Biography
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Izabella Kaminska joined FT Alphaville in October 2008, which was, perhaps, the best time in the world to become a financial blogger. (Added bonus: there was a free breakfast trolly.) Before that she worked as a producer at CNBC, a natural gas reporter at Platts and an associate editor of BP’s internal magazine. She has also worked as a reporter on English language business papers in Poland and Azerbaijan and was a Reuters graduate trainee in 2004.

Everything she knows about economics stems from a childhood fascination with ancient economies, specifically the agrarian land reforms of the early Roman republic and the coinage and price stability reforms of late Roman emperors. Her favourite emperor is one Gaius Aurelius Valerius Diocletian.

She studied Ancient History at UCL, and has a masters in Journalism from what was then the London College of Printing.

And yes, she is also a second-generation West London Pole (who likes mushroom picking, bigos and pierogi).

The Mt.Gox Bitcoin bubble

Come with us on a journey back to March 3, 2014. A time just after the premier bitcoin exchange Mt.Gox suspended operations (on Feb 22) and when nobody really knew why.

The in vogue explanation was that Mt.Gox had suffered an unfortunate technological fault in the shape of a “malleability” issue.

But it was also a time when the likes of Marc Andreessen were keen to reassure the Bitcoin faithful that: “MtGox price decline has little do with BTC price itself, has lot to do with MtGox-specific issues”, that “like collapse of MFGlobal in commodities trading, the collapse of MTGox posed no system risk. Didn’t affect broader system” and that “In wake of MtGox shutdown, BTC is trading at same level as it was .. two months ago. (Up strongly since shutdown itself.) Markets work”. Read more

WTI is retesting $45

WTI prices were sliding again on Monday:

And we’re probably going lower due to a glut of Saudi and Middle Eastern crude entering the market. Read more

A Cambrian robotic explosion

Space. The final frontier. We look out into it to seek out new life and new civilizations so that we can boldly go where no man has gone before. But also to overcome the unsettling feeling that we might be all alone in the cosmos.

So what do we do to overcome this angst? We develop high-grade instruments to peer ever deeper into the universe. We do this to try to make sense of the vast big black expanse. To see into the darkness. To extract meaning from the data.

In so doing, we discover new mysteries like dark matter and dark energy. We get up close and personal with Pluto.

And what do we do then? We manipulate the readings until the data makes sense to our own primitive pre-existing aesthetic expectations. We segment it, mould it, refine it, until it’s not just a fuzzy incomprehensible data feed but a pretty picture we can make sense of and relate to. And comment on. Read more

When financial inclusion stands for financial intrusion

A standard line you hear from fintech promoters is that innovative digital technologies can liberate the world by bringing financial services to the financially excluded.

Yet, as we’ve noted on numerous occasions, there’s something disingenuous about this claim.

You see, the only way financial technology can drive financial inclusion is by de-risking people who would otherwise be too risky to lend to, who can’t be trusted to use funds allocated to them productively and who certainly can’t afford the extortionate rates which would make it worth lending to them. Read more

Disrupting FREEDOM!

Citi’s back with the upcoming third edition of its Disruptive Innovations report, with ten new big opportunities to stop and think about.

These include:

  • Autonomous driving
  • Drones
  • Machine learning/artificial intelligence
  • Biosimilars
  • Floating LNG
  • Public API
  • Sharing economy
  • Virtual reality
  • Marketplace banking
  • Robo-advisors

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AIs desperately seeking an imagination model

What is imagination? How does it work? And what role does it play in consciousness?

Cognitive scientists have long hypothesised that imagination equals a “mental workspace” within which information can be processed across specialised subdomains. In other words, it’s a place where the brain can simulate the physical world around it and manipulate that simulation according to new variables to anticipate future scenarios. What’s always been a mystery, however, is how the mind knows what rules to use when manipulating that simulation.

Don’t worry. FT Alphaville isn’t turning into a bad science blog (Pluto fraud excluded). We raise the query mainly because of the current hubbub surrounding artificial intelligence systems and existential risk. On which note, do see John Gapper’s latest on killer robots and our own post from Wednesday.

In any case, the “imagination” issue is important because it’s a key factor differentiating a conscious AI system from a dumb one. And, weirdly enough, it’s also an area where economic modelling — the art of creating simplified theoretical constructs representing the complex economic process and relationships of the real world for the purpose of extrapolating future paths — can play a role in building AI systems.

Hence, we thought, it was a good time to showcase the work of Dr Simon Stringer and team at the Oxford Centre for Theoretical Neuroscience and Artificial Intelligence precisely because of how it differs to the engineering/big data-led approaches currently being touted as existentially threatening.

As Stringer has told us in the past, AI is a broad category of many kinds of techniques. Yet a true AI, in his opinion, is one capable of learning about its world without human supervision.

Despite all the media attention, techniques being developed by the likes of Google’s DeepMind venture are not capable of learning this way. Read more

Twitter’s active user problem

This is Twitter’s stock performance on Wednesday:

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Killer robots, AI and the path to stranded IT assets

Climate campaigners have popularised the notion that fossil fuel assets might one day become “stranded” because, if global warming is to stay within the internationally agreed two degree Celsius limit, they can’t realistically be burned.

It’s a view that has gained a lot of traction with investment managers leading to growing debates about strategies to de-risk portfolios by way of active engagement at the shareholder level or outright divestment. Read more

The bond liquidity ‘cognitive bandwidth deficit’ problem

The laissez faire school of finance has always orientated towards the notion that capital market funding is preferable to bank financing. Why? Because it’s only by taking your business to the open market that a borrower’s situation can be properly scrutinised and evaluated, and a fair price arrived at.

But, of course, some capital markets are more developed, sophisticated and disintermediated than others. In the US, for example, funding by way of the capital market is common practice even for small and medium-sized corporations (increasingly for unsecured household borrowers too if P2P market-based lending trends are to be accounted for). In Europe, however, the private sector — especially the SME sector — has always tended to fund through bank loans. Read more

On Nigeria’s ongoing inflation, fuel scarcity challenge

The Central Bank of Nigeria MPC voted eight to four to leave the monetary policy rate unchanged at 13.00 per cent following the conclusion of its two-day meeting on July 24, note Barclays’ emerging market team.

But, in a further signal that the oil producing country, which transitioned to a new government in March after 16 years of rule by the People’s Democratic Party, may be prepping for a sustained period of low petroleum prices the Central Bank stressed the importance of diversifying the economy away from oil and expanding its base of FX receipts. Read more

The greatest sustained EM reserve slump in 20 years

Bigger than Greece, bigger than China (or at least one of the most significant parts of the China story) is the massive shift occurring in global currency reserves. Long story short: they’re being depleted, rapidly. Especially the reserves of emerging market sovereigns.

On Thursday we suggested the evolving dynamic could be linked to a contraction of petrodollar/sweatdollars in the global monetary system, thanks to growing US energy independence and US labour/tech-based re-shoring.

We failed to mention, however, how the situation is exacerbated by China’s growing inability to throw renminbi at its export competitiveness problem due to not insubstantial dollar leverage exposure on the country’s books. Which is to say: China can only help its exporters — and by extension other emerging markets — by shedding a whole bunch of dollar reserves at the same time. Read more

With petrodollars also go global reserves

US energy independence alongside labour re-shoring is contracting the global pool of petro and sweatdollars and with it the business that is petro/sweatdollar recycling, especially to the EM world.

We’ve speculated before that this could create a financing hole that not only slows EM demand and trade, but weirdly enough also leads to the emergence of the petroeuro as the global funding and reserve currency. [Yes. Even accounting for Greece.]

It’s really only the ECB that in our opinion has the global presence, reputation and gravitas — not to mention the need — to be able to extend its balance sheet to the emerging markets, whilst maintaining the euroeuro shadow/parallel market in check. Read more

Why you can’t technically default on the IMF

It’s a nuance, but an important nuance.

The IMF isn’t a creditor in the usual sense of the word. It’s a collateralised bilateral swap agent that exists to help countries balance international payment obligations so that they don’t have to start wars, grab resources or asset-strip trade partners when they abuse their trust.

The clue comes in the ‘F’ of the IMF acronym, which of course stands for fund not force.

But even that is a misdirection, since the fund is actually made up of capital commitment quotas, not pre-paid lump sums of capital. Pre-paying would be dumb, you see — a waste of perfectly good capital. What if there’s no crisis to allocate the funds to? That capital just goes to waste, unused. Read more

Reminiscences of a Chinese stock operator

It looks increasingly likely that the latest Chinese stock boom (now abating) was fuelled by a rush of margin financing rather than anything like fundamentals, turning the whole thing into a bit of a house of cards (you don’t say), but just in case you have doubts, here’s UBS’s Lu Wenjie presenting some supporting evidence.

First, a chart and some factoids:

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Mpesa: the costs of evolving an independent central bank

We started this post before a Greek deal rendered the discussion of a digital parallel currency moot. Nevertheless, it’s still worth looking to the Kenyan M-pesa for a better understanding of why it’s dangerous to treat fintech solutions as panaceas for economies struggling with productivity, poor credit profiles, tax collection issues and overall corruption without understanding what’s really at stake.

Kenya is often presented as an example of a country which has flourished thanks to mobile money adoption — the poster child that “digital payments can make the world a better place”.

But often forgotten is Kenya’s unique circumstances. The M-pesa mobile money system, owned and operated by Safaricom which is 40 per cent owned by Vodafone, was allowed an unchallenged monopoly in the country for a very long time. Read more

China’s decreasing margin debt and those ETFs

What role did margin calls play in the Chinese market in recent weeks? In particular, margin calls against shares pledged as collateral by controlling shareholders, unleashing a wealth destroying vicious circle?

Following on from our previous post attempting to answer those questions, we bring you a chart, by way of Pravit Chintawongvanich, derivatives strategist at Macro Risk Advisors:

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What goes up must come down

Alternative title: Lessons in altcoin manipulation, or, how to manage a China-related cash-out without spooking the bitcoin market.

Over the last few weeks, it’s not been Bitcoin but Bitcoin’s little brother litecoin which has been clocking up the bulk of Greek/China crisis related gains. (The community has, of course, been doing their best to talk the crisis up for the benefit of paper profits.) Read more

Sharing economy disruption, maybe not so disruptive?

Airbnb has bulldozed its way onto the hotel market unleashing untold capacity and cratering prices. In 2015 the network orchestrator, as sector analysts describe the model, is likely to take $900m in disruption revenues.

And over the next five years Airbnb’s planned the growth could take its global market share from 1 per cent to 9 per cent, challenging even the largest existing online travel agents (OTA) leaders. And all because the platform’s figured out how to tap amateur hotelier capacity — other people’s assets basically — and make it commercially viable. Read more

Politics not fintech will determine a Greek parallel currency’s success

Earlier this week we gave fintech people a brief guide to the Greek crisis in a bid to explain why payments technology is unlikely to be part of any solution there.

On bitcoin specifically: why on earth would Greece want to replace the euro, a currency it already thinks too restrictive, with another which would be even more constraining and give Greeks even less control over monetary affairs!? Read more

Goldman on the commodity/EM financing negative feedback loop

When we bang on about there being a seismic shift going on in the world of commodity financing on account of the hypothetical eventuality of no more petrodollar or sweatdollar recycling, we too are talking about a negative feedback loop of worrying consequences for commodity/sweat-power producing emerging markets. Read more

China’s pledged collateral and those margin calls

Marginal Revolution’s Tyler Cowen presents the following as his question of the day:

How many China share halts r due to shares pledged as collateral by controlling shareholder who now faces loans called in and losing stake?

It is, of course, an excellent question. And we say to ourselves, if only we had the data.

But there’s another dimension to this sorry saga. The effect of margin calls on what may mostly have been circular paper-wealth effects (rather than real economy wealth effects) for such shareholders in the first place. Read more

Presenting the winners of the Great CampAV Quiz

And the triumphant winners were….

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Crowdsourcing wisdom at Camp Alphaville

If you attended Camp Alphaville last Wednesday you may have come across a chap like this:

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BAILOUT FICTION: Greece and the Groogle Syndicate option

The following is an extract from a hypothetical soon-to-be released fictional recasting of the Grexit story entitled #Groogle, by Stavroshi Notamoto.

IMPORTANT NOTE: THIS IS DYSTOPIAN FICTION Read more

A radical idea to bypass the Greek government

Citi’s Willem Buiter-headed team of economists provides an interesting external solution for the Greek debt crisis in an opinion piece late on Monday: bail out Greek banks but not the Greek government.

Remember, the problem for eurozone banks is part of their core capital is supposed to be made up of liquid instruments like government bonds, but in the case of Greece these bonds are as toxic as subprime securities and depreciating quickly.

Even if the ECB continues accepting Greek bonds as collateral for Emergency Liquidity Assistance, the terms would no doubt involve much larger haircuts, bringing us back to a 2011 capital hole scenario very quickly. So, it actually makes more sense for Greek banks to start swapping government bonds into different types of assets. Read more

Bitcoin being forked?

On the bitcoin.org website right now:

Which, just in case you didn’t catch the small print, magnifies to say:

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A not very golden crisis

Here’s a puzzle. Neither the Chinese stock slide or the Greek ‘no’ vote are having much of an effect on the gold price — odd given that the goldbug narrative that gold always performs well in a crisis:

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A summary of the Greek crisis for the benefit of fintech people

They say crises define movements and people.

If that’s the case, purveyors of fintech payment solutions could soon be defined as those who stood ready to exploit a Greek national bankruptcy crisis for the benefit of “onboarding” users. Read more

Financial technology, sustainability & Trichet on our sci-fi future

We’ve rushed straight from Camp Alphaville’s big data, AI and debt sustainability conversations to Paris to take part in a United Nations Environment Program-hosted symposium entitled New Rules for New Horizons: Reshaping Finance Sustainability.

[As an aside - we were delivered to the venue by a particularly overjoyed Parisien taxi driver celebrating news that local protests against Uber's UberPop service, which allows non-professionals to offer rides, had successfully persuaded the Silicon Valley Taxi-Unicorn-App-Monopoly-Disruptor to suspend the service as of this weekend.]

This is a very brief summary of the session we moderated on financial technology and sustainability — yes there is a connection — before a more thoughtful take on everything we’ve just downloaded sometime next week. Read more

Camp Alphaville videos: Transhumanism

For those who couldn’t join the FT Alphaville team in the sweltering heat on Wednesday at Camp Alphaville, here’s a recap courtesy of the FT video team.

Cardiff Garcia starts by asking Zoltan Istvan — writer, futurist, philosopher and 2016 US presidential candidate for the Transhumanism party — what exactly is transhumanism all about? Read more