I definitely picked the wrong week to give up pointing at things and saying 'the purpose of a system is what it does'
https://t.co/cP5vsFcHkU
Oct 15 • 5 tweets • 1 min read
a few UK think tank heads might remember that a couple of years ago I was shopping round a potential project called "Off-Label Island" - an industrial strategy for the UK based on using our small but economically viable market as a place to test products ...
... and get approvals from our internationally well-regarded regulators, which could be taken and used as evidence in bigger markets.
I never proceeded, partly because I wrote "The Unaccountability Machine" instead, but partly because I got serious ethical worries...
May 13, 2023 • 7 tweets • 2 min read
I am surprised that the Tony Blair Preservation Society ("god bless deregulation and economic anxiety") advising Starmer haven't noticed (as the big man's Institute have!) that the old policy of "economy first, services after" isn't going to fly anymore
in 1997 it was arguable; Brown's "prudence" had a certain amount of sense to it. if you are worried about borrowing (and this was a world pre QE) and made commitments on taxation then you have to wait to pay for public investment until economic growth shows up.
Apr 2, 2023 • 6 tweets • 1 min read
I think it hits me a bit harder because 2015 was the year I came back from my big trip and started a new life, and my kids have grown up so much; two of them are now adults rather than schoolchildren. But really, British politics has changed so little, achieved so little.
In the period in which my son has left home, and my oldest daughter has gone from primary school to being a cocktail bartender, the newspapers I read still haven't found a new thing to talk about. This is bad.
Apr 2, 2023 • 4 tweets • 1 min read
Oh come on, no. "Read the whole article not just the headline" is annoying but perhaps defensible . "You can't respond to my tweets unless you pay for my pay wall" is frankly rude. But "you have to buy and read this book to check that it's as bad as it sounds" COME ON
Here's an alternative way that we could do things; don't put anything in the public space that you're not prepared to stand behind. Why don't authors and commentators do the job of summarizing their own views accurately rather than outsourcing it to me.
Mar 20, 2023 • 6 tweets • 1 min read
Straw poll: as a comedy bit, should I spend tomorrow being a Wealth Management Guy, explaining that most Credit Suisse AT1 bondholders were just HNWI accounts with maybe $10m max, and you can't expect a 25 year old trust fund kid to do due diligence on a GSIB?
All very well you laughing but there's payrolls need to be made. Personal trainers, live in nannies, ski instructors. If we don't get a guarantee on all AT1 and I mean RIGHT F-WORDING NOW, you are going to have yacht crews abandoned in Lyford Cat before the weekend
Mar 14, 2023 • 10 tweets • 2 min read
I am probably being harsh here, but some experience at a Swiss bank gives me a more than normal sense of the fuzzy boundary between "a bad bank" and "a good bank with bad clients"...(oh god, THRED. this was what the Substack was meant to protect you from).
SVB *existed* for Silicon Valley. The whole value of the business was based on bending over backward for the clients. It was completely unrealistic for anyone to expect Greg Becker to turn business away, or to charge SV startups fees which reflected the true cost of the service
Mar 14, 2023 • 4 tweets • 1 min read
Here's a thought experiment - if a thousand hedge funds with $10-100m under management suddenly fell victim to a cyber attack, and it turned out that none of them had employed a CTO or used widely available firewall software, what would we say?
Would you get lots of tech industry commentators saying "fair enough these are small companies run by three or four guys who know finance, they can't be expected to know about software vulnerabilities"?
Dec 1, 2022 • 4 tweets • 2 min read
😡 When you tell people their money is segregated and it's not, when you use one company's bank account and represent it as another, that's fraud! That's the fraud, that bit there! The bit you tried to do! What he means is he never intended to get caught. ft.com/content/2abfb5…
Fraud isn't a "subjunctive crime". Even if you make the money back, even if the client funds are eventually protected, the fraud still happened. It's open to question whether he intended for the clients to be separated from their money, but that's a matter of mitigation not guilt
Nov 12, 2022 • 5 tweets • 1 min read
FTX is neither Enron nor Lehman. It's MF Global. If there is a party who is responsible for prop trading and who is also able to authorise movement of client funds, you are putting temptation in the way. Funds segregation and front office/back office split are hard won lessons.
SBF seems to be constructing an "it was all so complicated ... Confusingly labeled accounts" narrative. This looks like what Donald Cressey called a "rationalisation" in his classic book on white-collar crime, "Other People's Money. He used client money to cover losing positions.
Oct 29, 2022 • 16 tweets • 3 min read
WHY TRANSPORT OUGHT TO SUCK, a thred...
It begins with what might be called "bastard urbanism", by analogy with Joan Robinson's description of cyclical policy. There's a idea that "the city will provide solutions" - that when you get enough people in a place...
... economic growth is inevitable because of increasing returns, and that these increasing returns will not meet any constraint, because the city is capable of solving all its own problems. Unfortunately for all, this school of thought got caught up with...
Mar 10, 2022 • 5 tweets • 1 min read
The terms of the Chelsea licence of very interesting and fans of other clubs might be a little premature in cheering for them. The prohibited actions are a template list of all the ways the authorities think football clubs can launder money to their owners.
On first reading I thought it was absolutely draconian and indefensible to stop them from selling tickets - you shouldn't drive a business into insolvency when your goal is to prevent it from delivering cash to the owner, not least because it is frozen not expropriated.
Mar 9, 2022 • 9 tweets • 2 min read
Something that's just occurred to me about the framing of financial sanctions as foreign policy action rather than criminal enforcement is that the former, but not the latter, allows a clear path to *lifting* them at a later date. This is important for many reasons ...
... first and most obviously, sanctions will be part of the peace talks, and we surely don't want to find ourselves in the horrible and ridiculous situation of preventing a deal that the Ukrainians want to agree to.
Mar 8, 2022 • 8 tweets • 2 min read
excellent article, finally taking Mearsheimer seriously and arguing against him rather than reaching for the heightened language newstatesman.com/ideas/2022/03/… I think my own view is that Mearsheimer is wrong, because ...
... because Russia isn't a Great Power, not really and not any more. It's able to act like one, a bit, because it's got nukes (like Britain and France) and it's run by a maniac prepared to fight stupid wars at absurdly negative cost/benefit (not much like Britain and France) ...
Mar 7, 2022 • 7 tweets • 2 min read
Once more, it's not "Russian" money. There's no "Londongrad" any more than "Londonistan" or "al-London". The laundromat is a consequence of the openness of London to all kinds of global money and it takes it from wherever it comes.
That means that getting rid of it isn't a matter of "weaning"; it would require a massive change in the nature of the system. And not just the UK system either. I'm very sceptical about whether you can draw a line round one part of free market capitalism ...
Feb 20, 2022 • 6 tweets • 1 min read
This article is a bit difficult to understand; there's a mixture of actual money laundering with the non-crime of "a really bad person has a bank account". theguardian.com/news/2022/feb/…
(full disclosure I guess; I worked for CS for a while, had some good friends there, left on what I'd call less than perfect terms). There's a difficult and IMO increasingly urgent question here, of whether the banking system is a utility or something else.
Jan 28, 2022 • 12 tweets • 2 min read
Because I'm a) bored and b) deep down, where it counts, quite an annoying person, here's a pointless devil's advocate theory of what might justify the Met's actions...
First building block - they would have to be investigating something more serious than a fixed penalty COVID ticket.
Jan 16, 2022 • 5 tweets • 1 min read
A short list of the tunes that my evil daughter has sung the words "didn't ask" to in response to being told something
Sailing
Do They Know It's Christmas
Theme from Mission Impossible
William Tell Overture
Country Roads Take Me Home
this list will, I feel, be updated
The hallelujah chorus
Nov 26, 2021 • 4 tweets • 1 min read
I'm talking here about things like "doubling the size of the Fed's balance sheet". That thing fundamentally isn't a balance sheet. There's no particular need for it to balance. It isn't credited or debited in the normal way. There's no useful analogy.
So the reaction to hearing that QE rules have changed again, or that there's a new reserve remuneration arrangement or whatever ought to be your local dialect equivalent of "ehh there's nowt so queer as folk", and no more.
Nov 26, 2021 • 10 tweets • 2 min read
A medium length Friday THRED, loosely inspired by That Nordea Note, among other things. Titled "It Usually Begins With Repo"...
I regularly plead with people not to look into the bowels of central bank operations and money markets. It sends you funny in the head. I can do it - to the extent necessary for my parochial obsession with bank regulation - and so can some economists, like Pierre-Olivier Beffy...
Nov 19, 2021 • 7 tweets • 2 min read
there was almost an interesting debate about this a few years ago, but it happened in the context of a proposal by John McDonnell, ensuring it went partisan. But the current battle over "Team Transitory" has important implications for the productivity "puzzle" ...
... basically, if the central bank is surrounded by people who get panicky every time growth picks up, then a) we are never going to find out what the true productive potential of the economy is, and b) companies will take this into account in their investment plans...
Nov 17, 2021 • 6 tweets • 2 min read
Massive disagree. Monetary policy doesn't work by "stitches in time" - this is a bit of Eddie George verbiage from the 90s. It works by either doing not much and taking the credit for normal conditions, or by a big shock like the Volcker and Thatcher recessions to reset.
basically, it's dynamite. Either a chimney needs to be demolished or it doesn't. You can't say things like "well, this chimney is a bit in the way, so let's set off a few firecrackers and damage it a bit".
