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European monetary union: so troubled, so awkward and ill-conceived, et cetera.
And so… speedy?
We spent a bit of time last year pondering precedents and possible scenarios for monetary union break-ups, of which there are few with much appeal. But Deutsche Bank strategist Stuart Parkinson makes the interesting argument that it took about 147 years for the US to become a monetary union. Read more
OK – Lisa’s the modelling maven and she’s promised a longer post on this paper tomorrow…
“‘The Formula That Killed Wall Street’? The Gaussian Copula and the Material Cultures of Modelling” is a recommended read (H/T Tracy Alloway). It’s not really about anything killing Wall Street — more a combination of economic sociology and an oral history stretching back to January 2007. The authors even got in touch with David X. Li. Read more
The Amulree Commission on a peripheral debt crisis, 1933:
No part of the British Empire has ever yet defaulted on its loan obligations; in the absence of any precedent, the consequences which would follow from a default by Newfoundland must remain to some extent a matter for speculation. But if no precedent can be drawn from the history of the Empire, instruction may be derived from the experiences of other countries, and it is clear from these that any play of default such as that outlined above could be approved with the greatest apprehension… Read more
Earlier, we considered whether the Republic of Greece is turning into a giant collateralised debt obligation.
This is because proposals to have the EFSF back a Greek government bond buyback appear to introduce some element of collateralisation to Greece’s debt. Although it’s all very complex – and we could be wrong. Read more
Some consolatory reading for the Greek… Irish… and Portuguese finance ministers on Friday. Citigroup chief economist Willem Buiter has taken a long hard look at other developed sovereigns — and has used the opportunity to remind that no sovereign is safe.
From the archives of Time magazine, a worthwhile read on how US bankers reacted to the “monstrous system of guaranteeing bank desposits” – aka, financial regulation, 1933 style:
Through the great banking houses of Manhattan last week ran wild-eyed alarm. Big bankers stared at one another in anger and astonishment. A bill just passed by both houses of Congress would rivet upon their institutions what they considered a monstrous system of guaranteeing bank deposits. Such a system, they felt, would not only rob them of their pride of profession but would reduce all U. S. banking to its lowest level. They saw their deposits which they had spent a lifetime to build up and protect with their good names confiscated by the Government to pay for the mistakes and dishonesty of every smalltown bankster. Read more