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For Every Asset is a Liability
One of the panelists at the Milken Institute’s annual conference said the $62 trillion in assets held by European banks is a bullish factor. However, for every asset, is a liability. The size of...
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Leverage Causes Fat Tails and Clustered Volatility
Stefan Thurner, J. Doyne Farmer, John Geanakoplos “Previous explanations of fat tails and clustered volatility depended on “irrational behavior”, such as trend following. Here instead this comes from...
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Forecasting Crises Factors: Credit Regulation, Credit Growth, Real Estate,...
Rose and Spiegel (2010) are pessimistic on the ability to forecast crises, but did find support for the following: Short-term foreign debt: more debt raises crisis intensity Real estate appreciation:...
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Bank Assets as a Proxy for Credit Growth
Due to the rise of securitization, it is a challenge to determine the amount of credit in the system, especially post WWII. Bank assets is one such measure. "Financial market liquidity can be...
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Catching Up with the Forbidden Fruit, Credit Growth
Central banks love to boost growth with debt-induced sugar highs, only to see much of this debt go bad. Unfortunately, they do not associate the two. Research from the BIS, NBER, and many other studies...
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