Quotes by Robert F. Engle - Page 1

When I am skating, economics is far away. I always return refreshed and ready to carry on.
Robert F. Engle / Economist
Far Away
Ready
Return
Skating
Carry
Refreshed
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There are a lot of ways that investment banking models work, but these risks are not internalized by the people that are taking them.
Robert F. Engle / Economist
Banking
People
Risk
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Well if you've got information about a company, or you believe that a company is undervalued, you can go out and buy their stock and you can make some profit on it.
Robert F. Engle / Economist
Believe
Information
Profit
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If you pay attention to where your exposures are, you might tend up buying credit default swaps against a variety of people that you - companies that you deal with.
Robert F. Engle / Economist
Attention
Buying
People
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Credit default swap gives you something to do. You can buy some credit default swaps from them to protect yourself against the bankruptcy of people who owe you money.
Robert F. Engle / Economist
Credit
Giving
People
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That is, many times we're not risking our own money, we're risking somebody else's money, or maybe that someone is going to back stop or downside, but we still get the upside.
Robert F. Engle / Economist
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A lot of ambitious code has been written into the law for those and we will have to see if it actually works, if we have another example of a big financial institution going bankrupt.
Robert F. Engle / Economist
Ambitious
Example
Law
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I'd like to see a little more action on the energy side of things. I've been pushing for some kind of a carbon tax for years, and it seems to me we've had lots of opportunities to do it.
Robert F. Engle / Economist
Opportunity
Pushing
Years
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I was convinced that the trading frequency measured a fundamental heartbeat of financial markets. Clearly it reflected the flow of information. It turns out also to be closely related to measures of liquidity.
Robert F. Engle / Economist
Financial Markets
Frequency
Heartbeat
Liquidity
Related
Trading
Turns
Closely
Fundamental
Measured
Measures
Reflected
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The Nobel Prize in Economics is an incredible recognition for the work that my students, colleagues and I have done over the years. We all worked hard, but we were also lucky that the financial applications were so important.
Robert F. Engle / Economist
Colleagues
Nobel
Nobel Prize
Prize
Recognition
Work Done Important
Applications
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I think global coordination is tremendously important. I hope we can see this happening through the G20 and through coordination of regulatory regimes around the world. I guess those are the main features of this bill that are important.
Robert F. Engle / Economist
Important
Thinking
World
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Why not put a tax on carbon emissions. It would raise a lot of money, it would reduce the environmental damages in the future, it would solve so many problems, and it would be a much more constructive thing to do than to think about raising the income tax.
Robert F. Engle / Economist
Environmental
Carbon
Constructive
Emissions
Income
Income Tax
Why Not
Tax
Damages
Problems
Raise
Reduce
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Risk managers and investment bankers and actually, all kinds of investors took on more risk than they expected. So there was a failure of risk management. There was a failure to recognize how much risk there was in some of these securities that people bought.
Robert F. Engle / Economist
Bankers
People
Risk
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If a lot of people feel like this company is undervalued and go out and buy the stock, the stock price will go up reflecting the higher value of this company. You might have information because you trade with them or because you've done some research on them.
Robert F. Engle / Economist
Done
People
Research
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I think we're fooling ourselves if we think that regulators are going to be able to outsmart the bankers. So, the task of designing regulatory reform is trying to make more or less foolproof regulation and that's one of the advantages of the systemic category.
Robert F. Engle / Economist
Design
Thinking
Trying
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I don't think the idea of requiring these to be only sold to people who have already own the bonds, in other words, this naked position that the Germans have recently put into their financial regulation and has been discussed here. I don't think that makes any sense.
Robert F. Engle / Economist
Ideas
People
Thinking
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If you have information that a company is not as good as its stock market valuation, you don't have a way to sell that stock unless you already own it. And so that information doesn't get incorporated in the company's stock price as fast if you don't allow short selling.
Robert F. Engle / Economist
Information
Selling
Way
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There are some risks we choose to take because the benefits from taking them exceed the possible costs. Optimal behavior takes risks that are worthwhile. This is the central paradigm of finance: we must take risks to achieve rewards, but not all risks are equally rewarded.
Robert F. Engle / Economist
Finance
Exceed
Optimal
Paradigm
Worthwhile
Central
Equally
Rewarded
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So what is the role that credit default swaps can play in an economy? Well my feeling is that if these things actually will now be traded on either exchanges or some kind of central clearing, they are going to be a very good measure of the credit worthiness of different companies.
Robert F. Engle / Economist
Different
Feelings
Play
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The collateralized debt obligation, the CDO, is a structure which allows you to more or less continuously choose how much risk you want to take in a whole batch of securities. And the reason why they got us into so much trouble is that it's hard to figure out how much risk you really are taking.
Robert F. Engle / Economist
Debt
Reason Why
Risk
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We're talking about should we increase taxes? Why not put a tax on carbon emissions. It would raise a lot of money, it would reduce the environmental damages in the future, it would solve so many problems, and it would be a much more constructive thing to do than to think about raising the income tax.
Robert F. Engle / Economist
Carbon Emissions
Talking
Thinking
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My mother says that my father truly enjoyed having a son. My two-years-younger twin sisters felt that he didn't quite know how to enjoy them. But I wasn't aware of those things then. So many of my childhood memories involve him. All the excursions into science were shaped by his knowledge and enthusiasm.
Robert F. Engle / Economist
Childhood Memories
Enthusiasm
Memories
Sisters
Twin
Excursion
Involve
Shaped
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I think the credit default swaps can take the place of the rating agencies who really have missed the ball in this procedure and are quite conflicted by the way the ratings are paid for. So, I would like to see credit default swaps become an evermore important way of understanding credit risk in the economy.
Robert F. Engle / Economist
Agency
Risk
Thinking
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I agree with a lot of the points in Taleb's book, but I don't agree with many of his conclusions. It seems to me that he rightly points out that risk managers miss a lot of the risks, but the conclusion is that he draws, is that we should abandon risk management, whereas my conclusion is we should improve it.
Robert F. Engle / Economist
Book
Missing
Risk
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You know, some of the portfolios we might consider buying are portfolios which would do especially well if we have an economy-wide, or I mean, a global climate change that impacts us very negatively there are some companies that will do well, and so it might make sense to hold some of those in your portfolio.
Robert F. Engle / Economist
Buying
Impact
Mean
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I don't see what the alternative to risk management is. If it's just getting rid of the models and instead using the smart people who can figure it out? How do you train them? What do you teach them? Do you just put them in a cockpit and let them stumble for 10 years of their life and then after that they're good at it?
Robert F. Engle / Economist
People
Smart
Years
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If the Chinese economy can be opened so that currencies are convertible, Chinese tourists can take money and go see the world. Chinese businessmen can go and buy property in the U.S. and France and every place. All of a sudden, it's just going to be a blossoming global economy. I think it's going to be good for everybody.
Robert F. Engle / Economist
Blossoming
Chinese
France
Global Economy
Property
Tourists
Good Money World
Convertible
Opened
Sudden
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The advantage of knowing about risks is that we can change our behavior to avoid them. Of course, it is easily observed that to avoid all risks would be impossible; it might entail no flying, no driving, no walking, eating and drinking only healthy foods, and never being touched by sunshine. Even a bath could be dangerous.
Robert F. Engle / Economist
Advantage
Drinking
Flying
Healthy
Impossible
Might
Sunshine
Touched
Avoid
Bath
Course
Easily
Observed
Foods
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I think that's something that investment banks have worried about for a long time and are continuing to worry about, but it's not an easy solution when you have lots of people betting the company's money, how do you really allocate those risks? How do you make sure that the people that take the risks are feeling the risks in an appropriate kind of fashion?
Robert F. Engle / Economist
Fashion
Long
Thinking
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I mean, we've always had gold bugs, but now we sort of realize that Treasure Bills might be in the same category. And we have derivatives like credit default swaps which are in this category, and we have derivatives like volatilities that are actually an asset class that we can invest in which are now - would out perform if we have another financial crisis.
Robert F. Engle / Economist
Class
Gold
Mean
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I think what we need is better understanding of how to do risk analysis of a CDO, but that they still can perform a very valuable function because they can aggregate these risks and pass them around so that mortgages or other kinds of loans can be packaged and sold to investors all over the world, who in most times, would justify a small amount of each one.
Robert F. Engle / Economist
Risk
Thinking
Understanding
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When large companies take on risk, then they impose risks on the rest of the system. And these are systemic risks and these systemic risks we never used to think were really that important, but as soon as we recognize how the financial sector - the risks the financial sector takes on can impact the entire global economy, we realize that those risks needed to be controlled for the social good.
Robert F. Engle / Economist
Impact
Risk
Thinking
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Allowing short selling is allowing people to sell - instead of having to buy the stock and then sell it, which doesn't do much; allow them to sell it, and then buy it. In which case they can express that information and the idea is that you would get more accurate valuation of companies by letting people express both their positive information and their negative information through either long or short selling.
Robert F. Engle / Economist
Ideas
Long
People
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Robert F. Engle Quotes - Page 1

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