…Calmly observing the changing world

There is an entire (extremely profitable) business devoted to selling insurance against the default of bonds.  This allows an investor to purchase a riskier bond than he otherwise would (say, a Italian bond), and still feel safe – since he purchased insurance on his bond. This insurance is known as a credit default swap that we [...]

Everyone knows that times are tough, and also that the banks have been on very shaky ground.  If you were a bank, you’d probably be pretty worried. And the banks know better than everyone else just how bad off they are.  Such a bank might think long and hard about just how to protect itself and come [...]

When you are a small nation in the Alps and the currency of the countries around you is – how shall we say – in jeopardy, you might think you’d take some pride in your homeland.  You might think they’d pat themselves on the back for staying out of the Eurozone, and successfully forging their [...]

Back, in April, Treasury Secretary Geithner proclaimed that the debt of the United States would never be downgraded and that there was “no risk” of such an event.  As just about everyone knows by now, S&P downgraded the US on Friday.  Now that it’s occurred, Geithner is claiming that it doesn’t matter anyway. But it’s [...]

While the press core is enthralled at the prospect of the Obama administration’s renaissance (no matter how unlikely), and statiticians pour over census data, most normal Americans are making last-minute preparations for Christmas gatherings. Not the number crunchers over at Moody’s though. While admittedly it was a dud, they fired a shot across the political [...]

If your weather hasn’t cast a pall over June as it has here in the Pacific Northwest, the news and the economy surely have.  The oil spill in the Gulf of Mexico highlights governmental incompetence, the G20 lacks unified economic policy, some place called Kyrgyzstan is a complete basket case, and currencies and markets gyrate [...]

Supposedly, countries around Europe are tightening their belts.  Gone are the days of reckless spending, they say.  The Tories are ruthlessly slashing services after taking power: Chancellor of the Exchequer George Osborne announced today a 25 percent cut in spending over the next four years, excluding overseas aid and the National Health Service. The move [...]

When we are children, we conceive of banks as places to safely deposit money. If, by chance, you grew up watching It’s A Wonderful Life every Christmas, you probably have the idea that money deposited in banks is loaned out into your community: If modern banking truly worked this way, you would understand that when [...]

We’ve been watching Greece teeter on the brink for what now seems like an eternity. In another trend, we’ve been watching Fitch attempt to get tough with its ratings, in an effort to brand itself as the good rating agency. Both trends continued today, as Fitch downgraded Greece’s debt rating to BBB+. The Hellenic Republic [...]

Marxist czars are ascending to heights of power over the American economy. Bankrupt corporations stay in business by borrowing money at near-zero interest rates from the equally bankrupt government. The invisible hand of the market has been replaced by the translucent hand of the Federal Reserve as they no longer conceal their “ongoing market activities”. [...]