Buyers suddenly decide U.S. Treasury securities may not be risk-free any more. They start to hedge against possible price decreases. An easy way to do that and limit risk is by purchasing put contracts on Treasuries. Continue Reading →
Huge numbers of economists, politicians, and people in the street are all calling for one policy: make the biggest banks smaller. A common refrain is, “If it’s too big to fail then it’s too big period.” Overlooked in the hue and cry is the issue of cost. It’s quite likely that shrinking the biggest banks will drastically increase the price of banking services to the public. Continue Reading →