December 2011
3 posts
Re-hypothecation
If ever there was a word that you’d expect to find in a Harry Potter novel, it’s rehypothecation. This a classic example of financial people inventing impenetrable terminology to make their business look like a black art. “Oooh, re-hypothecation, it must be magic!”
Well it isn’t. To explain re-hypothecation, we have to explain hypothecation. And hypothecation is pretty simple. It’s when you...
Why do they need our dollars?
The Fed’s announcement of its deal with the ECB this week means essentially one thing: it’s easier for Europeans to get dollars.
But why do they need dollars? Why can’t they use euros? After all, they spent ten years creating the euro, why not use it?
There are a couple of reasons why Europeans need dollars. First, because many companies always do business in dollars, rather...