Quantitative Easing: Will It Work?

Long-term bond yields around the world have been rising recently. Is this because the “green shoots” of recovery are apparent and investors are moving to increase exposure to risky assets or is it possible that despite the very low short-term overnight rates being set by major central banks around the world investors are choking on bond supply?

German Toxic Debt

More than $1 trillion of Bad Debt in German Banking System A leaked report in the Sueddeutsche Zeitung today indicates that there is over $1 trillion of bad debts in the German banking system with the landesbanks looking like they may all be insolvent. Just as has been speculated in Spain, where the Spanish savings [...]

The FED’s Stress Tests

Stress Tests to Reveal Substantial Increases in Capital? The Fed released its much anticipated paper on the stress tests at the nation’s 19 largest banks (those with assets of greater than $100 billion) on Friday. What is was not in the paper was at least as interesting as what was in it. In particular, the [...]

Are Structured Products Like Other Bonds?

Recent Article in Financial Times Shows that Investors Still Don’t Understand Structured Notes A recent article in the Financial Times speculated that the new TALF program by the Fed might weigh on the corporate high yield market. It noted that rather than buy corporate high yield  debt, investors could instead buy leveraged positions in AAA-rated [...]

Policy Induced Volatility

Different Market Reactions in Major Asset Classes Indicates that the First Quarter Sell-Off and Rebound was Policy Induced Since the beginning of the year, most equity markets have experienced a large sell-off, followed by an equally sharp rebound. However, the view from other markets have made clear that the wild moves in global equity markets [...]

The Private Equity Investment Puzzle?

Private Equity: Undisclosed Fees More than Offset Any Gains from Control Two survey arrticles in the Journal of Economic Perspectives (Winter 2009) (“Leveraged Buyouts and Private Equity” by Steven Kaplan and Per Stomberg and “Beware of Venturing into Private Equity” by Ludovic Phalippon) both reach the same conclusions. On the one hand, private equity firms [...]