Archive for November 27th, 2018

How Israel lowered concentration in banks’ credit portfolio and cleaned up its banking system (lessons for India?)

November 27, 2018

Interesting remarks by Dr. Hedva Ber, Supervisor of Banks at Bank of Israel:

The supervisor points how from 1990-2010, Israel’s credit market was highly concentrated in hands of few companies. Since then, they have cleaned up the system taking stringent steps involving firing several key people:

(more…)

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Israeli settlers sue Airbnb for delisting West Bank homes

November 27, 2018

Interesting case of how technology companies which think “one globe one market” are getting involved into regional matters.

 

How the discovery of a Jewish banker’s looted estate reunited a scattered family

November 27, 2018

Fascinating piece:

The family of the banker Marcus Heinemann was scattered all over the world. Then a provenance researcher discovered a file from the Nazi era, allowing the family to reunite in Germany for the first time in 70 years.

Amazing application of historical records…

We need to go beyond self-interest or we’re doomed: Jean Drèze

November 27, 2018

Nice interview of Jean Dreze. Kudos to G-Sampath of Hindu for asking pertinent questions.

Here is a sampler:

In general, economists are a part of the problem and not the solution. Would you agree?

Well, economics can be a very useful discipline if studied critically. But if you are not critical, then it can become toxic. If you take economic models at face value, you could end up being in a world of your own.

But even as a discipline, economics seems biased against the poor.

It’s not just economics. In many disciplines, if you look at the history of ideas, it is essentially ideas that are convenient for the privileged and the powerful that tend to flourish; they are the ones that get sponsored, the ones around which conferences are organised, and so on. In contrast, ideas that are deemed threatening to the established order tend to be sidelined.

Can you give an example?

Take the idea that competition is good not only for economic efficiency but also for social welfare. This is questionable even in terms of mainstream economic analysis. But the way it is taught is that, except in cases of asymmetric information or other market failures, there is general compatibility between competition and social welfare. On the other hand, ideas about the value of cooperation, which are equally important, have not been developed much. Another example is the concept of exploitation. We do not learn anything about it, and it is not even a word we use in economics courses. How can you understand the labour market in India, or the Indian economy without thinking about exploitation? Economic ideas like asymmetric information could help, but somehow they tend to be used for other purposes.

Isn’t ‘exploitation’ a ‘Marxist concept? Maybe that’s why it’s not in mainstream economics?

It’s not a Marxist concept, it’s a common sense concept. But it is perhaps seen as something that doesn’t belong in the discipline. We do have a conceptual tool to think about exploitation — the whole literature on asymmetric information. But this is just a big term to describe something as simple as, “I know something that you don’t, and I wont tell you.” In effect, this is just lying, but we don’t call it lying.

So if economics does have a conceptual tool to study exploitation, where is the problem?

The problem is in how it is used. If you look at the literature on asymmetric information, it started focussing very quickly on the concerns of the privileged, primarily the employers, the lenders — what if the labourer does not do the work he is supposed to do, what if the borrower does not repay, and so on. The whole thing started being looked at not from the point of view of the exploited but from the point of view of the exploiter. So, by this process of selection of ideas, we end up losing sight of a lot of things that are extremely important, such as exploitation, cooperation, class, caste. That’s why economists can end up, despite all their skills and brilliance, as not very reliable advisers on matters of social policy.

Much more in the interview..

The first D-Mark notes were printed by US based Bureau of Engraving and Printing..

November 27, 2018

Interesting speech by Mr Burkhard Balz, Member of the Executive Board of the Deutsche Bundesbank. The speech is about US-Germany relations.

Your decision to invite me, a representative from the Bundesbank, to speak on this topic today is particularly fitting. That is because the Bundesbank has been nurturing major transatlantic relations from day one.

To be precise, the very creation of the Deutsche Bundesbank – or should I say, that of its predecessor, the Bank Deutscher Länder – is very much tied up with an American, and British, project: the currency reform in 1948.

The Allies deemed this reform necessary in order to combat the steady depreciation of the German currency. To put the project into practice, it was also necessary to create the right German institutions.

But the Americans’ support didn’t end there. Would you believe that the first Deutsche Mark banknotes were designed and printed in the United States?

Take a look at one of these original Deutsche Mark notes and you will quickly see the signature style of the responsible Bureau of Engraving and Printing and the similarity to US dollar notes. So the Bundesbank – and its predecessor, the Bank deutscher Länder – enjoy close and amicable relations with the Federal Reserve System that go back a long way.

For one thing, there is the quasi-institutionalised cooperation at the international level which came into being when the Deutsche Mark was pegged to the US dollar as part of the Bretton Woods monetary system.

Nowadays, the Federal Reserve and the Bundesbank meet at regular intervals to share their views, such as within the G 20 framework or at the Bank for International Settlements in Basel.

And for another thing, the Bundesbank has been a fixture at the New York financial centre since back in 1963, and it has had its own representative office there since 1986. You see, the United States and the New York financial centre were becoming increasingly important for the Bundesbank’s operations. We do, after all, hold a great deal of our reserve assets in US dollars.

Hmm..

 


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