Death Star Economics



An era of errors and structural reforms

India experienced a bit of a flash crash this morning, when the S&P Nifty Index slumped by 15.6%. For once, this had nothing to do with algorithms, but resulted from 59 erroneous orders [read erroneous quantities] and led to the brief disappearance of $58bn. Oops. read article

Of course this is only two days after the latest NASDAQ glitch during which Kraft Foods rose 30% or $12 in practically no time due to an algorithmic error.

In yesterday’s press conference, the ECB’s Mario Draghi made clear that the central bank was ready to buy some bonds, if an unnamed country [Spain] was to submit a bailout request. According to Daghi, purchases would take place for a month or two at a time and be suspended during the following assessment stage. read article

Otherwise, the trend of the day seems to be structural changes in investments banks, led by Barclays intend to remodel their investment arm entirely, merging the equities and fixed income business into one division. At J.P. Morgan, Barry Zubrow, Head of Corporate and Regulatory Affairswill leave the company.

In the past three years, six executives have left Mr Dimon’s operating committee – an elite group that currently has 15 members and represents all the firm’s key decision makers.

(One of these resignations was Ina Drew, see Weekend reading.)

Finally, there is Morgan Stanley, which announced possible job and bonus cuts in 2013 to save money that can be paid out as dividends to shareholders.

On SundayVenezuela is holding general elections, with the incumbent president Hugo Chavez of the United Socialist Party of Venezuela being challenged by Henrique Capriles Radonski of the center-right Justice First party. The Guardian’s data blog has an overview of reforms since Chavez took office 14 years ago. read article

Weekend reading:

– Dilma Rousseff on growth, an interview with Brazil’s president, read article
 the Amish and Mitt Romney, fight of the religious minorities, read article
– Erik Hobsbawm’s obituary: “The Last Intelligent Marxist“, read article
– Ina Drew and Wall Street: after it took her 23 interviews to get her first job in which she said she cried every day, she became J.P. Morgan’s CIO, and took the fall for the ‘London Whale’ trading lossread article
– the case for the Liikanen reviewread article

Have a good one.

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One Response

  1. […] the London Whale shook all of JP Morgan‘s senior management, prompting six of the 15 members of the firm’s operating committee to leave, the bank is now issuing a report for its board of directors, blaming CEO Jamie Dimon, ex-CFO […]

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