Playing at Home
The often used phrase "sovereign debt-crisis" happily lumps the PIIGS (Portugal, Ireland, Italy, Greece and Spain) into the same collective boat, but each national crisis has its own characteristics that make the likelihood of default different from country to country.
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Derived and Contrived
The current notional value of outstanding global financial derivative contracts stands at close to $600 trillion. That’s quite a figure; roughly ten times annual global GDP. Only 10% of these derivatives flow through regulated exchanges, with 90% traded “over-the-counter” on a bilateral basis between institutions. At the moment there is little reliable information on what goes on in the “OTC” market. From a risk perspective current proposals to increase transparency and adjust capital requirements make good sense. On the flipside, if properly implemented they may shine a light on a dark place and impose an unmanageable burden on industry participants, who are already under-capitalised.
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Sharing is Caring
Amidst the staggering news flow of the past few weeks, Ireland’s debt crisis and its status in the Eurozone, has been relatively low on the international agenda, but potentially epoch making for Irish people. Ultimately, Ireland will have to default on some of its obligations – they have grown (and will continue to grow) to the point where they are simply too great to sustain. The new coalition government needs to play their hand with subtle aggression. Burden sharing is a compulsory goal, but it should be sought in the first instance for good behaviour – follow through on public sector reform, austerity and hitting economic growth targets. The nuclear option of non-payment and euro withdrawal should be held in the background.
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Winners are made not born
Analysis: An excessive focus on praising ‘innate’ talent in companies, organisations and society as a whole is both flawed and counterproductive. Winners are made, not born and talent is only cultivated through passion and hard work.
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The Family Silver
In the 1980s when Margaret Thatcher's Tory government embarked on its expansive privatisation program, Harold MacMillan, the then Labour leader, warned of the dangers of selling the "family silver".
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Education Musings
The last few weeks of student protests in the UK and Ireland have been a microcosm of what we can expect over the coming years as "austerity measures" take hold. Undoubtedly, more interested parties will take to the streets to lay claim to a bigger slice of public expenditure than the next group. Lucky for students that they apparently have the most time on their hands to kick things off - presumably the afternoon start times for the riots where a big draw.
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