A key concept at the heart of financial theory is the “risk-free rate.” The idea is simple: the rate at which you would lend money to a very secure borrower, one with 0% probability of default. If you lend money to a riskier borrower (one with some probability of default) you would charge a “risk […]
Swiss Franc: It ain’t gonna happen
This colloquial phrase is used when something is considered impossible. That seems to be the case with the Swiss franc, which saw a major appreciation when the Swiss National Bank (SNB) announced it was floating its currency. It is an excellent example for one type of exchange rate. For obvious reasons, Switzerland is a major […]
The Sharing Economy: An Ocean of Unconscious Cooperation
The sharing economy is a topic of hot debate. It means different things to different people. For investors, firms like Uber and Airbnb offer tantalizing market capitalizations. For visionaries, the peer-to-peer transaction model represents a new, post-capitalist economic reality. Meanwhile, critics see the rise of these services as just another brick in the winner-takes-all wall. Whatever […]
Botín: The Man Who Revolutionized Banking
It is safe to say that Emilio Botín was an extraordinary person in every way. Without a doubt, the history of banking and the Spanish economy will surely bestow him a place of honor, no matter how the story is written. He had a decisive influence in shaping the history of the society in which […]
Rethinking Welfare State
What is the welfare state? Highway robbery? A necessary evil? A good idea? All three perspectives are out there and deserve addressing …
