FT.com / Comment / Opinion - Let central banks direct the supply of credit
Interesting policy suggestion that I am not sure will be so easy to implement. The question is how do you set capital ratio levels to counteract foreign capitals inflows? What formula do you use?
if too much capital is set aside, it will go to buy government bonds, thereby pressuring down interest rates against central banks goals,...
The real pb in my view was the inability to control long term rates.
Again, a BICs framework on interest rate is to me the most efficient mechanism of controlling long term rates, thereby controlling mortgage demand/supply
Showing posts with label credit. Show all posts
Showing posts with label credit. Show all posts
Monday, April 27, 2009
Friday, April 10, 2009
The Crisis of Credit Visualized
The Crisis of Credit Visualized
Just virally sharing this short & comprehensive clip about the Credit Crunch I just watched, courtesy Fabienne-Fariba Salimi, Process Safety Expert on the HEC Alumni page
The Crisis of Credit Visualized from Jonathan Jarvis on Vimeo.
Just virally sharing this short & comprehensive clip about the Credit Crunch I just watched, courtesy Fabienne-Fariba Salimi, Process Safety Expert on the HEC Alumni page
The Crisis of Credit Visualized from Jonathan Jarvis on Vimeo.
Sunday, March 22, 2009
A Medical Madoff: Anesthesiologist Faked Data in 21 Studies: Scientific American
A Medical Madoff: Anesthesiologist Faked Data in 21 Studies: Scientific American
As I was going through the French edition of this article in Le Monde, it hit me once again that the present crisis is also at a deeper level a crisis of defect in the structure of means of attribution of credit that is not limited to finance, but that extend to all learned fields of knowledge in the upper echelons of society.
I have refused to play the "gaming the system" strategy for I believe sooner or later things in such games fall apart.
This gives me hope that someday those who stood up to look for the truth and claim it no matter what the price may receive their due.
Someday, somewhere over the rainbow...
As I was going through the French edition of this article in Le Monde, it hit me once again that the present crisis is also at a deeper level a crisis of defect in the structure of means of attribution of credit that is not limited to finance, but that extend to all learned fields of knowledge in the upper echelons of society.
I have refused to play the "gaming the system" strategy for I believe sooner or later things in such games fall apart.
This gives me hope that someday those who stood up to look for the truth and claim it no matter what the price may receive their due.
Someday, somewhere over the rainbow...
Sunday, March 15, 2009
TALF Is Reworked After Investors Balk - WSJ.com
TALF Is Reworked After Investors Balk - WSJ.com
This subsidized lending program just looks like major league subsidy to the securities industry with layers of transaction costs that incentivize people to trade in potentially irrational way with cheap money and are likely to contribute to TARP assets price inflation . Why not just do market making as I have repeatedly suggested?
The key mistake here is that policy makers seem to confuse
- incentivizing trade on securities with high economic impact which should be the mission of the government here and would lead to a more rational underwriting industry practices going forward
vs
- encouraging the potential reckless issuance of new securities which may in fact perpetuate the practices that led to this mess.
This subsidized lending program just looks like major league subsidy to the securities industry with layers of transaction costs that incentivize people to trade in potentially irrational way with cheap money and are likely to contribute to TARP assets price inflation . Why not just do market making as I have repeatedly suggested?
The key mistake here is that policy makers seem to confuse
- incentivizing trade on securities with high economic impact which should be the mission of the government here and would lead to a more rational underwriting industry practices going forward
vs
- encouraging the potential reckless issuance of new securities which may in fact perpetuate the practices that led to this mess.
Monday, March 9, 2009
Mathematical Model and the Mortgage Mess - NYTimes.com
Mathematical Model and the Mortgage Mess - NYTimes.com
Yes, BICs 4 Derivatives Volume I : Theory
chapter IX pp 203-232, showed that this was faulty and proposed the coherent alternative. When will you wake up people? when?
I cry a river over this. I cry a river over this....
As I have described at length in other writings(See this or this ), this crisis was a failure of the existing mathematical modeling framework at describing the real world dynamics of underlyings. Therefore the corresponding hedging and risk management strategies failed to represent reality and this fact becomes most obvious at times of crisis. One of the reasons for this development is the over-representation of former physicist at the highest levels of "quantdom" who have forced the adoption of a framework coming from another world. But "It ain't physics". It just ain't.
And I cry a river over this. I just cry a river over this....
Yes, BICs 4 Derivatives Volume I : Theory
chapter IX pp 203-232, showed that this was faulty and proposed the coherent alternative. When will you wake up people? when?I cry a river over this. I cry a river over this....
As I have described at length in other writings(See this or this ), this crisis was a failure of the existing mathematical modeling framework at describing the real world dynamics of underlyings. Therefore the corresponding hedging and risk management strategies failed to represent reality and this fact becomes most obvious at times of crisis. One of the reasons for this development is the over-representation of former physicist at the highest levels of "quantdom" who have forced the adoption of a framework coming from another world. But "It ain't physics". It just ain't.
And I cry a river over this. I just cry a river over this....
Sunday, February 22, 2009
Introduction to BICs
I am making my first post with an introduction to BICs that I have posted on my knol at:http://knol.google.com/k/phil-kongtcheu/introduction-to-basis-instruments/
More about me also at: http://knol.google.com/k/phil-kongtcheu/-/24v2kgtuvzk2v/0#
This article provides a definition for the concept of Basis Instrument Contracts (BICs) and explains why such a concept is needed and useful in Finance, Economics and Mathematics. It explains how BICs are practical and represent both a prophylactic and a therapeutic structural tool for a crisis such as the 2008 crisis. BICs help mitigate market volatility and facilitate more robust risk management.
More about me also at: http://knol.google.com/k/phil-kongtcheu/-/24v2kgtuvzk2v/0#
Subscribe to:
Posts (Atom)