Finance & Markets Channel: Latest Posts
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Great Leap Forward
Why Reinhart and Rogoff Results are Crap
Kudos to UMass economists for exposing the flaws in R&R’s empirical work. The conclusion that there is some magic debt ratio beyond which growth slows was never substantiated by R&R’s data–they fudged and flubbed the empirical work. True enough. However, the whole “research” method as well as the “theory” behind it was bunk anyway, as [...]
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Finance & Markets
‘Financial Stability Monitoring’
In order to stabilize the financial system, there are two recommendations that I would definitely make. One is to reduce the chance of runs in the shadow banking system — a key factor behind the financial crisis. As noted below, the Dodd-Frank Act “does not address structural problems in wholesale short-term funding markets, such as [...]
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Finance & Markets
The European Commission’s Proposed Financial Transactions Tax
On September 28, 2011, the European Commission formally proposed a plan to implement an EU-wide financial transactions tax (FTT)[1]. Unanimity is required to implement such a proposal at the EU level and this is impossible as many member states, notably the United Kingdom and Sweden, oppose it [2]. As a way around this, in Oct [...]
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Finance & Markets
Yet Another Study On The Wonders Of Momentum
Momentum is one of the oldest and most persistent anomalies in the financial literature. The tendency of positive or negative returns to persist for a time seems like a ridiculously simple predictor, but it works. There’s an ongoing debate about why it works, but the results in numerous tests speak loud and clear. Unlike many (most?) [...]
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Finance & Markets
FSB Publishes Fifth Progress Report on Implementation of OTC Derivatives Market Reforms
On 15 April 2013, the Financial Stability Board (FSB) published its Fifth Progress Reporton the implementation by FSB member jurisdictions of the G20 commitment to reform global OTC derivatives markets. The next progress report is expected to be published ahead of the G20 Leaders Summit in St Petersburg in September 2013. In summary, the report concludes [...]
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Finance & Markets
Gold Prices Falling
Was their rise caused by “bad policies”? And why are they falling now? From the NYT: The assumption among gold bugs was that the flood of new money would cause inflation, making hard assets like gold more attractive. So far, though, there have been few signs of inflation taking root even as central banks in Japan [...]
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Great Leap Forward
KRUGMAN DOES MMT AGAIN: GOLDBUGS AND BITBUGS
In a very nice piece, Paul Krugman blasts the anti-social orientation of those who tout gold or bitcoins as an alternative to state money (see here). You see, Uncle Sam is hell-bent on generating hyperinflation through President Obama’s run-away deficits and Chairman Bernanke’s money-dumping helicopters. To protect yourself, you need to buy gold and bitcoins—like [...]
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Finance & Markets
Setting the Stage for the Bubble Phase?
Until recently I was expecting the bubble phase for gold to occur as we came out of the next 8 year cycle low in 2016. However with the panic sell off over the last two days and break of support at $1523, I’m now starting to think what we are seeing is the washout prior to [...]
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Finance & Markets
Another Golden Lesson For Asset Allocation and Rebalancing
Maybe it’s the sell recommendation from Goldman Sachs. Or perhaps the trigger is the general fear of a sharp slowdown in China’s economy that will take a toll on global GDP. Whatever the reason, the price of gold yesterday suffered it’s biggest drop in 30 years. For gold bugs who loaded up on the precious metal, it’s been a rough 24 [...]
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Finance & Markets
Obama: The Buckraking Starts Here
When I was in DC about a month ago, speaking at the Atlantic Economy conference, the keynote speaker was Paul Volcker. Tall Paul could not refrain from starting his remarks by commenting on how prosperous the capital looked and made it clear he regarded it as unseemly. And indeed, at least to someone breezing in [...]
