Category: Finance


    In September of last year, Paul De Knop, rector of Vrije Universiteit Brussel (VUB), set up a project for a teaching and research chair on the subject of finance seen from an ethical perspective. He put together a multidisciplinary team presided over by Michel Flamée, professor of law at the VUB, and including representatives from the VUB as well as the Université Libre de Bruxelles (ULB). This team asked me whether I would be prepared to associate myself with the project, and become ultimately the holder of the chair. I, of course, gladly agreed.

    The VUB, the Dutch-speaking University in … Read the rest


    Guest post. Translated from the French by Tim Gupwell

    The European Finance Ministers managed during the course of the night to finalize a minimal agreement, which needs, as usual, to be examined in detail due to its grey areas. They put together a set of nominations to the ECB and the ESM based upon the provisional re-appointment of Jean-Claude Juncker at its head, in the absence of any other solution. Then they reached a “tentative agreement” (another way of saying a broad outline) with regard to the particular case of Spain which needs to be wrapped up for adoption on … Read the rest


    Translated from the French by Tim Gupwell

    Paul Tucker, Deputy Governor of the Bank of England, made a statement this afternoon before a British Treasury Select Committee. The reason for his presence today was that on the 4th July, before this same committee, Bob Diamond (who was the Chief Executive of Barclays until a few days ago) had hinted that he had been under pressure from Tucker for the bank he managed to submit lower figures for its inter-bank borrowings than the figures it was actually submitting. The figures in question were used at the time by the … Read the rest


    Translated from the French by Tim Gupwell

    From the Financial Services Authority’s Final Notice of their decision, dated the 27th June, to impose an 85 million Pound fine on Barclays Bank (less a reduction of 30% for exemplary co-operation with the enquiry) due to their manipulation of the LIBOR interbank rates, two separate periods need to be distinguished. In the first period, which loosely spans the period from 2005 to 2007, rates were manipulated on trading floors by operators at a subordinate level; in the second period, which runs from 2007 to 2009 and which corresponds to the height … Read the rest


    Translated from the French by Tim Gupwell

    The question of whether a debt contract can be considered as money is central to my book L’argent mode d’emploi (2009). I expose the violence exerted by Joseph Schumpeter (1883-1950), when he imposed the idea that such was the case, and I demonstrated the inanity of the pseudo-arguments that he advanced – employing phrases that often lacked any sense – to support the idea (p. 175 – 180).

    A debt contract is indeed another form of money according to Schumpeter, and its amount can be added to that of money in order to … Read the rest

  • GUILTY PARTIES WANTED !, by François Leclerc

    Guest post. Translated from the French by Tim Gupwell

    In accordance with the predictable script, the bond market is under pressure again. The cost of servicing Spanish and Italian debt has continued to increase as their financing plans move forward in little measured steps. The effect of all this is to place an additional burden on the budgets, undermining those measures which are intended to reduce the deficits.

    The statistical institutes INSEE (France), IFO (Germany) and ISTAT (Italy) all agree: Europe is sinking into a recession which they describe as ‘technical” in an attempt to make it sound innocuous, but … Read the rest


    Translated from the French by Tim Gupwell

    The paradox of the 2008 ‘LIBOR scandal’ – in addition to its familiar ring in 2012 – is that, as I alluded to at the time and as I recalled a few days ago, the fraud was well-intentioned for once: the ‘philia’ of Aristotle, the good will exercised by everyone so that a common activity can be pursued – in this case the very existence of the financial system.

    Yesterday’s ‘surprise’ was that Paul Tucker, Vice-Governor of the Bank of England, was said to have advised Bob Diamond, who resigned yesterday from … Read the rest


    Translated from the French by Tim Gupwell

    I watched the hearing of Bob Diamond live, who had resigned the day before from his post as Chief Executive of the British bank Barclays.

    Diamond was extremely polite but his tactics in response to the questions posed him were very skilful: the more brutally a British parliamentarian interrogated him, the more he highlighted in his answer the complicity that had previously bound them together, frequently resorting to the use of his interrogators’ first names in the answers he gave (playing on the fact that they would  be forced to pass this familiarity … Read the rest


    Translated from the French by Tim Gupwell

    In my Friday morning video (in French), I said that when a pirate (Rupert Murdoch) does business with a ship wrecker (the City of London), it tends to weaken the entire system, and I went on to add that this is particularly the case when the population, which is observing all this from afar, starts to exhibit a certain degree of indignation.

    The LIBOR affair has been widely discussed for several days now, due to the 290 million pound fine imposed on the British bank Barclays. My reaction hitherto has been limited to … Read the rest


    Guest post. Translated from the French by Tim Gupwell

    In the little game of who won and who lost, what conclusions can be drawn from the recent European council? Interpretations differ widely: some highlight the German Government’s about-turn, who themselves retort that the essence of their position has been preserved intact; others congratulate Mario Monti for his skilful manoeuvring; while the French claim that the real winner is Europe itself, magnanimously playing the role of victor, and giving credence to the idea that the Germans gave in. With everybody trying to turn the situation to their advantage, where does the … Read the rest

  • AFTER THE WORDS, THE MAGIC FORMULA…, by François Leclerc

    Guest post. Translated from the French by Tim Gupwell

    What can you say when you are in total disagreement? You can always assert, with one voice, the need for a union! This is this perspective that the quartet composed of José Manuel Barroso, Mario Draghi, Jean-Claude Juncker and Herman Van Rompuy (in alphabetical order) continues to work on.

    A new magic word has been discovered and is going to be proclaimed with all its variations, to push for the implementation of four unions: banking, fiscal, economic and political. With the fiscal union already in the pipeline, the next stage which … Read the rest

  • STICKING TO ONE’S PRINCIPLES…, by François Leclerc

    Guest post. Translated from the French by Tim Gupwell

    What was the plan being drawn up last week in Rome which Merkel refused to sign up to? The other three participants, Mario Monti, Mariano Rajoy and François Hollande advocated using the EFSF, and in the near future the ESM, directly, to bail-out the banks without adding further to the public deficit (thus breaking the link between these two types of debt), as well as using them to purchase sovereign bonds in order to ease market tensions.  Spain and Italy would be the principal beneficiaries of these measures.

    But there is … Read the rest

  • TREASURE HUNT, by François Leclerc

    Guest post. Translated from the French by Tim Gupwell

    Following the clues for the next bail-out of the Spanish banks is proving to be a veritable treasure hunt. To participate, follow the guide!

    Initially, the EFSF (European Financial Stability Facility) is going to borrow funds on the markets, using the member states guarantees, in order to lend them to the Spanish Government, which will subsequently lend them to the banks for the bail-out. The result of this haywire approach will be a transfer of debt from the private sector into the public sector.

    But in the meantime the banks … Read the rest


    Spain managed to borrow 2.22 billion Euros this morning. It was hoping to raise 7.7 billion. The Wall Street Journal pointed out that this was “thanks to demand seen overwhelmingly coming from domestic banks”.

    The coupon obtained by lenders for 2 years was 4.706% (compared with 2.069% on the 1st March); over 3 years it was 5.547% (compared to 4.876% on the 17th May) and over 5 years it was 6.072% (compared to 4.960% on the 3rd May).

     … Read the rest

  • NOTHING TO WORRY ABOUT ! , by François Leclerc

    Guest post. Translated from the French by Tim Gupwell

    The G20 in Los Cabos seemed like a preparatory meeting for the Summit of the Heads of State and European Governments! This seems to highlight the fact that they no longer know what to do, and are running round like headless chicken.

    The same ideas that had previously been abandoned are back on the table, only to be refused once again by Angela Merkel. Thus, Mario Monti proposed, during the G20, that the EFSF/ESM buy sovereign bonds in order to ease market conditions. He was supported in vain by Mariano Rajoy … Read the rest


    In my article this morning ‘The Greeks have made the right choice’ I indicated that:

    …the 10 year rate for Spanish bonds was 6.82% at opening time this morning and now stands at 7.13%. (10.25 AM).

    The dramatic progression has continued: it is 2.40 PM and the rate is now at 7.22%

    The correct Greek vote did not lead to much of a state of grace, to say the least!

    To follow the developments live, click here.… Read the rest

  • A BIG BANG, OR NOTHING , by François Leclerc

    Guest post. Translated from the French by Tim Gupwell

    With the G20 meeting being held in Mexico at the start of the week, our perspective will find itself altered, falsely accustomed as we are to only seeing the debt crisis from a European angle. On the 18th and 19th June, the greats of this world are going to gather in Los Cabos, a tourist resort in Southern Lower California, under the double auspices of debt and global recovery.

    To avoid standing idly by whilst confronted by a disaster of its own making, the British Government has just announced a plan … Read the rest

  • STEPS TOO STEEP TO CLIMB, by François Leclerc

    Guest post. Translated from the French by Tim Gupwell

    François Hollande is on the offensive and Angela Merkel firmly on the defensive, with both setting their sights on a compromise in the summit at the end of June (a compromise which remains inconceivable for the moment). How is it viewed by Paris, with Berlin continuing to stall, proposing a political union first and, pending this, the use of the existing mechanisms already in place – based on an analysis which sees the origin of the crisis as excessive public debt and a lack of competitiveness?

    The main measure which is … Read the rest

  • AND NOW?

    And now?

    14 juin 2012 par Paul Jorion

    And now? What are we going to do? Now that Spain has lost access to capital markets for its debt?

    True, the downgrading yesterday evening of Spain’s rating by three notches by Moody’s, from an A3 to Baa3 has not helped matters. But after all, it hasn’t taught us anything that we didn’t already know last weekend: with a 10 year sovereign debt rate stuck around the level of 6.75% (*), the game was up anyway when it comes to financing its debt on the capital markets.

    The cause of all this? … Read the rest

  • NOW THE CHAINS ARE GIVING WAY, by François Leclerc

    Guest post. Translated from the French by Tim Gupwell

    The chorus of voices is becoming increasingly strident and events are moving very fast: the now inevitable Spanish request to benefit from a rescue package; plus the impending recognition of the failure of the second Greek plan, followed by the negotiation of a third one with a new extended timescale – whatever the result of the elections this week-end.

    Having claimed as a “victory” the Spanish banking bail-out (which he had tried to avoid at all costs), Mariano Rajoy can no longer remain in denial, and will now have to acknowledge … Read the rest