Despite the mostly friendly rivalry and healthy competitiveness between them, the universities of Cambridge and Oxford are far more alike than different. A neutral visitor to both would be struck by their similarities, the differences largely consisting in geography (Oxford city is larger, denser and surrounded by more attractive countryside than Cambridge, which has a… Continue Reading
Africa’s economic growth acceleration – this time is, I hope, different
Timothy Taylor’s blog comments on the latest World Bank Africa’s Pulse report, which has some encouraging data and analysis about the African economy. Having for so long been the laggard region of the world economy, sub-Saharan Africa has sometimes seen a growth spurt on the back of a temporary commodity price boom, only to see it… Continue Reading
The great mutual fund rip off
When I used to teach an MBA elective on capital markets, I would say that if the students remembered only one thing from the course it should be that on average active fund managers fail to beat the market and you are wasting your money paying for their advice. (I was gratified when I met… Continue Reading
The true meaning of “In the long run we are all dead”
Many commentators use John Maynard Keynes’ quotation “In the long run we are all dead” to suggest that Keynes, and by association those economists today who urge a moderation of government austerity policies, didn’t care about the future. The implication is that Keynes and Keynesian economists are recklessly short termist and would happily buy some… Continue Reading
Feline foreign policy
Socrates, who according to Plato argued around 400BCE that “the unexamined life is not worth living,” might have expected those of us lucky enough to have escaped the restrictions of a subsistence economy (that is, a billion or two people) to enjoy their wealth by spending more time contemplating and philosophising. Karl Marx wrote very… Continue Reading
The difficulties in doing social science
In natural (real) science you can do experiments where you can measure the influence of A on B while holding other things constant. No matter how good a theory is, it’s only taken seriously if there is an experiment that provides data consistent with it. You can’t prove a theory is true, proof is only… Continue Reading
Even now, banks are still not safely capitalised
A recent speaker on the MFin mentioned, almost in passing, that he didn’t think the Basel III regulatory system would actually be implemented, so flawed was its approach. I thought this sounded a little exaggerated but a recent speech from the the Vice Chairman of the Federal Deposit Insurance Commission (FDIC), Thomas Hoenig, suggests our… Continue Reading
On the difficulties of using macroeconomic data for policy advice
The economics blogosphere and now the mainstream financial press are full of discussion about the flaws in widely cited research done by Professors Ken Rogoff and Carmen Reinhart. These authors produced an excellent and path-breaking book This Time Is Different which surveyed in detail several centuries of financial crises. This book, which suggested, unfortunately correctly, that… Continue Reading
Master of Finance degrees and the job market
The Cambridge MFin careers report came out a few weeks ago. It showed that for the class of 2011/12, 11% were without jobs as of January 2013, four months after the end of the degree programme. Actually the figure should have been shown as 7%, because two students had jobs that they hadn’t actually told… Continue Reading
How to evade capital controls
The latest data on China’s foreign exchange reserves, showing a rise of $130 billion to $3.4 trillion, suggest that capital is flowing into China again after an apparent outflow ahead of the change of government in late 2012. There is also growing evidence of Chinese residents smuggling capital into China by disguising it as exports. The… Continue Reading
The dark side of share trading
A New York Times article recently reported data from Rosenblatt Securities showing that the percentage of total US stock trading done “off-exchange” has risen from about 15% in 2008 to over 35% in 2013 and occasionally as high as 40%. What does this mean? Conventionally, stocks (shares) are traded on an exchange, which is an organised… Continue Reading
The world’s most powerful bank?
The US magazine Foreign Policy recently ran an article titled “Hugo’s Banker” (meaning the late President Chavez of Venezuela) describing as the world’s most powerful banker Mr. Chen Yuan, the Chairman of China Development Bank (CDB). In what sense is this true? CDB is certainly very large – its total lending at the end of… Continue Reading
Bankers were deluded rather than evil – some evidence
A great piece of research from the authors at the University of Michigan and Princeton University (*) tests the hypothesis that the bankers inside the sub-prime mortgage bubble knew it was all too good to last. They find the hypothesis false. Many of the bankers in mortgage securitisation (transforming bank mortgage loans into bonds that were… Continue Reading
What is a sovereign wealth fund?
A sovereign wealth fund (SWF) is an organisation that manages financial and other assets on behalf of a government or nation. But what about the holdings of foreign exchange reserves by central banks? These assets, often much larger in size, are not regarded as SWFs. So what’s the difference? This question arose for me last… Continue Reading
Letter from Istanbul
It’s uplifting to visit a city that has a rich and glorious past but also an exciting future. So many cities attract tourists to their historic sites and buildings, who leave with a slightly melancholy sense that the best has gone and these cities have slipped outside the stream of history. But Istanbul is one… Continue Reading