Guest post: What if Putin had bought Crimea?

The prospect of selling any sovereign territory to resolve disputes may seem like a taboo — especially so when it comes to the conflicted territory of Crimea. However, Joseph Blocher and Mitu Gulati, both law professors at Duke University, argue that such a “market” should in future be considered in public international law.

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Guest post: The IMF approach to sovereign debt restructuring

This year’s IMF-World Bank Spring Meeting is likely to include discussion of proposals to change the fund’s policy on sovereign debt restructuring. Gabriel Sterne, senior economist at Exotix with IMF experience, and Charles Blitzer, Principal at Blitzer Consulting and a former IMF staff member, argue in favour of a case-by-case approach.

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Gnawing the bones in China

By Anne Stevenson-Yang of Beijing based J Capital Research and author of “China Alone” who argues against any misguided faith in the magical powers of China’s leadership.

Between mid January and late March, China’s renminbi depreciated by 2.8 per cent, before settling into a few days of small and shifting up-and-down movements. The official line painted the fall as an intentional move by regulators trying to reduce speculation in the currency. Belief in such intent, however, relies on a dangerous conviction that China’s policymakers want to stop that inbound flow of capital and are in complete control of the system.

Within China’s banks, the view is quite different: “No one will take our calls or meet with us,” said one investment banker about the regulators. Government officials are too afraid of political reprisals to take responsibility for policy moves which could expose them to reprisals and prefer to stay as inconspicuous as possible. Read more

Guest post: Bitcoin, derivatives, and the IRS

This guest post is by Tim Karpoff, a partner at Jenner & Block and formerly Director of the Treasury Department’s Office of Financial Institutions Policy and Counsel to CFTC Chairman Gary Gensler, and Israel Klein, a Principal at the Podesta Group and formerly a senior Capitol Hill staffer. The authors do not represent clients with interests related to Bitcoin.

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Guest post: Outtakes from the American Express informercumentary & the Andreessen Bitcoin circus

This is a guest post by Aaron Greenspan the founder of Think Computer and creator of the FaceCash mobile payment system.

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Crimeanomics favours the West

This guest post on the Ukraine crisis is from Jorge Mariscal and Alejo Czerwonko, emerging markets chief investment officer and emerging markets economist, respectively, at UBS Wealth Management.

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Guest post: Ukraine’s debt — now comes the interesting bit

When your creditor takes some of your territory — can you make that territory take some of your debt? Mitu Gulati, a law professor at Duke University, last wrote for us on Russia’s $3bn Ukrainian bond. With Russia reinforcing its annexation of Crimea, Mitu considers Ukraine’s options with its debt after the secession.

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Overshooting and the Fed

This post by the FT’s US economics editor Robin Harding is cross-published from FT Money Supply.

I think people are confusing two separate questions in the recent debate about wage rises and spare capacity in the US economy: first, the amount of slack left in the labour market, and second, whether the Fed should deliberately try to overshoot its inflation objective of 2 per cent. Read more

Guest post: Mr Putin’s clever bond issue

What to do when your creditor invades? Beyond its occupation of Crimea, Russia remains a lender to Ukraine — even as IMF teams ponder the Kiev government’s financial sustainability. Mitu Gulati, a law professor at Duke University, considers both sovereigns’ options.

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GT Pellizzi, Financial Times, Mary Boone Gallery, NY

Something to catch in New York before it closes this weekend – a view of the times will live in by Mexican artist GT Pellizzi, exhibiting at the Mary Boone Gallery, close by Bergdorf Goodman on 5th Ave…

David Adler, a New York-based economic analyst and artist in his own right, offers a last minute review and discusses the belated rise of a movement focused on finance as an artistic inspiration and subject of critical commentary. Read more

Guest post: In defence of FX traders

From Joy Rajiv, who formerly worked in the Foreign Exchange trading divisions at both Morgan Stanley and Deutsche Bank. He left the industry in early 2013 for personal reasons unrelated to the current regulatory probe into the FX industry, and writes in a private capacity here drawing on his experience in the industry.

As someone who has worked in FX trading for three years at Morgan Stanley and Deutsche Bank from 2010 to 2013, I have been dismayed and discouraged by the recent coverage of alleged manipulation by FX traders at major banks. Traders have been fired, lawsuits have been filed and comparisons to Libor have been thrown around without much concern for detail. Media reports have focused their attention on abuse of a daily benchmark, called the WM/R (World Markets/Reuters) fix. Read more

An EM credit crunch, not a sudden stop

This post by Gavyn Davies has been cross-published at Gavyn’s own blog.

The crisis in the emerging markets’ “fragile 8″ , which threatened to sweep all before it a few weeks back, seems to have settled down almost as quickly as it erupted onto the scene. Investors are already asking whether it is now safe to enter the undoubted attractive valuations in the emerging world. Read more

Guest post: Back to the future with Scottish currency

The following is a guest post from Chris Cook, a senior research fellow at the Institute for Security and Resilience Studies at University College London. His work is focused on a new generation of networked markets – which will, in Chris’s view, necessarily be dis-intermediated, open, decentralised and, therefore, resilient. But his approach is informed by the past, and it is there that he finds a framework for an independent Scotland to use the pound, a Plan A Plus.

The rejection by all the Westminster parties collectively of the SNP’s Plan A for a post-independence UK currency union has elicited a string of possible Plan B solutions, several of them already considered and rejected as inferior to Plan A by the SNP’s expert group of ‘wise men’.

But the current debate is ill-founded, since the UK can have no more control over who uses the £ symbol as a unit of account, than they can have control over the use of metres and kilogrammes. Read more

The Fed, reverse repos and tri-party/bilateral repo market wedges

This is a guest post by Manmohan Singh, a senior economist at the IMF. Views expressed are his own and not those of the IMF.

The idea of eliminating the present wedge between Fed’s reverse repo program (RRP) floor and the interest on excess reserves (IOER) is intriguing because such a change would only allow the Fed to set the price on such operation (P), and would leave the market to determine the quantity of reserves (Q) on Fed’s balance sheet (Gagnon/Sack proposal).

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Russia must use Olympics to shrug off contagion talk

On the eve of the Sochi opening ceremony, FT Alphaville is pleased to present this guest post by Jorge Mariscal, emerging markets chief investment officer at UBS Wealth Management…

As it hosts this month’s Winter Olympics in Sochi, Russia will spend more time entertaining the world than educating it about the Russian economy. But financial market conditions mean it must also use the Games as a platform to prove some serious economic points.

This year, a tidal wave of capital outflows has engulfed emerging market currencies. Although Russia is stronger than the average developing nation, its currency and stock market have underperformed emerging market averages, with declines of 7.3 per cent and 11.6 per cent in US dollar terms, respectively. Against this backdrop, Russia needs to use the Games as a platform to advertise its resilience and competitiveness to investors. Otherwise, contagion from weaker countries risks sweeping it up. Read more

Investors should abandon long-term commodity bets

This guest post is from Mark Haefele, Global Head of Investment at UBS Wealth Management, and his colleague Chris Wright, Cross-Asset Strategist.

A key rule in financial markets is that rational investors should not take unnecessary risks. It is strange, then, that some savvy investors still allocate to commodities over a long-term, five-year-plus horizon. The assumption is that commodities diversify portfolios, hedge against inflation, and, in the case of gold, offer a safe store of value. But our research suggests these justifications for long-term bets on commodities are illusory. Read more

Guest post: The helicopter can drop money, gather bonds or just fly away

This a guest post by Stephanie Kelton, chair of the Department of Economics at the University of Missouri, Kansas City, who tweets under @stephaniekelton and Scott Fullwiler, associate professor of economics and James A. Leach chair in banking and monetary economics at Wartburg College.

Paul Krugman pointed out out in a recent post that whether a government finances itself through bond purchases, which are later bought by the Fed, or whether it prints money directly, makes no difference. The two are in effect the same. Some, however, still question this idea because they wrongly believe the Fed and the Treasury to be two separate entities. While this may be the case on paper, in reality they represent more of a married couple with a joint account than two separate entities. Read more

Deflation and secular stagnation: the real threats to EM

This guest post is from Larry Brainard, Chief Economist and Co-Founder of Trusted Sources, an independent advisory firm specialising in emerging market macroeconomic and policy research.


The continuing debate about the timing of Fed tapering has overshadowed two developing issues that have important implications for EMs in 2014. The first is the reappearance of deflation in the Eurozone and the other is the suggestion by former Treasury Secretary Larry Summers that the US economy is slipping into secular stagnation. Read more

El-Erian: Monday’s early market moves are notably consistent, but will they last?

Mohamed El-Erian, chief executive and co-chief investment officer at PIMCO, submits this guest post to FT Alphaville.

Note: an earlier post attributed to Mohamed was published in error. This was old copy. Apologies!


Every once in a while you get an almost perfect alignment between the trio of overall market performance, relative moves, and the news flow.

Monday morning proved to be one of these cases – shedding interesting light on immediate market drivers and how they interact. But the bigger market complexities and uncertainties – and, therefore, where legitimate differences of views exist – are impacted only marginally. As such, durability is an open question. Read more

Guest post: Why assassins don’t prefer Bitcoin

By David G.W. Birch, a director of the secure electronic transactions consultancy, Consult Hyperion. He is an internationally-recognised expert in digital identity and digital money, this year named one of Wired magazine’s favourite top 15 global sources of business information.

A few people e-mailed me about the recent no.1 threat to society as we know it. Personally I still think it is MTV, but other, better-informed people, think it might be assassination markets. More than one correspondent sent me a link to this article in Forbes.

The website Assassination Market, a crowdfunding service that lets anyone anonymously contribute bitcoins towards a bounty on the head of any government official.

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Guest post: The precariat needs a basic income

By Dr. Guy Standing, professor of development studies at the School of Oriental and African Studies and author of The Precariat: The New Dangerous Class, in which he argues that society must share the rental income gained by finance and capital investment in the global economy.

All over Europe, the precariat has grown sharply since 2008, although this emerging class, which has education but only intermittent, unstable labour, has been growing since the beginning of globalisation. The precariat faces chronic uncertainty, about what to do, about what incomes to expect, about state benefits that might be their due, about their relationships, their homes and about the occupations they can realistically expect. Read more

Art and Economics at the Athens Biennale

This guest post reviewing the current Athens Biennale is from David Adler, a New York-based economic analyst who is also an artist. He is currently preparing a monograph for the CFA Institute’s Research Foundation on “Financial Frictions” and co-authored an anthology “Understanding American Economic Decline” (Cambridge University Press).

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The Ultimate Stimulus

This guest post by renegade economist Amanda McCloud is based on her new lecture and was transcribed by her personal assistant, the satirical playwright Felipe Ossa. The talk was mysteriously rejected by the TED conference.

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El-Erian: Toyota’s consequential macro economic angle

Mohamed El-Erian, chief executive and co-chief investment officer at PIMCO, submits this guest post to FT Alphaville.

Toyota’s strong earnings announced today, together with the boost in its full year forecasts, will do more than turn heads among car analysts. They also speak to a global policy debate that has been simmering beyond the surface – namely the extent to which QE creates or diverts demand. Read more

Bear hunting

This post by FT commentator James Mackintosh is cross-published from the FT Long Short blog that James writes with John Authers. It’s well worth bookmarking.

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Is DIP financing the best option for Detroit?

By Bond Girl*

Last Monday, the Detroit City Council unanimously rejected a $350m debtor-in-possession (DIP) financing that would have been arranged and purchased by Barclays. Detroit’s state-appointed emergency manager, Kevyn Orr, has aggressively championed the deal as a means of releasing the city’s casino revenues, which are a stable and recurring resource that could be applied to eliminating blight and improving city services. Read more

The chart that explains the world

This post by FT commentator John McDermott is stolen cross-published from Off Message, John’s policy and culture blog, which you should be reading. — The management

In a new paper, Branko Milanovic depicts the recent history of global incomes: Read more

Guest post: The real fissure

Alexander Friedman, global chief investment officer of UBS AG, and his colleague Kiran Ganesh, cross asset strategist at UBS Wealth Management, share their thoughts on the core issues behind the Washington impasse. For reference, Friedman is American and oversees $1.7 trillion in managed assets…

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Guest post: A central bank unwind and collateral damage

This is a guest post by Manmohan Singh, a senior economist at the IMF. Views expressed are his own and not those of the IMF.

Some central banks (Fed, Bank of England) have become large repositories of good collateral as a result of their QE policies. But excess reserves at central banks are not the same thing as good collateral that circulates through the non-bank/bank nexus. Read more

Mercado Livre stock dances to a strange (earnings) beat

By the FT’s Joe Leahy and Arash Massoudi

Try to buy something on the internet in Brazil – tools, car seats for babies, cellphone covers – and one of the first sites to pop up will inevitably be Mercado Livre. Read more