New Money Review podcast

When, why and how do countries go bust? That’s the topic of the latest New Money Review podcast, where I’m joined by Greg Makoff, a former physicist, banker, government advisor and now senior fellow at the Harvard Kennedy School.

Makoff is the author of a recent book on what has been called “the most contentious default in history”—Argentina’s 2001-2016 debt restructuring.

In the podcast, we discuss:

• When, why and how countries go bust
• What distinguishes a sovereign insolvency from a corporate or personal bankruptcy
• Who has jurisdiction over sovereign defaults?
• What brings governments and creditors to the table?
• Sovereign immunity and the negotiating power between debtor and creditor
• What went wrong in Argentina’s debt restructuring?
• How Elliott Capital Management made billions on defaulted Argentinian debt
• The broader public policy lessons of Argentina’s debt restructuring
• China, the IMF and the geopolitics of sovereign debt
• Default risk in domestic and foreign currency bonds
• Why sovereign debt problems will never go away

Supporters of the $10trn private equity industry say it fuels economic growth and delivers leaner, better-performing companies.

One leading critic of the sector is Ludovic Phalippou, who says that the industry routinely overstates its financial performance. And, he says, private equity funds charge a whopping 6-7% a year in fees, wiping out any potential benefits to investors.

In the latest New Money Review podcast, I interview Phalippou, who is professor of financial economics at Oxford University. We cover:

• What is private equity?
• How big is the private equity market?
• Why have private equity assets grown fivefold in a decade?
• What is the economic footprint of private equity?
• How should we measure private equity funds’ performance?
• How honest are private equity firms in reporting performance?
• Do private equity funds have higher returns than public equity funds?
• What do private equity funds cost?
• Agency conflicts in the private equity industry
• The impact of recent interest rate rises on private equity
• The need for standardised reporting of private equity performance.

Want to know what happens when fraud is a core component of your business model?

Want to know how a business idea described as an “economic fairytale” could be valued at $300m?

Want to know how an unknown cryptocurrency exchange could end up with a $1bn a year marketing budget, rivalling that of Microsoft?

Want to know how easy it is to corrupt auditors and journalists with crypto tokens?

All this is in Crypto Confidential, a new book by Jake Donoghue that’s coming out in August 2024.

I read a review copy, really enjoyed it and have invited Jake to talk to New Money Review podcast listeners.

Donoghue describes his book as “a record of the sheer extravagance, excess and absurdity I bore witness to on a daily basis”.

In the podcast we discuss:

• How an unviable betting start-up could be worth $300m on its first day of trading
• Why its founders switched focus from gambling to marketing
• Duplicitous tactics, shilling, pumping and dumping in crypto
• The confluence of politics and cryptocurrency
• Why did the cryptocurrency markets recover after the 2022 FTX/Terra/Luna frauds?
• From bitcoin to ICOs, NFTs and memecoins: how crypto has lost touch with its origins
• How influencer crypto marketing hit its peak in 2022
• When Bybit’s reported $1bn a year marketing budget rivalled Microsoft’s
• The innovation of crypto fundraising
• Why crypto journalism is an oxymoron
• Tether and sanctions evasion
• Why crypto projects are jumping onto the AI bandwagon
• What next for cryptocurrency?

In the latest New Money Review podcast, I interview Richard Comotto, a specialist in repo, the multi-trillion dollar marketplace used by large financial institutions to borrow and lend money in the short term.

Richard, who started his career at the Bank of England, works for the International Capital Markets Association (ICMA), for whom he has authored the ICMA “Guide to Best Practice in the European Repo Market”, its website FAQs on repo and the semi-annual survey of the ICMA European repo market, which has been running since 2000.

He has also advised on the development of domestic money and repo markets for bodies such as the Asian Development Bank, the International Monetary Fund and the World Bank.

He is also co-founder and chief product officer at London Reporting House, a fintech providing data and analytics on the repo market.

In the podcast, we cover:

• What is the repo market?
• The role of repo in the bond markets
• Did repo help trigger the 2008 financial crisis?
• The difference between repo and a pledge
• The difference between repo and a securities loan
• Why repo has largely replaced unsecured wholesale lending
• When and how can repo go wrong?
• How do central banks use repo?
• Is quantitative tightening (QT) the reverse of quantitative easing (QE)?
• The effect of blockchain on the repo market
• How shorter settlement cycles affect repo
• Could central clearing trigger a repo market accident?

The Stoic philosophers said we should manage our emotions when it comes to money and wealth.

But is this a realistic goal? How can we resist the siren call of riches? How can we persevere and stay positive through tough economic times?

In this episode of the New Money Review podcast I’m joined by Donald Robertson, philosopher, psychotherapist and author of best-selling books on how to apply Stoic principles to modern life.

In the podcast, we cover:

• Who were the Stoics?
• Why have we turned repeatedly to them over the centuries?
• What explains the latest surge of interest in their ideas?
• Stoicism and stoicism
• Why the former is good and the latter is bad for your mental health
• How Marcus Aurelius’s meditations speak to all of us
• The Stoics’ sophisticated understanding of emotions
• Why strong emotions cause cognitive biases
• Why we are blind to our own biases
• Stoic practices and modern methods of cognitive distancing
• Stoic beliefs on wealth and money
• Were the early Stoics communists?
• How the Stoics could save democracy

Almost half of the crime now committed in the UK is now fraud, most of it taking place online. But only 1% of police resources are devoted to catching the fraudsters.

In the last New Money Review podcast I looked into how to bridge this alarming gap, exploring the mindset of the cybercriminal with my guest Sarah Armstrong-Smith.

In this episode I dig into a small, but disturbing and rapidly growing part of the multi-trillion electronic crime business—romance fraud.

My guest is Dr Elisabeth Carter, a criminologist and forensic linguist who works at the intersection of language and the law.

She’s recently published a book in which she shows how criminal gangs exploit language to lure and then cheat their victims.

Romance fraudsters exploit psychological weak points as well, making it look as if they are on the victims’ side. As a result, when the fraud is exposed, the victim suffers both monetary and psychological harm. Even worse, the rest of us then often blame the victims, says Carter.

Listen in for the next 30 minutes to learn more—and how best to protect yourself.

We cover:

• Why a romance fraud often seems normal at the beginning
• How fraudsters harness the context
• Why a fraudster invites protective responses from the victim
• Secrecy, isolation and urgency—trademarks of the crime
• Why romance fraud is a long con
• Why fraudsters give gifts
• Coercive control--the psychological harms of romance fraud
• How a romance fraud may escalate to physical threats
• Negligence or abuse—should banks compensate fraud victims?

Cybercrime is often more than just a demonstration of hacking skills.

The attacker could be motivated by money, but equally by nationalism, a search for notoriety or revenge. The victim may be random and innocent, but he/she could have been singled out because of an emotional weak spot. Following the crime, other human emotions, such as guilt or shame, may prevent the attack from being disclosed.

So when addressing cybercrime, we need to focus as much on psychology as on technology.

As internet-enabled fraud reaches ever more alarming proportions, in the latest New Money Review podcast I interview Sarah Armstrong-Smith, author of a new book called “Understand the Cyber Attacker Mindset”.

In the podcast, we cover:

• Why pandemics and war are great news for fraudsters
• The amplification effect of social media
• How disinformation campaigns drive polarisation in society
• Why nation-state hackers are well-resourced and focused
• Why cybercrime and fraud are the invisible crime
• How police forces are scrambling to catch up
• "Pig-butchering": blaming the victims of fraud
• Seeing frauds as human-to-human relationships
• Bolstering our defences as organisations and individuals
• The need for transparency about cyberattacks
• Why sanctions are most effective at the individual level

We need a new approach to building trust in economic and monetary systems, says Ian Grigg, my guest on the latest episode of the New Money Review podcast.

Grigg, a computer scientist and cryptographer, is one of the pioneers of internet-based money. In the 1990s, he worked on digital cash systems, which applied strong cryptography systems to money transfers.

Grigg also published articles on shared ledgers, triple-entry accounting, proof-of-work systems, smart contracts and social reputation systems well before the emergence of bitcoin.

In the podcast, Grigg talks about the ballooning problems of financial exclusion, money laundering and financial crime. He argues that the current US-driven approach to isolating bad actors and excluding them from the financial system is bound to fail.

Instead, says Grigg, we need to focus on rebuilding identity and money systems from the ground up, using models found in countries where trust in governments and financial institutions is largely absent.

To listen to the podcast, click here.

In it, we cover:

• How the cypherpunks became interested in digital money
• Why Satoshi Nakamoto was a cryptographer, not a cypherpunk
• Why strong cryptography caused a revolution in accounting
• The prospects for triple-entry accounting
• Why state identity systems cannot fulfil humans’ need for trust
• How community money can fill the trust gap
• The ballooning costs and falling returns of banks’ compliance efforts
• Why anti-money-laundering (AML) and know-your-customer (KYC) rules have failed
• The problem of false positives in AML monitoring
• Why governments cannot beat the money launderers—the OODA loop
• Building virtuous circles of trust—in communities, countries and globally 

In the latest episode of the New Money Review podcast I’m joined by someone who says we’re in the middle of a historic battle between the public and private sector over money. And it’s one the state can’t afford to lose, he argues.

Our future global money will be digital, cheap and mobile, says Richard Holden, professor of economics at the University of New South Wales, Sydney, Australia, but it may be issued by a tech giant or an emerging economy rather than the Federal Reserve, European Central Bank or Bank of England. And that right to issue money will confer massive power on the winner of the digital currency race.

In his new book, “Money In the 21st Century”, Holden makes a passionate defence of state money and says the US central bank should get its act together and start issuing its own digital money, which he calls Fedcoin.

In the podcast, we cover:

• Why should we go cashless?
• What about those who rely on physical cash?
• How should we go cashless?
• Why is it a problem if a private currency wins the digital currency race?
• Why should the US issue a “Fedcoin”?
• Aren’t faster payment systems enough?
• What did we learn from Facebook’s digital currency experiment?
• China, the US and the geopolitics of digital money
• The future role of the banking system

In the latest episode of the New Money Review podcast I’m delighted to welcome Satyajit Das, a former investment banker, derivatives expert and author.

His book “Traders, Guns and Money”, published in 2006, remains one of the best books ever written about the world of high finance.

It’s been called “a wickedly comic exposé of the culture, games and pure deceptions played out every day in trading rooms around the world. And played out with other people’s money.”

Das went on to publish “Extreme Money” and “The Age of Stagnation”, in which a common theme is the high global levels of debt.

In the podcast, Das talks in detail about debt and the complexities of measuring it. He says all financial markets are now at risk from excessive leverage.

Japan, whose currency has recently undergone a big devaluation, may point the way ahead for all of us, he says.

We discuss:

• Why debt is like heroin
• How the marginal productivity of debt has been falling
• Reaching the “trust moment” in government bond markets
• How vulnerable are US Treasuries to a liquidity crisis?
• Why inflation may be higher for longer…
• …and interest rates could overshoot expectations
• Debt on debt and the challenge of understanding leverage
• How tech entrepreneurs borrow against equity
• Complexities in leverage chains—the example of Greensill
• Why non-bank financing of debt is particularly risky
• Why regulators struggle to monitor shadow banks
• Cross-border exposures in the Evergrande bankruptcy
• Why the “usual disinfectants”—better disclosure and more capital—no longer work
• How Japan finally escaped its debt trap
• Why sovereign wealth funds are buying up global infrastructure
• The end of financial engineering