Archive for the 'Financial Crisis' Category

Minister No More!

Goodbye, Mr Varoufakis,

… and welcome back on the science stage.
Policy and science rarely come together.

Science approximates the truth, it’s a conquest for the rules of the game.
Policy approaches power, it’s a strenuous fight to set the rules of the game.
No politician seems to like being taught his own rules.
Better a good teacher than a knowing politician.

Yanis Varoufakis

The referendum of 5th July will stay in history as a unique moment when a small European nation rose up against debt-bondage.

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Greece, thank you for bringing back democracy!

Thank you Greece for exposing the state of the European Union

Thank you Mr Tsipras and Mr Varoufakis for opening the eyes of European citizens who can clearly see now the shape and nature of the European Union, very clearly.
It is a monetary behemoth politically restrained by national egos.

Over the past months of Greece’s evolving debt crisis, the Eurogroup and the European treasury secretaries told Greece what it ought to do and what to omit. Each of those negotiators referred itself to the will of its national voters.

But even the position of Greeks government has been justified by its public.

Europe’s dilemma

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Greece — and now CONFESS!

Greece, you have any right for a referendum
And here’s why.
Let’s consult game theory – the playground of Mr Varoufakis – to find some answers.

Let’s be clear: neither Greece nor the European Union is interested in Greece’s disintegration.
Greece’s referendum is NOT about Greeks membership in the European Union!
The general question of a Grexit is a prisoner’s dilemma in the eyes of a game theorist.
It is clear that Greece’s membership as well as its disintegration will cost the EU tax payer anyhow.
The costs of a dissolution are assumed to be higher than the cost of integration.
Greece and the EU are thus better off within the European framework, so both they more or less openly confessed to stay together.

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This time is different

What happened?
Having survived the dot.com collapse, well educated people were on the hunt for new revenues.
Astrophysicists, mathematicians, and other geeks started drawing profits from market volatility with the help of machines crunching their elaborate quant models.
Icelandic fisherman buying assets abroad with borrowed foreign money.
Irish banksters inflating their national real estate markets with destructive tax competition and borrowed money from abroad.
Greeks cheating their way into the EU in order to borrow like solvent citizens and nordic tax payers.
Investors, mainly the Landesbanks from Germany, hurled in to take the opposite side of the bet that none of these borrowers will ever default.
And the quants who produced such toxic crap ran to mom and asked her for insurance on assets they did not even own!
Glorious days, those were.

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Who can save the EU now?

“A picture tells more than a hundred words.”

So I put my thoughts into two pictures.

Continue reading ‘Who can save the EU now?’

Mr Koo, tell me something new

Two years ago I stumbled across an amazing explanation of Japans recession after its property bubble, the so-called “Heisei bubble”, went bust at the end of the 1980’s.
Stories of Japans dwindling economic miracle and skyrocketing governmental debt had hit the front pages and economists had turned themselves loose on the phenomenon of zombie banks.
Sarcastic folks even called Japan a “loser’s paradise”.

But how do such judgments fit into the picture that the Japanese economy has actually not tanked despite a “lost decade”?

Continue reading ‘Mr Koo, tell me something new’