Simple Money

By |2018-09-19T05:31:54-05:00September 19th, 2018|Global Market Update|

Is our financial system too complex? Photo: Ben Thai. Source: Pixabay In banking, there are four or five ways to measure capital and over a dozen ways to classify assets. In insurance there’s a complex web of reserve calculations and investment silos. And everyone in finance is subject to an alphabet soup of regulators: the SEC, FDIC, OCC, FINRA, FinCen, CFPB, NAIC, NFA, CFTC, and the list goes on. Will we improve our financial system by adding another layer of calculation and regulation? Having [...]

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China Futures

By |2017-12-14T07:27:09-05:00December 14th, 2017|Global Market Update|

What’s happening in China? Pudong Skyline. Photo: Pjt56. Source: Wikipedia China is the second largest single economy in the world and over half the size of the US economy. It’s home to some of the largest – and fastest growing – tech companies: Tencent, Alibaba, Baidu, and others. And of course, over 1.4 billion people live there, the most populous nation on the planet. They import and export over $3.7 trillion of products every year. China’s growth over the past 30 years has been [...]

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Looking Backward, Looking Forward

By |2017-11-09T07:31:27-05:00November 9th, 2017|Global Market Update|

Have we learned anything? Sketches of Janus, Roman god of beginnings and endings. Source: Wikimedia Ten years ago the world experienced a series of financial cataclysms that resulted in the longest and deepest recession since the Great Depression. It started in August 2007, when BNP Paribas announced that they were suspending redemptions on three of their most aggressive real-estate-linked mutual funds. Real estate prices had been falling for over a year, and the market for many mortgage-backed securities was drying up. BNP couldn’t raise [...]

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Torsken Kroner Nå!

By |2017-10-23T08:19:09-05:00October 23rd, 2017|Global Market Update|

Who says bankers can’t have fun? KLM : Source: NRK News Norway’s central bank is issuing new currency notes, with advanced security features. In the process, they updated the pictures on the front and back. In the past, these notes pictured artists, authors, and scientists. The new notes will feature scenes from the sea: lighthouses, ships, and fish. To promote the new notes, the Central Bank produced a lighthearted video: a take-two version of a popular song from the ‘80s, “The Cod is Coming.” [...]

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Making Banking Boring Again

By |2017-08-09T08:34:46-05:00August 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 [...]

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Make Banks Safe Again

By |2017-07-17T12:21:22-05:00April 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 [...]

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A Brief History of Bubbles

By |2017-07-17T12:21:40-05:00October 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. [...]

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By |2017-07-17T12:21:58-05:00May 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 [...]

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Bootleggers and Bankers

By |2017-07-17T12:22:04-05:00April 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 [...]

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Banking on Trouble?

By |2017-07-17T12:22:08-05:00February 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 [...]

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