Monthly Archives: February 2010

More on Sovereign Risk and Semi-Sovereign Risk

When does a sovereign or semi-sovereign government default?  I have seen three answers: 1) When debt is greater than future seniorage revenue (central bank profits) plus future debt repayments.  (Kind of a tautology, but what is implied is that if future debt repayments are onerous, a government would default.) 2) When the interest rate a […]

Of Credit Ratings, Sovereign Risk and Semi-Sovereign Risk

This post was prompted by Barry’s article Credit Rating Firms: Worthless in a Bull market, Damaging in a Bear Markets. When I was a bond manager, we had a rule for our analysts — ignore the rating, but read the write-up.  The analysts at the rating agencies would give their true opinion in the write-up.  […]

Thoughts on my Last Two Posts

Some follow-up on my last two posts.  I will be talking to those that suggested parties that would be willing to create a definitive bond blog.  But, others brought up a good point, which I am well aware of, but forgot for a moment.  The bond markets are mainly institutional.  Institutional bond investors have no […]

Book Review: Diary of a Hedge Fund Manager

This is a book that gives a feeling for being in hedge fund management, rather than a dry description of what needs to be done if you are in the rare position of being asked to manage a hedge fund. The author was an ambitious guy.  Growing up in Canada, he wanted to play professional […]

A Question of Cultural Failure (II)

Good cultures balance short and long-term goals.  Focusing too much on the long-term can lead to overinvestment, and problems like Japan still faces.  Focusing on the short-run can lead governments and companies to focus on manipulating budget and earnings numbers to fulfill their own selfish ends. At present, we have no surplus of long-termism, but […]