How Significant is the BRICS New Development Bank?

"The argument that the creation of the BRICS Bank could make a significant difference to the global financial architecture should not be pushed too far. In the final analysis development banks are instruments of state capitalist development. Such specialised institutions are needed because of the shortfalls in the availability of long-term finance for capital-intensive projects in market economies, resulting from the maturity and liquidity mismatches involved. Resources mobilised are from those wanting shorter maturities and greater liquidity, and sums lent are to projects that are large and illiquid with long gestations lags and long-term profit profiles."

"Whether even this difference would be material depends on three factors. The first is the degree to which the emergence of the NDB alters the global financial architecture and perhaps, therefore, the behaviour of the institutions currently populating it. The second is the degree to which the BRICS bank can differ in its lending practices from the institutions that currently dominate the global development-banking infrastructure. And, the third is the degree to which a development bank set up as a tool of state-guided development by governments in countries pursuing capitalist and even neoliberal development trajectories can indeed contribute to furthering goals of more equitable and sustainable development."

http://www.nakedcapitalism.com/2014/08/significant-brics-new-development-bank.html

Europejski Enron 2.0

"Na początku lipca specjalizująca się w krótkiej sprzedaży i audycie śledczym firma inwestycyjna Gotham City Research opublikowała raport analityczny, w którym stwierdziła, że spółka Let’s Gowex (GWO) jest finansowym oszustwem fabrykującym nawet 90% swoich przychodów i ustaliła cenę docelową spółki na poziomie 0."

"Historia Let’s Gowex i jej charyzmatycznego założyciela i prezesa dostarcza wielu cennych lekcji o rynku akcyjnym. W niniejszym tekście skupię się na tym co zrobił GCR i co robią podobne firmy inwestycyjne. Od czasu do czasu na Blogi Bossa wraca dyskusja o przewadze rynkowej – czym jest i skąd inwestor ma wiedzieć, że ją posiada. Wydaje się mi, że inwestorzy potrafiący stwierdzić, że spółka, o której rynek nie ma zielonego pojęcia, że jest oszustwem, jest jednym wielkim szwindlem, mogą się pochwalić autentyczną przewagę. Inwestorzy z detektywistycznym zacięciem i znajomością rachunkowości mogą spróbować swoich sił w audycie śledczym. "

http://blogi.bossa.pl/2014/08/20/europejski-enron-2-0/

How Much Do Hurricanes Hurt the Economy?

"For years economists have debated whether destructive storms are even bad for a country's economy. To a non-economist, the ill effects of a storm might seem intuitive, but economists have a knack for finding plausible counterintuitive explanations."

"Hsiang and Jina looked at 6,712 cyclones, typhoons, and hurricanes observed from 1950 to 2008 and the economic fortunes of the countries they struck in the years that followed. With their data, Jina and Hsiang can decisively say: These storms are bad—very bad—for economic growth."

"The effects are lasting: Overall, they find that "each additional meter per second of annual nationally-averaged wind exposure lowers per capita economic output 0.37 percent 20 years later" (emphasis added). Put simply, economies "do not recover in the long run." 

So what does this mean for a planet with a changing climate?"

http://www.theatlantic.com/business/archive/2014/08/how-much-do-hurricanes-hurt-the-economy/375594/

Buffett Waits on Fat Pitch as Cash Hoard Tops $50 Billion

"Warren Buffett has never had so much money to spend.

Cash at his Omaha, Nebraska-based Berkshire Hathaway Inc. (BRK/A) rose past $50 billion at the end of June, the first time it finished a quarter above that level since he became chairman and chief executive officer more than four decades ago."

http://www.bloomberg.com/news/2014-08-04/buffett-waits-on-fat-pitch-as-cash-hoard-tops-50-billion.html

How to rip off a bank, Espirito Santo style

"I have been going through Banco Espírito Santo's half-year 2014 results. They make pretty grim reading. No, actually it's worse than that. They read like an instruction manual on how to rip off a bank.

I can't work out if the BES management at the time was stupid, naïve, complacent or criminal. Probably all four. No matter – it has now been entirely replaced. Well, I say “no matter” - but actually such abysmal management DOES matter. Those responsible for audit, risk and compliance have been guilty of incompetence so gross it borders on the criminal. And the former CEO and vice-chairman, Ricardo Espírito Santo Salgardo – a member of the Espírito Santo family – has been arrested on suspicion of money laundering and tax evasion. But I suspect he has done more than that: he was also chairman of ESFG, which – as will become apparent shortly – systematically drained the bank and its other subsidiaries. If he didn't know what was going on, he was incompetent: if he did, then he was a party to corruption and fraud on a simply massive scale. Exactly how massive is not yet clear. But I think we are talking billions of Euros."

http://www.pieria.co.uk/articles/how_to_rip_off_a_bank_esprito_santo_style

Creeping nationalisation

"Commercial banks are slowly dying. The activities that were formerly profitable are either illegal, immoral or simply not profitable any more. And the core activities that society wants and needs are also unprofitable, at least if they are done in the way that society has come to expect – free-while-in-credit transaction accounts, inflation-level interest on deposits, fixed low margins on lending. Meanwhile, commercial banks face stiff competition from new competitors – not new banks, though there are some of these, mostly backed by large retail organisations – but an astonishing and ever-increasing range of mostly internet or phone-based providers of deposit-taking, lending and payments services. Unlike the new providers, banks are having to meet higher capital and liquidity requirements and comply with tighter regulations, while suffering margin squeeze because of low interest rates and a continual drain of dissatisfied customers. And they are still facing legal costs and fines for their past misbehaviour. It's a very tough world for banks at the moment.

And they are paying the price. The big investment banks are already breaking themselves up, and they will be followed in due course by the big universal and retail banks. What has not been achieved through regulation may yet be achieved through market forces."

http://coppolacomment.blogspot.com/2014/07/creeping-nationalisation.html

BRICS’ new financial institutions could undermine US-EU global dominance

"During the 1997–98 Asian financial crisis, when middle-income countries were hard hit by big capital outflows, there was an effort by China, Japan, Taiwan and other countries to put together an Asian Monetary Fund to offer balance of payments support. Washington vetoed the idea, insisting that all assistance had to go through the International Monetary Fund. The result was a mess, including an unnecessarily deep regional recession, as the IMF failed to act as a lender of last resort and then attached all kinds of harmful and unnecessary conditions to its lending.

But the world has changed a lot in the past 15 years. Last week the BRICS countries (Brazil, Russia, India, China and South Africa) decided to form the Contingent Reserve Arrangement (CRA) and the New Development Bank (NDB), and the United States will not have a veto this time. These new institutions could mark a turning point for the international financial system."

http://america.aljazeera.com/opinions/2014/7/brics-developmentbankimffinance.html

Cztery analizy

"Literatura i praktyka proponują nam 4 rodzaje analiz decyzyjnych, których granice zacierają się na tyle, że mogą powodować pewien rodzaj niedopowiedzeń i nieświadomych działań oraz ocen.

Ich zakres rozpościera się od matematycznych czy statystycznych modeli z jednej strony po dyskrecjonalne (intuicyjne) oceny na przeciwległym biegunie. Krótki przegląd powinien pomóc rozpoznać ich wady i zalety, a przez to pozwolić odnaleźć nasze własne miejsce na tej mapie. A może przede wszystkim określić źródła części porażek.

Uprzedzę jedynie, że używane przez mnie niektóre nazwy mają charakter jedynie umowny."

"1. Analizy ilościowe"

"2. Analiza quasi-ilościowa"

"3. Analiza ilościowo – intuicyjna (lub inaczej: dyskrecjonalna, od ang. discretionary)."

"4. Analiza dyskrecjonalna (intuicyjna)."

http://blogi.bossa.pl/2014/07/15/cztery-analizy/

http://blogi.bossa.pl/2014/07/19/cztery-analizy-czesc-2/

BIS Slams the Fed; Ridiculous Question of the Day: "Is The Fed Going To Attempt A Controlled Collapse?"

Obszernym fragmentem wpisu jest podsumowanie w 31 punktach ostatniego raportu Bank for International Settlements (BIS), które warto przeczytać.

"The question stems from lengthy (256 page PDF) from the BIS Annual Report (Bank for International Settlements) that stated among other things "The only source of lasting prosperity is a stronger supply side. It is essential to move away from debt as the main engine of growth."

The BIS slammed the Fed in numerous places and in numerous ways, especially regarding the Fed's reliance on QE."

"30. Policy responses matter too. Central banks find it difficult to operate with policy rates that are considerably different from those prevailing in the key currencies, especially the US dollar. Concerns with exchange rate overshooting and capital inflows make them reluctant to accept large and possibly volatile interest rate differentials, which contributes to highly correlated short-term interest rate movements. Indeed, the evidence is growing that US policy rates significantly influence policy rates elsewhere. Very low interest rates in the major advanced economies thus pose a dilemma for other central banks. On the one hand, tying domestic policy rates to the very low rates abroad helps mitigate currency appreciation and capital inflows. On the other hand, it may also fuel domestic financial booms and hence encourage the build-up of vulnerabilities. Indeed, there is evidence that those countries in which policy rates have been lower relative to traditional benchmarks, which take account of output and inflation developments, have also seen the strongest credit booms."

http://globaleconomicanalysis.blogspot.com/2014/07/bis-slams-fed-ridiculous-question-of.html

Why Europe Needs Two Euros, Not One

"As the Eurozone cautiously implements stabilising reforms, Germany is forced to go further with concessions than it would prefer. This column suggests that it would be beneficial for discontented members to consider the formation of a second monetary union. The second euro can be constructed better than the first, bringing the discontented members exchange-rate adjustments relative to Germany, and avoiding competitive devaluations."

"A repeated question about the Eurozone is whether the members form an optimal currency area. But another question – which is actually closer to Mundell’s original contribution (Mundell 1961) – is whether the right number of currencies in the Eurozone is as high as 18, the number of member countries in the system. If the right number is neither 1 nor 18, then 2 may be far, far better than either extreme.

Let me begin by recalling the reasons why 18 would be too many. First, some of the members are probably small enough to have no scope for using monetary or exchange rate policy as a tool of economic stabilisation over the business cycle (McKinnon 1963). Next, the 18 members do form an economically integrated group of geographical neighbours, and therefore their mutual efforts to use monetary and exchange rate policy to their advantage could easily lead them to enter into non-cooperative games with costly Nash consequences. Finally, national monetary policy can mean Treasury-dominated monetary policy, which can lead to very poor outcomes apart from strategic games with any foreigners, near and far."

http://www.nakedcapitalism.com/2014/07/europe-needs-two-euros-one.html