most Germans do not know that Germany’s interwar period was shaped by two separate crises, but rather see them as being one and the same.
Looking back into a skewed version of their own history, many Germans conclude that mass unemployment and high inflation are just two sides of the same coin. What makes this worse is that this misconception is especially prevalent among well-educated and politically interested Germans. Hence, the group of people following the ECB’s monetary policy most closely is also the group most likely to draw the wrong lessons from German history. But public thinking about Weimar economic history is not just substantially flawed. We can also show that the skewed memory of the Weimar Republic still affects the way in which at least some Germans think about monetary policy today.
AI will disrupt finance, but not in the way some tech bros think.
In a viral thread, David Heinemeier Hansson describes how Apple Card discriminates against his wife. Nobody at the company can explain how the algorithm makes its decision. Just “computer says no”.
That’s the kind of bureaucratic horror you expect from an old-fashioned state-run company. Ironically, Apple markets its credit card as “built on the principles of simplicity, transparency, and privacy” and “Created by Apple, not a bank”.
Yeah, I’ll stick to my bank, thanks.
If you can’t explain your AI, lawsuits are coming.
Pseudonymous banking expert Johannes Borgen recently discussed the impact of low interest rates on European life insurers. Because insurers discount the value of their liabilities, low rates are a huge problem.
But as Johannes Borgen points out, the regulator lets insurers use a hypothetical long term rate that “is a f**** joke. IT IS NOT EVEN REMOTELY LOOKING LIKE REAL WORLD INTEREST RATES ; which mean that all insurer liabilities are grossly undervalued.”
I recently started working at the Social and Economic Geography research group of Ghent University, in the team of professor Ben Derudder. We study financial networks in collaboration with the team of professor Sabine Dörry at the Luxembourg Institute of Socio-Economic Research.
But why am I at the department of geography instead of economics? In other words, what exactly is financial geography? I have to admit that I didn’t know until a couple of months ago.
This post is an attempt to describe what financial geography is, and what sets it apart from other fields that study finance.
“In Europe, the relative underperformance of value [stocks] versus growth has not been as sustained since the early 1980’s. In the US, according to research by O’Shaughnessy Asset Management, investors have to go back to 1926-1941 to find a comparable period of sustained relative performance.”
That’s from Inflection Point, a blog post in which Marc Rubinstein takes a long term look at the valuation of stocks and the impact of technology on markets and the economy. The article has a lot of references.
Update: Chris Meredith of O’Shaughnessy Asset Management talked about his research on Odd Lots.