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Instability: Macro, Banking and Agency: PDF Print E-mail
Written by Burnham Banks   
Thursday, 15 November 2012 05:19

Instability: Macro, Banking and Agency:

 

Thirty years of prosperity, falling interest rates, rising stocks and bonds, moderate inflation and widening inequality of wealth within nations had led to an unstable position. While inequality has receded between countries, it had increased within countries regardless of their economic model or system of politics.

Last Updated on Friday, 30 November 2012 01:05
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Friday Pearls of Folly Nov 9 PDF Print E-mail
Written by Burnham Banks   
Friday, 09 November 2012 01:06

 

The yield on high yield bonds is not very high.

 

The ability of an insolvent concern to raise debt can stave off insolvency.

 

  • I’m sorry, I can’t pay you in silver or gold, will you take an IOU?
  • But that’s what you said last time. Can you pay off the last IOU?
  • Will you take paper money? 
Last Updated on Monday, 26 November 2012 07:31
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Time is Running Out, Even For Countries With Low Borrowing Costs. PDF Print E-mail
Written by Burnham Banks   
Tuesday, 30 October 2012 06:54

 

How does one put an economy in order? An economy is like a business, but it is a lot more complex, with more stakeholders. Still, a business in distress is a good starting point to try to find a way out.  

Last Updated on Tuesday, 30 October 2012 07:00
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Sheep to the Slaughter PDF Print E-mail
Written by Burnham Banks   
Tuesday, 23 October 2012 03:12

The need for political correctness is the tolerated, celebrated suppression of honesty. It conflicts with the goal of transparency. Yet today's world seems to drift toward more political correctness, rhetoric and oratorical populism.

Last Updated on Tuesday, 23 October 2012 03:14
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Friday Pearls of Folly Oct 12 PDF Print E-mail
Written by Burnham Banks   
Friday, 12 October 2012 07:22

Never write off the US consumer, particularly when the Fed is providing them with financing.

Last Updated on Friday, 12 October 2012 07:25
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Friday Pearls of Folly 28 Sep 2012 PDF Print E-mail
Written by Burnham Banks   
Friday, 28 September 2012 02:31

Happy Friday

Last Updated on Monday, 01 October 2012 00:42
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A Potentially Missed Opportunity. Southern Europe Has Bought UK and Germany Time. Will It Be Well Spent? PDF Print E-mail
Written by Burnham Banks   
Thursday, 27 September 2012 00:00

For the US, UK and Germany, a small window remains to raise long term debt. Take the UK for example. They need to issue 30 year debt in quantities sufficient to remove refinancing risk for the next 5 yrs, and then cut tax rates.

Last Updated on Friday, 28 September 2012 02:32
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Friday Pearls of Folly PDF Print E-mail
Written by Burnham Banks   
Friday, 21 September 2012 06:20

Its Friday and its been a long week...

Last Updated on Monday, 24 September 2012 03:11
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QE3. QE(N) PDF Print E-mail
Written by Burnham Banks   
Tuesday, 18 September 2012 07:03

Finally Bernanke has tired of announcing successive bouts of quantitative easing, he's just announced that the Fed will be buying assets until the labour market picks up.

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Asset Allocation Under Acute Uncertainty - The RIsk Neutral Portfolo PDF Print E-mail
Written by Burnham Banks   
Tuesday, 11 September 2012 05:26

Uncertainty and the Futility of Having A View.

 

Financial markets are highly uncertain today. As the great workout of 2008 continues to unfurl, the interplay of politics and policy on economics has blunted the traditional methods of fundamental analysis and asset allocation.

Last Updated on Tuesday, 11 September 2012 05:34
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QE, Debt Monetization and Hyperinflation Risk PDF Print E-mail
Written by Burnham Banks   
Monday, 27 August 2012 06:13

The rescue efforts from 2008 - 2012 to bail out the global economy have resulted in a massive inflation of sovereign balance sheets almost everywhere from the US Fed, to the Bank of England, the Bank of Japan, the Peoples Bank of China, and even the ECB.

Last Updated on Monday, 27 August 2012 06:18
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Liquidity Premia and Financial Oppression PDF Print E-mail
Written by Burnham Banks   
Friday, 24 August 2012 07:50

The co opting of banks in debt monetization, the fear of investors, the shackles of Basel 3, place significant constraints on the banking industry. 

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Investing In Funds PDF Print E-mail
Written by Burnham Banks   
Tuesday, 21 August 2012 00:08

My wife just showed me her mutual fund statements and reports which she received from the manager. After 15 years, this much vaunted fund manager had generated a nominal return of... zero.

Last Updated on Tuesday, 28 August 2012 22:17
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Economic Growth to Slow, Equities at Risk PDF Print E-mail
Written by Burnham Banks   
Wednesday, 08 August 2012 06:07

Equities continue to rise or at the very least are resilient in the face of good and bad news., Sovereign bond yields head for zero. Meanwhile economic data seem to indicate a synchronized global slowdown. What gives?

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Interest rates, equities, bonds and FX. Yield Droughts and Yield Junkies. PDF Print E-mail
Written by Burnham Banks   
Wednesday, 25 July 2012 02:36

Interest rates will stay low for a long time. The implications for higher interest rates are sufficiently dire that policy has no choice but to ensure low rates across the major currency curves for the foreseeable future. OK, longer than that.

Last Updated on Saturday, 04 August 2012 01:16
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Another Intractable Problem: Economic Growth, Sovereign Solvency, Inflation and Equality PDF Print E-mail
Written by Burnham Banks   
Wednesday, 14 November 2012 08:45

In early 2012 it gradually became apparent that the world was slipping into a synchronized slowdown. At least it became gradually apparent to slower minds like this one. By mid 2012 it became quite clear that the US recovery which started in August or September 2011 was petering out, Europe had never really picked up since the Summer of 2011 when Greece first exposed the vulnerability of the Union, and China’s slide was gaining momentum. In the last month we have seen better numbers from China, continuing weakness in Europe and in the US, a rebound in the real estate market if nowhere else in that economy.

Last Updated on Thursday, 15 November 2012 05:19
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Engineering Inflation, A Good Idea? PDF Print E-mail
Written by Burnham Banks   
Monday, 05 November 2012 01:23

Since the great transfers following the great crisis of 2008 and the realization that debt levels had surged out of control, inflation has seemed like a tantalizingly viable and easy solution to the debasement of debt.

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The Thirst For Yield (and other Class A drugs) PDF Print E-mail
Written by Burnham Banks   
Wednesday, 24 October 2012 01:06

The past decade has seen the emergence of the yield junkie. You recognize them from their propensity to pay and subsequently overpay for anything with the tiniest shred of yield from investment grade corporate bonds to sovereign bonds to AAA rated junk. In the past couple of years, the yield junkie has trampled on spreads and thinned out yields across investment grade and high yield bonds. The more hardened ones even buy equities for an at risk dividend payout.

Last Updated on Friday, 04 January 2013 06:41
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Human Nature PDF Print E-mail
Written by Burnham Banks   
Wednesday, 17 October 2012 00:45

Morality and social norms are informal rules of law which humans invent to deal with conflicts which do not yet warrant formalization in law. Morality exists for pragmatic reasons, the result of a Folk Theorem.

Last Updated on Tuesday, 30 October 2012 06:56
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Investment Outlook for 4Q2012 PDF Print E-mail
Written by Burnham Banks   
Tuesday, 02 October 2012 02:41

Note that the US economy had begun its recovery in October 2011. Stage 1 of the recovery came from exports. Countries that benefited were not the natural exporters like China and Japan but rather anyone exporting to emerging markets, since they were the only importers with any ability to pay. Now even this game appears to have run its course as every country on earth seeks to export amid the current synchronized slump. Exacerbating this is a dearth of trade finance whose natural source has been the European banks who now find themselves a little bit short on capital.

Last Updated on Wednesday, 03 October 2012 00:45
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Hedge Funds Ever More Relevant Today PDF Print E-mail
Written by Burnham Banks   
Thursday, 27 September 2012 00:36

Hedge funds are now more useful than ever now that many investors have given up on them.

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QE Is Only Debt Reorganization. Where Is The Business Restructuring? PDF Print E-mail
Written by Burnham Banks   
Monday, 24 September 2012 01:25

I'd like to understand the causality between lower MBS yields and unemployment. I'm sure there is a correlation, but I'm not sure that the dependence is so high.

Last Updated on Monday, 24 September 2012 08:15
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The Consequences of Serial Quantitative Easing, QE3, 4, 5... PDF Print E-mail
Written by Burnham Banks   
Friday, 21 September 2012 06:07

Painkillers are addictive. People follow the path of least resistance. Principles are always compromised. The prudent are the few. And often made to pay.

Last Updated on Friday, 21 September 2012 06:12
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Asian Private Wealth Management PDF Print E-mail
Written by Burnham Banks   
Tuesday, 18 September 2012 02:41

In a previous article (Private Wealth Management) we explored the failings of the current model of wealth management in Asia. Now we look at possible solutions.

Last Updated on Tuesday, 18 September 2012 07:07
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How Emerging Markets Mature and Employment PDF Print E-mail
Written by Burnham Banks   
Tuesday, 11 September 2012 04:42

Having just read the article in the latest Economist magazine on Emerging Market economies creating a welfare state I started thinking about how economies mature.

Last Updated on Tuesday, 11 September 2012 05:35
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Emerging versus Developing Markets; Equities versus Bonds PDF Print E-mail
Written by Burnham Banks   
Monday, 27 August 2012 00:36

Given the fragile state of the global economy the resilience of risky assets is remarkable.

Last Updated on Monday, 27 August 2012 01:43
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Where, When and How Does Quantitative Easing End? PDF Print E-mail
Written by Burnham Banks   
Tuesday, 21 August 2012 12:38

What's all this talk of QE3? The private commercial banks have been big buyers of US treasuries to the extent that they are operating QE3 on behalf of the Fed. Buying has accelerated from 63 billion usd in 2011 to 136 billion usd YTD 2012. The Fed is already the largest lender to the US treasury, ahead of the PBOC.

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This Protectionist, Mercantilist, Non-Cooperative Landscape. PDF Print E-mail
Written by Burnham Banks   
Monday, 20 August 2012 02:53

You can't have your cake and eat it. The economy is a complex system and like most systems it has a number of variables or parameters. Some of these you can control. Others are the consequence of what you control. It isn't always possible to choose all the controls and consequences.

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ESM = Hedge Fund. ECB = Its Prime Broker. Will the ESM be UCITS? PDF Print E-mail
Written by Burnham Banks   
Saturday, 04 August 2012 01:13

 

The world's major central banks need to buy the debt issued by their governments. This is not just to boost the economy by increasing money supply. It is mostly because no one else will buy their junk bonds.

Last Updated on Saturday, 04 August 2012 01:17
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A Strategy For Erratic Markets: Event Driven and Pentwater Capital. PDF Print E-mail
Written by Burnham Banks   
Monday, 23 July 2012 23:38

In these treacherous times the degree of macro risk in markets is substantial and it is tempting to try to capture these opportunities. The confident macro trader will certainly argue for the opportunity while the fundamental investor may be confounded by factors beyond their considerations. One of the more controlled ways of investing in the current environment is event driven strategies.

Last Updated on Wednesday, 01 August 2012 00:27
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