Tag Archives: Politics

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,...

The shock of Great Britain’s vote to leave the European Union has already thrown global financial markets into disarray and cost Prime Minister David Cameron his job, but it will take years before the geopolitical impact of the Brexit referendum fully materializes. The political uncertainty generated by the “Leave” vote will reach far beyond 10 Downing Street, potentially into Scotland, Northern Ireland, Eurozone capitals, and beyond. It may even mark the beginning of the end of...

Summary Center-right PP won the Spanish election. Anti-EU forces were setback. Rajoy needs a coalition partner. The UK has decided to seek a divorce from the EU after a 43-year rocky marriage. It was not an overwhelming decision.  Brexit won by 52%-48% margin, seemingly too small for such a momentous decision. The UK has not decided exactly when it will formally begin the divorce proceedings, and it wants to be...

SNB interventions During the Brexit turmoil on Friday, the Swiss National Bank has intervened in markets. Just after they got into the office, at 7.45 am CET, they started the interventions. Apparently the Singapore office did not have a mandate to do interventions. The central bank drove the EUR/CHF price from a low of 1.0646 towards 1.08. FX traders might have moved it higher to 1.0850. We do not think that the...

Sterling is hovering around seven cents above last week’s lows as many short-term participants better position themselves for the UK to vote to say in the EU, even though many opinion polls show a statistical dead heat.   The German Constitutional Court dismissed claims that the ECB’s Outright Market Transactions does not violate the German Constitution. Italy’s run-off for local elections was held over the past...

The betting and events markets have shifted more decisively than the polls in favor of the UK to remain in the EU.  Sterling extended its rally from $1.4010 last Thursday to nearly $1.4785 today, as the market participants adjust positions. What is particular striking is that the asymmetrical perceptions of the personal impact of a vote to leave the EU.  The Great Graphic here was posted on Business Insider,...

This infographic was in the Wall Street Journal on the US election.  It is important to remember that the US does not elect the President by direct popular vote.  This makes the national polls a bit misleading. There are 538 electoral college votes.  To be elected a candidate must secure a majority or 270  electoral college votes.    Obama received 332 elector votes and Romney 206. The WSJ cites four major...

The Economist’s Graphic Detail reports about research documenting that While the Senate’s interest in science is generally quite low, Senate Democrats are three times more likely than Republicans to follow science-related Twitter accounts like NASA or the National Oceanic and Atmospheric Administration. Interest in science, the authors conclude, “may now primarily be a ‘Democrat’ value”.

Many people understand politics and economics to be two different disciplines. I remember in graduate school more than two decades ago, many colleagues and professors operationally defined political economy as how politics, by which they meant the state, screws up economics. I spoke at the Fixed Income Leaders Summit earlier this week and teased that many seemed to think that politics comes from the ancient Greek “poly”...

“Every thinking person in America is  going to vote for you Governor Stevenson,” said an enthusiastic voter.“I am afraid that won’t do.  I need a majority,” reportedly quipped Stevenson (1952 or 1956).   The UK referendum on June 23 is the most important political event of the first half of the year.  A decision to leave could be a significant disruptive force.  No one knows for sure. It is precisely that uncertainty that is fueling the demand for insurance in the options market that...