Gambling for Resurrection; Volatile Equity Returns; Advanced Economies not Immune From Currency Crises

November 8, 2012

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“Theories without facts are empty: facts without theories are blind” ~ Immanuel Kant

“Gambling for resurrection” (politics): when a leader weakened domestically is willing to go to war to maintain office

“Gambling for resurrection” (banking): when a bank takes larger risks as its equity falls, such as rolling over loans to struggling borrowers in attempt to avoid default

“fatal conceit”: believing oneself wise and powerful enough to be able to keep the most suitable monetary policy at all times ~ FA Hayek

Research:

The Asian Credit Bubble – the Next Blowup ~ historysquared

The current account-to-GDP ratio is an important factor in sharp depreciations of OECD countries’ exchange rates ~ Wright and Gagnn (2006)

Currency crashes in advanced economies have generally not led to an increase in bond yields (Gagnon 2009a) ~ $study

interesting

Real Interest Rates Help Forecast Currency Crises ~ historysquared

Long Term Interest Rates Back to 1790 and Events $TLT ~ twitter

Why All Politicians Lie ~ Reason

It helps to look at a politician’s belief systems and motivations (often power), not words, to forecast politicy makers

Joachim Klement: How Personal Experience Can Determine Risk Preference ~ CFAInstitute

Housing Bubbles, Interest Rates, the Taylor Rule, and Central Bank Folly ~ historysquared

U.S.

@MoodysRatings @FitchRatings @HobbsieNY If the U.S. is a AAA rating for being willing and able to print, why isn’t Zimbabwe a AAA rating?

Trimtabs’ Charles Biderman prefers current income to the bubble and debt rewarding GDP ~ Trimtabs

Hedge Fund All-Stars Stand Out in Another Bad Year ~ WSJ

‘President Barack Obama rode the federal auto bailout’ to victory in Ohio ~ Bloomberg

@BloombergNews – so, he bought the election?

Baltimore announces city-wide surveillance roll out that records passenger conversations on city buses ~ Natural News

World:

Eurozone ignoring parallels with Latin American debit crisis of the (1980s Aug. 2012) ~ UK Guardian

Australia’s “Big Four” hold 85% of the home loan market. Combined “assets” total 2.66 Trillion $AUDUSD, or 200% of Australia’s 2011 GDP

Japan’s Banks May Face Pressure From Electronics Exposure, says Fitch ~ Reuters

China:

Hong Kong Bank loans to Chinese non-banks grew 60% in 2010 and 35% in 2011, prompting a warning from HKMA – SOEs? good luck $HBC

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