Tag Archives: Banking

Yesterday morning we noted why, in light of the ongoing global bond rout, all eyes would be on the BOJ, and specifically whether Kuroda would engage his "Yield control" operation to stabilize the steepness of the JGB yield curve and implicitly support global bond yields in what DB said would be "full blown helicopter money" where the "BoJ is flying the copter over the US and may be about to become the new US government’s best friend." And sure enough that is precisely what Kuroda did last...

Mr. Abele, few industries today operate to such a degree at the juncture between analog and digital as the financial sector. On one hand, digitalization has caught up to the banks, while on the other hand, the financial business functions through personal relationships, discretion and tailored consultation. How can you resolve this conflict? That's the wrong question, in my view. Digital and analog are not binaries, but are more along the lines of the synergy equation: 1+1=3. New...

Money, generally accepted medium of exchange, acts as a veil that confuse and blurs economic relations. This is especially true when it comes to intertemporal considerations. Whilst probably the most important institution in a free market, money can be highly destructive when politicized. Why? Because politics is about power and distribution of real wealth. And since money affect almost every single transaction,...

We have seen several explanations for the financial crisis and its lingering effects depressing our global economy in its aftermath. Some are plain stupid, such as greed for some reason suddenly overwhelmed people working within finance, as if people in finance were not greedy before 2007. Others try to explain it through “liberalisation” which is almost just as nonsensical as government regulators never liberalised...

Online sales juggernaut Amazon has a toe in the Internet finance business, processing payments and offering loans to the site’s merchants. What about its Chinese counterpart, Alibaba? It does those things, too. It also facilitates peer-to-peer lending, sells mutual funds and insurance policies, and has formed a private bank to lend to consumers. Who’s leading the Internet revolution now?   From a modest start in processing online payments, Alibaba, online media and entertainment firm...

Italy is big enough to matter (it is the eight largest economy on the planet), but so uneventful that most does not pay any attention to what is going on there. We contend that Italy will, during the next year or two, be on everyone’s radar screen as it has the potential to derail the European project for real. Greece, Portugal and Ireland were mere test subjects for what will come. Spain would have been a challenge, but were narrowly avoided. Italy will drag the whole structure down if...

Italy is big enough to matter (it is the eight largest economy on the planet), but so uneventful that most does not pay any attention to what is going on there. We contend that Italy will, during the next year or two, be on everyone’s radar screen as it has the potential to derail the European project for real. Greece, Portugal and Ireland were mere test subjects for what will come. Spain would have been a challenge, but were narrowly avoided. Italy will drag the whole structure down if...

When looking at the current state of the Chinese economy it is important to note what happened leading up the ongoing predicament. By managing the USD/CNY exchange rate the Chinese factory worker was essentially funding excess consumption in the United States. One of the many perks enjoyed by global reserve issuer. The factory worker obviously did not do this out of his own volition; on the contrary, he was duped into it by swallowing the propaganda spewed out by party apparatchiks in...

Bar a disastrous NFP print this coming Friday the US Federal Reserve will change the target range for the Federal Reserve (Fed) Bank’s Funds rate from the current level of zero – 25bp to 25 – 50bp on December 16th.  The Fed will effectively raise the overnight interbank rate of interest to around 30bp from an average of only 12bp in 2015. Ironically, that will be seven years, to the day, when the Fed first lowered rates to the current band. During the period of ZIRP madness, the Fed’s...

SWAP spreads recently took a nosedive and are once again trading at negative levels, even for shorter maturities. As can be seen from the chart below, treasury yields, here represented by the 10 year maturity, rose during QE policies programs contradicting the very raison d’être spouted by the central bankers. Interestingly enough we also see the same pattern in SWAP spreads. As QE programs were enacted SWAP spreads started to move upwards, just to rollover as the central bank program...