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Saturday, August 13

13th Aug Weekender - Time to think


The really big questions are the same as before. Time to read, think and relax. The answers will come. What would you like to see here? Would you like to hear my view on your questions? Email me, or leave a comment.

EURO CRISIS
Greece’s bailout plan – agreed more than a year ago – is failing to meet some of its key objectives.”



FINANCIAL CRISIS
Probably this week’s best roundup of the really big themes.

Very good article on what is needed and what is probably done instead.

Asia holds $2.6 trillion of U.S. treasuries. 10 things Asian leaders need to think about

“They can buy a little time, but the real remedy must come from Western politicians”

“policy transmission mechanisms are severely undermined by structural weaknesses…a stunning lack of effective multilateral coordination”

While the stock market earnings yield and bond yield levels would suggest that stocks offer good value, the long-term picture is not that clear-cut.

Cash rewards to snitches. Time to get rid of skellies in closet before someone rats.

The Week That Was, in Verse – DealBook NYT


RATINGS AGENCIES

U.S. political leaders are using the S&P downgrade as an excuse to cut spending.




WEEKEND

1h video lecture from James ‘Jim’ Simons, the founder of world’s greatest hedge fund. Landing page has a long text summary of the lecture’s contents. From Dec 2010.

1h 43 min video lecture of  reunion of “five of the founding fathers of modern finance”:Andrew Lo, Stewart C. Myers, Myron Scholes, Robert C. Merton, John Cox and Stephen Ross, from Jan 2011

1h 38min video lecture by William Wheaton, Andrew Lo, Robert C. Merton, Bengt Holmstrom and Jiang Wang, from Oct 2010

Diversification good for extracting risk premia over reasonably long time and a key component of risk management, but ill-suited for loss control in severe downturns. Solution: hedging and insurance

EFA 2007 working paper: under random walk stops do not add value, but in the presence of momentum and several other distributions (i.e. periodic flight to safety regime switching), they work.

Safe haven flows and interest rate differentials explain more of the crisis-related movements in 2008 than in the past crises.
(pdf) Exchange rates during financial crises – Mario Kohler / BIS

World’s third-largest tobacco market by volume has become dominated by the international big tobacco. So no more Mr. Nice Guy, smoking and advertisement bans planned.


Dawkins’s book turned into a musical, runs until 20th Aug in Edinburgh, U.K.
The Selfish Gene, a musical – New Scientist

Unavailability of food leads to stress reaction and increase of appetite. But if the stress reaction is blocked, appetite does not increase. Behavioral finance people, to the experimental economics lab!