2/8/15: Credit and Growth: A Marriage Not Made in Haven

My recent post for @LearnSignal on the OECD report on the role of banks-intermediated credit in economic growth: http://blog.learnsignal.com/economics/oecd-credit-is-bad-for-your-economy.

30/5/15: The New Financial Regulation: Part 10: Legal v Operational Logistics

My post for @learnsignal blog on EU financial regulation covering operational logistics is now available: http://blog.learnsignal.com/?p=188.

22/5/15: You are What (and Where) You Eat

For a half-decent Italian, food is a part of defining both the value and the meaning of existence. For other cultures, food is at the very least definitive of our connection to culture, family, history, land and so on.

Gabriela Farfan, Maria Eugenia Genoni and Renos Vakis of the World Bank looked the the consumption of food away from home across the developing world. And instead of positing aesthetic or value questions relating to food, they look at the impact that ready-to-eat food purchases have on poverty statistics in one developing country for which such data is available: Peru.

Per authors, "…Peru is a relevant context, with the average Peruvian household spending 28 percent of their food budget on food away from home by 2010."

So to the findings, then:

1. "…accounting for food away from home results in extreme poverty rates that are 18 percent higher and moderate poverty rates that are 16 percent lower. These results are also consistent, in fact more pronounced, with poverty gap and severity measures." Why? Because factoring in food consumed away from home boosts overall consumption of those above extreme poverty levels, making extreme poverty look worse in relative terms. However, for the poor who are not extremely poor, adding food away from home recognises more accurately their relative well-being.
2. "…consumption inequality measured by the Gini coefficient decreases by 1.3 points when food away from home is included, a significant reduction." Which is to say, systemic inequality falls. Why? Because the improved scores for middle, low-middle and working poor classes more than offset worsening poverty measurements for the extremely poor.
3. "Finally, inclusion of food away from home results in a reclassification of households from poor to non-poor status and vice versa: 20 percent of the poor are different when the analysis includes consumption of food away from home. 

Full paper: Farfan, Gabriela and Genoni, Maria Eugenia and Vakis, Renos, "You are What (and Where) You Eat: Capturing Food Away from Home in Welfare Measures" (May 5, 2015, World Bank Policy Research Working Paper No. 7257: http://ssrn.com/abstract=2603040).

15/5/15: New Financial Regulation: Part 8: An Overconfidence Bias Awaits

My latest blog post on European Union innovations in financial regulation, continuing coverage of the European Banking Union is now available here: http://blog.learnsignal.com/?p=181

8/5/15: Three Strikes of the New Financial Regulation – Part 7: Fundamentals Matter

My latest blog post on European Union innovations in financial regulation, continuing coverage of the European Banking Union is now available here: http://blog.learnsignal.com/?p=178

7/5/15: Hedgies v Buffett Debate: It's Superficial on Both Ends

A heated, if perhaps somewhat esoteric debate has been launched by Dan Loeb of the Third Point hedge fund and Warren Buffett. The debate as to whether or not hedge funds are capable of outperforming the market and whether or not Warren Buffett is a hypocrite.

You can read on this here: http://www.zerohedge.com/news/2015-05-07/dan-loeb-slams-buffett-being-habitual-hypocrite

But what you won't read in the post above is that the debate is superficial at best. The problem is:

• Warren Buffett's investment style… setting aside his claims about it being Grahamian (aka fundamentals-driven)… is very much hedge fund-like. To see this read my post about what defines Buffett's exceptional returns here: http://trueeconomics.blogspot.ie/2014/10/28102014-buffetts-magic-cheap-leverage.html. Like a hedgie, he takes leverage. Like a hedgie (in very broad sense) he takes activist positions, often outside or beyond the secondary markets and in alternative asset classes, such as PE as well as across undefined time horizons; and like a hedgie, he has 'black box' management style; but unlike a hedgie, he has access to cheap, very cheap funding that is insensitive to time horizon of investments he takes. Finally, like a hedgie of the old, he manages risk well.
• And the concept of a hedge fund return is, shall we say… too complex to be useful for Buffett's bet/comparative. To see this, follow the thread of links from this, back, across four posts on the topic: http://trueeconomics.blogspot.ie/2015/03/hedge-funds-returns-part-4-to-higher.html

1/5/15: Three Strikes of the New Financial Regulation – Part 6: Banking Dis-Union

My latest post on the ongoing developments in financial regulation in the EU is now available on Learn Signal blog: http://blog.learnsignal.com/?p=177. This week, I am continuing coverage of the European Banking Union system.

22/4/15: Three Strikes of the New Financial Regulation – Part 5: European Banking Union

My latest post on Financial Regulations innovations courtesy of the European Union is now available on @learnsignal blog: http://blog.learnsignal.com/?p=175. This one starts coverage of the European Banking Union.

31/3/15: Three Strikes of the New Financial Regulation: Part 2: Dubious Economics of FTT

My new post on the mess that is Europe's Financial Transactions Tax is available on LearnSignal blog: http://blog.learnsignal.com/?p=169

Hedge Funds Returns: Part 4: To higher moments and beyond

My latest post for LearnSignal Blog on the topic of measuring hedge funds' returns: http://blog.learnsignal.com/?p=165

4/3/15: Core biases in Hedge Funds returns

My second post on the topic of measuring hedge funds returns for LearnSignal blog, covering the issue of biases in measurement, induced by timing and risk considerations is now available here: http://blog.learnsignal.com/?p=161