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Author: Aidan Neill

Every Little Helps

Every Little Helps

Two weeks ago Ireland’s National Treasury Management Agency (NTMA) announced the rarest kind of accounting mistake. As a consequence of some double counting of liabilities within the Housing Finance Agency the Irish government established that it was 3.6bn Euros better off than it previously believed that it was. Following the discovery of the error, Ireland’s gross outstanding debt for 2010 was revised to €144.4 billion (92.6% of GDP) rather than the published €148 billion (94.9% of GDP). A nice windfall, certainly, but…

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Playing at Home

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. For Greece, fiscal adjustment is the key issue, as the government has been extravagantly fire-hosing the public sector with borrowed money for some time. For Portugal, however, the key problem is the private sector’s continuing external deficit: the government debt…

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Derived and Contrived

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…

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Sharing is Caring

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…

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Where to park it?

Where to park it?

Analysis: Last week saw high-yield bond yields drop below an average of 7% for the first time in six years, according to BofA Merrill Lynch data. On the face of it this is good news: low recent default rates should persuade lenders to dish out more loans to small businesses, while low costs of capital for businesses will encourage hiring and expansion. The wider problem is that most of the high-yield market’s performance stems from investors needing to find somewhere…

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Dodgy Network

Dodgy Network

Analysis: Facebook has recently raised around $2bn in new funding from Goldman Sachs and other investors in a deal that values the social networking business at around $50bn. While the company recently reported being “free cashflow positive” (it makes money) for the first time, the valuation reflects a multiple of earnings that is likely to be well into the hundreds, if not thousands. In a similar vein, the 19th Century saw huge investment in the railroad infrastructure in the US….

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Winners are made not born

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. I’m reading a book at the moment called “Bounce: How Champions are Made”. Not exactly autobiographical, but I’ve got a few years in the tank left to work with. The book’s author, Matthew Syed, focuses mainly on sporting excellence and how it is achieved, but has…

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Jam today or jam tomorrow…

Jam today or jam tomorrow…

An important tenet of many organised religions is the concept of delayed gratification. This can be seen as a measure of self-control, self-discipline and self-organisation – all of which are in theory helpful to the leading of a happy and at the same time socially responsible existence. Many psychologists, perhaps most notably Freud, tested the concept of delayed gratification on children – and it’s has been widely recognised to be an important guide to the probable future success as those…

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