Opinion

James Saft

Helicopters’ faint whirring heard in UK: James Saft

Oct 17, 2012 20:14 UTC

Oct 17 (Reuters) – It is one thing when commentators burble
on about the possibility of outright central bank financing of
deficits, it is quite another when a viable candidate to lead
the Bank of England is reported to be thinking along these
lines.

Reported of course is different from said, but a speech last
week by Adair Turner, outgoing head of Britain’s Financial
Services Authority and a candidate to be the next governor of
the BOE, may serve as a warning or a promise, depending on your
view of money printing.

Turner, after ticking off the already extensive list of
support the BOE has given to the Treasury and economy, held out
the promise of more:

“We need to be ready if these measures prove insufficient,
to consider further policy innovations, and further integration
of different aspects of policy – to overcome the powerful
economic headwinds created by deleveraging across the developed
world economies.”

Nothing but a hint there, but shortly thereafter two
respected journalists, Robert Peston of the BBC and Simon
Jenkins of The Guardian, reported that Turner believes that the
BOE should simply forgive some bonds issued by Britain which it
owns.r-bank-of-england

EU deserves Nobel for literature: James Saft

Oct 16, 2012 04:03 UTC

(James Saft is a Reuters columnist. The opinions expressed are his own)

By James Saft

(Reuters) – Rather than peace, or even, at a stretch, economics, perhaps the European Union should get a Nobel Prize in literature, as it is a work of imagination, creation, and, at least for a time, the suspension of disbelief.

This is not necessarily a criticism.

The Nobel Committee awarded the EU this year’s peace prize, citing what it said was the evolution from being “a continent of war to a continent of peace.”

That can’t be gainsaid, but what is also remarkable is the way in which, as we witnessed the knitting together of the euro area, rational people, investors who prided themselves on only acting in their own cold self-interest, failed to appreciate the underlying structural absurdities.

Are small investors really that bad?

Oct 4, 2012 19:59 UTC

(James Saft is a Reuters columnist. The opinions expressed are his own)

By James Saft

(Reuters) – It has always been a tenet of faith in markets that individual investors are the financial equivalent of shark chum, forever bamboozled by news flow and buying high and selling low.

A close reading of the data reveals that things might not actually be all that bad.

If so, we might just have to revise our views, not just of individual investors but also of the role and contribution of financial advisers.

The monetization game: James Saft

Oct 3, 2012 20:33 UTC

(James Saft is a Reuters columnist. The opinions expressed are his own)

By James Saft

(Reuters) – The issue isn’t whether the Federal Reserve and European Central Bank are monetizing debt now, it is instead whether their actions make them more likely to later.

For both institutions the game is to get the benefit out of buying up government debt, with all the very considerable benefits that brings in current circumstances, while retaining the market’s faith that when things get too wild they will unwind their purchases.

It isn’t that the Fed, or ECB, is monetizing the debt, but rather that they are putting themselves in a situation where reasonable people might expect that they possibly would later. Not will, but might, but that is a big risk to introduce into events in and of itself.

Promises, lies and the interbank market: James Saft

Oct 2, 2012 04:08 UTC

(James Saft is a Reuters columnist. The opinions expressed are his own)

By James Saft

(Reuters) – Maybe it is time to accept that there is no such thing, really, as a free and independent inter-bank lending market.

That’s because a genuine bank loan market, at least one which would be allowed by regulators and participants to exist, must be founded on some combination of good collateral, which is vanishingly scarce, and faith, which has gone away on a long trip.

Understanding why puts us a bit closer to reckoning with exactly how false and officially supported financing markets are, a realization which manages to be both terrifying and strangely reassuring.

Market whistles merrily as Romney sinks: James Saft

Sep 19, 2012 20:20 UTC

Sept 19 (Reuters) – Mitt Romney’s chances of capturing the
White House dwindle almost daily and financial markets seem not
bothered a bit.

Not only have equity markets been buoyant and government
debt stable but also both markets show every indication of
paying more attention to the fate of Europe and to extraordinary
central bank measures than to the election.

Romney’s chances of defeating President Barack Obama in
November are down to 33 percent, according to wagers placed
through Dublin-based online betting exchange Intrade, down from
44 as recently as Aug. 27. Since then the S&P 500
has gained 4 percent, and stands 10 percent higher than
late-June levels. The interest the U.S. must pay to borrow money
for 10 years has risen to a still historically low
1.78 percent from 1.64 percent in the same period.

Column: Banks, bailouts and texting and driving: James Saft

Sep 18, 2012 05:01 UTC

(James Saft is a Reuters columnist. The opinions expressed are his own.)

By James Saft

(Reuters) – The idea that a brush with death will change a lucky escapee’s priorities apparently does not apply to bailed out banks.

While you might be pulled from the smoking wreckage of your car and decide to stop texting while driving, the banks which got government injections of capital during the financial crisis concluded, it would seem, that the problem was that they were not pressing the buttons fast enough.

A new study by the Bank for International Settlements, the so-called central banks’ central bank, shows that not only did the bailed out banks not cut back on risk in their lending into the syndicated loan market after being defibrillated by their governments, they actually increased it relative to the market and banks which did not get rescued. here This is both astounding and totally predictable. Astounding because it was so clear that those risks were not just foolish but destructive. Predictable because of course the banks realized that they had not been just lucky but had been given a special exemption from death which will be very hard to revoke.

Banks, bailouts and texting and driving: James Saft

Sep 18, 2012 05:01 UTC

Sept 17 (Reuters) – The idea that a brush with death will
change a lucky escapee’s priorities apparently does not apply to
bailed out banks.

While you might be pulled from the smoking wreckage of your
car and decide to stop texting while driving, the banks which
got government injections of capital during the financial crisis
concluded, it would seem, that the problem was that they were
not pressing the buttons fast enough.

A new study by the Bank for International Settlements, the
so-called central banks’ central bank, shows that not only did
the bailed out banks not cut back on risk in their lending into
the syndicated loan market after being defibrillated by their
governments, they actually increased it relative to the market
and banks which did not get rescued.This is both astounding and totally predictable. Astounding
because it was so clear that those risks were not just foolish
but destructive. Predictable because of course the banks
realized that they had not been just lucky but had been given a
special exemption from death which will be very hard to revoke.

Crystal balls vs. bag lunches

Sep 13, 2012 16:25 UTC

By James Saft

(Reuters) – Few advisers want to say it, and no client wants to hear it, but your best bet isn’t obsessing over funds and strategies but simply raising your savings rate.

The investment industry – and clients – are intensely focused on how to maximize returns, with much ink, brain power and tears spent on trying to divine which fund to choose and what strategy to adopt.

While this is entirely appropriate, and sometimes even fruitful, it is also, in many ways, a self-defeating diversion.

Column: As Asian miracle wanes, U.S. may wax: James Saft

Sep 11, 2012 04:03 UTC

(James Saft is a Reuters columnist. The opinions expressed are his own)

By James Saft

(Reuters) – Asia’s economic miracle may be waning just as the foundations for an eventual resurgence in the U.S. are being laid.

Asia, China in particular, may be bumping up against the limits of a capital-intensive growth model predicated on cheap labor. To counteract this, countries like China may have to adapt legal, political and even academic practices which could up-end existing power relationships.

At the same time, technology, geology and new manufacturing techniques may in combination give U.S. growth an energy and innovation boost.

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