Category: Finance & Economy

A Market Lesson on Leverage

Long a favorite tool by the investment community to juice up returns, financial leverage works both ways. The consequence of a leveraged bet gone wrong can be existential, as the latest lesson on currency trading demonstrates once again.

January 18, 2015

Bail-in At Your Local Bank – Part 4: Your Last Chance To Act

G20 governments are quietly slipping bail-in provisions into law to make sure that next time a too big to fail bank blows up again by derivatives it will be rescued using depositors’ money, in the name of protecting the taxpayers.

January 6, 2015
In-depth topic: Bank bail-in

Bail-in At Your Local Bank – Part 3: Institutionalizing the Money Grab

Herded along by the Financial Stability Board, governments of leading economies endorsed a framework during the past G20 Summit whereby depositors’ money will be used to rescue a failing bank when the global derivatives casino blows up again next time.

January 5, 2015
In-depth topic: Bank bail-in

Bail-in At Your Local Bank – Part 2: The Derivatives Time Bomb

The derivatives market, the trigger of the 2008 global financial crisis, has since gotten even bigger and more concentrated into fewer hands. A mutually assured destruction awaits the global economy next time it goes off again.

January 4, 2015
In-depth topic: Bank bail-in

A Primer on Derivatives

Financial derivatives are financial contracts in which the promised payoffs are derived from the performance of another underlying entity. The underlying entity can be an equity (such as an individual stock or a stock index), interest rate, credit or c …

January 3, 2015
In-depth topic: Bank bail-in

Bail-in At Your Local Bank – Part 1: The Stage Is Set

With no fanfare and little to no media coverage, your government has just put in place a mechanism to use your deposit money to bail-in a failing bank, like what happened in Cyprus a short time ago.

January 3, 2015
In-depth topic: Bank bail-in

The tapering that was not and the concept of stock and flow

The Fed surprised the world this week by calling off its widely anticipated ‘tapering’ plan which would have called for a gradual reduction of the amount of bond purchases from its current $85 billion per month level. The decision highlights the box the Fed is in and the increasing dominance of flow over the stock of the bond purchase program, a concept missed by the vast majority of economists and so called subject matter experts.

September 22, 2013
In-depth topic: Monetary reset