Nobody really knows what is going to happen as Greece disproves all the narratives about the ECB’s ability to actually fix anything. As with all things monetarism, the attempts of liquidity were really about time rather than dissuading imbalances. But the funny thing about trying to buy time is that it so often removes the very pressure necessary to instill [...]
After enduring quite a bit of restlessness even into the early part of 2014, the Banco do Brasil (Brazil’s central bank) believed it had regained order in its currency “market.” Going back to the dramatic and global tightening episode around Chairman Bernanke’s taper threats in the middle of 2013, the real was caught in a very dramatic downdraft that has [...]
The Banco do Brasil, Brazil’s central bank, announced that it is beginning to study market demand for rolling over the swaps it introduced this year to stem the depreciation in the real. As I noted back in August, the bank was playing with fire by appealing to the swaps market. The problem with using swaps as a currency supporting measure [...]
With earnings season growing closer, banks are beginning to report on their initial estimates of how they fared during the “taper summer”. So far, it is not looking like they did well at all (not that that was a surprise). Despite all their elegant models and simulations, including risk/hedging systems, traditional statistical evaluation, no matter how complex, has trouble with [...]
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