Free markets boost economies and raise global prosperity

Globalization and prosperity are synonyms for the free movement of goods, people, and capital around the world. While this is something easy enough to understand, it's equally important to be aware of the downside effects when international imbalances take place. Although Cédric Tille's paper tackles the Swiss banks, it's an insightful tale about how global finance operates.

What are Switzerland’s vulnerabilities?
Cédric Tille © voxEU.org
12 March 2009

The biggest risk facing the Swiss economy is its large financial sector with substantial international exposure. Foreign currencies, mostly held by UBS and Credit Suisse, account for nearly two-thirds of banks’ balance sheets - an amount equivalent to four times annual GDP. This column suggests splitting the two large banks’ domestic and foreign operations, so that losses on the latter do not jeopardize the domestic financial system.

Read the article here.

Money, money, money, and the financial markets

This readable and meaningful book review of The Origins of Value: The Financial Innovations that Created Modern Capital Markets (edited by William M. Goetzmann and K. Geert Rouwenhorst, Oxford University Press, 2005), written by Stephen Fidler for the Financial Times, may shed some light on money and its usage. Loans bets and trades, or bonds stocks/options and commerce.

A globe-trotting history of modern finance
By Stephen Fidler

Published: December 27 2005. © The Financial Times Limited 2009

Loans, bets and trades. These three words, more or less, encapsulate all transactions in the world's financial markets. Raw computing power in the past 20 years has pushed modern finance to levels of sophistication that make it hard for laymen to grasp. But understand these building blocks and you understand, at root, what financial markets are about.

Read the article here.

What, another money blog?

Given the lack of financial knowledge of most, as revealed in various recent surveys both in Canada and in the US (and by the stellar losses in our savings and pension plans), we believe that indeed there is room for another Web site dealing with money matters. While the blog was conceived as just a reference and place to exchange ideas for our own benefit, we decided that it may prove to be of help to others, and that we'll all learn from a more public forum. Financial survival (or, as your case may be, hobby) in today's world requires a certain degree of knowledge. As a rule, the realization that it's all in your own hands comes a bit late (retirement around the corner, permanently let go anyone?)...

There are several personalities, and different levels of experience and interests behind the pages of this blog. We fully embrace capitalism on a good day in the markets, but tend to lean somewhat towards the other side on correction days. But we always enjoy a good discussion, and share a passion for learning.

And, finally, a profound message. William Goetzmann and Geert Rouwenhorst write:

The word "finance" in English comes from Old French, and shares a common root with the word "finish." It was used in the fourteenth century to imply a final settlement, and used most colorfully in Chaucer's Lamentation of Mary Magdelene who proclaims: "dethe is my Finaunce," a metaphor suggesting that life itself is a loan from God and death is the completion, or repayment. This similarity between life's course and a financial contract was apparently more than just a poetic conceit in medieval times.