Making Banking Boring Again

By | 2017-08-09T08:34:46+00:00 August 9th, 2017|Global Market Update|

Were banks ever boring? “Jewel Box” bank in Owatonna, MN. Photo: Jonathunder. Source: Wikipedia. License: GDFL1.2 Since the Financial Crisis many critics have called for a return to “boring banking”—by which they mean banks that are limited to taking deposits and making loans, restricted from nontraditional activities like securities underwriting, insurance, investments, and other activities that led up to the Great Recession. The implication is that if we could just restore the Glass-Steagall act, banks would be boring again and the world would be [...]

Make Banks Safe Again

By | 2017-07-17T12:21:22+00:00 April 12th, 2017|Global Market Update|

Are the big banks finally safe? Picture: New York Fed The Financial Crisis put bank safety and soundness fully in view. The serial bailouts or failures of Bear Stearns, AIG, Fannie and Freddie, Lehman, Merrill, and Washington Mutual put the global economy at risk. The problem was systemic: all the big banks were affected, because investors weren’t certain where their money would be safe. Bank stocks fell about 70%, and yields on their bonds rose about 4%. When this happens, banks cut back on [...]

A Brief History of Bubbles

By | 2017-07-17T12:21:40+00:00 October 17th, 2016|Global Market Update|

What’s wrong with bubbles? Photo: Michelle DiNocola. Source: Morguefile Sir John Templeton once famously noted that the four most expensive words in the English language are, “This time it’s different.” It’s easy to get caught up in the excitement of the moment, to believe that the latest innovation will lead to a new era. But human nature doesn’t change. That’s why it’s so fascinating. Before the first documented financial bubble—the tulip crisis in 17th century Holland—there were other markets that were manipulated and distorted. [...]


By | 2017-07-17T12:21:58+00:00 May 4th, 2016|Global Market Update|

Is there a company aiming to upend banking, the way Uber has displaced taxis? Taxis in Budapest. Photo: Elkes Andor. Source: Wikipedia Fifteen years ago online retail seemed pretty risky. Who would give their credit card to a web merchant? Now Amazon sells more than Macy’s, Sear’s, and Kohl’s combined. Their revenues have grown more than 20% per year for the past several years. And while many retailers have had their customers’ credit cards hacked, Amazon has been more secure even as it has [...]

Bootleggers and Bankers

By | 2017-07-17T12:22:04+00:00 April 25th, 2016|Global Market Update|

Are banks out of control? Photo: Nightscream. Source: Wikimedia Many people are still hurting as a result the Financial Crisis. And there’s a lot to be upset about. By some measures upwards of $5 trillion in wealth was destroyed. The crisis triggered the Great Recession of 2008-9, and led to government bailouts and fiscal stimulus packages around the world. At the heart of the crisis was our overly complex banking system. Fundamentally, banking is pretty simple: move money from people who have it to [...]

Banking on Trouble?

By | 2017-07-17T12:22:08+00:00 February 17th, 2016|Global Market Update|

What’s wrong with the banks? Photo: IvoShandor. Source: Wikipedia So far this year, equities are down about 10%. Shares of financial firms have led the way, down about 15%. And longer term, bank stocks still haven’t recovered from their losses during the financial crisis. What’s wrong with them? You could throw up your hands and attribute it to random price action, but that doesn’t make sense. Even though they’re hard to predict, there’s still some semblance of rationality to stock prices. When oil prices [...]

Show Us The Money

By | 2017-07-17T12:22:10+00:00 January 27th, 2016|Global Market Update|

Why don’t people trust bankers? Source: Gallup In a survey of how people rate the honesty of folks in different lines of work, medical professionals came out on top; members of Congress and car dealers were on the bottom. Bankers, lawyers, and journalists were pretty much in the middle. Confidence in financial professionals took a big hit after the latest financial crisis and Madoff scandal, as it did after the S&L crisis of the early ‘90s. Few people have experienced real losses when it [...]

Dark Matters

By | 2017-07-17T12:22:42+00:00 July 22nd, 2015|Global Market Update|

Dark Matters Is anything holding our financial universe together? Globular Star Cluster. Photo: Skeeze. Source: Pixabay In 1932 a Dutch astronomer couldn’t account for the movement of the stars given the current measurement of visible mass in the universe. He posited that dark matter must be holding the galaxies together. His hypothesis was confirmed 40 years later by another astronomer making observations about galactic rotation. In the same way, our economic galaxy appears to be spinning apart, lurching from one crisis to the next. [...]

Long Live the Queen?

By | 2017-07-17T12:34:14+00:00 September 15th, 2014|Global Market Update|

The King is dead. That’s what I thought when I heard that Emilio Botin, Chairman of Banco Santander, had died. Botin had been running Santander—based in Madrid, Spain—since 1986. His father, grandfather, and great-grandfather had all been bankers. He took what was then a sleepy, regional bank and built it into one of the largest banks in the world. He was a canny manager, acquiring Sovereign Bank in the northeastern United States for $3 / share in late 2008, when it might have cost [...]