Ahead of teaching corporate finance each year, I like to try to explain what a corporation actually is. * A corporation is a particular way of organising economic activities. What is called a corporation in the US is called a … Continued
Climate change is a systematic risk * In the standard theory of portfolio diversification, we divide risk into systematic and idiosyncratic or diversifiable risk. We argue that idiosyncratic risks can be diversified away, so there is no market reward for … Continued
Each year on the Master of Finance core course on Financial Institutions and Markets, I do a session on the Great Financial Crisis of 2007-09. One thing I emphasise is the many different causes of this highly influential event, which … Continued
Nuclear has a role to play in providing reliable carbon-free electricity, but in the US and Europe it is likely to be too expensive to have more than a small role. * As I have written two books about nuclear … Continued
Debt rating agencies have no particular expertise or special information on sovereign debt, especially for developed economies, so their views don’t matter * News that Fitch downgraded the US sovereign debt rating from AAA (the highest rating) to AA+ (the … Continued
Climate change involves systemic risk, so it’s not possible to insure against, or diversify away the risk. * Over the years I have sometimes heard investors talk of insuring their portfolios against climate change risks. A group of students once … Continued
Geopolitics has two related but distinct meanings * International politics, the relationship between states, is complicated. What are a nation’s interests? Determined by who? How do national politics affect foreign policy? Can technology transcend geography? How do culture and “national … Continued
A child’s enquiry about the Cold War brings back memories and raises concerns for the future * The other day a friend’s child asked me, what was the Cold War? Children ask about history all the time, but perhaps in … Continued
A country with several thousand years of distinctive cultural history is governed through European ideology * It is often said that China is one of the world’s oldest civilisations, tracing a history back to around 2,200BCE. Of course there were … Continued
Some people who know me don’t believe it, but as a child I wasn’t interested in international politics. But, like most people in Britain in the 1970s, I knew the name of the Saudi oil minister, because he was a … Continued
People are often surprised when they ask economists, what is money, and the reply is, well, anything that fulfills the functions of money is money: money is as money does. The classic definition of money is anything that is: i) … Continued
What happened? At 14.46 on 11 March 2011, the largest earthquake ever to hit Japan started in the Pacific Ocean about 72km (45 miles) from the Japanese coast. Occurring in fairly shallow waters, the earthquake caused a tsunami with a … Continued
People paid to worry about bad stuff happening concluded long ago that one way to destroy the USA as a functioning state would be to explode a high altitude nuclear weapon above the country; the resulting electromagnetic pulse (EMP) would … Continued
The shift of US attitudes on China owes as much to American disappointments as it does to changes in China’s behaviour * After the revolution that brought the Chinese Communist Party to power in 1949, a shocked US foreign policy … Continued
Oil and gas companies have few skills that are transferable to electricity generation and risk wasting a lot of their shareholders’ money. * “Peak oil” used to refer to supply but in recent years has come to mean the year … Continued