Credit Writedowns

There is an element that links the terrible human tragedy in the Mediterranean and the ongoing Greek crisis. It is Europe's over-emphasis on moral hazard.

The point of all this is that models don't have to model everything, and even "wrong" models can be helpful if used in the right way. And narrative has its uses too.

Greece is expected to submit a more complete list of reforms in order to free up funds so the country can service its obligations. Four times the Greek government has provided lists and four times the European group of finance minister…

Yesterday was a big conference day in Washington, D.C., with the IMF and World Bank meeting and with the Brookings Institution holding an event featuring the Greek and German finance ministers. While I attended the Brookings event, the…

The question of whether markets are prepared for the default of such a large debtor is a good one to ask in thinking about tail risk as the situation at Petrobras encapsulates the intersection of emerging market US dollar corporate debt,…

By Michael Pettis When Isaac, an editor at Foreign Policy, sent me an email two weeks ago asking if I could write a piece on the new Asian Infrastructure Investment Bank (AIIB), I quickly wrote back promising 1,200 words within a few…

I have mentioned 1994 as a benign comparison for the US economy of 2015 as opposed to the 1937 comparison Ray Dalio made recently. Having looked at reasonable worst case scenarios with 1997 Japan as a model, I want to look at upside…

A number of stories over the past week that I don’t have a full analysis for are interesting enough that I want to mention them in a potpourri post of market news. I don’t have a view on all of these stories but I do think these are some of…

Yesterday I made up the phrase “The Four Horsemen of this rally” when discussing the bull market rally with a colleague. What I was trying to get at was the unsustainable nature of a divergence between top line revenue growth and the…

Going forward, equity markets are likely to have a much bigger impact on the economy than has been the case in the past. This is a simple conclusion derived from the fact that total equity market value today is 1.2x GDP. 35 years ago, when…