What May Have Happened at JPMorgan?

Let me start with a disclaimer: I have no privileged information about the USD 2B trading loss at JPMorgan. The reasoning in this post is purely speculation on my part. How could a firm with a long history of conservative, commercial banking practice make a USD 2B error investing its own capital? The error is […]

What is the Price of Risk Aversion?

Those of you familiar with First Degree’s investment process will know that we focus on risk aversion as the major determinant of asset prices. Risk aversion, in our opinion, dominates cash flow variation as the driver of returns – easily by a factor of ten times or more. If risk aversion is so important, is […]

The ECB Keeps the Politicians Honest

The ECB has always maintained that the EU debt crisis is a fiscal problem requiring a fiscal solution. Monetary policy is the ECB’s domain and they will not deviate policy to afford the EU spendthrifts an easy way out. The ECB owns the very same Greek debt that the politicians are seeking to force the […]

The Benefits of Delaying the Second Greek Bailout Package

As I write, the EU are debating whether they should delay their decision on the second Greek bailout. One issue is that should they delay, then the EUR 14.4B redemption due on March 20 2012 will have to be paid in full rather than be subject to the haircut associated with the Bond Swap. Does […]

Take Two a Day and Come Back and See Us in Three Weeks

…so was the prescription from the world’s richest nations to the EU and the IMF. Following on from last week’s blogpost, the baton to beat up the Europeans begging for money at last weekend’s G20 Finance summit was passed to Brazil. More emotional than the Asian cultures, the Brazilians were quite open with the EU/IMF […]

What Do Steve Jobs and Josef Stalin have in Common? Thought Vacuum in their Management Teams

When Josef Stalin died in a dachka outside Moscow, there was no announcement for 36 hours. Stalin’s management team, the Politburo, were frozen with no idea how to continue alone now that their leader had departed. Stalin was so commanding that the Politburo members had had little experience taking initiatives or making decisions. Apple, the […]

Is Greece a Prime-A Credit?

Its 9:40am in Greece on Sunday, Feb 12. Today should be a big day as its up to parliament to vote on the proposed bail-out package. This post attempts to put things in perspective … First, some facts: Fact 1: Greece is not a poor country. Despite five years of contraction its GDP per capita […]

Saying ‘NO’ in Asia…

Asian cultures value relationships very highly and so it is very difficult to say ‘no’ to a friend. For this reason, negative sentiments are generally communicated indirectly so as not to embarrass those seeking assistance. This way, the original request can be politely withdrawn. The Japanese are experts at this. The word ‘chigiomasu’ means ‘different’ […]

Red Packets Between Hu and Merkel?

Its the Year of the Dragon and Angela Merkel is off to Beijing. It is traditional at this time of year to give Ang Poh (a red packet) filled with money to those less well off. So who will receive the fattest cheque? Merkel’s mission is to convince Mr Hu to forgive Greece its debts […]

Greek Officials Used to be Indecisive, But Now They Are Not So Sure

In an earlier post (Dec 13, 2011) I argued that Greece was in no position to bargain with the banks voluntarily forgiving them debt. If they did, the banks would likely walk away. Well, the Greek Government is trying to bargain and guess what? The banks are walking away… What’s going on? First, there is […]