The Martin Hutchinson Place
According to the Financial Times, the major international investment banks are cutting their spending on “quants” and their mathematical risk management models by about 40% from the current average of $100-150 million annually per bank. The regulators no longer give a risk capital allocation benefit for banks with “sophisticated” truly incomprehensible modeling systems, so there […]
As I have discussed recently in this column, the world’s adoption of ultra-low “funny money” interest rate policies over a number of years has caused productivity growth to slow markedly, and in the most extreme case of Japan, to go into reverse. Since we appear unlikely to change interest rate policies in the near future, […]
It appears that the U.S. electorate in November will be faced with a Hobson’s Choice between two alternatives: a protectionist nationalist who will raise trade barriers and make the nation poorer versus a regulating environmentalist Keynesian who will equally impoverish the country and indeed the world in general. All over the world, political choices are […]
Writing in the Wall Street Journal on Monday, Peter Wallison of the American Enterprise Institute argued that world growth was excessively subdued because Dodd-Frank and other repressive financial regulations were preventing bankers from taking risks. I agree entirely with Wallison’s detestation of regulation, and admire his previous analyses of Fannie Mae and Freddie Mac’s contribution […]
Goldman Sachs announced this week that it was to offer consumer savings accounts over the Internet, with a minimum of $1. It’s not a bad marketing idea; no doubt a “Bank of Dr. Evil” branded savings account would also go well. It appears to indicate that Goldman’s confidence in its core investment banking business is […]
Argentina’s $15 billion bond issue, engineered by their new market-friendly president Mauricio Macri, was four times oversubscribed and increased to $16.5 billion. The Brazilian Congress has voted to impeach President Dilma Rousseff, suggesting that leftist policies may be on their way out there, too. These events give hope to those still suffering under extreme leftism, […]
Two weeks ago, this column denounced central banks’ post-2008 policies because of their effect on savers and savings. This week I will demonstrate an entirely different result of their feckless policies: a deep decline in productivity growth, in all markets where their foolishness has manifested itself. There is not enough criticism of this insanity, […]
In two months, Britain will vote on whether to leave the European Union. If it votes for “Brexit” there must be some chance that other EU members will follow it, either partially or completely dissolving the union that for good or ill has been the central thrust of postwar Europe. It’s worth trying to imagine […]
Central banks have kept their policy interest rates close to zero for nearly eight years and with the partial exception of the Fed are now intensifying this policy by pushing rates negative. Combined with large budget deficits and ultra-aggressive regulation in the service of several dubious causes, these policies have provided a destruction test of […]
Nineteenth century accounting worked differently from accounting when I was going through business school, and very differently from today’s accounting. Investors were told not to buy “watered” stocks and bonds, advice that would be laughed at by a modern professional investor. Yet with modern mark to market accounting we have far less certainty, much more […]