interest rates

Last week's newsletter focused on Monti and Rajoy forcing Europe into true EuroTARP as the chief headline coming out of the latest European summit. A lot of other commentary focused on the agreement to let the ESM/EFSF buy up sovereign…

Liberalizing interest rates means that those sectors of the economy who have benefitted from very low lending rates – SOEs, local and municipal governments, real estate developers, and other large borrowers – are likely to find many reasons…

The US pension bailout fund PBGC is already stretched and may require more taxpayer money. Now it would be taking over pensions that will be even more underfunded, with asset values way below the present value of the liabilities. And more…

the ECB decided to prop up the German economy with low interest rates, rates that produced negative real interest rates and housing bubbles in Ireland and Spain. This was a policy designed to "bail out" the indebted German economy. We…

On Twitter the latest buzz is about the US ten-year government bond hitting a record low of 1.6713%. Some are amazed that the world of 'financial repression' where long-term yields are lower than consumer price inflation can go on and on…

Not a lot to say today but I do have a lot of links. The stories today are all the same, which is why I don't have a lot to add. One story to note is that the German government is now borrowing 2-year money at zero percent. This tells…

Our brains are not calibrated to deal with the unexpected. Most of us believe we are good risk managers but in reality we are not. Most of us trust that risk can always be quantified and expressed through some fancy modelling whereas,…

JPMorgan recently performed a study on the composition of portfolios managed by life insurance companies. The study looked at the top 20 life insurance firms using their regulatory filings. These are the portfolios set up to support…

Since the Great Financial Crisis began, Austrian house prices have zoomed at a pace well above the rate of inflation and the rate of rentals. The price action and other anecdotes make this sound suspiciously like a bubble. The same has…

Yesterday, John Carney at CNBC had a nice little post comparing Hyman Minsky's Financial Instability Hypothesis with some of the thinking by Friedrich von Hayek behind Austrian Business Cycle Theory. John rightly points to this passage as…