economics

More spreads

17 November 2011

To provide a bit more context for the French government bond spreads discussed in the last post, the chart below shows the 5-year spreads to German bonds for a few more European countries. With spreads over 4300 basis points (43%), the chart is dominated by Greece, so here is the chart again with Greece removed. [...]

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French spreads

17 November 2011

Changes of leadership in both Greece and Italy were initially well-received by markets, but investors are getting nervous again. Attention is shifting to France, and French government bonds seem to be on the nose. The chart below shows the “spread” between French and German 5-year government bonds. Measured in basis points (1/100th of 1%), the [...]

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The oldest bank in the world

29 October 2011

Yes I am back. I know it has been a while. What can I say? I have been quite busy! One of the things taking up my time during the week was preparing for and then giving a talk for the Q-Group on operational risk capital modelling. It sounds arcane, I know, but there was [...]

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Ring-fencing rogue traders

25 September 2011

Kweku Adoboli managed to cost UBS over $2 billion with his rogue trading, and has now cost chief executive Oswald Grübel his job. While this time the buck stopped at the top, it is more than can be said for many previous rogue trading cases. Grübel was called out of retirement to take the helm [...]

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Dissonance and Debt

1 September 2011

Ever since Standard & Poor’s downgraded the US government from AAA to AA+ I have been drawn into debates about the risks posed by growing US government debt. Ever since reading the book Mistakes Were Made by Carol Tavris and Elliot Aronson I have been fascinated by cognitive dissonance and as my debt debates kept following the same [...]

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Train in vain

4 August 2011

James Glover is a regular contributor to the Stubborn Mule who tries, whenever possible, to incorporate back of the beer coaster calculations in his posts. Here his beer coaster helps him skewer the prospects of high speed rail in Australia. Don’t get me wrong–I love trains. I have caught trains around Europe and even the [...]

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Currencies punching above their weight

24 July 2011

I recently enjoyed lunch with a group of former colleagues. At one point, the conversation turned to the Australian dollar, a natural enough topic for a bunch of finance types. Someone observed that the Aussie is the 5th most actively traded currency in the world, which is impressive since Australia is certainly not the 5th [...]

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Looking beyond the financial crisis

13 June 2011

The IMF has been busy of late, what with their attempts to stave off European sovereign defaults and shenanigans of its erstwhile managing director, Dominic Strauss-Kahn. I have been busy too (for rather different reasons I hasten to add) and so it has taken me a while to get to looking at the IMF’s most [...]

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Return of the Drachma?

8 May 2011

It has been reported that Greece is considering leaving the euro and re-establishing its own currency*. More than a year ago, I argued that being part of the euro seriously exacerbated Greece’s economic woes, and for the reasons given there, I do think that re-establishing sovereignty over its currency is in Greece’s interests in the [...]

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S&P being silly again

20 April 2011

The debt rating agency Standard and Poor’s (S&P) has placed their rating of the US on negative outlook. What this means is that they are giving advance warning that they may downgrade their rating of the US from its current AAA level (the highest possible rating). Their actions were motivated by concern about “very large [...]

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