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Daniela Gabor Profile picture
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28 Jan, 5 tweets, 1 min read
Behind everything there is a collateral + settlement story.
Securities traders had the same problem in the 1980s with their repo financing, and the solution was for triparty repo providers to take the market on their balance sheet, basically providing intraday financing unsecured
I wrote about it here - and there is no neat, non systemic solution to time- critical liquidity problems
ft.com/content/4da3a0…
The upside to this - a lot more people are going to become familiar with margin calls.
Ahem
bloomberg.com/news/articles/…

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More from @DanielaGabor

Daniela Gabor Profile picture
29 Jan
remember those massive central bank purchases of governments bonds & 'we're here to close spreads' last year?

my new report 'Revolution without revolutionaries: the return of monetary financing'

argues we live in a world of Minsky without Keynes.

transformative-responses.org/wp-content/upl… Image
Historically, we can trace two regimes of monetary financing, subordinated MF vs shadow MF.

across (a) objectives of intervention, (b) targets, (c) institutional hierarchy, (d) macroeconomic paradigm, and (e) accumulation regime/distribution of political power.
Since 2008, central banks have quietly adopted shadow monetary financing. This is Minsky without Keynes: central banks upgrade tools to evolving financial system – shadow banking or market-based finance– without fiscal authorities reclaiming their Keynesian dominance. Image
Read 9 tweets
Daniela Gabor Profile picture
29 Jan
quite remarkable how often @FT reads like a PR rag for Blackrock

ft.com/content/e5b57e…
first 5! paras of this piece - Larry Fink, the green man, worried to see climate crisis marks in all the pristine places he flies to in his private jet
look journos of the world, this is how you greenwash Blackrock:

Step 1: set out the scene, the personal detail of the man in charge who really cares.
Step 2: note the fiduciary duties of the financial capitalist, which conflict with the personal beliefs of the green man Image
Read 15 tweets
Daniela Gabor Profile picture
20 Jan
bankers against Biden's fiscal plan could really do with some proper fact-checking before sending their op-ed to the FT.

We all understand 'it's ideology, stupid!', but no excuse for lazy arguments.

ft.com/content/d49b53…
apparently, the Gospel according to Morgan Stanley is that we havent had enough neoliberalism for the past 4 decades
if you click on BIS link, it tells you monetary policy, not higher deficits, are associated with wealth inequality.

Incidentally, unconventional monetary policy through which central banks basically rescued banks after they nearly destroyed the global financial system in 2008
Read 10 tweets
Daniela Gabor Profile picture
19 Jan
new evidence that professors of finance should come out of their monetarist closets not to scream inflation, but to learn about banking ft.com/content/653611…
Quantity Theory of Money is wrong on many levels, but nowhere more so than in assuming banks dont have the power to create money (money supply exogenously controlled by central bank via reserve multiplier).

richmondfed.org/~/media/richmo…
The monetarist take on coming inflation shock:
1. before Lehman, banks didnt hold excess reserves, but lent them into money market.
2. They could absorb QE-injected reserves without increasing credit.
3. COVID19 reserve creation finally increased bank deposits = inflation
Read 9 tweets
Daniela Gabor Profile picture
12 Jan
show me something more confusing than accounting capital flows in the balance of payments - this, with due respect, is not helping. cc @jonsindreu @i_aldasoro

bankunderground.co.uk/2021/01/12/how…
in their first example, Chinese authorities have nothing to fear from Chinese residents moving their deposits to the US.

But of course, that is wrong, because down the line there will be a net loss of fx reserves for the Chinese banking system.
Example 2: US asset manager buys Kenyan corporate bond. There is literally no USD capital inflow in Kenya.

Helene Rey's global financial cycle obliterated out of existence.
Read 5 tweets
Daniela Gabor Profile picture
11 Jan
last year, @nssylla and I warned that France & G20 are planting budgetary time bombs in Africa through a conveyor belt that transfers their fiscal resources to institutional investors in the Global North.
news from Kenya today about one critical element of that conveyor belt - Public Private Partnerships through which state guarantees private profits.

The IMF estimated those derisking commitments to be around 8% of GDP in 2019 (and stressed this is a significant underestimate)
today, under IMF pressure (and as it finally joined the DSSI club), Kenyan Treasury accepted to include those PPP derisking commitment in public debt numbers

Read 6 tweets

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