Financial Stability

Debunking misconceptions on China?

Recently the research house CLSA issued an in-depth special report on Chinese economy called Misunderstanding China, trying to debunk certain so-called western illusions about China’s economy. Some of its points, such as the party’s influences on domestic financial institutions, the absence of a mature legal system and etc., are fairly reasonable. However, we believe that this report still illustrates a typical optimists’ view on China’s economy that we do not agree with. Therefore, we find it very necessary to clarify our standpoints of the Chinese Economy by raising our counter-arguments to some of CLSA’s assertions, with which we disagree most.

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Lethal Embrace? A Thought Experiment

At the heart of the Eurocrisis lies a vicious circle where once there was a virtuous one.  Over the last week or two, the FT has been reflecting on the connection between the sovereign debt crisis and the bank crisis, conjoined twins (as George Soros has put it) of the current Eurocrisis.  See here, here, here.

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Swexit - When will Switzerland exit the euro?

Since September 2011, the Swiss National Bank has held a floor of 1.20 francs per euro. This floor has in practice been a peg, as the pressure has been in only one direction, downward (that is, in the direction of CHF appreciation).

Image via FT Alphaville Read more

Why FX deposits surge in China

China’s monetary statistics for April 2012 showed weakness in both loan and deposit growth. In particular, Renminbi deposits fell by 465.6bn yuan, compared to a 342.4bn increase in April 2011. However, bank deposits denominated in foreign currencies (FX deposits) in China have been surging since the beginning of this year. FX deposits increased by 32.5% in the first 4 months of 2012, compared with 6% growth in the first 4 months of 2011. Every month there is about 20bn USD added into the banks’ deposit accounts.

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PBoC against the market on USDCNY

We update our USDCNY interday-intraday framework, which was first proposed here. The advantage of this framework is that it decomposes USDCNY movements into two parts and thus distinguishes market view from PBoC’s view on USDCNY, which are often in opposite positions.

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Maynard's Revenge: A Review



Below is a revised version of a talk I gave at the New School University, at a conference to launch Lance Taylor's latest book.  The date of the event was April 28, 2011, more than a year ago, and the delay in revision was entirely my fault--overcommitment and pressing deadlines on many fronts.  Sorry about that. 

Lance Taylor, Maynard’s Revenge:  The Collapse of Free Market Macroeconomics (Harvard 2010). Read more

Insights from Bagehot, for these Trying Times

Here is a talk I gave recently at Wake Forest University.  It is pretty long, but you can page through the video (on the left) by paging through the powerpoint (on the right), and anyway the last twenty minutes are devoted to questions.  I couldn't figure out how to embed it in the blog, but the link will get you there.

Banks as creators of money

In conversation recently, I was called upon to defend the claim that banks are in the business of creating and destroying private money. This has been for me a working hypothesis for so long that I was unable to respond effectively or cogently to the argument. My interlocutor followed up in e-mail with a Cowles Foundation paper by Tobin in support of her case. Here is my response to Tobin, hopefully better articulated than I managed on the fly. In this post, I'll stick to the theoretical claim (the practical context was bank capital requirements).

I agree wholeheartedly with Tobin's dismissal of the Read more

Huffington Post Features INET Financial Stability Documentary, With Introduction by Rob Johnson

The Huffington Post spotlights the INET financial instability video, produced by Four Corners Media, accompanied by an extensive written introduction from INET Executive Director Robert Johnson.

This video is the first in a series of mini-documentaries that will address vital areas in new economic thinking.

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