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Michael Parmar  

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  • China's GDP: Reading The Fine Print [View article]
    thanks - i stand corrected and will bear that in mind. it makes a big diff.
    Jan 21, 2012. 07:11 PM | Likes Like |Link to Comment
  • Adverse Selection, Price Discovery And Coordinated Central Bank Action [View article]
    Thanks!
    Jan 20, 2012. 03:36 PM | Likes Like |Link to Comment
  • Baltic Dry Index Is The Most Alarming Chart Of The Week [View article]
    The chart is also driven by a massive increase in new ships being delivered; the traditional delivery of new ships is january
    Jan 20, 2012. 03:17 PM | 10 Likes Like |Link to Comment
  • Risk markets have turned a bit as word begins to leak out of Athens about a deal between Greece and its private bondholders. What few details there are seem to confirm what has been leaked over the past week - NPV losses to bondholders in the 65-70% range. Stoxx 50 rallies about 0.5%, now -0.2%.  [View news story]
    details also being reported of some holdouts on the March 20 14.5bn bond payment, they want an extra sweetener
    Jan 20, 2012. 01:09 PM | Likes Like |Link to Comment
  • China's GDP: Reading The Fine Print [View article]
    with falling/low euro for the next few months and probable double dip recession in EU (china's biggest trade partner), there is less scope for growth in exports and more scope for growth in EU imports.

    That puts downward pressure on Fareast market GDP growth, a significant one at that.
    Jan 17, 2012. 06:53 PM | Likes Like |Link to Comment
  • The Impact of Technology: Unemployment May Be More Stubborn This Time [View article]
    I agree with the large part of your article, and with $ up the trade deficit implications weigh heavily as someone commented above.

    In the UK under Thatcher in the 1980s, unemployment hit its highest peak but employment never recovered to pre-peak levels. Manufacturing sectors were decimated and to this day there are some Welsh coal communities with second generation unemployed; 20 and 30 somethings whose parents never returned to fulltime employment and who never themselves entered employment.

    On the whole though tech raises productivity and that is the US comparative advantage.
    Jan 15, 2012. 09:14 AM | 3 Likes Like |Link to Comment
  • The Time Is Now To Take Profits On These 2012 Winners [View article]
    i read your comment and apart from making the obvious statement that monday NYSE is closed, I would suggest you missed the point of that para. Each situation ought to be judged on its own merits, i don't look, nor credit david with simply looking at " this is similar to situation x so the same things will happen". if that was your expectation from the article, and issue with it that indeed the situations are not the same hence same things wont happen, i suggest you read it again
    Jan 15, 2012. 09:04 AM | Likes Like |Link to Comment
  • As rumored earlier, Greek debt restructuring talks have collapsed, with private bondholders unwilling to accept the IMF's insistence of a greater than 50% haircut. "Under the circumstances, discussions with Greece and the official sector are paused for reflection on the benefits of a voluntary approach," says the IIF chief (negotiating on behalf of the bondholders).  [View news story]
    if greece defaults and all cds falls due then cds pays out 0, many insurers.banks collapse and EU goes under meaning biggest economic bloc in the world goes under, etc, etc....

    this is a bargaining game, the cooperative outcome is to deal, anyone holding CDS with a less than 100% probability of payout in the event of default has an incentive to explore a deal.

    in such a game, the cooperative solution is typically 50/50 split (both parties outside options are of equal value or worthless) which is where we were headed with the IIF/Greece.

    However, Hedgefund holders have a different valuation and the Greece/EU has to factor in the impact of the downgrade to its bailout requirements and EFSF role in the sustainability of the bailout plan (likely EFSF rating and funding changes), which means a reset to the talks
    Jan 14, 2012. 08:02 AM | 1 Like Like |Link to Comment
  • The Time Is Now To Take Profits On These 2012 Winners [View article]
    David says:

    "The market seems to have taken the European downgrades in stride, but this was a similar reaction to the downgrade of the U.S. ... it was Monday when the markets took a huge tumble. What's more, the euro is sure to start selling off and dropping lower, driving the dollar higher which is a huge negative for U.S. multinationals, acting as a tax on profits. On top of all this, here comes Greece again. Recent reports are stating Greece may not agree to the most recent austerity package and may have a hard default after all. The prospects of a debacle of this nature have not been priced in. The Greece issue was supposedly wrapped up."

    solid, succinct analysis that gets beyond the "stocks are up things are fine" view.
    Jan 14, 2012. 07:47 AM | Likes Like |Link to Comment
  • The Solution For The Eurozone Debt Crisis Is Actually Quite Simple [View article]
    Good article.

    Its a bit more complex than only moral hazard.

    The problem with pricing risk, especially when there is insurance/hedging involved, is also adverse selection. Government intervention interrupts price discovery there as well
    Dec 6, 2011. 07:44 AM | 2 Likes Like |Link to Comment
  • Picking Winners When Greece Defaults [View article]
    Thank you for a clear and well written article. If I understand correctly, you are arguing, contrary to current thinking, which is that with assets and debts currently priced in euro a default will have a large negative wealth effect; instead proposing that the euro will strengthen follwoing default and hence everything in sight at the moment is underpriced - a default will have a positive wealth effect?

    'tis a brave soul that would sail a small ship into a force 10 gale....
    Dec 4, 2011. 05:06 PM | Likes Like |Link to Comment
  • Why The Central Bank Loans Will Not Stabilize The Eurozone [View article]
    Liquidity freezes occur as part of a price discovery mechanism - please have a look at the piece I just wrote on this site on this subject
    Dec 4, 2011. 04:52 PM | Likes Like |Link to Comment
  • Why The Central Bank Loans Will Not Stabilize The Eurozone [View article]
    There are more immediate problems that the central bank intervention has raised, and one of those is by ex-ante intervention to prevent a liquidity squeeze tipping the Eurobanking system into a default scenario, they have prevented the markets from price discovery of the true value of risk.

    This has introduced a new set of uncertainties surrounding their role.

    Are things so bad that they HAD to intervene? or is the market simply paranoid and they are preventing that paranoia from becoming a self-fulfilling prophecy?

    The markets have priced in a Greek default but not a bank default.

    That difference is anywhere upwards of a few hundred points on most stock exchanges.
    Dec 4, 2011. 04:50 PM | 3 Likes Like |Link to Comment
  • Ambrose Evans-Pritchard sums up the EU impasse with one word: Merkel. For now, while insisting on increased power to police the budgets of sinner states, she offers precious little in return. In the end, he writes, "we may just have to hunker down yet again and wait for Germany to blink at last, or detonate the fuse."  [View news story]
    While this is not what the market wants to hear, Merkel IMHO is trying to steer Germany and the EU along the more sustainable long run path of having a "proper" fiscal union in place to underpin the currency union and any measures for common debt financing and transfer payments amongst the states.

    The nature of EU politics means she must first put out the simple message of "Nein!!" to quick fixes, but she has not ruled out eurobonds in the long term nor transfer payments.

    She is well aware the Germany did VERY well out of the EU of the 2000s and they, like the PIIGS have to pay just as much.
    Dec 4, 2011. 04:41 PM | 7 Likes Like |Link to Comment
  • The 'Fix' Is In [View article]
    Keynes called it the liquidity trap.

    Even when interest rates are very low - if investing prospects are poor and deteriorating, people will hold onto cash. With people holding cash and not investing, the economy is likely to continue to face poor prospects.

    Keynes' answer was more government spending. Part of the high government debt levels in 2008-9 were built up on the notion of Keynesian stimulus.

    Keynes never advocated "spend, spend, spend" - if governments cant get their spending back through higher taxes following the stimulus, the amount of proposed spending is inefficient.
    Nov 21, 2011. 07:45 AM | Likes Like |Link to Comment
COMMENTS STATS
243 Comments
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