Here’s a good idea (which will never be implemented). From Bloomberg: The lack of transparency is a problem. Interested parties can’t provide relevant input at the early stages of the process. Banks and their lobbyists get an advantage because they are able to secure far more frequent private meetings with Fed officials than less well-heeled [...]
This is a new (so far as I know) idea that I had over the weekend. The essential motivation is that OTC derivatives central clearing does some good things, such as impose a margin discipline, but some bad ones too, such as splitting OTC derivatives portfolios into cleared and uncleared pieces (and indeed into pieces [...]
Back in March 2009 I wrote: The Guardian had another set of articles on Barclays’ tax structuring group yesterday. The point is not whether the practices of this group are legal. Some may be; some are borderline; some may not be. The point is the continuing reputational damage being done to the Bank … And [...]
Back to finance tomorrow I promise but meanwhile… I love the fact that someone is thinking of using Kickstarter to fund a new translation of Antigone. OK, she might not have a novel take on the Tycho von Wilamowitz-Moellendorff problem (you knew I had to hit up the big T W-M, right?), but using a [...]
… or so they say.
Try playing So, what would your plan for Greece be?; it’s fun and insightful. I got 52 the first time around, 5 the second. Interestingly reading the comments, those, 53, and 10 seem to be the most popular answers, with the full Argentina leading. My favourite comment though was the suggestion that the game should [...]
When the RMMG (as it then was) issued the CVA capital rules in Basel 3, I said that they would lead to a number of capital arbitrage deals. Street talk was that the Swiss were first off the blocks; now we learn from Euroweek (HT FT Alphaville) of a deal by RBS: Royal Bank of [...]
Standard procedure, this, for European banks these days. Bloomberg reports: Commerzbank AG (CBK) will ask investors to swap hybrid capital instruments trading below face value for new shares, adding to steps by Germany’s second-largest lender to boost its financial strength. The measures, announced as Commerzbank unveiled earnings that beat analyst estimates, could boost the German [...]
My main concern about last week’s idea from Interfluidity of government inflation linked savings accounts was the impact it would have on bank funding. Essentially I was worried that fewer deposits at banks meant more repo/CP funding. Now I notice that this is a design rather than a feature: Frankly, it’s better if more bank [...]
Sunday in the woods: (The negative was a little over-exposed, but the scanner still found quite a bit of detail. I quite like the effect.)
From Steve Randy Waldman at Interfluidity, a typically intriguing and thoughtful post: The Federal government should offer inflation-protected savings accounts to individual citizens, but with a strict size limit of, say, $200,000. These accounts would work like bank savings accounts, and might even be administered by banks. But deposits would be advanced directly to the [...]
From the FT: US regulators are poised to increase 20-fold the amount of derivatives a company can sell before it is subject to strict new rules for the biggest traders, softening a significant plank of financial market reform… The CFTC which has proposed the definition along with the Securities and Exchange Commission, is set to [...]
A minor spat in the finance blogosphere – no one died. This is hardly news I know. But for me this fight is unnecessary; both parties have some of the truth. John Cochrane first – his tagline is As long as some firms are considered too big to fail, those firms will take outsized risks. [...]
The last post, BTW, was no. 1,500. Thank you wordpress for your sterling service over one and a half thousand posts. Now to substantive if not entirely serious matters. You see, I was musing given all the furore over Moody’s placing us on negative outlook, shouldn’t we really teach them not to mess with sovereigns? [...]
The Libor probe is heating up. Bloomberg reports: Global regulators have exposed flaws in banks’ internal controls that may have allowed traders to manipulate interest rates around the world, two people with knowledge of the probe said. Investigators also have received e-mail evidence of potential collusion between firms setting the London interbank offered rate, said [...]
No, dear reader, not my Valentine’s day, but rather macroeconomic models. Volker Wieland and Maik Wolters has a nice post on VoxEU where they look at the performance of a goodly number of the leading macroeconomic models. This picture in particular struck me: In other words, of the models studied, none – zero, nada, niente [...]
From a very nice article by Corinna Athanasopoulos from Sapient Global Markets (HT Bill Hodgson), a summary of the current state of OTC derivatives central clearing:
This was amusing… @justinwolfers: You’re my long-run target; my nominal anchor. @SFFedReserve: I’m going to extraordinary measures to increase your stimulus @AtlantaFed: I long for you as the economy longs for its long-run maximum potential @PhiladelphiaFed: Her deviations are never standard, her probabilities never mean. @PhiladelphiaFed: My initial projections never forecast someone like you would [...]
One of the easy mistakes you can make scanning film (you know, film, one of the few things that Kodak makes money on) is that you can flip the horizontal when scanning. It’s really interesting how this effects pictures. Some things are more or less the same flipped, or at least both ways round make [...]
What is the next item in the list: 300; 600; 1,200; 1,600; ? The series is, of course, how much client money was estimated to be missing from MF Global as time went on…
From a speech by Jaime Caruana of the BIS: The Committee on Payment and Settlement Systems and the International Organization of Securities Commissions have developed standards for addressing risks related to systemically important financial infrastructures, including CCPs, and will release finalised standards in the coming months… We don’t know yet whether we are moving towards [...]
From a recent speech by Benoît Cœuré, ECB Board member: In normal times, private liquidity dominates official liquidity. But private liquidity is highly pro-cyclical and highly endogenous to the conditions that prevail in the global financial system. The inherent endogeneity of private liquidity means that it can easily evaporate in times of financial stress. The [...]
Macro and other market musings has an important and interesting posting on safe assets. The proposition is If, however, the central bank slips and NGDP falls below its expected path, then some of the privately produced safe assets disappear, creating a shortage of safe assets. The government steps in and creates safe assets that, if [...]
Sometimes a really clear summary of a bad position clarifies thinking. Here’s one, from Idiosyncracies: The rationale for a clearinghouse is to create liabilities that are the joint obligation of all the members of the clearinghouse. In other words, the purpose of a clearinghouse is to place the responsibility for managing systemic risk where it [...]
This guy is slick. Goodness me yes. Check this out: One of the most pernicious effects, in my opinion, of the evolution of limited liability in the financial system, and the consequent transfer of more and more tail risk to society at large, has been the weakening of our understanding of the price of risk. [...]
My talk at the LSE which was postponed due to the strike in November will now (if the Gods are willing) happen on Wednesday. Title: Post crisis Bank Regulation and the Rôle of Capital Time and date: 6-8pm, Wednesday 8th February Location: Room NAB 1.04, New Academic Building, London School of Economics (entrance from the [...]
A site with a rather tacky name suggests: One of the most common reasons I hear for not letting a model be more transparent is that, if they did that, then people would game the model. I’d like to argue that that’s exactly what they should do, and it’s not a valid argument against transparency. [...]
Picture credit: a sensible comment on Boris Johnson’s cycle policy from Andy. Jonathan Hopkin gives us news of an unexpected but very welcome campaign from the Times to make London cycling safer. (The Guardian has been behind this for some time.) I joined the London cycling campaign in 1993, and over that period more people [...]
I have no idea. But I would have thought an FTT, like Sarkozy’s new one, would make HFT markedly less attractive, at least. Has anyone seen any analysis of this?
The Streetwise Professor pretty much nails one of the big winners in the (regulatory mandated) move to OTC derivatives central clearing: big custodial banks will be even more tightly connected with all major participants in the derivatives trade because of their comparative advantage in providing collateral transformation, and the strong economies of scope between providing [...]
