Japan to probe whale meat ‘theft’ BBC. The fraud of Japanese whaling as research is being exposed. Willem Buiter wants to save the Icelandic whales.
A Modest Glass of Wine Each Day Could Improve Liver Health PhysOrg
How to Devalue Your Brand, Greg Mankiw Version Ken Houghton, Angry Bear
The next (but not new) frontier for sovereign default Carmen Reinhart, VoxEU. Another intriguing finding of her and Kenneth Rogoff’s study of 300 years of financial crises (although she could take this data series back only to 1914).
The Systemic Effects of Countrywide Going Bust… Nouriel Roubini
Seniorage Profits: Fed Edition Alea
Foreclosures and More Bankruptcy Filings Bob Lawless, Credit Slips
Raise Margin Requirements NOW! Cassandra Does Tokyo. As always, apt and funny.
Antidote du jour:
Regarding “Raise Margin Requirements Now,” keep in mind that airlines like Southwest are already not hedging as much of their fuel costs as they’d like to because margin requirements are so high. Margin requirements on oil, for example, have doubled since last fall. Margins are reset regularly as the price of a commodity goes up.
You could possibly reset margins for speculators and not commercial traders, but I don’t think this will affect prices except to make the markets less liquid. If you look at the overnight trading on a commodity like oil, you frequently see big price swings that you would never see during the high-volume trading of the normal trading day.
There have been good posts on this blog about times when liquidity may be bad for a system, but there are also times when it’s good. High liquidity in oil markets tends to make prices less volatile and less subject to manipulation.
If people want to buy oil, you really want them to be doing it on a high-volume, highly liquid market. You don’t want them taking their capital and buying up oil fields and hoarding that supply in the ground.
I would like to hear what poster’s have to say about these articles by Frederick Feldkamp, suggesting that SEC and FASB rules giving big brokers and banks an advantage in doing securitizations, increase credit spreads to the detriment of the larger economy. He’s got graphs showing correlation between the enactment of various rules and increases or decreases in credit spreads.
Mike Masters in Senate testimony provided charts and related commentary about how index speculators (as opposed to traditional speculators) consume, not provide, liquidity. The point of an increase in margin requirements is to discourage such players from participating on a leveraged basis.