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Daily Archives: 11 July, 2012, 07:13, CEST+1

Whale of Problem

Crucial questions for Dimon to be answered on Friday. How, what, who, why….

Video by Bloomberg.

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China’s monetary policy

With all the focus on LIBOR and imploding Europe, investors have almost “forgotten” about China. How is the Chinese monetary policy run and much more, courtesy Also Sprach Analyst.

Just how different China’s monetary policy is run compared to the West? Perhaps not much. They cut and raise interest rates just as everyone else does.

Or not.

China is not different from the rest of the world in a sense that Newton’s three laws of motion and law of universal gravitation work in China just as everywhere else and basic principles of economics hold in China just as in everywhere else. Chinese central bank, just as every other central bank around the world, would like to see better growth in credit when they want to stimulate growth, and tighten monetary policy when they need to fight inflation. In that sense, they are the same. The difference is just how monetary policy is run.

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It’s Time for a New Constitutional Convention

Some thoughts by Biderman.

In my opinion, the US needs a new constitutional convention. The first constitutional convention occurred in 1787. The government created back then has obviously done fantastically well. However, if we continue forward in the direction we are headed, what lies ahead is an almost certain major economic calamity.

In last week’s July 4 video I said that the representative form of government set up in 1787 is not working today and has been taken over by the special interest groups. If you doubt that, read convicted lobbyist, Jack Abramoff’s Capitol Punishment, The Hard Truth About Washington Corruption. If as Abramoff claims it no longer matter who wins elections, because the special interest groups control, and in some cases own, the representatives; well then our current form of representative government, has to be changed before calamity hits. (Video below).

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Was Barclay’s Incompetent When Dealing with FSA?

Peter Tchir on the LIBOR scandal, FSA and Barclays.

Here is the FSA’s report from June 27th.

I will admit when I first looked at it, it seemed pretty damning.  The dialogue was awful and the charts looked bad.  But as I look through the details I have to say, Barclay’s seems incompetent in its own defense. I owe some of this report to Simone Foxman who looked at one of the trades in some detail, but here is a closer look at some of the accusations in the report and what impact it had.

My assessment so far is that Barclay’s was incompetent at moving LIBOR and was incompetent at defending itself against the FSA. I expect that the financial crisis period will be a lot more interesting as there is some real divergence and the potential influence on LIBOR is big and real.

Lost Reputation with Little Accomplished is what analysis of FSA examples demonstrates

58.  Barclays’ Derivative Traders would request high or low submissions regularly in emails, for example on 7 February 2006, Trader C (a US dollar Derivatives Trader) requested a “High 1m and high 3m if poss please. Have v. large 3m coming up for the next 10 days or so”. Trader C also expressed his preference that Barclays would be “kicked out” of the average calculation. Trader C’s aim was therefore that Barclays’ submissions would be high enough to be excluded from the final average calculation, which could have affected the final benchmark rate.

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