…in which case, better luck next time. Read more »

  • 17 Jan 2014 at 12:28 PM

Role-Based Pay Watch ’14: Goldman Sachs

Goldman Europe sees your bonus caps and raises you this: Read more »

  • 22 Oct 2013 at 6:08 PM

Europeans Near Resolution To Semantic Debate

Six years and countless working lunches after the financial crisis began, European regulators have at last nearly come to grips with one of its root causes. Read more »

Would you have predicted this?

This paper investigates the impact of credit rating changes on the sovereign spreads in the European Union and investigates the macro and financial factors that account for the time varying effects of a given credit rating change. We find that changes of ratings are informative, economically important and highly statistically significant in panel models even after controlling for a host of domestic and global fundamental factors and investigating various functional forms, time and country groupings and dynamic structures. Dynamic panel model estimates indicate that a credit rating upgrade decreases CDS spreads by about 45 basis points, on average, for EU countries.

I would not have! Perhaps I am biased from living in a country where credit ratings are a contrary indicator of sovereign interest rates, and where municipal defaults inevitably lead to helpful comments from ratings agencies like “If the payment doesn’t get made, we would downgrade the rating.” Apparently, though, sovereign ratings matter, at least in Europe and at least at some points on the ratings scale.1 Read more »

Bundesbank President Jens Weidmann does not mean to alarm you, but he thinks that Europe’s, um, difficulties could take a while to resolve. Read more »

  • 16 Apr 2013 at 4:48 PM

IMF: Europe Is Still Ruining Everything For Everybody

Perhaps it would like to do something about that? 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.

The various reasons to object to this boil down to its violations of absolute priority; the way things are supposed to work is more or less: Read more »