By Satyajit Das, a risk consultant and author of Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives A question of values… Derivative contracts are valued on a mark-to-market (“MtM”) basis. This requires valuation of the contracts based on the current market price. OTC derivatives trade privately. Market prices for specific […]
Read more...By Edward Harrison This is the third in a series of posts about ideas for financial reform generated by the “Make Markets Be Markets” conference I attended yesterday in New York City on 3 Mar 2010. You can download all of the written presentations here. A century ago, anyone with a bathtub and some chemicals […]
Read more...This came via e-mail from a savvy past client with the sign off, “Frustrated on a plane.” I like all his suggestions, and I particularly call readers’ attention to his recommendation regarding compensation reform. One thing that is striking is that the media (and pretty much everyone in DC) has fallen in with the industry-flattering […]
Read more...The Fed, having performed abysmally in recognizing the growth of a global debt bubble, and then having botched the early-stage reactions (after each of the first three acute phases, it went into Mission Accomplished mode), now is pushing not simply to hold its turf, but expand its sphere of influence. From the New York Times: […]
Read more...This report from Katie Porter at Credit Slips, which describes another ruse by which banks are undermining new credit card rules, illustrates why we need principles based regulation in the US: Did Congress’ effort to protect you from your card company with the Credit CARD Act inspire you to pore over the new Cardmember “Agreement” […]
Read more...By Richard Alford, a former economist at the New York Fed. Since then, he has worked in the financial industry as a trading floor economist and strategist on both the sell side and the buy side. Low rates have a more powerful effect on driving financial assets than on driving the economy. -Jeremy Grantham, GM0 […]
Read more...By Rob Parenteau, CFA, sole proprietor of MacroStrategy Edge, editor of The Richebacher Letter, and a research associate of The Levy Economics Institute Reader note: please see yesterday’s post for a discussion of the fiscal balances map. As evident from the financial balances map, there are a whole range of possible combinations of current account […]
Read more...I felt certain when I read the Financial Times headline, “Proposal sees consumer watchdog role for Fed,” that I must have woken up in a bizarre parallel universe (but that is probably unfair to pretty much all universes parallel to ours: I imagine it would be very difficult to have one more perverse than ours). […]
Read more...By Rob Parenteau, CFA, sole proprietor of MacroStrategy Edge, editor of The Richebacher Letter, and a research associate of The Levy Economics Institute The question of fiscal sustainability looms large at the moment – not just in the peripheral nations of the eurozone, but also in the UK, the US, and Japan. More restrictive fiscal […]
Read more...Credit default swaps played a much more central role in the financial crisis than is widely understood, and they continue to get a free pass in financial reform proposals that they do not deserve. As we have discussed on this blog, and recount in more detail in the book ECONNED, central clearing and/or putting them […]
Read more...We have pointed out more than once that a major impediment to reform of the financial services industry is that a small number of firms control infrastructure crucial to modern capitalism: 1. Credit is essential to any society beyond the barter stage 2. Debt markets are now at least as important in providing credit as […]
Read more...From the Independent: Chief executives from the world’s banks discussed the plans at a secret dinner held at Claridge’s, the London hotel, last October, at which several leading British bankers are said to have suggested that the sector should take greater responsibility for its part in the crash, and do more to reduce the vast […]
Read more...Bloomberg reports that former Treasury Secretary and Citigroup board member Robert Rubin will be summoned before the Financial Crisis Inquiry Commission in April, with Alan Greenspan and Chuck Prince likely to be tapped as well. On the one hand, it’s a welcome sign that the FCIC will be interviewing many of the major figures responsible […]
Read more...The Wall Street Journal is not the first to comment on the magnitude of the wagers against the euro (the Financial Times took note nearly two weeks ago: “Speculators raise record bets against euro“). But the Journal offers a spectacle sure to inflame sentiment in Europe: that of major hedge funds feasting first on lemon-roasted […]
Read more...Goldman may have made a fatal mistake. Fatal not to the existence of the firm, but to its standing, reputation, legitimacy, and ultimately, to the thing it covets most, its profits. Power is most effective when it is used as sparingly as possible. Niall Ferguson, in book The Cash Nexus, stressed the importance of financing […]
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