Fancy That, There Are Costs To Financial Regulation

We really must control the banks you know. Fat Cat B’stards that they are, can’t have them just doing as they wish!

The problem with this is that there are costs to everything. And the more we control he bankers then the less finance flows through to firms. Which, given that a reasonable purpose of a financial system is that firms get financed means that perhaps we don’t actually want to regulate them bankers too much:

The micro impact of macroprudential policies: Firm-level evidence
Meghana Ayyagari, Thorsten Beck, Maria Soledad Martinez Peria 11 December 2018

Macroprudential tools have been implemented widely following the Global Crisis.…

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Laurence Kotlikoff On What Really Produced The Recession And Crash – No, Not Bad Bankers

It’s not necessary to entirely agree with this analysis to grasp and agree with the underlying point being made. It was the structure of the banking system, not the existence of bad actors within it, which led to the crash and thus recession. I’d definitely not agree with the solution either:

The Big Con: Reassessing the ‘Great’ Recession and its ‘fix’
Laurence Kotlikoff 28 November 2018

The general consensus on what caused the Great Recession can be summed up as “bad banks full of bad bankers did bad things”.…

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Well, Yes, Obviously Mr. Dalio – The Fed Raising Interest Rates Should Impact Asset Prices

This is not the most remarkable observation of all time by Ray Dalio, that the Federal Reserve interest rate rises are reducing asset prices. For the point and purpose of the Fed’s reducing interest rates – and that QE – during the recent unpleasantness was to raise asset prices. Now that’s all over things should return to normal, including the inflationary effects of that increase in the money supply upon asset prices. This isn’t a mistake nor an oversight, it’s the point:

Hedge fund billionaire Ray Dalio argued Thursday that the Federal Reserve has raised rates to a point where they’re hurting asset prices.

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Problems With Sovereign Money – MMT – And The Benefits Of The Current System

Rather one for the monetary geeks here, a look at sovereign money and why and how the current system might be better.

Sovereign money: A challenge for science
Hans Gersbach 31 October 2018

There has been an intense academic and policy debate on what monetary architecture is the most appropriate recently, but many issues are still unresolved. This column looks at the circumstances under which the current system and the sovereign money system yield the same outcomes, the core arguments in favour of the current system, and what advantages a sovereign money architecture might offer.…

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It Was Always Trivially Obvious That The Brexit Financial Services Deal Would Be Done

Glory Be, we are saved, Britain’s financial services industry won’t be cut off from the European markets. All of which is akin to that wondrous – possibly apocryphal – headline of yore, “Fog In Channel, Europe Cut Off.” For it never was true that there was going to be a problem with us not being able to sell them stuff. Any problem was going to revolve around them not being able to buy stuff from us.…

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That Qatar Fundraising Was Fine – Barclays Not To Be Charged

It would appear that the saga is over. Barclays is not to be charged over the Crash induced refinancing they gained from Qatar. That would seem to imply that they didn’t do what some suspected, round trip the money. Thus this is the end – barring any appeals:

Barclays has been spared a court trial over its emergency fundraising during the global financial crisis.

The High Court has dismissed a claim by the Serious Fraud Office (SFO) to reinstate charges against the bank.

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Many Theories Are Right About – Because There Are Many Reasons For – Investing

There are myriad theories concerning the hows and whys of peoples’ investing. It’s extraordinarily difficult to narrow it all down to one or two dominant theories. That is, we can’t really find a theory, can’t sort through the evidence to prove there is the one or perhaps two. The reason may well be because there isn’t one. There are many reasons and whys, hows, people invest. Thus we can find support for many different theories. Not because it’s all indeterminate but because there are those many different reasons and hows.

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The FT Entirely And Completely Misunderstands AIM Tax Breaks

If only the country’s main finance and economics newspaper was written by those with a smattering of knowledge about finance and economics. Not something greatly in evidence here:

The recent near-death experience of Patisserie Valerie and collapse of Conviviality, the bargain booze business, might make Chancellor Phil Hammond think again about all those rich tax breaks attached to shares on Aim, London’s junior market.

Thinking again’s never a bad idea. What, maybe increase the tax breaks?…

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Two Absurd Claims About Lending And The Great Crash

The Observer’s business editorial really outdoes itself today with two fallacious claims about bank lending and recessions, crashes and even the Great Crash. It manages to make the opposite statement to the one they normally complain about and then also get the cause of and reason for that Crash wrong.

They wanted companies to borrow and grow, but not like this. Last week, this concern was visible in the minutes of Bank of England’s financial policy committee.

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IMF Warns That Regulation’s Great – As Long As Banks Don’t Escape It

It does rather depend upon who you read here over the IMF’s latest warnings about debt, the next downturn and the final crumbling of capitalism. It’s entirely true that debt is now higher than it was in 2008 – maybe not the problem some think – and that there will be another downturn at some point. The question is, well, will the next one be as bad as the last? There it’s not so certain, thus the warnings.…

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