Investingcaffeine.com poses this question based on the famous book – where are the customers’ yachts?
Cullin Roche reflects on a recent article by Passive investment guru – Jack Bogle. Bogle says that he will only invest in US markets and ignore others. As per Roche, this decision is itself an active one and likely to harm his investors.
A finance professor once told me that passive investing is far more active than it is made out to be. The amount of work needed to ensure your portfolio mirrors that of an index and so on is not an easy job. It requires continuous rebalancing and reallocating of portfolio..
They start with this basic paradox. Most economists proclaim to be independent thinkers but gain legitimacy and hype from some government appointed post:
According to purists, the field of economics is supposed to be free of political ideology. Economics views itself as a science1 and the prevailing consensus, best articulated by Nobel-winner and Chicago-school doyen George Stigler, is that “the dominant inﬂuence” in economics “is the set of internal values and pressures of the discipline” which help keep it nonpartisan.
And yet most well-known economists achieve their star status in the political sphere. The econowonks reading this could name the politics of economists Paul Krugman and Greg Mankiw without much hesitation. And a little Googling would uncover the ideological leanings of Martin Feldstein, John Cochrane, Christina Romer or Jonathan Gruber. Even Thomas Malthus and David Ricardo had disagreements over free trade that were mirrored in the House of Commons.
The authors go onto show how top econs political biases shape their research as well:
Still, economists’ beliefs are separate from what makes them successful academics: their research prowess. We can easily discount the political opinions economists express in op-eds. But they’re also publishing research in peer-reviewed journals. Are findings on tax rates, minimum wages or government spending also influenced by ideology?
This is not just navel-gazing, as economics research informs public policy.2 A recent Congressional Budget Office analysis of the minimum wage describeshow results from academia influenced the CBO’s projections. If those findings were at least partially influenced by political beliefs, then the CBO’s assessments may be unwittingly biased.
So we set out to test the idea of nonpartisan economics on a large scale. In arecent paper, we researched whether economists’ political leanings were associated with their professional work.3 The answer: yes.
Our main proxy for research was the text that appeared in academic papers. To identify political leanings, we had to figure out a way to measure the ideology of any economist — not just people like Krugman and Mankiw. Luckily, there’s a growing body of research on how to detect people’s ideology (ormood or personality type) from the way they write.
Nice bit..In a way paraphrasing Keynes who said politicians are influenced by some defunct economist. In this case, economists themselves are influenced by some funct or defunct political thinking. At the end of the day, politics is supreme and central to most things in economics…
This is an unusual speech but seeing how banking is shaping up could be the most usual thing to talk about. In things like banking union, one would usually see things like banks’ capital requirements, quality of assets and so on.
Dr Joachim Nagel, of the Bundesbank talks on IT requirements of banks post the banking union:
A nice research by Nandini Sengupta of KC College Mumbai.
She looks at the impact of monetary policy on things like credit markets, asset markets, interest rate and so (this is standard monetary policy transmission). More importantly, the paper divides the research into two periods- pre LAF (before 2000) and post LAF (post 2000) and sees whether the transmission has changed in the transition. The findings are:
It is found that the bank lending channel remains an important means of transmission of monetary policy in India, but it has weakened in the post-LAF period. The interest rate and asset price channels have become stronger and the exchange rate channel, although weak, shows a mild improvement in the post-LAF period.
Bank lending channel has weakened as now firms have much wider choices to raise capital. Banks are not the only option..
Well, one did not really need a study to prove this. But anyways, we have some research and that too from a reliable source IISC. There was an interesting paper on the same topic in EPW as well.
The study shows suburban train is way cheaper than metros:
Management of currency notes is one of the least focused tasks of monetary management. The origin of central banks largely came from this activity. There were many banks which issued their own notes convertible into some commodity (mainly gold). Some of these banks over-issued these notes, leading to problems of liability management. The governments then decided to have one bank issue notes which eventually came to be known as central bank. Then gradually, these banks were given additional tasks. Earlier, the banks had both deposits and currency as liabilities. But with central banks coming in picture, the currency became liabilityty of the central bank and deposits of banks.
Mr François Groepe of the South African Reserve Bank has comments on this currency management business:
Nice speech by Mr, Norman Chan of HKMA.
He says there is no reason why HK should decline as mainland China opens up. Both have their own strengths. He shows through statistics how things between the two regions have only improved overtime.
By leveraging on each other’s strengths bot can gain:
This is a weird prediction by Morgan Stanley econs even if they attach very low probability to the event.
The idea is Japan could have inflation moving in positive zone closer to its target of 2% but growth likely to remain stagnant. This could be a case of low stagflation:
ToI had this story yesterday. Indian President Pranabda’s much awaited book — The Dramatic Decade: The Indira Gandhi Years– is expected to be released on Dec-11. One would imagine the release to happen across stores across the country.
But it seems it will be inititally be available only on amazon.in for 21 days:
I had pointed how taxi players are planning to buy Tata Nano and reduce taxi fares further.
This has happened and taxiforsure.com now offers Rs 25 per 2 km. Autos are going to face the heat further. ..
This is a fab case study. How mix of technology and aggressive pricing are helping taxi companies to offer fares lower than autos. Till date we believed autos are the cheapest mode of transport, not any more.
Well there is an old joke. How to become a millionaire? By being a billionaire and then opening an airline..:-)
Anjuli Bhargava tries to make sense of the recent problems faced by Spice Jet. She looks at management related issues but in reality it is this airline sector. Somehow, it does not succeed. There are just a handful of players who have remained sane in the business.
Entry of a new airline generates enormous hype whether it is low cost or high end one. But in a few years time, things usually crash. And as most airliners have some other businesses as well (how else can one raise so much money unless you are a state), it impacts other businesses as well. The King of good times very quickly turns into king of all bad news..