The Modest Proposal will stem the European crisis without breaking any rules, without having the core countries pay one euro for the debts and losses of the periphery, and without any further diminution of national sovereignty.
Monday, September 22, 2014
Posted by Lambert Strether at 6:55 am |
Individuals who work in the finance sector enjoy a significant wage advantage. This column considers three explanations: rent sharing, skill intensity, and task-biased technological change. The UK evidence suggests that rent sharing is the key. The rising premium could then be due to changes in regulation and the increasing complexity of financial products creating more asymmetric information.
Results, Ramifications and Neglected Corners of the Scottish Independence Vote
Posted by Yves Smith at 6:55 am |
With the recent Global Crisis, the interest in systemic risk and the interconnection between financial institutions has increased. This column investigates the case of European financial firms, where several factors can jeopardise a firm’s financial health. Using data since 2000 to evaluate the firms’ systemic risk, the authors find that for certain countries, the cost to rescue the riskiest domestic banks is too high. They might be considered too big to be saved.
European Union Court of Justice Imposes Anti-Rasmussen Rule – Sanctions Cannot Be Imposed by Reason of Fabrication, Lies, Dissimulation
Yves here. A new ruling by the European Union Court of Justice is tantamount to shutting the gate door after the horses are in the next county. Nevertheless, it’s a striking if not well publicized indictment of US casualness about lobbing charges against countries on its enemies list.
Today’s Water Cooler: Scotland, the Day After, the war on ISIS, leading indicators, 2014 and 2014 campaigns, and serving papers via Facebook
Topics: Water Cooler
Posted by Lambert Strether at 1:58 pm |
A new article in Bloomberg gives a well-researched overview of a mess-in-the-making that regulators are choosing to ignore: the leveraged loan market. For newbies, “leveraged loans” means “risky loans to big companies”. For the most part, they fund private equity buyouts and restructurings. The juicy fees on these financings, 1% to 5% of the amount raised, versus an average of 1.3% for junk bonds, is a big reason why none of the incumbents is particularly eager to change a market that is working just fine for them in its current, creaky form.
Posted by Yves Smith at 6:55 am |
We’re expecting to have some more thoughtful commentary in the next day or so from some close observers of the Scottish independence vote. On the surface, the results look more decisive than expected earlier. The margin of victory, at 55% against and 45% for, was wider than the forecast 54%/46% split. And the English press looks to be rubbing it in, with most UK media outlets showing celebratory images of the victors.
But keep a few things in mind….
Yves here. It is gratifying to see economists take up the question of when laws work, and perhaps even more important, how to make laws work even when they conflict with social norms. In typical economists’ fashion, they contend that as far as businesses work, fines work but more rules don’t. On further examination, that conclusion may not be well founded.
As Wolf points out, despite stock touts’ talk of “escape velocity” and other confidence-fairy boosterism, the Fed has been quietly making more and more negative assessments of the economic outlook.
Today’s Water Cooler: FOMC and Janet Yellen, housing stats, Scotland Independence vote, ISIS, and new Aretha Franklin album to be released.
Yves here. Even though the cease fire and the self-rule/amnesty deal for the eastern part of Ukraine might be the beginning of the end of that proxy war, the US is far from giving up its efforts to weaken Russia. John Helmer describes how the US is deploying one economic weapon, that of targeting Russia’s titanium exports.