RSS feedPresenting… the inaugural FT Alphaville awards
Our NY correspondents Cardiff Garcia and John McDermott present what we expect will be the first of many mirthful FT Alphaville annual awards. Watch the video below and:
LAUGH at Cardiff’s impression
Abstractions and morality in modern finance
Over the last three years, modern finance has been bailed out by policymakers and, by extension, taxpayers. But policymakers and financiers are taxpayers too, and hence themselves bear at least some of the costs of the crisis.
Immigration economics and “dirty jobs”, plus a Q&A with Giovanni Peri
We’ve seen a lot interesting and deservedly favourable commentary about Alex Tabarrok’s argument that liberalising high-skill immigration policy in the US would be an economic boon.
Hey, we’re all for it — and it’s more politically feasible than wider substantive reform on illegal immigration,
How to arb Basel II
In a previous post, we detailed trades that while making no sense economically, allow banks to game regulations around capital requirements and kick the recognition of losses further down the road.
This may have left you wondering how this is possible under the Basel II regulations,
[Something for the weekend] A Dickens of a mess
Ebenezer Draghi sighed. These bank books would never come out right, and it was Christmas Eve already. As he struggled, the numbers began to swim before his eyes. So many hundreds of billions of euros,
Further reading
Elsewhere on Friday,
- Hey United Nations, you owe me a $1 trillion.
- What really caused the Eurozone debt crisis.
- John Paulson’s Disadvantage Plus.
- I’ve always kind of enjoyed talking to eurocrats.
Pink picks
Comment, analysis and other offerings from Friday’s FT,
Martin Wolf: America’s inequality need not determine the future of Britain
“The poor you will always have with you,” said Jesus. Despite vast rises in wealth,
Snap news
Breaking pre-market news on Friday,
- Blacks Leisure says equity worthless; talks over sale of assets and brands continue — statement.
- Haverford walks away from Omega Insurance — statement.
- EC approves Roche’s Avastin for use in ovarian cancer — statement.
Further further reading
For the commute home,
- Feldstein on the failure of the euro.
- Why the world’s central banks should produce more safe assets.
- The global youth unemployment crisis.
- Another big week of borrowing from the Fed’s dollar swap facility.
The LTRO, the switch and the basis swap market
Were you puzzled by the immediate reaction of the euro following Wednesday’s LTRO?
Icap’s Don Smith, has a rather compelling interpretation.
And it’s all to do with currency basis swaps and the ECB’s dollar funding operation:
2012 – the year of the double dip
Festive cheer seems to be in short supply at Capital Economics:
– We don’t have high hopes for 2012. In fact, we continue to think that the UK will re-enter recession. Output could already be contracting and is likely to continue to fall throughout most of next year.
More Angry Birds, less regulatory arbitrage, please
Last Friday, FT Alphaville noted a rather interesting notice from the Basel Committee. It indicated that some banks have been engaging in a rather outrageous bit of financial engineering. The end result of the alchemy was the kicking of losses further down the road and the improvement of capital ratios.
Are western central banks having an existential crisis?
David Wessel over at the Wall Street Journal has followed up on a story FT Alphaville has been covering for a while. That the world economy is running out of super-safe financial assets, and that this is doing untold damage to central banks’ abilities to control interest rates (the last bit is our spin).
Q&A: The ECB’s three-year loans
The below is from the FT’s Money Supply blog that covers on all things central banky. FT Alphaville enjoyed it so much, that we had to ask Claire if we could nick it cross-post. She kindly agreed.
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So the ECB is offering three-year loans with a cheap interest rate.
Markets Live transcript 22 Dec 2011
Markets Live chat transcript for the chat ending at 12:08 on 22 Dec 2011. Participants in this chat were: Neil Hume, FT Bryce Elder/FT NHHola NHBreak open the bubbly NHIt’s the last ML of 2011
FT Alphaville – Xmas opening hours
AV will be taking a little break over the festive period — from midday on December 23rd until January 3rd.
OK, it’s an extended break. But it’s been a hectic year and the team need to recharge their batteries. Of course,
Further reading
Elsewhere on Thursday,
- The new Fed regs and what it means to “hold capital”.
- Reflecting on 2011, at the IMF.
- The leverage in the system, makes it go round and round.
- The ECB’s balance sheet:
Pink picks
Comment, analysis and other offerings from Thursday’s FT,
Rodric Braithwaite: The myths of Russia
On Christmas Day 1991 we were still wearing our funny hats and eating our mince pies when Mikhail Gorbachev came on television to tell the world that he had resigned as President of the Soviet Union,
Snap news
Breaking pre-market news on Thursday,
- International Airlines Group signs binding agreement to buy BMI for £172.5m — statement.
- A small country will leave the Eurozone says chairman of RBS — report.
Further further reading
For the commute home,
- Economists and economic policymakers explain 2011 in charts.
- Teleprompter fail improv fail.
- Delusions of helplessness, monetarist edition.
- NY Fed on central bank imbalances in the euro area.
Interview with Goldman’s Jan Hatzius
We interviewed Goldman’s Jan Hatzius yesterday about the 2012 outlook and a few other things for FT.com, but we’ve embedded below a longer version of the clip with only light edits (just enough to deal with the inexperienced host’s annoying tendency to um and ah).
China’s worried local governments
In the steady drip feed of anecdotes about China’s property market, Patrick Chovanec’s blog post earlier this month rounding up a series of first-hand, second-hand and media reports made for some fascinating reading.
Implications of the US money market fund retreat
That chart is from the latest Fitch Ratings report of the biggest US prime money market funds.
Check out Tracy Alloway’s writeup and we’ve also chucked the report in the usual place.
But the short story is that these funds continue to pull back from French banks in large amounts but have gradually eased back into non-euro-plagued UK,
Do you believe in netting? — Part 2
In Part one, FT Alphaville asked whether there was reason to doubt the netted derivatives exposures reported by banks. Here, we discuss how netting works (or doesn’t, ahem) when counterparties collapse.
Do you believe in netting? — Part 1
On Friday, Jeffrey Snider of Atlantic Capital Management argued that finance now exists for its own exclusive benefit. The thrust of his argument is that derivatives have allowed banks to escape the bounds of actual cash assets and the real economy.
The BoE on the collateral crunch
Minutes from the Bank of England’s last policy setting meeting on December 7-8 are out.
The general view of the monetary policy committee was that while inflation remained well above the 2 per cent target,
Markets Live transcript 21 Dec 2011
Markets Live chat transcript for the chat ending at 12:20 on 21 Dec 2011. Participants in this chat were: Neil Hume, FT Bryce Elder/FT NHHola Rabble NHsorry we are late
LTRO use at €489.19bn
Here they are, the results of the ECB’s three-year long term refinancing operation (LTRO) allotment, via Reuters:
RTRS – ECB ALLOTS 489.191 BLN EUROS IN 1134-DAY OPERATION
RTRS – ECB ALLOTS 489.2 BLN EUROS IN FIRST EVER 3-YEAR LENDING OPERATION VS REUTERS POLL 310 BLN EUROS
€489.19bn is definitely at the top end of analyst expectations,