
After the success of its US$600 billion fiscal stimulus policy, the Chinese government (PRC) currently needs to dial down the property boom the stimulus package has inflated. All through 2009, residential developers in cities across China made money hand over fist, filling their coffers as first, second, and third-time buyers all found plenty of cheap mortgages available. This is one direct consequence of the stimulus that the PRC is…

It is extremely hard to argue against absolute, in-your-face, common-sense logic, except for those rare occasions when there is some wildly counter-intuitive meta reason that justifies flinging logic and common sense to the winds. On that note, consider Japan. Japan’s outstanding debt is almost 200% of its GDP and two obvious maxims would seem to apply with some force, the first being: “When you are in a hole, stop digging,” and the second…

The weaknesses of bank boards and particularly the lack of financial industry experience of nonexecutive (or external) directors at banks, is seen as one of the reasons why so many such banks and financial institutions came within a whisker of going bust during the crisis. According to new research from Moody’s Investor Service, this is one area that US and European banks have been striving to address in recent months by replacing…

The scale of government spending in several developed economies has thrown a sharp media spotlight onto the whole topic of government debt. The challenge, however, is to get past or to resist the temptation to indulge in apocalyptic thinking. Instead of trying to imagine the catastrophe if the UK defaults, or euroland implodes, or the US collapses under insuperable debt, we should actually be asking more restrained and sensible questions…

In 2007 an extraordinary fact arose which passed completely unremarked by the media and the vast majority of academics. This was the first year in human history that saw more people living in cities than in the world’s rural areas. Cities constitute hugely important markets and centers of commerce and as such their continued success has immense implications for businesses across all sectors. In an excellent report on the “citification” of the world…

Three years after the crisis began is as good a time as any to take stock of the US policy response to the fallout from the subprime catastrophe—and assess the response’s effectiveness in nursing the world’s largest economy back to health. One of the fiercest critics of recent US economic policy is the Nobel prize-winning economist Joseph Stiglitz. In his book Freefall: America, Free Markets, and the Sinking of the World Economy, he lambasts…

The financial meltdown did not just devastate Western economies. It also took large bites out of the sovereign wealth funds and inflicted some harsh lessons on those charged with running these funds, many of whom have solid careers behind them as bureaucrats and bankers rather than as mainstream investment managers. In a recent analysis of sovereign wealth funds post the crash, State Street anatomized the funds’ reactions and strategies…

Imagine you owe a large amount of money to half a dozen creditors and that you need them to think well of you so that you can continue to borrow from them in order to ply your trade, which, by the way, is your only hope of earning sufficient money to pay off your creditors. Now imagine that these creditors have a definite view of what constitutes a tolerable amount of debt that a serious debtor to them might carry, and what constitutes either an intolerable…

Now that so many of the frauds perpetrated on unsuspecting investors during the heyday of the boom have come home to roost, the unrivalled reputation for high standards of UCITS (Undertakings for Collective Investments in Transferable Securities) funds has given them a tremendous boost in the market. Many hedge funds are now running UCITS-branded funds instead of the more esoteric vehicles they favored prior to the crash. The original UCITS directive appeared…

According to Anton Valukas, the examiner appointed to look into the demise of Lehman Brothers, there are “colourable” claims against Lehman’s auditors, Ernst & Young, for allowing the company to “window dress” its accounts using a technique that removed over $50 billion in leveraged debt off Lehmans’ balance sheet for just long enough for it to present its quarter end accounts—a trick it pulled off at least three times in the period before its abrupt demise…
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