Finance and Economics

Low Interest Rates: Possible Consequences?

Since the crisis of 2008, Central Banks in advanced economies have been pushing interest rates lower and lower and in some cases even into negative territory in the hope of reviving economic growth in the country. This has meant that for over 8 years the global economy has experienced near zero interest rates. With an more »

Black Wednesday: Why Britain never used the Euro

In recent days we hear a lot about “Brexit” i.e. the exit of Britain from the European Union (EU). But, Britain was never really a complete member of the EU. Unlike the rest of the members, Britain was/is not under the European Central Bank (ECB) and did/does not use the Euro as its currency unit. more »

More Money Than God

“In November 2008, after two months of market pandemonium, five hedge-fund barrons were called to testify in Congress, in what promised to be a show trial. But someway through the proceedings, an unexpected tone emerged. “”   “More Money Than God” has been written by Sebastian Mallaby, the Paul Volcker Senior Fellow in International Economics more »

Irish Real Estate Bubble

The Irish economy earned the distinction of being called the “Celtic Tiger” due to its phenomenal performance between the years 1994 and 2006. A huge driver of growth for the country was the construction industry, which accounted for nearly 24% of GDP in 2006. The Great recession of 2008 dealt the Irish construction industry a more »

CDS and Synthetic CDO: 2008, the other side of the bet

The global economic boom of the early 2000’s saw the explosion of the use of various financial products, these products were utilised by investors to profit from the high growth and optimism characterising the global economy in the early 2000’s. On the back of this positive sentiment in the global economy, products such as Collateralized more »

When Genius Failed

“At Long-Term there was radio silence. Its markets were tumbling, especially the equity volatility trade. The latest quote was 41 percent! It almost didn’t matter now. The firm had come to a halt. Trading had ceased, the phones were finally quiet. There was no one to call; the people the partners had been talking to more »

Interest Rates: Effect on Consumption and Savings

Interest rates have been used as an important policy tool to prevent inflation by Central Banks across the world. They adjust interest rates to correct supply and demand imbalances and hence solve the menace of inflation in their respective countries. A central bank increases interest rates when inflation is higher than what the central bank more »

Indian Growth: Corporate earnings and Government revenue

In continuation from the article Indian Growth: Transportation Sector Data for the transportation sector in India points towards a steady recovery in the past two years, with a pronounced recovery in one of the most important sectors of the country, the next sign of a recovery would come from an improvement in revenue growth for more »

Indian Growth:Transportation Sector

India overtook China to become the worlds fastest growing major economy in the year 2015. For the year 2014-15, the country grew at a rate of 7.3%. The estimates for the year 2015-16 point to an even better growth rate of 7.6%. In an otherwise dull global economy, India is a bright spot. India: The more »

Boomerang

“When people pile up debts they will find it difficult and perhaps even impossible to repay, they are saying several things at once. They are obviously saying that they want more than they can immediately afford. They are saying less obviously that their present wants are so important that, to satisfy them, it is worth more »

The Black Swan

“The sighting of the first black swan might have been an interesting surprise for a few ornithologists, but that is not where the significance of the story lies. It illustrates a severe limitation to our learning from observations or experience and the fragility of our knowledge. One single observation can invalidate a general statement derived more »

Iron and Steel Market

Starting 2013, the world has seen a dramatic fall in steel prices. The so called commodity super cycle which began at the start of the millennium has come to an end. Steel producing firms are frantically trying to reduce capacity since steel prices which fell by nearly 35% in 2015 no longer justify production. Iron more »

Panic of 1873

On 18th September 1873, Jay Cooke & Co. suspended deposit withdrawals, this led to the onset of what is now know as the “Panic of 1873.” The panic was also the beginning of the original “Great Depression” which is more formally known as the “Long Depression.” The panic was primarily due to the over expansion of more »

Liar’s Poker

“I was flushed with pride. But something didn’t quite fit. What did he mean:our AT&T’s? I hadn’t realised the AT&T bonds had been on Salomon’s trading books. I had thought my trader friend had snapped them from stupid dealers at other firms. If the bonds were ours to begin with….”(Lewis on making his first trade) more »

1979: FOMC and Bond Trading

On October 6, 1979, the FOMC or Federal Open Market Committee led by Paul Volcker announced a slew of anti recessionary measures, the most significant measure being, the Federal Reserve would target the quantity of money rather than the price of money, more specifically the amount of bank reserves in the system. The price of money more »