"Des waerelds doen en doolen, is maar een mallemoolen,"

"Des waerelds doen en doolen, is maar een mallemoolen," engraving from Het Groote Tafereel der Dwaasheid, 1720.

"The actions and designs of the world go round as if in a mill." South Sea bubble financial crisis.

Wednesday, October 9, 2013

The Wall Street - Washington corridor

Robert Zoellik, former president of the World Bank is to be appointed as chairman of International Advisors at Goldman Sachs. 

Saturday, October 5, 2013

The amounting evidences against financialisation

Bruce Barlett gathered a good list of findings on the broken financial sytems of western countries and their effect on economic growth. It might be slowed down, because financial sectors compete with other ones for scarce ressources (human ones, most importantly), because they diverts investments in the real sectors of the economy and because of rising fees paid by nonfinancial companies. 

These empirical evidences is proving that the effects of big financial sectors on economic growth (to say nothing about rising income inequality, increasing political weight and the changes it induces on corporate governance). In other words, they show the costs of size. Which Western societies could maybe accept if financial sectors were at least efficient in what they are supposed to do (i.e. allocating capital). Far from it, there are plenty of evidences that they became casinos. Not only the piggy eats some money - which could be normal - but is loosing some too. Because its broken. 

Missing the good old scandals

Patrick Chappatte for the International Herald Tribune, July 18, 2012

If you think the LIBOR fraud were difficult to understand, wait until the alegation of this one are proven to be true. FINMA - Switzerland financial regulator - is investigating some swiss banks for possible manipulation of FX rates, among which the WM/Reuters FX rates, used as benchmark for "90 percent of currency derivatives contracts, such as swaps and options". It is getting harder and harder to even joke about it :)