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Saturday, September 7

7th Sep - Weekender: Economics & Markets



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ECONOMICS
The Most Important Economist You’ve Never Heard Of – BB
Ronald Coase and the Misuse of Economics – The New Yorker
Remembering Ronald Coase – Free exchange / The Economist

The Absorption of Talent into Finance: Evidence from U.S. Banking Deregulation – DNB (pdf)

Finance as a Magnet for the Best and Brightest: Implications for the Real Economy – DNB (pdf)

Quantitative Economics – quant-econ.net
This website presents a series of free lectures on quantitative economic modeling, designed and written by John Stachurski and Thomas J. Sargent. The primary programming language is Python.

Capital controls: Against the tide – Free exchange / The Economist
If minimal capital flow limits let you float your currency and guarantee monetary independence, well, economists might warm to that compromise.

Banks and sovereign risk: a granular view – Bundesbank
Deutsche Bundesbank Discussion Papers by Claudia M. Buch, Michael Koetter, Jana Ohls

Intraday dynamics of euro area sovereign CDS and bonds – BIS

Global and euro imbalances: China and Germany – BIS (pdf)

Libertarians Are the New Communists – View / BB
Radical libertarianism, if ever put into practice at the scale of something bigger than a tiny enclave, would also be a disaster.

  CENTRAL BANKING
Effects of explicit FOMC policy rate guidance on equities and risk measures – DNB (pdf)

Gold, paper, scissors, lizard, e-money – alphaville / FT
Miles Kimball, economics professor at the University of Michigan who blogs at Confessions of a Supply-Side Liberal, is fast becoming the poster child for the movement to introduce an e-money solution to overcome the ZLB problem.

Whose Central Bank? – Project Syndicate
J. Bradford DeLong: Broadly speaking, economists have long split into two camps over the purposes a central bank should serve. One camp believes that a central bank should serve bankers, while the other camp believes that its primary responsibility is to maintain the robust functioning of the economy as a whole.

Dilemma not Trilemma: The global financial cycle and monetary policy independence – voxeu.org
Hélène Rey: The global financial cycle has transformed the well-known trilemma into a ‘dilemma’. Independent monetary policies are possible if and only if the capital account is managed directly or indirectly. This column argues the right policies to deal with the ‘dilemma’ should aim at curbing excessive leverage and credit growth. A combination of macroprudential policies guided by aggressive stress-testing and tougher leverage ratios are needed. Some capital controls may also be useful.

Quantitative and Credit Easing vs. Forward Guidance – EconoMonitor
Just because QE/CE has apparently small impacts on interest rates doesn’t mean that those measures necessarily have small effects on all asset prices. - See more at:

Democracy: Building a bypass – The Economist
The idea of independent central banking is to take decisions on monetary policy out of the hands of politicians.


FINANCIAL CRISIS FIVE YEARS OLD
The origins of the financial crisis: Crash course – The Economist

Explaining the schools briefs – The Economist

This Day in Crisis History: Sept. 6 and 7, 2008 – WSJ

The Failure of Free-Market Finance – Project Syndicate
Five years after the collapse of the US investment bank Lehman Brothers, the world has still not addressed the fundamental cause of the subsequent financial crisis – an excess of debt. If the debt problem continues to be ignored, the 2008 crisis will not be the last.

Where’s the next Lehman? – The Economist
Five years after the September 2008 global finance is safer but still not safe.


OTHER
Investment Outlook September 2013: Seventh Inning Stretch – PIMCO
In short, and in too-abbreviated summation, debt-laden economies with near-zero-bound interest rates became victims of their own excess, a condition that was more difficult to stabilize cyclically because Big Government and Big Bank had reached limits, and private market investors with huge portfolios of their own began to leave the ballpark early. Why stick around if your team is down by seven runs with only a few innings left? Why invest in financial or real assets if bond prices could only go down, and/or stock prices could no longer be pumped up via the artificial steroids of QE?

Complete Histories – The South Seas Company – The Forgotten ETF – The Big Picture

Hot Potato: Momentum As An Investment Strategy – Research Affiliates

What Buffett Believes But Cannot Prove – CFA Institute

Quants-R-Us? – Forbes
Algorithmic Trading Trickles Down To Individual Investors