Europe threatens bankers' bonuses

[mongers]

It is taken as received wisdom that there was a general bubble in US financial markets, but I think the evidence is coming in that there wasn't...

Four years ago today the world appeared to be coming apart at the seams. Today the US equity markets are at an all time high, and bonds have gone through the stratosphere.

Maybe this is The Bubble ?

[DGuller]

It is taken as received wisdom that there was a general bubble in US financial markets, but I think the evidence is coming in that there wasn't...

Four years ago today the world appeared to be coming apart at the seams. Today the US equity markets are at an all time high, and bonds have gone through the stratosphere.

Not sure about that.  S&P 500 is back to where it was 6 years ago.  I think what that tells us is that there wasn't a catastrophic Japan-style bubble, but 6 years of flat performance implies that 2007 market caps were considerably inflated, and there are still serious questions about today's valuations.  Of course it's a very simplistic analysis, I realize.

[DGuller]

In fact, S&P 500 is back at the level it was 13 years ago.

[Valmy]

Badly phrased by me. What I wanted to say is that I feel that the pendulum is swinging back at the moment and liberalization and deregulation are no longer accepted by many people.

I have my doubts they were ever that popular, maybe tolerated as a necessary evil.  Even in the heydays of the 90s I remember 'Neo-Liberal' being an insult in Euroland.

[The Larch]

Badly phrased by me. What I wanted to say is that I feel that the pendulum is swinging back at the moment and liberalization and deregulation are no longer accepted by many people.

I have my doubts they were ever that popular, maybe tolerated as a necessary evil.  Even in the heydays of the 90s I remember 'Neo-Liberal' being an insult in Euroland.

Neo liberal is an insult for fringe lefties. The internet is not a faithful sample for the real world.

[alfred russel]

Not sure about that.  S&P 500 is back to where it was 6 years ago.  I think what that tells us is that there wasn't a catastrophic Japan-style bubble, but 6 years of flat performance implies that 2007 market caps were considerably inflated, and there are still serious questions about today's valuations.  Of course it's a very simplistic analysis, I realize.

Flat performance over 6 years in an era of historically low inflation rates doesn't imply to me that there was a bubble of such magnitude to imperil the global economy. The S&P500--and stocks in general--are supposed to be fairly risky investments. It seems more like a period of below normal returns.

[Admiral Yi]

The notional value of an interest rate swap is the theoretical principal amount used to calculate interest payments.

Take an interest rate swap for one period with a net settlement feature where I pay you 5% and you pay me LIBOR + 3%. The notional value is $1 billion.

In this case, lets say LIBOR comes in at 1%. So I owe you 5%, you owe me 4% (1+3), and when we net that together, I owe you 1%.

Our transaction is settled with me paying you $10 million ($1 billion * 1%).

Thanks Fredo.

Confirms my suspicion that the author is a propagandist.

[Iormlund]

Nationalize the banks. 

That doesn't work either. Pretty much all the institutions going down in Spain were dominated by regional/local politicians (CAM, CajaMadrid). Those that are still sound were either private (Santander, BBVA) or maintained independence from (and influenced) regional governments (Caixa, Ibercaja).

[frunk]

I don't think the issue is whether the bank is private or nationalized, but the extent to which it can obfuscate its financial situation.  If you have a bank that's making risky moves (or in the case of nationalized banks corrupt/cronified loans) without it being externally visible or internally auditable it's bound to cause trouble eventually.