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What is all this Basel regulation stuff about, anyway?

Back in the mists of time (about 10 years ago) it must have been; that was the question I was asked to answer; I did a lot of work so the client must have been seriously interested;-

What the bloody hell is this Basel Thing Anyway?

Kapital has transitioned to the state (ref. AMA) Political Economix & Rational Expectations

What we have to realize is that ‘capital has transitioned to the state’[1]; through the bail-outs and bail-ins, QE’s & SLS’s, LTRO’s & EFSFs; TARPs & twists; capital has transitioned to the state; it has happened, it is ‘what it is’; de-facto (not de-jure); capital has crossed the great libertarian 'blood brain barrier' and it did it @ a ridiculously low price with the greatest irony of all, no central planning!

A European Monetary Fund/ EU Stabilization Bank / The Eurozone Problem and Proposed Solutions

When asymptotix first developed a European Stabilization Bank proposal, our thinking was just “common sense”, maybe driven a little by some experience not only of capital markets but of Public Sector policy development and specifically of the EU. It is possible that when I myself first wrote “The Lunatix are on the Grass: A new Bretton Woods proposition for Europe” I was thinking in a sort of “Kydland & Prescott[1]” / “Political Economics” [2] way. I was schooled in all that stuff way back when in the Adam Smith School in Glasgow.  That blog led us into the Stabilization Bank (SB) paper; but really we were driven by only one method; Structured Common Sense! And with the blogs we are always in a hurry; “it’s just a blog after all” !?! In fact a lot of this blog post here, I have said before in summer 2010 or summer 2011; it is GroundHog Day  every day in Van Rompuy space! But in blog-land I have no editor!

Liquidity Risk - The Sharp End Issue of the Credit Crunch in 2008

Liquidity Risk is a confused topic (from a supervisory or B2 perspective)

because it has not been clear whether this is a risk type to be treated qualitatively or quantitatively through the development of the Basel II (B2) accords. In the initial months after the first Basel Accords were published most European regulators discussed the challenge of Liquidity Risk in qualitative terms. Latterly however the emphasis has been on the need for regulated financial institutions (FI) to stress test this aspect of Market Risk. This stress testing requirement demands that Liquidity Risk be treated quantitatively, from the perspective of a methodological approach to capturing how the FI’s exposure to this risk may fluctuate under extreme conditions.

Rigging LIBOR or EURIBOR Macroeconomic Implications / asymptotix

version 4

 

In the midst of this LIBOR / EURIBOR scandal I thought I would share some references to LIBOR & its role in world capital markets from asymptotix. One would not generally reference LIBOR or EURIBOR explicitly since that would be far too arcane even for us!! Most of my references to LIBOR are in “asymptotix papers” which are long pdf documents; developed with the sole purpose of boring you to death! 

About this running LIBOR rigging story, unravelling this weekend; a ‘friend’ said

“What they've caught onto is barely the tip of the iceberg. Eventually, the part below the surface might be revealed...”

 Why are LIBOR & EURIBOR so important? They are the foundations, the technical-basis of the TERM STRUCTURE of interest rates; a crucial concept in Macroeconomics (& in banking risk management); in summary the 'term structure' is the PIVOT between MONEY & (real economic) ACTIVITY. LIBOR (or EURIBOR for Euro demoninated transactions) is the base, the lowest value of the 'term structure' vector (what is sometimes called the 'ratchet'). The technical phrase ‘Yield Curve’ can be used interchangeably with ‘Term Structure’. I give some colorful articulation of that relationship between Monetary conditions and the real economy in the references here on this page (but particularly in the paper below);-

Lunatix3 EURO AREA SUMMIT STATEMENT 29 June 2012

 

 

 

 

 

 

 

 

RATIONAL EXPECTATIONS &

 

THE EU STATE / CAPITAL MARKETS INTERFACE

 

version 2.2 4th July 2012

 

POLICY & PROCESS RECOMMENDATION FOR BRUSSELS

 

REFERENCE: Press release / Summary

 

TOWARDS A EUROPEAN STABLISATION BANK

An Essay for the EU summit June Twenty Twelve

 

 

 

 

MEMO TO EU POLICY MAKERS SUMMIT JUNE TWENTY TWELVE

HERE WE GO AGAIN / TIDYING UP ASYMPTOTIC ORPHANED IDEAS / TIME TO LISTEN

 

Financial Services Regulation & Supervision (the future): Transparency Analytics and Big Data

 

Gillian Tett put me onto this topic in this article in the Financial Times; she set me thinking as she usually does and a google search turned up some interesting stuff. As I do on some pages here on asymptotix & over on my technical blog on Analytic Bridge, I share the benefits with you of my experienced filter and select the best of the material as references for you to use but this process also creates a repository of useful references for me! Anyway here are some references to some people doing some important thinking about the uses of Big Data and thus the Analytics thereof in the future of Financial Services supervision and regulation; all progressing towards that ‘Transparency’ nirvana.

LTRO: Criminal Political Behaviour by Merkozy with Van Rompuy as the Marionette

 

Think about it, as LTRO triggers on the leap day TODAY, why is the Central Bank being forced to do this against its will? The European monetary transmission mechanism doesn't have an IMF-Equivalent; so not only is the euro a political mishmash at the concept level its a stool (sic) on two legs at the practical institutional level. 

EU Money supply is at rock bottom, the pump at the 'heart' of European money supply is on life support.

That 'life support' is LTRO from the Central Bank, right? The Central Bank should be independent right? It shouldn't be pumping up the very thing that it is chartered to control, that is perversity by definition right?

THAT ARMAGEDDON SUMMER OF 2010 Lessons for LTRO2 in 2012

 

THE SEQUENCE OF EVENTS ON ASYMPTOTIX

 

SECRETS LIES & SMOKE AND MIRRORS

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