An international programme for strengthening the global financing system

So reads the title of the briefing document in front of me at this EU summit in Brussels.

One point made is that:

market participants should develop a robust central clearing facility for OTC credit derivatives and fulfil .....

Hmm. Good idea, seen it around quite a bit. That by having contracts cleared through an exchange we provide both visibility and remove counterparty risk.

What they don't seem to realise though is that we've already got a clearing house.

The DTCC.

Slightly worrying when those call for a huge extension of their powers in this area don't actually know such things, no?

Email to a friend   |   Permalink   |   Comment

Oh Please!

Second, a cut in interest rates is announced less than a week before it is disclosed that inflation is at a 16-year high.

If we're going to do monetarism can we at least get the basics of it right?

The interest rate now influences the inflation rate some 18 months to two years hence.

So when we set interest rates we don't want to be looking at what the inflation rate is now but what we think it will be in the future.

Now, it is true to say that possibly the most accurate method of forecasting is...

Continue reading...

Email to a friend   |   Permalink   |   Comment

Bretton Woods

Umm, no, I think not Jean-Claude:

"Perhaps what we need is to go back to the first Bretton Woods, to go back to discipline,'' Mr Trichet said after giving a speech at the Economic Club of New York yesterday. "It's absolutely clear that financial markets need discipline: macroeconomic discipline, monetary discipline, market discipline.''

Fixed exchange rates? Capital controls?

Like that worked so well last time. But even that's not the point.

The point is one of economic liberty. To make such systems work you have to place controls on the ability of individuals to do as they...

Continue reading...

Email to a friend   |   Permalink   |   Comment

It is to giggle

According to George Monbiot we need a new type of economics:

But what Daly suggests is that nations which are already rich should replace growth - "more of the same stuff" - with development - "the same amount of better stuff". A steady-state economy has a constant stock of capital that is maintained by a rate of throughput no higher than the ecosystem can absorb. The use of resources is capped and the right to exploit them is auctioned. Poverty is addressed through the redistribution of wealth. The banks can lend only as much money as they possess.

Hmm,...

Continue reading...

Email to a friend   |   Permalink   |   Comment

Eeeek!

Polly's solution to the current banking woes is:

Brown needs a severe committee of those economists who were right when he was wrong - people to frighten the City, not to soothe its frightened feathers. Appoint the Richard Murphys, Will Huttons and Larry Elliotts not as City tsars but as City Savonarolas to flush out tax avoidance and evasion, to close down tax havens, to appoint honest non-executives to company boardrooms and institute a regime built on public trust.

Yes, trust is indeed important in banking. As we've seen actually, once that goes the whole system falls over.

It's...

Continue reading...

Email to a friend   |   Permalink   |   Comments (1)