The thing about antitrust law is that it’s so understandable. Not in the sense that a human can easily understand antitrust law, particularly, just that it’s easy to understand where the people who violate it are coming from.1 This EU antitrust case against 13 banks for “colluding to prevent the lucrative global business of trading credit derivatives from moving onto regulated exchanges and away from markets controlled by the banks themselves,” for instance. Like, here you are in 2006 or whatever, and you’re a big bank, and you’ve built yourself a nice little business buying and selling credit default swaps. This generates information and that information is useful; it’s even more useful if you share it with your other CDS-trading friends. So you and your big-bank friends and your ISDA and your Markit get together to share trade data, just like those guys did under that buttonwood tree that one time. Once you’ve got trade data, for instance, you can make an index, and so you can trade index CDS, which means you can move from having a weird niche product to a macro credit product, and it is good. Also you can gouge customers because, y’know, it’s OTC and stuff.
Anyway one day an exchange comes to you and says “we’d like to take all your data and use it to massively undercut you on price and drive you out of this lucrative little business you got here, whaddaya say?” And so obviously you say no. Read more »
Things in Cyprus: kinda bad. There are better places than here to read about it; I particularly recommend Joseph Cotterill here and here, pseudo-Paweł Morski here and here, Mohammed El-Erian here, the FT’s coverage here and here, the Journal’s round-up of analyst reaction here, etc.
The basic story is that Cyprus’s government and banks are both massively overindebted and need a bailout, and the EU and IMF will provide a €10bn bailout, but they demanded that Cyprus chip in some €7bn, which it has decided to do by means of a tax on deposits in Cypriot banks of 6.75% for up to €100,000 and 9.9% above €100,000. (Is that rate on bigger deposits marginal or absolute? No one knows!) Those numbers are being renegotiated and may end up not being approved by Cyprus’s parliament.
Here’s the latest impressively awful bit of data to emerge from the economic wasteland at the heart of the world’s economic slag-heap, Europe: Employment in the eurozone has dropped to a seven-year low.
Eurostat, the EU’s official statistics agency, said on Thursday that employment in the 17 countries that use the euro fell 0.3% in the fourth quarter from the third, to 145.7 million in seasonally adjusted terms.
That is the lowest number since the first quarter of 2006. In the previous quarter, employment fell 0.1%.
Europe’s leaders, who are beginning to bear a startling resemblance to U.S. leaders in terms of indecision and—when that subsides—bad decision-making, are meeting now to fight over whether austerity’s failure simply requires more austerity, or whether something should be done about all of those people out of work before they take up arms. All of which is making the Swiss very nervous, indeed.
The Swiss central bank pledged to keep up its defense of the franc cap after almost doubling its currency holdings to shield the country from the fallout caused by the euro zone’s crisis….
Jordan said in a newspaper interview on Feb. 27 that an exit from the cap was still far off given that the euro-zone crisis could flare up again. He today confirmed that assessment.
“Downside risks to the Swiss economy remain considerable,” Jordan said in Aarau. “There is a risk that tensions in the euro area will increase again.”
All of which has the dollar feeling positive frothy, rising to better than two-year high this week as our anemic recovery compares rather favorably to no recovery at all. This, of course, carries risks. Read more »