I can’t believe how the same blog post is basically exactly relevant, word for word, 3 years later. Eskom produces electricity for the country and makes a profit or a loss doing so. This profit or loss goes back into treasury, which, inefficiencies aside, belongs collectively to the citizens of South Africa. If prices are…
So the “right party” wins the election in Greece supporting the bail out. Â Good news? No, not really. The ECB and European (aka German) policies on Greece are doomed to fail. I tweeted this morning that all I don’t see any good news, but I can small straws burning. Those are the straws that are…
Fascinating idea.  Should Germany leave the Euro to save it? Would these be a less catastrophic result than several Southern countries leaving? What does this mean for runs on banks? It’s not all straightforward. We could still end up with a run on non-German banks since the  appreciation of the Deutschmark would correspond with a…
Clem Sunter outlines some scenarios and gives them probabilities. I’d stay as far away from this assessment as possible. In his explanation he demonstrates several times a pretty flimsy, superficial understanding of economics. I don’t think he knows the first thing about why unemployment rates have dropped in the US. Â He points to the dip…
Yes, government bond yields around the world are plummeting to all-time lows. Â They’re falling through the floor as investors realise the global economy is about as close to the drain as it’s been even through the “Global Financial Crisis”. What do you mean “what about Greece and Spain”? Government bond yields are plummeting everywhere except…
Volatility skew didn’t exist before the 1987 market crash. Before then, the assumptions of the Black-Scholes option pricing model were felt to be about right. Constant volatility, continuously tradeable instruments with no discontinuities in prices, independent returns from one period to the next. Then the market crashed downwards exhibiting leptokurtic, negatively skewed returns and large…
Bundesbank starts thinking about allowing higher inflation within Germany and the Eurozone to help the rebalancing of competitiveness of the periphery. This is the first sign of economic sense prevailing over popular ideology and rhetoric. A more in-depth look at the wording suggests maybe the move is rather smaller than I first thought, although it…
Mike Schussler has crunched some numbers and suggests, very strongly, that SA unskilled labour is vastly overpaid compared to international peers. My recent posts about the cause of structural unemployment in SA have mentioned the supply and demand imbalance of unskilled labour and the downwards rigidity of wages. If Schussler is right and the current…
