Olsen proposes the introduction of electronic certificates, global early warning system or stabilizing investment strategies, among other innovations. He also gives us his forecast on the market volume and turnover, diversity of market players, investment products, ethic changes or technology and internet evolutions. “Long-term, there will be one centralized exchange – it will be embedded and integral part of the Internet” he foreshadows.

BIS survey reports that spot volume is 1.5 trillion per day in Forex. Are currency markets really as liquid as BIS surveys imply?

Richard Olsen: No, they are not. To the contrary. The actual spot volume of 1.5 trillion per day translates into a small transaction volume of only 17 Mio USD per second. On average there is only 8.5 Mio USD buying and 8.5 Mio selling volume. If an order of 100 Mio USD is triggered, then this order will dominate the market for 10seconds and more. So relatively small market orders of 100 Mio USD or even less can trigger powerful price moves, which can bring about margin calls that amplify the imbalance of buyers and sellers pushing the price even further.

Will transactions turnover increase or decrease in the future?

RO: In the very long-term volumes in the foreign exchange markets will increase massively with the success of quantitative trading strategies that gain wider acceptance. Short-term, I expect volumes to decline, because of the increased uncertainty due to the economic crisis.

In this economic crisis context, some central banks decide to inject money in the market. What effect do these interventions have on the functioning of markets?

RO: The recent interventions of the SNB and BOJ stabilize markets in the short-term, but increase volatility in the long-term. The interventions of the central banks skew the perceptions of market participants. Market participants rely on central banks to continue to intervene; this skews the balance of buyers and sellers. As SNB and BOJ continue to intervene, more and more traders go short, CHF and JPY. When ultimately the price level breaks, the selling volume of margin calls is far larger than would have been the case otherwise increasing the size of the adverse price movement.

Will the market maker’s model be modified in the future?

RO: In recent years, we have observed that the Internet is rapidly mutating from a pure information network into a global market place. I expect that this development will accelerate and that the Internet itself will turn into one large exchange.

My long-term expectation is that traders will trade electronic certificates, a virtual representation of the underlying financial asset, directly on the Internet exchange. We are not yet there, but this is the major development that will take place.
In one respect the Internet exchange will function differently to other organized exchanges: the ranking of bid/ask limit orders will be done on the basis of the size of the respective spread, not the best bid or ask. This change is important, because the direct access with a ranking system based on best bid/ask gives rise to a price instability, which high frequency traders take advantage of.

Do you expect diversity in the types of market players (besides liquidity players, commercial and speculators) to increase in the future?

RO: Yes. In the recent past, we have observed a rapid increase of the number of retail traders; only 10 years ago, this group was quasi non-existent. Today, retail trader account for up to 10 percent of global volume. Corporations do hardly any foreign exchange trading, only the absolute minimum, this will change, when they become aware of the true cost of their passive strategy and the benefits of dynamic hedging. Going forward there will be a lot of growth in volume and diversity of market participants.

What kind of trading strategy should be developed based on this scenario of volume and market participants increase?

RO: Our trading algorithms take advantage of the diversity of trader profiles: our models measure the degree of imbalance between the different groups and identify trading opportunities, when the groups get out of line with each other and there is a large disequilibrium. We take advantage of the disequilibrium to take counter-trend positions i.e. we push back when markets overreact. In doing so, we contribute to market stability. We take advantage of the ongoing up and down move of the market to gradually improve the price average of our positions and then close out the position, when we have reached our profit objective.

What is your assessment of today’s financial system structure?

RO: My assessment might sound too negative; the global financial system has gone beyond the point of no return. The sovereign debt crisis, which has inflicted Iceland, Ireland, Greece and Italy will spread to other countries, not just at the outer frontiers of globalization. The crisis cannot be averted. Refinancing rates will go through the roof, Central banks are highly leveraged and do not have the necessary firing power to avert the real crisis, when the global economy starts to slow in earnest and investors panic. There will be a meltdown.
The global economic system is dysfunctional because of the mismatch between the modern technology used in the real economy and the operational procedures of the financial system, where there is no ongoing settlement and the whole system is batch based. The financial system needs to be reformed, which is not as difficult as people might think.

Your view of the current system is negative, but there is still hope then…

RO: There is not just one thing that needs to be done to make the world safer and more robust. Reforms at several different levels are necessary. If we go for partial solutions, then things can even get worse.

What reforms would make financial structure works better and more safely?

RO: We need to embrace new ideas. We have to streamline the back office operations and move to instantaneous settlement with second by second interest rate payments. In a financial system, where 80% of the trades have a duration of less than 20 minutes, second by second interest rate payments are more than a technical detail.
For instantaneous settlement to happen, we need to introduce electronic certificates, which make any asset easily transferable. The electronic certificates will be issued by the equivalent of notaries for property of land.

We also need to launch a global early warning system, which is organized along the same lines as Wikipedia. It will collect digital data of the real economy and financial markets from sources from around the world to generate online forecast and risk information. I envisage system like a huge economic weather forecasting service covering all aspects of our economy.

In the world economy, should investment strategies be changed? In which way?

RO: We have to stabilize investment strategies: few people are aware that the buy and hold strategies that are recommended for all types of investors and the trend following strategies destabilize the financial system. The global economy is a complex system, which can only achieve stability, if financial assets are managed by market stabilizing investment strategies. Central banks and sovereign wealth funds should use their collateral to trade counter-trend investment strategies and counter-act market excesses. I am not saying that central banks should target particular price levels, they should target a particular volatility regime and take positions, whenever volatility increases and prices overshoot.

Any reform regarding the investment products for the retail traders?

RO: There is a need to develop user friendly investment products. I very much believe in creating the equivalent of an iPhone for investment products – the products need to be designed in such a way that they are intuitive and user friendly; embedded in the financial products should be all the heavy lifting of intra-day decision taking and should be designed in such a way that they contribute to market stability.

Will analysts and traders be dependent on sophisticated technology to achieve absolute returns, or will basic tenets of technical analysis be preserved?

RO: Practitioners developed technical analysis because the economists were not able to provide them the appropriate tools. This is changing. Finance has made a lot of progress and is gradually making available to the everyday man useful decision support tools that significantly improve the performance of retail traders.

Many citizens are criticizing the lack of ethic of the traders and financial markets… Do you agree?

RO: The insiders of financial markets know the inner working of the financial system and can use this knowledge for their own personal benefit, but at the expense of the society at large.

Insider manipulation is prejudicial and illegal. Do you think financial markets actors should be given a stronger sense of responsibility?

RO: In medicine doctors have to swear the Hippocratic oath and are not allowed to abuse their power, we have to create awareness that all aspects of business have an ethical component, where we need to do the right thing: we are not allowed to embark on an action if it only benefits ourselves at the expense of the group at large or the whole society. We are only allowed to take actions that are also beneficial for society as a whole.

To conclude, Richard: are you bearish or bullish as for the future of the markets?

RO: I could not be more bearish for the next two years. There are, however, solutions and we can turn things around. We need to have the courage for change.

(Source: fxstreet.com)

Richard Olsen: I don’t think so. However, the current distortions in the market show that the economic mechanisms behind the foreign exchange markets are not understood well enough. In particular, the fact that the economy is not static, but in a constant state of change, is ignored. The situation is comparable to classical physics before 1900: only Einstein’s theory of relativity, which took the dynamical behaviour into account, allowed for a breakthrough.

So economics needs a new Albert Einstein?

RO: It needs new ideas. Indeed, there already exist new scientific models and algorithms, which incorporate the dynamical aspects. Now it is all about applying them. The methodology of High Frequency Finance offers a possibility.

Does this mean that the attempts of the recent crisis summit addressing the strong Swiss franc have fallen short?

RO: The problem is, that people try to directly influence the level of exchange rates. This, however, destabilizes the whole currency system even more.

What advice would you give the Swiss currency experts?

RO: A first step would be to dampen the massive exchange rate fluctuations in the franc. For instance, this could be achieved if exporting firms would hedge their foreign exchange risk dynamically. Thus buying Euros now as long as it is cheap, and selling when the franc drops again. This would substantially stabilize the exchange rate of the franc.

But hedging is the business of banks. Does this really require the presence of the government?

RO: Not necessarily. There simply has to be a clear signal that new solutions exist and are ready to be utilized. It takes courage to do new things, but necessity begets ingenuity. We need to support this process of innovation.

Will the franc become stronger against the Euro?

RO: The franc has risen strongly against the Euro in the last five weeks. This can hardly continue at the same rate, particularly as the exchange rate rise can most probably be attributed to the low liquidity around the holidays and the subsequent re-buying. Another recovery of the Euro rate is therefore probable.

But the fact that the eurozone countries currently don’t agree on the amount of funding for rescuing the Euro hardly speaks for it?

RO: Europe has many problems. But the impact of such news on the exchange rate is smaller than one would think: 95 percent of an exchange rate volume is based on speculation and only 5 percent can be ascribed to the real economy. The exaggerations seen in the rates occur because speculators are being forced to sell at a certain price, if they hit their stop loss, lowering the rate even more and scaring off more investors, similar to a herd of sheep plummeting over a cliff.

The Dollar is also under pressure. The Fed will soon be deciding on the interest rates – can they change the course of things?

RO: Here also, has it become evident that the wrong recipes are being applied. Interest rates in the financial system are not paid in a continuous manner but daily. This is in contrast to the financial markets where huge volumes can be traded in a split second. The market does not need more liquidity but interest rates paid every second for intervals of minutes or hours. This would also remedy the side effects of low daily interest rates.

Contrary to the USA, China is increasing the prime rates more and more aggressively: as a result, will the frictions in the foreign exchange market increase yet again?

RO: For the foreign exchange market the central banks appear as imps, who fix everything behind the curtains. Meanwhile however, there has been no consensus among them. In a dynamical system this leads to an increasing imbalance. Yes, the friction in the foreign exchange market will increase strongly.

Higher interest rates are commonly put forward as an argument to invest in the currencies of emerging countries.

RO: From the point of view of a diversification strategy this makes sense. However, it should not be forgotten that in the booming emerging nations, prices can also increase strongly, for instance for property. This can be very risky.

Given the risks, opacity and often the unfavorable spreads, shouldn’t private investors totally avoid the foreign exchange market?

RO: There is a big demand for currency investments and these requirements should be covered. Investors should, however, better focus on lower but steadier returns and minimized risk. The partly dubious offers that are available are, if nothing else, due to the fact that large suppliers are not innovative enough and charge very high prices. A little modesty would also benefit the foreign exchange business.

(Source: Handelszeitung)

Digitalize the financial markets.

The financial markets are computerized and banks operate huge computer networks to process the daily load of transactions. The computer systems hide the fact that the underlying business processes are outdated. They were defined at a time when only traditional postal services with overnight delivery existed; this is why even today international payments take two days and interest rate payments are made in discrete intervals of a minimum of one business day.

In traditional mechanics we experience how minor defects can have big repercussions. This is the same with financial markets, where minor operational deficiencies can have a major impact. By digitalizing financial markets and settling financial transactions in real time with second by second interest rate payments and by introducing digital financial contracts, where the full contract content is computer readable and not in the form of 200 paged contracts in lawyer speak with Excel spreadsheets; we improve the operational efficiency of the financial markets thereby reducing uncertainty. Such a development will reduce volatility in the financial markets and minimize systemic risk declines.

For the record, OANDA proves the feasibility of operating a currency-trading platform with second by second interest rate payments that has also been licensed to a few banks. Behind the scenes large banks discuss, how to streamline the processing of financial transactions but what is still lacking is the backing from the top management but this can change at any time.

Global economic weather service

In our everyday lives we take weather forecasts for granted. In the domain of the economy and financial markets there are no economic weather forecasts produced by large-scale models similar to the weather forecasting models that process millions of data points every day.

There are only traditional econometric models processing macro economic data, which are updated on a quarterly or monthly basis. We need a global information system that processes macroeconomic data and information of financial markets on a real time basis and is available as a public service. This would reduce uncertainty during periods of crisis and provide decision makers with the necessary information to take preemptive measures.

Again, for the record only, Olsen Ltd has taken a first step towards building such an information system. We have recently released a Scale of Market Quakes (SMQ) service, which is comparable to a Richter scale in geology. The scale measures the impact of political and economic events on the currency markets. This is just a first installment and a lot more needs to be done, but it is definitely technically feasible.

Market stabilizing investment strategies

In complex system, as for example the human body, dynamic processes play a vital role. The heart pumps five liters of blood every minute: this is necessary to transport fresh oxygen to the cells and remove toxic waste.

In our global economy the analogous is lacking: investments in the financial markets are largely based on trend following strategies, such as buy and hold. If, for example, pension funds buy property, then this bids up property prices, which has a negative impact on private families who then cannot afford to buy a private home.

We need stabilizing investment strategies, which dampen price volatility: we need to prevent the oil price from first rising to 140 USD per gallon and then within a few months to drop to 30 USD, as occurred in 2008.

Investment strategies that buy assets when market prices are falling and sell assets when prices are rising, are stabilizing investment strategies that lower price volatility. The profits that these strategies generate are a reward to contribute to market stability. The world economy should invest the bulk of its assets in stabilizing investment strategies, which would reduce market volatility and increase economic efficiency.

You might argue that it is impossible to develop stabilizing investment strategies because this would be akin to building a Perpetuum mobile. This is not the case because the global economic system is not a closed system. It is possible to create value if a service is beneficial to society at large. Investment strategies that stabilize markets do exactly that. An example of such a service is our investment products offered on the Olsen Investment Platform. I hope that this is not viewed as sly advertising.

Creative commons publication platform

For the functioning of the economy, access to information is key. With few exceptions, today’s knowhow is not a commons good but owned by individual publishing houses and patent owners. In nature, ‘information’ is frequently treated as a common good, accordingly every human cell includes the full DNA even though any one cell only uses a small fraction of the information.

The social and ecological challenges that our society faces makes it necessary that we utilize information as efficiently as possible and serve the interests of the whole society.

Nature treats information as a commons good. We can do the same by creating publication platforms, where authors can win prizes for the best contribution in exchange for their consent to make their work available under the creative commons license. This would among other things catalyze the development of a library of textbooks freely available over the Internet. There are already a growing number of books published under the Creative Commons license, what is still lacking is a publication platform with prizes but this is not difficult to build with modern Internet technology. Companies could fund the prizes as a way to build brand recognition, just as they do to sponsor sports events.

The same approach can be used to fund research. Instead of the traditional research grants, there could be a mechanism of prizes. Researchers publish their results and compete for research prizes. The winners would be able to use the prize money according to their own discretion and will typically invest the funds in the next research project in the hope of winning a follow up prize. In this way, every researcher would have an incentive to publish his research results on the commons platform, so a much larger number of projects will become public knowledge than is the case today, where scientific journals suppress articles that are not published. The prize money system will foster the accountability of researchers and ensure efficient usage of  research money. In the recent past, Netflix was highly successful in using this approach to improve its algorithms for its recommendations for customer renting films, see details of Netflix 1 Mio USD competition.

Labor market

Unemployment is one of the big issues of modern society. In the current economic crisis governments have incurred huge deficits to fight unemployment. In addition central banks have lowered interest rates to record lows to get the economy back on track, all because of unemployment and the fear thereof. To overcome unemployment it is not enough to pump money into the economy, we have to address the underlying problem.

During the course of the past 50 years, the typical employment relationship has morphed into a long-term employment contract with an intrinsic financial value. Employment contracts should be handled as a financial instrument, but modern labor law has failed to accommodate this development.

In the middle ages the king and farmer entered into an employment relationship, which defined the work of the farmer and the place of his farm. Initially, their contract was short-term but over time it developed into a long-term contract. If the plot of land was at an attractive location and could be used for an inn for example, the contract acquired an intrinsic value. Farmers tried to capitalize and take advantage of the value of their land by selling their employment contracts, but initially could not do so. It took several hundred years for society to accept that an employment contract between king and farmer should be transferable. In the United Kingdom, this development gave rise to the so-called leasehold that still today is a prevalent form of ownership for land. Property of land originally evolved from an employment contract between king and farmer.

I argue that a similar development should take place with today’s employment contracts. I am aware that this sounds provocative but let us imagine that employment contracts could be sold and bought like other financial instruments. Employers could sell employment contracts to raise money for creating a job. Employees could buy their jobs subject to the constraint that they have the appropriate professional qualifications. Employees should be allowed to use their unemployment benefits as equity and get a mortgage to fund the purchase of a suitable job. The pricing of jobs would be similar to the property market where specialists value properties.

By converting employment contracts into financial instruments, employees would acquire an ownership interest in their company transforming traditional companies into a modern day cooperative. Treating employment contracts as financial instruments would increase the flexibility of the labor market and address the unemployment issue at its roots.

Governments have responded to the economic crisis by lowering rates of interest to nurture the economy and spending huge amounts of money to create jobs through employment programs. My proposal is bottom up and can be initiated in a step-by-step approach by first relaxing the constraints on the disbursement of unemployment benefits and allowing employees to use their unemployment benefits as working capital to build a small business. This would set the stage for companies planning to expand production facilities to apply for funding with labor offices in exchange for the number of people that they get off the dole.

Corporate States

The economic crisis has forced governments to incur large deficits that have undermined the government finances. Going forward governments will be forced to scale down public services.

The institution of a political state with a democratic constitution is a consequence of the absolute power of kings in the 17th century in Europe. The governments had monopoly power over their people, because they could only emigrate at great cost to another country. The democratic processes were introduced to make the governments accountable. Democracy was thus a substitute for the lack of choice, which is typical for a competitive market place.

During the past 200 years more and more industries have evolved where suppliers have an oligopoly or a monopoly over their customers. Companies with monopoly or oligopoly power are similar to the absolute states of the 17th century, where the typical CEO has discretionary power comparable to a monarch. The citizens of a corporate state are the customers of the company.

Whether we are aware of it or not, today we are all citizens of Google and Microsoft. What we miss are democratic processes that make these corporate states accountable. Corporate democracy is more straightforward to implement than we might think.

As a first step towards consumer democracy, we can utilize the fact that large companies routinely survey their customers. We can ask them to publish the results of their surveys on the Internet thus creating a platform for debate. These platforms would nurture public debate and create pressure for companies to adhere to customer requests. On initiative of their consumers, corporate states would take on more and more public services.

The introduction of democratic corporate states has several advantages: companies with oligopoly or monopoly power have typically strong balance sheets, they have access to specialized domain expertise not available with traditional states and they have an international network making them ideally suited for international projects. These features make them ideally suited to take on tasks that we have traditionally relegate to the political state.

Environmental issues

Newspapers report regularly on environmental issues covering a broad range of topics from resource depletion to pollution. For readers it is hard to find their way and arrive at a definite idea of what the actual state of the environment is and understand, how they should live as a responsible individual. The environmental issues are by their nature highly complex and there is no one answer that fits all cases.

The debate about the environment has focused on getting commitments from countries to limit emissions and agree on specific quotas. In addition, developed countries are being asked to make transfer payments to countries that are particularly exposed to the impact of global warming. In all this debate the focus has been on setting limits and constraints, there has been too little discussion of the bigger context of how we can change the underlying mechanics of the global economy to be less energy intensive.  It is one thing to improve the fuel efficiency of cars, but it is even more effective, if we find ways of living together where we do not need a private car. The introduction of teleconferencing is an example, of how we can reduce travel and improve our environmental profile.  The gadgets of modern technology are result of our ingenuity in leveraging subtle mechanisms, such as the behavior of electrons to build computer chips and then embed them in mobile phones, such as an Apple iPhone, and the development of sophisticated computer applications. Decisive for how the global economy operates, are not just the human beings themselves but the many social institutions ranging from something as abstract as language to law, contracts, corporations, financial instruments, exchange based and over the counter markets but also political institutions, such as the United Nations; the different national states with their respective constitutions. These social institutions have a strong impact on how we as individuals behave, how we consume, save and what our environmental impact is. We can improve the energy efficiency of global society by appealing to the individual but it is equally important to do so by creating social mechanisms that improve our environmental footprint.

The initiatives that I have outlined above are motivated by the objective to improve the efficiency of the global economy. The proposed reforms of the financial markets, the commons publication platform, employment contracts as financial assets and corporate states are intended to change the dynamics of the economic system: the reforms of the financial system will increase the stability of economic markets, reduce the price volatility and thus enhance economic efficiency by minimizing the losses incurred by unnecessary price shocks. The global crisis has cost approximately 4 trillion USD, just imagine if only part of these losses could have been prevented. Society has to make up for these losses and in doing so incur another round of environmental damage. The different initiatives each have their specific purpose. The commons publications platform seeks to improve efficiency by making information omnipresent and thus increasing economic efficiency. Corporate states are set to fill the void left by the traditional political states, which are over indebted and have to reduce expenditure and curtail their public services. The corporate states are better suited than political states to tackle the environmental issues: they have a strong domain knowledge, they have an international presence and can overcome the antagonism of national differences that have bogged down progress of international political initiatives.

The above is a brief description of the main ideas that I have developed over the past 35 years. There is so much more to say and explain, but this will follow in future blogs. I ask readers to ask questions and I will try to give answers.

Obama calls for a stronger Renminbi: does he have real clout or is this just a publicity stint to appease voters back home? China is the powerhouse of international finance. It has accumulated the world’s largest pool of currency reserves of 2.3 trillion USD. By imposing strict capital controls China has been able to peg its exchange rate to the Dollar. Its ultra-competitive exchange rate has allowed China to grow its exports disproportionately. Today, exports in the amount of 1.4 trillion USD account for 32 percent of its GDP. The low cost Chinese products are the de-facto price benchmark of manufacturing goods across the world. The prices put downward pressure on manufacturing prices and force businesses to offer their goods at prices that are not sustainable and do not allowfor long-term investment and reserve accumulation. This has a distorting effect and drives companies across the globe out of business leading to a loss of valuable human capital.

Are the political leaders right in asking the Chinese government to revalue the Renminbi or should they follow another tactic? Because China’s export industry accounts for 32 percent of GDP, the Chinese government is highly dependent on the continuing success of its export industry. So it goes without saying that the Chinese government will do everything to resist the call for Renminbi appreciation. Anyway, they have the financial clout with their 2.3 trillion in capital reserves and are in the driver’s seat, so no one need tell them, what they should do.

It is in the world’s interest, including the Chinese government’s that the global economy has adaptive exchange rates, which allow currencies to move up and down. The currency price adjustments are important, because they insulate any given country from outside pressure and enable the local economy to adjust in gradual pace to outside changes. So the Chinese government has every interest to move to flexible exchange rates, but it will not want to do so, if the strategy risks its hold on power.

Is there a way out? The rest of the world should not force the Chinese government to float the exchange rate; this is an internal matter and should not be interfered with. Having said this, the governments should support efforts to create a liquid offshore market for the Renminbi. If the offshore Renminbi is higher than the official Renminbi, Chinese will subvert the exchange rate controls putting internal pressure on the Chinese government to relinquish the controls and open its economy. As long as the Chinese government has full control of the Chinese economy and everything is ticking smoothly, it is likely that the offshore Renminbi will have a high market price. It is then that the pressure on the exchange rate controls is strong. As soon as the Chinese economy stutters and government is weakened, the offshore Renminbi will decline in value, which will in turn reduce the pressure on the Chinese exchange controls. The advantage of this approach is that it is adaptive.

There is one word of caution. Free financial markets as they exist today do not work as well, as we think. The reason is the lack of liquidity leading to large price fluctuations. I thus argue that governments should focus on building an offshore market, but also set capital aside for stabilizing the market price with dynamic investment strategies. These strategies do not target a particular price level, but seek to reduce price volatility. If the offshore Renminbi market is highly liquid with low volatility, the price adjustments will be smooth.

My plea is to stop arguing with the Chinese government about the right price level of the Renminbi. Let us expand the fledgling over the counter market for the Renminbi. We should invite retail traders and institutional investors, including sovereign wealth funds to participate. If the spectrum of participants is heterogeneous and a significant share of the participants follow stabilizing strategies, then the off-shore market will be liquid and produce a consistent market price for the Renminbi. The price differential between the offshore and the official pegged price will vary reflecting the changing outlook of the economy and political regime. The price differential will in a dynamic way exert pressure on the Chinese government to open its economy. This more flexible approach will make it easier for the Chinese government to come to terms with the need for change.

Author: Richard B. Olsen, Founder and CEO of Olsen Ltd

In the last month, the economic news releases have been better than expected. Manufacturing numbers and property sales for the US have turned positive surprising the public. Investors and government decision makers ask themselves whether this trend will continue; little do they realize that these numbers are spurious. They depend on the point of reference; are they computed month-to-month, or relative to a year ago? The outcome depends on the starting point; if in the previous year the numbers were bad, then it is easy to report a positive performance now. The practice of reporting one number, such as the growth compared to a year ago, is misleading. Economic numbers should be made public in the appropriate context, ideally as part of a comprehensive weather map for the economy and its financial markets.

To reduce economic uncertainty, we need a global information system that aggregates on a continuous basis, the economic time series from all around the world. By putting the time series into their appropriate context and displaying them graphically it is possible to provide more concise and easy to interpret information than is the case today. The weather maps in meteorology are a template for such a service where simple pictures convey a lot of information. We have to learn how to come up with something similar for the economic and financial markets.

The global information system with the online updates of the macroeconomic data will replace the discrete news releases that today shake the markets where; for example, the Non Farm Payroll numbers can move the market by 2 and more percent. The discreteness of the news releases creates volatility because market participants in anticipation of the release close out their positions and as soon as the release hits the market, they try to jump on the bandwagon of the price move. With online updates, there is a gradual absorption of information without the market disruptions of today’s news releases.

Author: Richard B. Olsen, Founder and CEO of Olsen Ltd

Clicking here will retrieve an Acrobat version.

Author: Richard B. Olsen, Founder and CEO of Olsen Ltd

Clicking here will retrieve an Acrobat version.

By: Richard B. Olsen, Founder and CEO of Olsen Ltd

In technology, we have been able to exceed our wildest expectations, so why not try to achieve the same in social issues? The contributions to the economics section of the blog will span a wide range of areas that are critical for such an endeavor…

Clicking here will retrieve an Acrobat version.

By: Richard B. Olsen, Founder and CEO of Olsen Ltd

Clicking here will retrieve an Acrobat version.