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Sunday, January 20

20th Jan - Weekender: Economics & Markets

A long post - but you don't have to read everything, so take your time and choose wisely. If this is not enough, see last weekend’s Markets and Economics

Previously on MoreLiver’s:

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 (audio) Masters of the Universe: Hayek, Friedman, and the Birth of Neoliberal PoliticsLSE
How did American and British policymakers become so enamoured with free markets, deregulation, and limited government? Based on archival research and interviews with leading participants in the movement, Daniel Stedman Jones has traced the ascendancy of neoliberalism from the academy of interwar Europe to supremacy under Reagan and Thatcher and in the decades since. He contends that there was nothing inevitable about the victory of free-market politics.

McKinsey: World needs $57 trillion in infrastructure by 2030. Yes, trillion with a 't' – Wonkblog / WP

The incoherence of risk coherencePortfolio Probe
What coherent risk measures are, why some people think coherence is important, and why I don’t.

Some small thoughts – On the power-struggle between ‘money’ and debtGolem XIV

Deep Dive: Financial Repression ReconsideredMarc to Market

Great Graphic: New Insight into Global TradeMarc to Market

Blocking a Bad Idea That Enriches the Rich EconoMonitor
Peterson, Austerity, and the Washington Consensus

A Comment on What’s Causing the Rise in InequalityEconospeak

The End of Labor: How to Protect Workers From the Rise of RobotsThe Atlantic
Technology used to make us better at our jobs. Now it's making many of us obsolete, as the share of income going to workers is crashing, all over the world. What do we do now?

Our correspondents ask whether the capacity for technological innovation to drive growth is slackeningFree exchange / The Economist

Unlimited growth... why the idea is just sillyThe Physics of Finance

Two extreme fiscal/monetary worldsWorthwhile
The real world lies somewhere between those two extremes, because most governments have both money and bonds as liabilities.

Once you turn base money into short-term debt, can you go back?alphaville / FT
The most exciting wonky discussion being had right now is between Steve Randy Waldman and Paul Krugman over whether “base money” and short-term debt are perfectly substitutable or not, and what that may or may not mean for central bank policy.

Monetary Policy: From Managing the Monetary Base to Setting an Interest Rate FloorEconospeak

Still a Skeptic: Addressing a Few Questions about Nominal GDP TargetingFED

High-speed Trading: Is It Time to Apply the Brakes?Knowledge@Wharton

Short Selling Bans Generally Don’t Work!Turnkey Analyst

Have we solved 'too big to fail'?
The Subprime Crisis became the Global Crisis when one too-big-to-fail bank was allowed to fail. This column argues that too-big-to-fail is far from gone despite years of reform efforts. It is important that it not be forgotten. Further analytical work, weighing the costs and benefits of different structural reform proposals, would help keep memories fresh and policies on the right track.

A better way to design global financial
Internationally prominent economists and politicians have been pushing for effective implementation and better coordination of the new financial regulations currently under construction across the globe. This columns argues that at a time of crisis, financial regulators were forced to act on systemically important assets and liabilities, rather than just on the individual financial institutions holding them. A key turning point towards better regulation will be when we recognise the need for such action ahead of time, building the essential infrastructure that ensures excessive risk-taking is discouraged.

Ending 'Too Big to Fail': A Proposal for Reform Before It's Too LateFED
(With Reference to Patrick Henry, Complexity and Reality), Remarks before the Committee for the Republic, Washington, D.C. · January 16, 2013

Snakes and Ladders: Investment Banking on the BrinkSpiegel
For decades, investment bankers have held the key to untold riches -- but now they're being laid off by the tens of thousands. As the crisis forces the industry to search for a new identity, is it ready to mend its ways?

Footnote 74: FACEPALM alphaville / FT
Oh, my, my, my. From JPMorgan’s Task Force Report into the London Whale with its billions of losses in synthetic credit, this footnote:

More Ideological Excuse Making for Bad BanksThe Big Picture

Deutsche Bank Derivative Helped Monte Paschi Mask LossesBB

EU Lawmakers Criticize Deutsche Bank’s Monte Paschi DerivativeBB

Bank capital requirements: Are they costly? –
There is a view that banks are using more equity capital – and relatively less debt – to finance the assets they hold, creating substantial costs so great as to make more capital unfeasible. This column argues that these costs are exaggerated, but that the benefits of having banks that are far more robust are likely to be large.

A tempest in a spreadsheetalphaville / FT
The Task Force Report into the billions of dollars of losses racked up by JPMorgan’s Chief Investment Office has revealed a number of things, not least of which are some impressive spreadsheet errors.

Book BitsThe Capital Spectator

Amazingly, 89% of bull market performance can be explained by timeLighthouse IM
Research Review: Asset AllocationThe Capital Spectator
Getting on with life after the “policy vol crunch”alphaville / FT

Top Ten Ways to Deal with Behavioral BiasesAbove The Market

Benjamin Graham’s “Foolproof Method of Systematic Investment”Greenbackd

Irrationality, trend-following, and catsFree exchange / The Economist

10 Trends to Watch in Finance for 2013The Big Picture

Founding Father of the Quants Was Revolutionary MarxistBB
Jacob Marschak may not be a household name today, but he inspired a number of financial practitioners and thinkers, from Milton Friedman to Harry Markowitz, and his insights are now the backbone of trading strategies and computer algorithms worldwide.

The Trading Profits of High Frequency TradersThe Big Picture

How Bucket Shops Lured the Masses Into the MarketBB

Daily QuickieHistorySquared
A Quick Look at Global Real Estate Bubbles For Hints of Bank Risks

Bridgewater AUM Rises To $142 Billion: Best And Worst Firm Trades RevealedZH

Credit hedge funds will continue to demand appropriate liquidity terms from investorsSober Look

On the Trail of SAC Capital's Steven CohenBusinessweek

How Vanguard amassed $2 trillionMarketWatch
What investors can learn from the fund giant’s success

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