CPI at 3.7% for July 2010

From Stats SA The headline inflation rate in July 2010 (i.e. the Consumer Price Index for all urban areas in July 2010 compared with that at July 2009) was 3,7% The official inflation rate (i.e. the percentage change in the CPI for all urban areas in July 2010 compared with that in July 2009) was […]

Book Review: The Big Short

Michael Lewis, of Liar’s Poker fame, has written an engaging account of the role that subprime lending played in the global financial crisis. The new book is called The Big Short: Inside the Doomsday Machine The jargon that Lewis uses is generally explained and shouldn’t prevent non finance geeks from understanding the role of subprime […]

Basel III likely to be tempered

The FT has an article (Banks win battle to tone down Basel III) describing how the proposed new rules for banking capital requirements might have some of the new requirements around liquidity removed or weakened. Key amongst these new considerations is the limitation of mismatches between the term of assets and liabilities, which would limit the danger […]

Allocating capital to insurance products

A friend “volunteered” me to answer an insurance question from Aardvark on allocating economic capital across different insurance products. After writing a short response, I received the frighteningly useful message: “Error”. Having written a brief summary of the different techniques used in this really important area, I thought I should use it as a blog […]

69th bank failure in the US for 2009

The US Federal Deposit Insurance Corporation closed the 69th bank of 2009 recently. The rate of closures has increased recently, leading some analysts to believe that well over 100 banks could be closed this year. The Savings and Loan crisis of the 1980s in the US started at about the same pace, with 100 closures […]

Good economic news for Lebanon

I blogged before about some medium-term concerns I have around Lebanon’s currency stability. A story I saw today shows an opposite view, so I’m linking it here.  Moody’s have upgraded Lebanon’s bond ratings due to improved external liquidity. My original post was to temper the irrational optimism around the currency peg, rather than to say […]

Massive currency risk

In my previous post I discussed some of the risks to various currencies. Now what happens if your local currency is pegged to the US Dollar as it is in Lebanon? Speaking to Lebanese bankers and insurers there seems to be a devout belief  that the peg is rock solid.  This is surprising given the […]

Spare a thought – reverse mortgages

Skyrocketing home prices were ignored by the retired masses. With limited income and huge equity stored in their primary houses, thousands of retired home-ownders in the US and UK dipped into the equity in their houses. photo credit: TheTruthAbout… Banks facilitated this through the creation of home equity release products or “reverse mortgages”. The bank […]