Tuesday, 4 September 2012

Interview with Martin Upton about financial crisis

Martin Upton

Martin Upton has a background in financial markets and risk management.

1) Where did you study and where are you teaching now?

I studied at the University of East Anglia and the University of Leeds. Now I am Head of the Centre for Accounting and Finance at the Open University Business School.

2) On summer 1992 Bank of England and Bank of Italy were "fighting" against traders not to devalue british Pounds and italia Lira; since summer 2011 ECB is "fighting" against traders in order to keep low interest rates for government bonds; do you find any similarities between the 2 situations?

The similarity is that in both cases traders and investors took the view (in 1992/3) that the GB Pound and the Italian Lira were over-valued (at the ranges set for these currencies against the DM in the ERM) and that in 2011/12 traders and investors took the view that the bonds issued by the governments of Spain, Italy and Greece were over-valued (i.e. their yields were too low - and, by inference, their bond prices too high - given the background economic fundamentals of those countries). In both circumstances the view was taken by traders/investors that it was financially rational to sell Pounds & Lira in 1992 and to sell Spanish, Italian and Greek government bonds in 2011/12 since the market view was that in each case these assets were over-valued.

3) At the end of summer, on 16 th september 1992, british government decided to withdraw the british Pound from ERM (followed by italian government doing the same with italia Lira); do you think that the lesson learned is that it's useless (and a waste of money) to "fight" against traders on specific circumstances?

(Note that membership in ERM was not withdrawn but only "suspended"). I think both episodes – particularly the ERM debacle - show that trying to maintain the price of a currency or of bonds (or indeed other assets) above the levels perceived by the market as being their ‘correct market price’ is ultimately doomed to failure. The history of the UK provides plenty of examples of how the government and the Bank of England tried to defend the value of the Pound against economic logic only, in the end, to have to give way to market forces. The ERM debacle was only one such episode – see also the periods up to the devaluation of the Pound in 1949 and 1967.

4) In Europe there's a lot of talking about a anti-high yield mechanism (the ECB will buy government bonds when they reach very high yield), do you think it could solve the problems? I personally think it will be even worse: the traders could bet even more easily if they are 100% sure that the ECB will buy government bonds when they lose value.

Well such a mechanism would put a ‘floor’ on the bond prices (or ‘cap’ on the bond yields) so it would to a degree discourage those trying to make money by short-selling. Investors will also draw some comfort if they know of the maximum downside to their investments in such bonds.

5) It's been more than 2 years of talking of "saving the Euro", do u think that one currency can work with one central bank, 17 different ministries of finance and 17 different public debts?

My view has always been that you can’t have a stable single currency zone if you don’t have a single fiscal zone. The problems faced by the Euro zone show that you can’t have a single interest rate environment in a zone where member counties go ‘solo’ on their fiscal policies. Hence the rescue of the Euro has seen a move towards a greater centralization of fiscal policy decision making. Additionally the different nature of the member counties’ economies (particularly the differential importance of the housing market to them) weigh against the workability of a single currency.

6) The ECB decided to help some governments (like italian and spanish one) buying government bonds in the secondary market. Understarding that help is help, why not buying straight in the primary market ? Buying in the primary is giving money straight to the state, while buying in the secondary is giving money to the traders! So, ECB wants to "fight" traders (who bet against Italy and Spain) ... buying their devalued bonds! Don't you think that the ECB could avoid the hypocrisy and buy bonds straight from the primary market?

I suspect that the ECB only wants to act as the ‘buyer of the last resort’. If it bought primary issues the expectation in the markets would be for the ECB to be the ‘buyer of the first resort’ – and the size of the investments made by the ECB would potentially balloon. Buying in the secondary market maintains a defence against falling bond prices and helps underpin confidence in the primary market.

7) If there is a break up of the monetary union, what do you think it will happen? In the transition time, do you think people will try to use foreign currency (if there is enough of it for an area of 330 million of people) ?

Hard to speculate on this one. I suspect that the support of Germany and pressure from the US will continue to ensure that the Euro remains patched up. The worry is though that the crippling economic consequences of the budgetary restraint being applied to GreeceSpain and Italy – and Portugal and Ireland too – will create growing political and social strains. If a country does leave the euro zone its new currency (or restored legacy currency) would trade at levels implying a massive devaluation against other currencies. Additionally further support would be needed for the banking system – and not just within the country leaving the zone.

Wednesday, 1 February 2012

Interview with Paolo Tiefenthaler about Casale del Giglio

Paolo Tiefenthaler, oenologist of Casale del Giglio

Paolo Tiefenthaler is the oenologist of Casale del Giglio, he agreed to be interviewed.
1) When and where were you born?

I was born in Trento, on 9th february 1967.

2) How old were you when you started being interested about wine?

I started to be interested when i was very young, let's say primary school-middle school, cause i grew up in a beautiful area full of grapes, Valle di Cembra.

3) What did u study to become an oenologist?

I studied in istituto agrario di San Michele all'Adige, 6 years of oenology and i studied in Germany.

4) When and how did you start working for Casale del Giglio?

I began to work for Casale del Giglio on august 1988 after leaving a famous tuscan winery (i had a 10 month scolarship there).

5) Since 1985, what are the milestones for Casale del Giglio?

The milestones are: 1985 the beginning of the experimentation; 1989 large-scale planting of grape varieties; 1994 the first bottle of Mater Matuta [the best bottle of Casale del Giglio, a blend of 85% syrah and 15% of petit verdot].

6) How did you choose the grape varieties?

I come from a place with a strong tradition of wine and the first thing i decided was not to plant grape varieties only because they were famous in other areas; i tried to plant the grape varities that were suitable for this area [area of Casale del Giglio, in Lazio]

7) Which is the best selling bottle of Casale del Giglio?

The best selling bottle is Shiraz (in the pic above).

8) Will you ever choose to make a wine with native grape varities? (Casale del Giglio chose international varities)

If you talk about native grape varities to me (i'm from Valle di Cembra), i do agree; but if you talk about native grape varities related to Pontine Marshes, it's almost impossible to talk about it (before the 1930's there were only marshes there).

9) How important is marketing in wine?

In the world of the wine, marketing is importnat, but it must not be more important than the nature itself. The making of the wine and the marketing must help each other.

10) How many bottles does Casale del Giglio make, per year?

Casale del Giglio has 170 hectares, we make 90 quintals of wine per hectare; we make 1,200,000 bottles per year.

Tuesday, 17 January 2012

Interview with Philip Seib

Philip Seib is professor of journalism and public diplomacy and professor of international relations at the University of Southern California. He is authot of many books, including The Al Jazeera Effect: how the new global media are reshaping world politics (2008); on next february we will have in bookshops his new book called Al Jazeera English: Global news in a changing world.

1) When and where were you born?

I was born on 1949. Arlington, Virginia, USA.

2) When did you become interested about journalism and public diplomacy?

Long-time interest in how journalism affected policy and politics. Focused on public diplomacy beginning in 2007, when I came to the University of Southern California, which is home of the Center on Public Diplomacy.

3) Al Jazeera was born on 1996, how long time did you need to understand the importance of Al Jazeera for the muslim world?

After the 2000 intifada and the 2001 attacks on the United States, it became clear how important Al Jazeera was to Arab audiences.

4) Al Jazeera english was born on 2006, (beside experts like you) do you think it has been having a real impact towards english speaking audiences?

Through its coverage of events in the Arab world during 2011, Al Jazeera English proved that it is an important journalistic source for English-speaking audiences around the world.

5) On february your new book about Al Jazeera english will be out: what's the main idea behind that book? What's the difference between this new book and the book you wrote on 2008 (the Al Jazeera effect) about Al Jazeera?

The Al Jazeera Effect was about the general importance of satellite television and online news in changing the politics of the Middle East and the rest of the world. Al Jazeera English is more tightly focused on this one channel, and how it brings news of the Global South to the Global North.

6) I watched Al Jazeera english during the egyptian uprising (25th january-11th february 2011) and i thought that the non-stop live coverage of Tahrir Square and the reports were all pro-uprising and were encouraging the "revolution". Do you think that encouraging (even against a dictatorship) an uprising with biased reports is fair journalism?

Al Jazeera and Al Jazeera English feature what might be called "activist journalism". Some purists would disapprove, but others would commend AJ/AJE's role in serving a broad public.

7) How important was Al Jazeera in encouraging the Arab spring?

Extremely. For instance, AlJazeera brought news of events in Tunisia to Egyptians in ways that Egypt's government-run media would never have allowed.
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