BIS Quarterly Review (December 2019) and Repo Markets

The December 2019 BIS Quarterly Review is out and it includes some very interesting articles.

There is one on the evolution of OTC interest rate markets.  Given these are an indicator of market volatility, the research is important, because the turnover of interest rate derivatives has increased for a variety of reasons; some of which are the changing structure of the market.

Collateral is king in the euro repo market.  Repo markets provide liquidity, but the euro repo market has seen activity which indicates investors are seeking particular securities rather than just liquidity and the availability and price of those particular securities has become a factor in the euro repo market.

One article receiving a lot of attention is one on the September stress in the U.S. dollar repo market

2020 Form W-4 Is Complicated and Invasive

 In June, I wrote about the proposed new Form W-4.  The final Form W-4 for 2020 can be found here with an explanation on how to fill it out.  Be prepared for a long process using a worksheet or an IRS calculator (which will not have 2020 tax information until 2020).  It is as complicated as filling out the new tax forms and requires an invasive amount of information about your incomes.

If you have multiple jobs, a employee job and a self-employed business, are a new employee but not

Beware: New Medicare Plan Finder Tool Misadvises

The new Medicare Plan Finder Tool has been found to have glitches which could result in consumers choosing more expensive plans by mistake.

It ranks plans by lowest premium without consideration to out of pocket copay expenses. 

In the past the Tool calculated total cost making the new Tool even more misleading if you have relied upon it in the past.

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Italian Mini-BOTs Would Be Liability Swaps

In the last two weeks there has been a flurry of economic/financial writing about the Italian proposal for a parallel currency in the form of mini-BOTs by an Italian Lega politician, Claudio Borghi, who, as a former Deutsche Bank person, should understand the implications of a parallel currency deployment and who has been quite vocal in his desire to exit the euro.  Since Italy is the third largest economy in the eurozone, the impact would be significant unlike Greece.

Most of the writing has been monetarily critical --- concentrating on perceived debt increase to unsustainable levels and legality.  Papadia and Roth have tried to review the competing viewpoints through existing literature, but they omit the earlier 2015 Andresen and Parenteau electronic TAN proposal, which was the basis of the Varoufakis plan via Galbraith.  Papadia and Roth would have us believe the paper form would be better than the electronic form, because it would be less likely to be used criminally.  In fact, the electronic form is even less like currency, less expensive and simpler to implement, and not subject to counterfeiting.  Papadia and Roth make a good listing of what makes currency and what makes a security.  In their conclusions, they worry about the mini-Bot enabling an