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Archive for the 'Financial' Category

When does diversification increase risk?

Why did the financial crisis occur?  One reason may be due to too much institutional diversification.  George Sugihara explains how even when individual institutions diversify, system-wide risk can increase exponentially. “Leading up to the crash, there was a marked increase in homogeneity among institutions, both in their revenue-generating strategies as well as in their risk-management strategies, thus […]

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Markets in Everything: Bin Laden edition

Here’s how the killing of Osama Bin Laden may affect: Stock markets. Share prices rise. Commodity markets. Oil prices fall. Election markets.  Obama to get re-elected? Artists’ First Response.  A Bin Laden folk song? Healthcare Economist’s Receipt of Spam.  I’ve received an above average number of  unsolicited emails today regarding how Bin Laden’s death will affect […]

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Poor Need More Financial Services than Rich

Why would that be the case?  The answer is risk.  Poor people (especially in developing countries) have a larger share of their assets at risk due to theft, a family illness, or funeral.  Thus, cash flow management is vital for survival for the poor.  The Enlightened Economist discusses a book called Portfolios of the Poor […]

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