% series. Absent the EU-mandated 2 year coupon pass for the 13% security for “burden sharing”, the 13% notes would have been trading around 132/133, so credit markets value the [...]
10 predictions to end the year
Posting will probably be somewhere between light and non-existent from here to year end, so here are few predictions to mull on. They are in the tradition of Saxo Bank’s 10 Outrageous Predictions for 2010, although some of them are a little less far into the tail. I don’t expect any of them [...]
Indeterminate cheer from Basel
The market’s reaction to the latest Basel committee document was swift and severe: bank share prices fell significantly. However, a close reading of the proposals suggests that those falls might be overdone. Here’s the good news/bad news skinny: (where I’ve used ‘good’ to mean ‘good for the banks’ – the skeptical might well [...]
The simplest risk management error
Financial risk is the risk of loss. That implies that you know the current value of your portfolio. After all, saying that you might lose $10M from market moves is not that helpful if the portfolio is already worth $20M less than you think it is. Valuation, then, is absolutely fundamental to [...]
Happy Christmas from the Basel Committee…
…now get more capital.
That seems to be the message anyway. The press release is here, with links to two consultative papers. Full analysis follows next week, but on first glance there does not seem to be anything particularly unexpected in the document: leverage ratios, countercyclical capital requirements, high standards of liquidity risk management, [...]
Monoline sues bank: home owners wonder if they can boo both sides
MBIA, once one of the most important monoline insurers, is sueing Credit Suisse for pervasive and material misrepresentation of the risk that they insured on RMBS. From Bloomberg via FT alphaville:
A Credit Suisse Group AG unit was accused in a lawsuit by MBIA Insurance Corp. of making fraudulent misrepresentations about mortgage-backed securities… [in [...]
A second
Parachutists sometimes count “A thousand and one, a thousand and two, …” since it takes roughly a second for each increment: it provides, apparently, a reasonably accurate measure of how fast the ground is rushing up towards you. So, this is post number a thousand and one, and thus by the peculiar analogising that [...]
Kilopost: looking back, looking forward
This is post one thousand on Deus Ex Macchiato. Moreover, it is the traditional time of the year for reviews and previews. So let’s take a longer perspective, at least for today.
The loose – at times so loose as to be completely invisible – thread holding the blog together was how the rules [...]
Northern Rock equity is worth nothing
The tax payer can thank the Gods that we have the right result. According to the FT:
Andrew Caldwell, a partner at BDO Stoy Hayward, the accountancy group, who was appointed by the Treasury last year to determine whether investors should qualify for a pay-out, said there was no value in Northern Rock’s shares.
The coming crisis in your Christmas reading
Paul Kedrosky provides me with a good opportunity to do something my publisher has patently failed to do with any diligence – promote my book. He points out that:
There has been an explosion in books published about the ongoing financial crisis. From just two books published per month back in June of 2008 [...]
The Too Big To Fail Premium
A few weeks ago, I discussed the idea that we could reduce both moral hazard and the profitability of banking by charging banks for the cost of the option the bank has to be rescued by the state. In related work, Elijah Brewer and Julapa Jagatiani at the Philadelpha FED have attempted to estimate [...]
Being Balanced
In Sunday’s Observer, Will Hutton makes some poignant observations:
The City of London is now too big and too risky for a country our size. It is not just that bailing it out has cost £850bn, as the National Audit Office reported, and that the recession it imposed has led to the biggest ever increase in [...]
Boasting about your lack of interest in your job
Why do both Felix Salmon and Paul Krugman think that it is OK to say thank bank regulation is boring? Aren’t these people actually paid to take an interest in it? If supposed experts can’t rouse any interest in the most fundamental topic in finance right now, what hope is there?
Update. The [...]
Bonus post
The vexed topic of bonuses is provoking lots of people: see for instance here for a news story about windfall taxes, or here for Alistair Darling’s latest.
A lot of ink has been split and a lot of pixels lit on this topic. So just two thoughts from me.
First, if banks did not make so [...]
Dodd gets it
From Naked Capitalism:
in a sudden and uncharacteristic burst of courage, Connecticut Senator Chris Dodd has proposed a federal subsidy for vampire hunting. “Nothing brings a community together like a vampire hunt,” commented Senator Dodd. “Moreover, a vampire hunt requires serious tools. You don’t want to break into that crypt with a cheap stake that might [...]
How to take intellectual hazard out of Ferguson and Kotlikoff
The two first introduce Limited Purpose Banking, or LPB. They then write, in How to take moral hazard out of banking:
Mutual funds are, effectively, small banks, with a 100 per cent capital requirement under all circumstances. Thus, LPB delivers what many advocate – small banks with more capital. Will this work? It has. Unlike [...]
Paradigm hunting
Like most things which create careers and make money, science isn’t what it claims to be.
It claims to be objective; validated by experiment; unbiased. Of course it isn’t because that takes far too much time. Usually the cranks are exactly that. So it would be an awful waste to test their claims [...]
Must everything be a creche these days?
Susanna Rustin in The Guardian is being annoying today:
Museums have invested hugely in access programmes over the last decade, and many have figures to prove it. Manchester Art Gallery saw pet visits increase from 32,000 to 77,000 over the last four years. Even grown-up and not obviously pet-friendly collections, such as the Wallace and Dulwich [...]
I’ll take an alpha please Bob*
Dealbreaker says:
Robert Litterman is head of quantitative resources at Goldman Sachs Asset Management… And as he sees it, … quantitative hedge funds have to do a better job of making money for their clients. And in Litterman’s considered opinion, they need to find new ways of making money. New and non-quantitative, apparently.
We’re putting together data [...]
