Tag Archives: Debt

Free Money for Germany Is Bad News for Euro


By Mark Gilbert – Germany yesterday (Aug 20) sold 4.04 billion euros ($5.3 billion) of notes that pay no interest, repayable in September 2016.

Investors, it seems, are willing to forgo income for the safety of stashing their cash in the AAA-rated government debt of Europe’s biggest economy.

That’s a huge vote of no-confidence in the region’s growth prospects. more> http://tinyurl.com/qzkdneo

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Old Debts, Shady Collectors and Your Rights


BOOK REVIEW

Paper Boys, Author: Jake Halpern.

By Megan McArdle – The problem is enforcement.

The Federal Trade Commission, which is in charge of regulating this stuff, is not really equipped to rid the world of a bunch of fly-by-night collection shops operating out of temporary office spaces or the back of some guy’s warehouse; it’s good at wrangling with corporations that have big, marble-floored headquarters that can’t easily be moved to a nearby shed if the government comes knocking.

It’s easy to see why enforcement would be a low priority when shutting one fishy operation down just means that someone else will pick up the paper and do the same thing — maybe even the owner, operating through a brand-new shell company. more> http://tinyurl.com/qaefsmn

Russia Sanctions Accelerate Risk to Dollar Dominance


By Rachel Evans – While no one’s suggesting the dollar will lose its status as the main currency of business any time soon, its dominance is ebbing.

The greenback’s share of global reserves has already shrunk to under 61 percent from more than 72 percent in 2001.

The drumbeat has only gotten louder since the financial crisis in 2008, an event that began in the U.S. when subprime-mortgage loans soured, and the largest emerging-market nations including Russia have vowed to conduct more business in their currencies.

“The crisis created a rethink of the dollar-denominated world that we live in,” said Joseph Quinlan, chief market strategist at Bank of America Corp.’s U.S. Trust, which oversees about $380 billion. “This nasty turn between Russia and the West related to sanctions, that can be an accelerator toward a more multicurrency world.” more> http://tinyurl.com/law7nnm

Who’s to blame for Argentina’s debt default?


By Tim Fernholz – The whole reason for Argentina’s 2001 default was the string of currency crises in Asia and South America in the 1990s, with the IMF and other international financial leaders having bungled their responses to a series of problems in developing economies.

Now, because the courts didn’t provide a pathway to a settlement, some say that New York’s status as a center for international finance may wane.

But why did Argentina issue its bonds in New York in the first place?

In no small part because people with money trusted US law more than that of Argentina, thanks to the country’s history of erratic economic policy. That suggests the real villain is … more> http://tinyurl.com/pao4nwk

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The Hidden Reason for Americans’ Shrinking Wealth


By Allison Schrager – Starting around 2001, American families put an increasing amount of their wealth in housing and took on more debt. This came at the expense of other kinds of investments, such as nonhousing wealth, which hasn’t returned to its 2001 peak.

As a result, real estate became a far bigger part of household wealth: Its value increased, and people bought more of it. The disproportionate investment is a big reason median wealth fell almost 40 percent when the housing bubble burst, and also a big reason we still haven’t fully recovered. more> http://tinyurl.com/pmdcp9x

Economics faces long needed upheaval as students demand right to dissent


By Robert Skidelsky – In a manifesto published in April economics students at the University of Manchester advocated an approach “that begins with economic phenomena and then gives students a toolkit to evaluate how well different perspectives can explain it”, rather than with mathematical models based on unreal assumptions.

Significantly, Andrew Haldane, executive director for financial stability at the Bank of England, wrote the introduction.

The Manchester students argue that: “The mainstream within the discipline (neoclassical theory) has excluded all dissenting opinion, and the crisis is arguably the ultimate price of this exclusion. Alternative approaches such as post-Keynesian, Marxist, and Austrian economics (as well as many others) have been marginalized. The same can be said of the history of the discipline.” more> http://tinyurl.com/otce83o

Why This Merger Boom Is Different


By Peter R. Orszag – In a relatively sluggish economy, it’s harder for companies to generate fast revenue growth, and investors seem to believe that it’s becoming more challenging to boost earnings growth by further streamlining existing corporate operations.

Over the past three years, 15 percent to 20 percent of growth in earnings per share has come from companies buying back their own shares. Such activity typically has diminishing returns.

As companies approach this threshold after years of substantial buybacks, the relative return for mergers and acquisitions may increase. more> http://tinyurl.com/lmqhdsj