From Bitcoin to Ethereum


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These crypto currencies have been hot topic of discussion recently with the success of Ethereum. Today’s needull tries to explain what these are and the differences between Bitcoin and Ethereum.

The Ethereum blockchain is much faster than that of Bitcoin. The delay between two blocks in the bitcoin system is around 12 seconds. The propagation time of a block through the network, understandably, poses de facto new challenges. The Ethereum protocol provides solutions in both cases. Moreover, and this is the great innovation of this platform, one can arbitrarily store data on the blockchain—by which I mean smart-contracts—that are, in fact, programs written in a complete Turing language. There is thus no restriction on the complexity of programs that can be deposited on this particular blockchain.

The complete article

Aurélien Alvarez, reply by Jean-Paul Delahaye — Inference

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All in the Family Debt


What do social conservatism and neoliberalism have in common? They both undermine community responsibility and force families to take on cross-generation debt.

Indeed, many of the policy reforms after the Reagan revolution can be understood as an attempt to reinvent the imperative of familial responsibility in the new idiom of household debt. As policymakers imposed cuts to health, education, and welfare budgets, they simultaneously identified the family as a wholesale alternative to the twentieth-century social state. And as the responsibility for deficit spending shifted from the state to the household, the private debt obligations of family were defined as foundational to socioeconomic order. The family, not the state, would bear primary responsibility for investing in the education, health and welfare of children.

Boston Review

Image: Painting by Brianna Keeper

Why regulators should focus on bankers’ incentives


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This is an article advocating incentives and disincentives on bankers rather than banks.

Regulators should not levy fines on banks, despite them having the legal status of a person, and instead apply the fines to those responsible at the time of the offense, whether subsequently retired or not.  As earlier noted, the onus of proof should be on the managers of those who committed the misdeed, and so on up the hierarchy, to convince (a jury) that they took all reasonable steps to prevent the misdeeds of their subordinates.  The size of fine could be related positively both to the extent of negligence and to rank.

Of course, the threat of personal liability and loss could make bankers overly cautious, as is often said of US medical practice, with unnecessary and costly tests of patients to reduce the threat of suits.  As usual, there would be an optimum internal degree of liability, but we are currently well below it.

The complete article

Charles Goodhart – Bank Underground

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Ten Years after the Crisis


A decade has passed since 2007, the year sub-prime loans began to default, signalling the start of the financial crisis which shook the world within months of its beginning. Governments have changed, foreign exchange rates are back to pre-2007 era, real estate rates have stabilized, jobs are back but the banking sector is still dealing with the aftershocks and it still remains under intense public and political scrutiny.

The very memory of 2007-08 sends shivers down bankers across the globe

So, the question that remains after 10 years since world’s largest banks began to feel the tremors that would ultimately lead to their end, what exactly is the future of banking?

Today’s Needull, a recent article from The Economist, sums it up all, as it looks at the various changes triggered by this financial apocalyse, over the decade.

So have the banks at last put the crisis behind them? This special report will argue that many of them are in much better shape than they were a decade ago, but the gains are not evenly spread and have further to go. That is particularly true in Europe, where the banks’ recovery has been distinctly patchy. The STOXX Europe 600 index of bank share prices is still down by two-thirds from the peak it reached ten years ago this month. European lenders’ returns on equity average just 5.8%.

America’s banks are significantly stronger. In investment banking, they are beating European rivals hollow. They are no longer having to fork out billions in legal bills for the sins of the past, and they are at last making a better return for their shareholders. Mike Mayo, an independent bank analyst, expects their return on tangible equity soon to exceed their cost of capital (which he, like most banks, puts at 10%) for the first time since the crisis.

Full Article Here

The Economist – Patrick Lane

Original Blog: Brazen Banker

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Wall Street Made Charles Murphy Successful and Rich, but Happiness Eluded Him


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One of the many successful but not happy stories from Wall Street.

The next day, Mr. Murphy sat down for breakfast with his wife and children. As he left for work, the nanny took notice of Mr. Murphy’s suit and crisp shirt.

“You look good,” she said, according to a close family friend.

“I feel great,” Mr. Murphy responded.

That morning, Mr. Murphy worked in Paulson’s Midtown Manhattan office.

Later, he headed to the Sofitel New York hotel a few blocks away, checked into a room and jumped from the 24th floor.

The complete article

The Wall Street Journal

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Most Influential Women in Finance


Everyone seems to be cashing in on the International Women’s Day frenzy. The above image of a defiant girl in front of Wall Street’s iconic charging bull statue was just another addition to the same. State Street Global Advisors, world’s third-largest asset manager, installed this bronze statue on Tuesday morning as part of its new campaign to pressure companies to add more women to their boards.

Talking about women in financial sector, today’s Needull is a list of my favourite women finance professionals. Go through the list, read through these relatively unknown names and you will be surprised to know how women are ruling the world, even in a literal sense.

The financial world is dynamic, unpredictable, capricious and sadly, male driven. But thanks to the women mentioned in this blog and thousands more like yours truly, the world is gradually waking up to the idea to let the fairer sex handle the finances, at home and outside. There is a lot needed to be done but as for now, the defiant girl is just standing, determined and steadfast, as the bull ahead snarls in anger.

Full Blog Here

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No Future without Past


The future of fintech is bright, almost blindingly so, but many of the entrepreneurs in the industry fail to grasp what will eventually lead to the downfall of countless fintech firms, particularly those that lend money – a tendency to forget the past and inability to say ‘No’.

FinTech (or Financial Technologies) is undoubtedly the new buzzword in the banking scene. Everyone is talking about it, be it the biggies or the newcomers. Start-Ups have sprung like weeds around the concept of applying latest web or mobile based technologies in finance & banking.

But most of these firms have a tendency to ignore the power of history. When it comes to banking, or investing in bank stocks, few things are as important as history. An investor with deep and visceral appreciation for the historical swings of the credit cycle gets a definite competitive advantage. However, these new tech-based lenders often tend to neglect history and in their desire to acquire clients, tend to say ‘yes’ top every request. They just dismiss hundreds of years’ worth of experience reflected in the history of banking as outdated. There demise will begin the very day the credit cycle takes a turn for the worse.

Today’s Needull, an article from the pages of FOX Business, is actually a warning to such lenders who play with tools of future but tend to neglect the past.

Full Article Here

John Maxfield – FOX Business / fools.com

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