James Rickards, a former LCTM legal counsel and long-time capital market practitioner talks about capital markets, risk models and effect of globalization on the capital markets.
An interesting piece. James G. Rickard
Interesting points include:
* How the faulty Wallstreet's VaR model does not model the capital market risks and a "power model" derived from physics would be a better one in constructing a stable capital markets. A good analogy of how Richter scale is created to build cities around world regardless it's not forward-looking. (It's intriguing how a lawyer is so attracted to physics being applied to economics, and a new field of science - Econophysics)
* Wallstreet greed, arrogance, and repeal of glass-steagal act created the same bubble leading to 1929 crash.
* This time is no different to depression era essentially. Market is in a critically unstable state with tensions building up between deflation force and inflation attempt by government printing press.
* How globalization and unregulated derivative markets created a system that's strongly co-related and eventually too big to fail.
* Regulations on OTC derivative market, developing exchange-traded derivative market, breaking up of big banks, Volcker rule, etc.
* Banks' role and CDS trading on Greece problems
Friday, March 5, 2010
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment