Tying European countries together to form a single currency was always going to be difficult. Productivity is different in each country. And deeper than that, attitudes, lifestyles, and cultures are different. This is probably the reason why productivity levels across Europe have not converged. In the past decade productivity in Germany grew by 9.4%, while …
Daily archives: October 21, 2011
In favour of banking transparency
A short story about a bank that in the 1930s published a complete list of all its assets and liabilities, and showed how these made it a sound bank which therefore did not need to be tightly regulated. As the writer points out, steps towards greater transparency and disclosure would no doubt be resisted by …
Will China’s bubble burst?
Local governments have over-borrowed and are having cash flow problems. Beijing has allowed them to raise new money, via bonds (which previously were banned). This will help with short term cash flow issues, and buy time to get their borrowing in order. But the trend is that the situation is worsening. Much of the local …
Penalties for future bank bailouts
Distressed banks that needed aid from European governments or the region’s rescue fund would be subject to restructuring or wind-down. Those, at least, are the draft guidelines being discussed this weekend. http://www.ft.com/cms/s/0/b013215e-fb02-11e0-bebe-00144feab49a.html
New rules for ratings agencies?
European regulators are seeking to introduce new rules for ratings agencies. Ratings would be suspended for countries undergoing bailouts. (But what counts as a ‘bailout’, and how would the EU prevents ratings being applied by entities outside the EU?) The issuers of financial products would be forced to change the ratings agency they use, possibly …