Pausing (not Rushing)

I’m doing a big piece of analytical work at the moment, and it’s swallowing blogging time, so my apologies but DEM is going to be quiet for a while. At the moment for instance I don’t have much more to say than that it is amazing how much like James Hunt Chris Hemsworth can be […]

Debateable statement of the day

From Douglas Flint, chairman of HSBC: “Size is too simple a metric… It really doesn’t matter from a systemic point of view whether you have four banks or forty banks in a market. It’s the system’s asset concentration – principally in government debt and in mortgage debt – that can be dangerous.” Colour me unconvinced.

Tapering, the exit path, and collateral

Peter Stella has an excellent post on VoxEU on the implications of the central bank exit strategy for collateral. What’s nice about this in particular is that Stella understands modern credit creation: Most credit in the US is created by nonbanks; virtually all bank lending is funded by the creation of liabilities that are not […]

It can only be attributable to human error

Dave: Hello, Hal. Do you read me, Hal? Hal: Affirmative, Dave. I read you. Dave: Open the central bank window, Hal. Hal: I’m sorry, Dave. I’m afraid I can’t do that. This classic exchange, or at least my version of it, came to mind as I listened to an excellent talk by Hal Scott yesterday. […]

A sign that US insurance regulation needs to change

The captive reinsurer problem is kicking up, thanks mostly to Benjamin Lawsky, NY state insurance commissioner. Lawsky is withdrawing from the new National framework on captives, saying that it did not work and was, in fact, making the “gamesmanship and abuses” in the industry even worse. Now, I haven’t studied this issue in detail, but […]

In the mountains

There are signs that we could have a hard winter this year in Europe: they had their first snow of the autumn in the Swiss mountains last week. Awesome weather:

Cash settled repo and funding stress

Cassa di Compensazione e Garanzia is part of the London Stock Exchange Group. It offers, according to its website, a variety of different clearing services on securities (stocks, warrants, bonds, CBs, ETFs), derivatives (futures) and repo. Proudly, CC&G says that it eliminates counterparty risk acting as buyer toward the seller and vice versa, becoming the […]

What is a run on a CCP?

The term ‘run on a CCP’ has been bandied around a fair amount, but it isn’t entirely obvious what it means. Let me attempt to shine some light onto the idea. A run on a bank occurs when depositors withdraw deposits quickly. In the days before deposit insurance, bank runs from retail depositors were common […]

Cheap, cheap

UK readers, and perhaps others (although the postage might be ugly) can get my book at 30% off the RRP, beating Amazon, here. Many thanks to Bill, author of an excellent chapter in the book on the operational aspects of clearing and owner of the OTC space for sorting this out.

When experiments don’t pan out

With merely a high end modern lens (the stunning 31mm Pentax limited), a digital camera and photoshop, I managed to produce something that looks like a bad example of a 1910 Bromoil process print. Ah well, better luck next time.

The student debt bubble

An interesting fact courtesy of the American Enterprise Institute (HT FT Alphaville): total US student debt has now exceeded a trillion dollars, and is larger than both US credit card debt and auto loan debt. The usual rules about things going up apply.

Don’t bash Larry for this

Let me be clear: if it was my choice, I’d pick Janet Yellen as FED chief. But that said, I wouldn’t rule Summers out on the basis of his prior statements on financial regulation. Reading this, for instance, I don’t see the outrage. The key section seems rather well balanced to me: Let me be […]

The detail of the ESMA equivalence statement on the US

For real OTC geeks this, from ESMA’s Technical advice on third country regulatory equivalence under EMIR – US: 78. In addition to the legally binding requirements which are applicable at a jurisdictional level, to CCPs in the US, ESMA is aware that some CCPs authorised in the US might, on an individual basis, have adopted […]