27/10/08 @ 3PM: Sleepy-head
I’m sleepy! Apologies for the lack of updates, I was out at the flood site for most of last week and then I spent all weekend working on my CV and a couple of job applications. No rest for the wicked! I’ve joined the program committee for the 1st IEEE Workshop on Service Oriented P2P Systems (see the events list above). If you work in this area, why not submit something? You could be visiting Shanghai next spring :-)
13/10/08 @ 6PM: Paul Krugman is a Really Nice Guy
I was happy to see that Paul Krugman won this year’s Nobel Prize for economics, though I suppose they couldn’t give it to a Chicago-school guy given the financial problems that their ideology is causing us. Aside from correctly predicting today’s financial problems as well as the East Asian crisis, Krugman always goes above and beyond in order to educate normal people on important economic issues. So much so, that he even responded to an email question of mine way back when I was studying for Economics 101 – what a nice guy! Oh, and it looks like the markets survived another day. Phew!
12/10/08 @ 3PM: Anticipation
The IMF / G7 plan is interesting, but I’m not sure if it will be enough to reassure the markets when they re-open on Monday, particularly as a common European-wide capital injection plan has been written off. There may be a chance for significant gains for UK banks as the government now says it will make capital available as early as Monday, but this will depend on the forthcoming announcements by RBS and HBOS. The stakes are incredibly high at this point. If the financial system cannot be resuscitated, the failure of whole economies could be the next, just as we saw with Iceland. I’d place the chance of global financial Armageddon at around 40%.
10/10/08 @ 5PM: Potential Energy
The financial disaster continues unabated and that should terrify UK citizens. The problem is not today’s 9% drop in the FTSE 100 per se. The bigger problem is that this fall occurred after the UK government promised upwards of £400bn (30% of GDP) to cover banks short-term funding requirements. Yet today, bank shares were amongst the biggest losers… how can this possibly be? The reason is the poorly understood Credit Default Swap (CDS) market. To make a long story short, credit default swaps are bond insurance derivatives. The protection seller accepts payment to guarantee the protection buyer's bonds. The CDS market is opaque and no-one knows which institutions hold what liabilities. Furthermore, as the market is entirely unregulated there is no requirement that insurers must have any assets to cover their liabilities. So the question becomes, who insured the failed banks and hedge funds? The Lehman liability alone is estimated at $350bn and for almost every institution that has failed, CDS payouts are now coming due. In the current climate no one has enough liquid assets to meet this kind of liability and thus each CDS liability is best thought of as a virtual bomb that will blow up whatever institution currently holds it. Worse yet, the CDS market is valued at $50 trillion, so bailing the market out is quite impossible as there literally isn’t enough money in the world! The only hope to stave off depression-like collapse is a massive, unprecedented global intervention. This has to happen before Monday, and even then it might not work.
06/10/08 @ 2PM: Nowhere to Run
Two updates in a week? It’s like the good old days. I had a really nice weekend. Some of my school fiends came to visit. It was nice to see that despite the financial apocalypse everyone is doing very well. On that subject, I’m planning to deposit half of my savings into a fixed rate Euro denominated savings account when my money matures in November. Hopefully it will still be worth something :-) though with the troubles of the European banks, nowhere seems safe! Oh and there’s a new paper on my research page.
01/10/08 @ 5PM: Sickly
I’m just getting over a nasty cold :-(. The business issues I mentioned in my previous post are now resolved. The eagle-eyed amongst you may notice something missing from this page which might indicate how things turned out… but I will say no more on the subject! Last weekend some of my University friends visited for a little reunion (10 years since we started!). Friday was fun, but Saturday was a washout as I started getting ill. Also, I found out last week that my research contract ends a little sooner than I thought (January ’09), which has accelerated my job hunting. If you hear about anything interesting, let me know.
15/10/08 @ 1AM: RPI
UK academics got a very nice 5% pay rise today, as our pay increase was linked to the UK RPI… which is nice :-) I also found out that our demonstration paper for Middleware’08 was accepted, which is also nice :-).