Bankruptcy Primer

Bankruptcy- What exactly is it ?

I’ve been studying bankruptcy as part of a wider project around distressed and event driven investing. I came across a lot of jargon and had to Google extensively. To clarify concepts for myself I took it upon me to write a simple primer that I am sharing here. (Nothing very original here as it’s stuff I found in different places on the internet).

Development Banks Must Now Find a New Raison D’être

Development banks have done precious little to bring about meaningful development for their member states. Their members remain mired in poverty, their efforts have spurred little economic growth, and for the most part have done little to attract private capital or catalyze strides. These institutions have been parking places for bureaucrats, served as jobs programs for mediocre but well connected civil servants pursuing careers with cushy benefits, low expectations and job security with precious little accountability.  To be relevant they need to do more than lend. They need to catalyze financial flows, beef up on new products, as well as mobilize newer resources. And U.S. tax payer should stop funding such agencies.

I have some recommendations here.

History Lesson: How Did the 2008 Crisis Spread in the U.S.?

History never repeats itself but does it really rhyme? As one who lived through the 2008 global financial crisis I have been reflecting on ‘those who cannot remember the past are condemned to repeat it’.  To seek lessons, I recreate the broad building blocks of the ’08 crisis. The contagion, the transmission mechanism as well as government interventions. The financial crisis was a lot more complex than the coronacrisis. This visual built off my research, that I hope to expatiate on forthcoming, speaks a thousand words.

How did the 2008 crisis spread in the US

 

Principal Component Analysis of Contagion Spread in 2008 vs 2020

We examined multiple likely causal reasons that in combination exacerbated the 2008 crisis in the United States. Our analysis removed the “least important” variables and left us with four variables with high explanatory power – decline in home prices, a doubling in oil and higher energy prices, wealth destruction in equity markets and large reduction in credit availability. We do not see this combination of factors during 2020.