a note for my quick observation

Subscribe your tweeter to Techcrunch or subscribe its RSS reader, you can get a day a hundred links for news of new tech stuff. I'm a daily reader of the site, to learn more about the internet industry which I do not really belong to (but I'm working for one kind of company). It occurred to me that there're lots of innovations and new things happen to the industry, news that can make you feel overwhelmed like things happen with the financial industry, even when it's in the crisis. The innovations in the industry to me, sometimes change as fast as the Dow.

The difference about the two is that the Dow can go up and down extravagantly, 14k when I was in the States in 2007, to 6,000 and now 10,000. But with the tech stuff, it seems that there's no deterioration, at least like the financial ones. Isn't it worth working for the IT and technology industry than working for a financial firm where you spend days by days with money, having no control of it, indeed? For developers, they would answer 'yes', I think, for the meaning of the job.
However, most of the young internet and media companies (I'll do the research for the stats when having some time) are financed by the venture capitalists and private equity firms. Still, the entrepreneurs need financial firms.

P.S: the job for a risk manager in the banking/ financial industry and the job of any kind of 'risk manager' in the internet area is difficult and head-aching as equivalent. Or is it not?

ING breaks up (where I was supposed to work this time last year)

ING breaks up: Slimming cures | The Economist

Baseline Scenario - Simon Johnson

http://baselinescenario.com/

"It is part of the merging social science"

Nobel Prize 2009 for economics are for: Elinor Ostrom and Oliver Williamson, one political scientist and one economist.
The challenge is to design institutions, mechanisms and incentives that move us in the right direction.


Economics is not really fundamentally about markets, but about resource allocation and distribution problems. Markets appear because they operate effectively to handle a subset of these resource allocation challenges.

And Andrew Lo, who proposes the adaptive market hypothesis says EMH is not incorrect, it's just a part of a puzzle.

still a Depression to be expected?

Despite the rise in the stock exchange and people's thought that the economy is on the way of recovery, still it appears uncertain (to me). The figures do not show good signs. Are people deluding themselves at the moment?

Martin Wolf on the recession and the Great Depression

Capital inflows in emerging markets

Capital inflows can overwhelm the domestic financial system, resulting in macroeconomic overheating as well as imprudent lending and borrowing activities at the microlevel. Studies of banking crises show that many have occurred after periods of high liquidity.

The financial systems in emerging economies also include institutions that are not as yet able to deal with major increases in capital inflows. As such, some of them make bad decisions, often with significantly negative results for them and for the system as a whole.

The unfortunate irony is that countries may end up actually worse off after a period of sudden large capital inflows. At first, this sounds counterintuitive. After all, these inflows are beneficial inflows. Surely, at worst, the countries will simply be no better off. How can they be worse off?
A recent IMF study has shown that the risks of developing countries’ winding up worse off after experiencing large sudden capital inflows are particularly elevated for countries that run large current account deficits. The reason is that the surge in capital inflows enables a set of activities that are inconsistent with the countries’ fundamentals. As such, the economies’ underlying vulnerabilities increase. These risks are especially acute for those countries with weak banking systems and inadequate supervision and regulation.


(From When markets collide)

"The Twenty-First Century Will be the Age of Inductive Economics"

Long but worth reading.

Travel with the Dow

It's cool, it's thrilling in the so-called 'security'. Enjoy!

American banks' liquidity ratios

American banks like Wells Fargo, Citigroup, JP Morgan are posting positive profit. Below are some of my findings in the thesis about Bank Liquidity Risk Management. Looking at the ratios of WFC back in September 2008, there could be a rational hope that WFC would be doing well.

Graphs were drawn based on figures from the Board of Governor of the Federal Reserve taken from November 2008.


Core deposit on the balance sheet of Citigroup has been very low since 2005 yet there was only problem to be seen when it came to the instability in the market.



Liquid assets comprises of trading assets, securities and papers, which could also explain one of the main sources of income in JP Morgan, Citi... who are active in buying and selling these papers.



The gap between the red and blue columns can be a measure in liquidity risk. And look at the red column, net loans and leases over core deposits of Citi!

(Non-core funding dependece = non-core liabilities - short-term investments/ long-term assets)

Again, Citi with a very high non-core funding dependence, the ratio to measure the degree to which banks fund long-term assets with non-core funding.