By April last year, it had become clear that conditions in China were heading into dangerous territory. Even though most mainstream attention was fixed on the then-still growing stock bubble, there was so much that was wrong almost everywhere else. The economy would not stop slowing, and indeed still has not. The financial system was worse, so much so that [...]
Part 1, with the introductory framework, is here. Prior to the crisis, the Basel rules “allowed” (if not downright encouraged since it was bankers that really wrote the rules through regulatory proxies) bank assets to be divided into “buckets” in order to calculate reserve ratios. The entire premise of reserve ratios, Tier 1 capital and all that, was to measure [...]
There is still a lot of what I think is misleading commentary about a couple of very important topics recently. In Europe, there is an overdrive by the ECB to get banks to lend to people and small businesses. That may be an ocean away with a currency difference in between even that, but what the ECB is doing is [...]
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