I thought of putting the Sahara case today vis-a vis the famous Bernard Madoff ponzi scheme scandal case … well the study is on, need more data collection and actual reporting but Kudos to RBI and SEBI as they finally nailed out the Sahara Scandal case with the help of Supreme court.
Recollecting some of the scandals in the Investment banking space from The Barclays Saga and Libor , LIBOR Manipulation : any thing for you Big Boyz , JP Morgan : Jamie Dimon Testimony and the series is endless ..I believe the quotes of the maverick author holds true :
- The main difference between government bailouts and smoking is that in some rare cases the statement “This is my last cigarette “holds true
- The difference between banks and Mafia: banks have better legal regulatory expertise,but Mafia understands the public opinion. Or you can say”Give a man a gun and he can rob a bank. Give a man a bank and he can rob the world” Continue reading “Financial Scandals”
I have been reading Noah Smith work and found very interesting, sharing the 2008, financial crisis that was unfolding, there was a big argument as to whether the crisis was a “liquidity crisis” or a “solvency crisis”. It’s a very important distinction. A “liquidity crisis” is when banks (or similar finance companies) are financially in the black – their assets are greater than their liabilities – but they can’t get the cash to keep paying their bills in the short term. A bank run is the classic example of a liquidity crisis – even if the bank could eventually pay everyone back, it can’t pay them back all at once, so if people get scared and all try to withdraw their money in a rush, they force the bank to collapse. A “solvency crisis”, on the other hand, is when finance companies are actually bankrupt, and no amount of short-term borrowing will change that fact.
This question has important policy implications in a financial crisis. If companies are illiquid but solvent, you just need to have the Fed lend them money to tide them over until liquidity comes back. If they’re insolvent, you either need to bail them out, or help them into an orderly bankruptcy, in order to reduce systemic risk caused by disorderly failure. Continue reading ““liquidity crisis” or a “solvency crisis” – 2008″
As we know this will be the year of Regulators across the globe, the deadlines are approaching to implement the regulations and some regulations already imposed on the financial industry. Trade Repositories to offer their services to Europe’s entities and ESMA’s updated version of EMIR implementation timeline showed the 12th of February as the start date for trade reporting, for all derivative asset classes, for both ETD and OTC derivatives.
Addressing few questions today and will continue to address in the future posts.
Question1: What’s your budget for Regulatory projects? Continue reading “Regulations 🙂 EMIR Trade Reporting – 1”
Many concepts in finance and economics are predicated on markets behaving rationally. Unfortunately for economists everywhere, humans can often behave irrationally, thus ruining many predictive models. In response to this apparent failing in what is called the “efficient market hypothesis,” a segment of economics called behavioral finance has emerged in order to explain why irrational behavior happens. Behavioral finance is an intersection of psychology and economics that studies why people behave the way they do when it comes to finances, risk, and other topics.
One aspect of behavioral finance is the exploration of cognitive biases. At its core, cognitive biases are thought patterns that cause people to make poor choices, even when evidence to the contrary is clear. They are thought to be mental leftovers from an earlier part of humanity’s evolution. Continue reading “Cognitive Biases in Behavioral Finance”
Well its the last day of the month and the world economy standing in the mid of year 2012. Lets try to pull the events by connecting the dots and see where the world is :
1) After months weeks years of posturing and denial Spain and Cyprus formally requested aid from Europe bailout funds. More so they have officially confessed to their insolvency and the insolvency of their banking system.
Spain 10 year bond yield breached the worst level and it touched the 7% in return many od the Spain bank ratings got junk by Moodys
2) Over in the US, the city of Stockton, California filed for bankruptcy this week… Continue reading “2012 Mid Year World economy towards the path of Bailouts & Bankruptcies”