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Demully's Latest Comments

In reply to Gradders73 (post #2) I think it explains why the policy of the Fed may not lead to inflation, according to the economic theory (basically because the expansionary monetary policy is not that expansionary as it simply gets deposited back with the Fed, i.e. borrow for free then earn interest on the deposit, yes it's that wacky), but the risk is not that…

Higher capital requirements => lower returns on equity Yes, but it's far from linear. By definition RoE = RoA * Leverage (Assets/Equity), so if you can deploy more leverage you'll tolerate lower RoA to achieve the same RoE and this is exactly what happened. As higher capital requirements crimp leverage, expect lending standards to stay tight to try to support RoA. I'm saying that RoE…

China's stimulus package seems to be working... Like everywhere else in the world, China has been pumping money into its economy in an attempt to fend off recession. Unlike everywhere else, China's stimulus package actually seems to be having an effect. Whether that's a good thing or not is another question – but we'll get to that in a moment. The Shanghai stock market is…

In reply to Isaac #50 Hi Isaac, Fair enough, and that's exactly the answer (I think) to the original question I've been such a hard-a**e about throughout. Which is to say the automatic assumption of, or at least the implied,  correlation between Asia and commodities doesn't make much sense on the surface. Precisely because Asia is commodity-poor and commodity-inefficient. If, however, you take the view…

Isn't the paradox with re-regulation the knowledge that high profits (before the bust) were put on a low multiple because they were seen as (less than by me at the time, I have to admit) low quality-profits. The market saw enough to value the banks at single-digit multiples on peak profits, after all. Now that the banks are cleaned up and made less risky and…



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