Archive for February, 2009

Call for global early warning system and dynamic central bank intervention to stabilize markets

Enclosed are the slides of a talk that I gave in context of the launch of the Asia-Pacific operation of OANDA Corp. I hope that you will find the content of the slides interesting. The talk explains, why tick by tick screening of market prices is so important for a successful analysis of market trends. It gives recommendations of how retail and institutional investors and corporations should respond to the current crisis. The foreign exchange markets offer significant return opportunities. For corporations and other institutions with currency exposure, the implementation of currency overlays are essential. I then outline, how the governments and central banks can be pro-active to overcome the current crisis. I suggest that they should launch a global early warning system for financial markets and the economy at large, start a program of dynamic foreign exchange interventions to stabilize volatility and finally launch an effort to digitalize the financial markets to get rid of the outdated business practices. You are invited to comment and ask questions…

Clicking here will retrieve an Acrobat version.

February 25th, 2009 | Economics, News | | No Comments »

How science can prevent the next bubble

Since the world became aware in the summer of 2007 of an imminent financial crisis, people have asked why so few experts saw it coming. There have been many calls for an early warning system for the world economy – but little has been said about how to build one.
To construct a global early warning system we have to overcome the predicament Alan Greenspan, the former US Federal Reserve chairman, highlighted 12 years ago. “How do we know when irrational exuberance has unduly escalated asset values?” he asked. “We should not underestimate … the complexity of the interactions of asset markets and the economy.”
Macroeconomic data alone cannot provide sufficient information to determine whether asset prices are inflated. We need to dig deeper and track the complexity of interactions in financial markets and the economy…

Clicking here will retrieve an Acrobat version.

February 18th, 2009 | General, News | | 1 Comment »