Economy Blog

addslashes(The Real Story Wrap, January 16

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The Education of Ben Bernanke
Score One Success for the Federal Reserve
Big winners : Death Bonds …
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I generally write about the economy and the markets from my little ivory tower, throwing stones, feeling frustrated and getting critical even though I am largely immune from the day-to-day impacts. Gas at $3.50 a gallon? It sucks, but I can handle it. A carton of orange juice that costs me $5 bucks? Irritating, but it’s not going to change my life. Even a domestic stock market that is down more than 10% from its high isn’t going to materially impact my existence. I am very lucky and I am acutely aware of my good fortune. Sadly, my s…
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Quelle horreur !
“Economic growth imposes a hectic form of life, producing overwork, stress, nervous depression, cardiovascular disease and, according to some, even the development of cancer,” asserts the three-volume Histoire du XXe siècle, a set of texts memorized by countless French high school students as they prepare for entrance exams to Sciences Po and other prestigious French universities. …
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Paper by Ryan Stever
This study examines bank risk by investigating the equity and loan portfolio characteristics of publicly-traded bank holding companies. Unlike the pattern for non-financial firms, equity betas of large banks are two to five times greater than those of small banks. In explaining this, we note that regulation imposes an effective cap on banks’ equity volatility. Because the portfolios of small banks are less diversified, this cap has a greater effect on small banks than large banks. But we reject the hypothesis that small banks lower their equity volatility through lower leverage. Instead, we find that t…
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Paper by Melvyn Teo
This paper analyzes the relationship between the risk-adjusted performance of hedge funds and their proximity to investments using data on Asian hedge funds. We find, relative to an augmented Fung and Hsieh (2004) factor model, that hedge funds with a physical presence (head or research office) in their investment region outperform other hedge funds by 5.28 percent per year. …
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addslashes(News You Need: Clearwire, Google

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Workers’ conditions keep improving.…
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Hedge funds in aggregate exploit a few of the famous anomalies, but they apparently have other methods of generating abnormal returns….
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Each day the market gets "new information" about a slowing rate of economic growth.  If the rate of economic growth slows enough, it can and will be interpreted as a recession, when the NBER does a retrospective analysis of the data.  What does this mean for investors?

An Interesting Table

Let us take a good look at some data from the W…
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By Vipin Agnihotri If you have plan a trip to Bangalore by air this year, my suggestion is to avoid it for some time. This is because of the simple reason that the new international airport at Devanahalli will open on March 30, but the roads connecting it to the city will take some time to shape up. …
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Robert Zoellick (Simone D. McCourtie/World Bank)
This week we return with Robert Zoellick’s answers to your questions. I think you’ll see that he has taken them very seriously - he’s even provided a visual aid for one answer! Without further ado, here they are:
Q. The short term benefits of writing off the African debt [...]…
Original Source: blogs.iht.com

The halcyon days of the prime brokerage industry may be coming to a close. Not content to wait for fee pressures to mount, many PBs are becoming turn-key hedge fund operations….
Original Source: allaboutalpha.com

Inflation will decelerate, helping sustain the expansion.…
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