From the South Sea Company Share to Credit Default Swap

In effect, two instruments with conflicting purposes and functions were packaged together and sold to investors that did not fully understand what they were buying: one was designed to make money as the subprime mortgage market grew; and the other was betting against it. So who ultimately won? The answer; the intermediary. Continue reading From the South Sea Company Share to Credit Default Swap

Yield Curve Inversion

Throughout 2019, there have been three rate cuts. And the flattening of the yield curve culminated in the inversion of the yield curves of 3-month T-bills and 10-year T-notes in March, and 2-year notes and 10-year T-notes in August. In both cases, it was the first time in 12 years that the inversions of those pairs were observed since 2007 when the U.S. subprime mortgage crisis surfaced on an epic scale. Continue reading Yield Curve Inversion

Depicting the Tulip Mania Bubble

In the late 17th century and early 18th century, a number of skilful painters emerged in the Netherlands and masterfully depicted the opulence of various flowers including the precious “Semper Augustus. ” Otto Marseus van Schrieck, Willem van Aelst and his protege Rachel Ruysch are amongst such masters. Their paintings are inevitably vanitas, depicting the decadence of rising prosperity, recurring cycles of the rise and fall, and inevitable death and decay. They certainly had the knowledge of the tulip bubble and evaporation of it. They are the wonderful visual reminder of boom and bust that we never cease to wake up to. Continue reading Depicting the Tulip Mania Bubble

Summarising The Global Economy Today (10 October 2018)

In early October 2018, the global economy is as dynamic as ever and the relationships amongst (1) rising oil prices, (2) strong US economic data, (3) mounting inflation pressure, (4) higher interest rate expectation, (5) downward pressure on the US equity market, (6) the strong US dollar, and (7) its pressure on emerging markets can be summarised in the diagram below. Continue reading Summarising The Global Economy Today (10 October 2018)

Charles Ponzi (1882-1949): A conman whose notoriety has been forever embedded in our common lexicon

While he grew ever more desperate for yet another idea for a get-rich-quick scheme, one day, he stumbled across postal reply coupons in an envelop his friend sent him from overseas. A flash of light crossed his mind, and he was instantly enthralled by the idea, this time, for a legitimate venture. Continue reading Charles Ponzi (1882-1949): A conman whose notoriety has been forever embedded in our common lexicon