Do Words Matter? The Impact of Communication on the PIIGS' CDS and Bond Yield Spreads during Europe's Sovereign Debt Crisis

The paper aims to shed light on the role of communication in the European debt crisis. It examines the effects of public statements by ECB Governing Council members, EU officials and national representatives on the PIIGS' CDS and bond yield spreads. The focus lies on dovish statements that signal strong determination in the rescue of indebted countries, and hawkish statements that indicate limited commitment to support the PIIGS and protect its creditors. The analysis of daily data for the period between January 1, 2009 and August 12, 2011 in an EGARCH framework suggests that communication by representatives of Germany, France, and the EU as well as ECB Governing Council members had an immediate impact on both types of securities. No effects.

Transcatheter aortic valve implantation: the transfemoral access route is the default access

Transcatheter aortic valve implantation (TAVI) is a widely accepted alternative to surgical aortic valve replacement (SAVR) among non-operable patients or selected high-risk patients with degenerative, severe aortic stenosis. TAVI is considered less invasive when compared with SAVR; however, there remain significant differences between different TAVI access routes. The transfemoral approach is considered the least invasive access route, and can be performed as a fully percutaneous procedure in a spontaneously breathing patient under local anaesthesia and mild sedation only. Moreover, transfemoral TAVI patients are typically transferred to coronary care rather than to an intensive care unit after the procedure, and benefit from early ambulation and a reduction in overall length of hospital stay. Considering these patient-specific and health-economic advantages, several TAVI centres follow the least invasive strategy for their patients and have implemented the transfemoral access route as the default access in their institutions. This article provides an overview on the prerequisites for a successful transfemoral TAVI procedure, describes the procedural advantages compared to alternative access routes, and highlights differences in clinical outcomes.

Credibility for sale

We develop a model where a sovereign’s incentive to repay its debt depends on the identity of its creditors. Higher exposure to official lenders improves incentives and thus credibility, for instance, because default would jeopardize the benefits from membership in a club (such as EU or EMU). But higher exposure also carries costs, because of reduced flexibility ex post and because official lenders may collude to extract rents. We characterize the equilibrium composition of debt across creditor groups as well as equilibrium debt prices. Our model can account for an important— and still unexplained—feature of sovereign debt crises: Official lending to sovereigns takes place only in times of debt distress and carries a favorable rate. It also offers a novel perspective on the interaction between deficits, debt overhang and the availability of official funds in determining default risk.

Practice Movements: The Politics of Non-sovereign Power

Practice movements, that is, forms of unorganized collective action, are a central site of politics. Their defining moments are that their goals are expressed in practices rather than in words, and that these “pre-ideological” practices aim at access to or redistribution of goods, whether material or symbolic, rather than at representation. They are transgression rather than resistance in that they transgress restrictions inherent in the material organization of space, property relations, status orders, and normative regulations, be they laws, morals, or customs. Practice movements are above all about access and participation rather than about autonomy, and thus have an ambiguous relation to the transformation of the status quo. Their politics are transformative and they can produce temporary or lasting changes in the material grounds or in the regulation of the everyday life of those who pursue them, and potentially of the normativity and the organization of the wider social order.

The brain’s default state interacts with working memory processes in a complex and load-dependent manner

Recently, many studies about a network active during rest and deactivated during tasks emerged in the literature: the default mode network (DMN). Spatial and temporal DMN features are important markers for psychiatric diseases. Another prominent indicator of cognitive functioning, yielding information about the mental condition in health and disease, is working memory (WM) processing. In EEG studies, frontal-midline theta power has been shown to increase with load during WM retention in healthy subjects. From these findings, the conclusion can be drawn that an increase in resting state DMN activity may go along with an increase in theta power in high-load WM conditions. We followed this hypothesis in a study on 17 healthy subjects performing a visual Sternberg WM task. The DMN was obtained by a BOLD-ICA approach and its dynamics represented by the percent-strength during pre-stimulus periods. DMN dynamics were temporally correlated with EEG theta spectral power from retention intervals. This so-called covariance mapping yielded the spatial distribution of the theta EEG fluctuations associated with the dynamics of the DMN. In line with previous findings, theta power was increased at frontal-midline electrodes in high- versus low-load conditions during early WM retention. However, load-dependent correlations of DMN with theta power resulted in primarily positive correlations in low-load conditions, while during high-load conditions negative correlations of DMN activity and theta power were observed at frontal-midline electrodes. This DMN-dependent load effect reached significance during later retention. Our results show a complex and load-dependent interaction of pre-stimulus DMN activity and theta power during retention, varying over the course of the retention period. Since both, WM performance and DMN activity, are markers of mental health, our results could be important for further investigations of psychiatric populations.

The brain’s pre-stimulus default state interacts with working memory in a load-dependent manner

Recently, multiple studies showed that spatial and temporal features of a task-negative default mode network (DMN) (Greicius et al., 2003) are important markers for psychiatric diseases (Balsters et al., 2013). Another prominent indicator of cognitive functioning, yielding information about the mental condition in health and disease, is working memory (WM) processing. In EEG and MEG studies, frontal-midline theta power has been shown to increase with load during WM retention in healthy subjects (Brookes et al., 2011). Negative correlations between DMN activity and theta amplitude have been found during resting state (Jann et al., 2010) as well as during WM (Michels et al., 2010). Likewise, WM training resulted in higher resting state theta power as well as increased small-worldness of the resting brain (Langer et al., 2013). Further, increased fMRI connectivity between nodes of the DMN correlated with better WM performance (Hampson et al., 2006). Hence, the brain’s default state might influence it’s functioning during task. We therefore hypothesized correlations between pre-stimulus DMN activity and EEG-theta power during WM maintenance, depending on the WM load. 17 healthy subjects performed a Sternberg WM task while being measured simultaneously with EEG and fMRI. Data was recorded within a multicenter-study: 12 subjects were measured in Zurich with a 64-channels MR-compatible system (Brain Products) in a 3T Philips scanner, 5 subjects with a 96-channel MR-compatible system (Brain Products) in a 3T Siemens Scanner in Bern. The DMN components was obtained by a group BOLD-ICA approach over the full task duration (figure 1). The subject-wise dynamics were obtained by back-reconstructed onto each subject’s fMRI data and normalized to percent signal change values. The single trial pre-stimulus-DMN activation was then temporally correlated with the single trial EEG-theta (3-8 Hz) spectral power during retention intervals. This so-called covariance mapping (Jann et al., 2010) yielded the spatial distribution of the theta EEG fluctuations during retention associated with the dynamics of the pre-stimulus DMN. In line with previous findings, theta power was increased at frontal-midline electrodes in high- versus low-load conditions during early WM retention (figure 2). However, correlations of DMN with theta power resulted in primarily positive correlations in low-load conditions, while during high-load conditions negative correlations of DMN activity and theta power were observed at frontal-midline electrodes. This DMN-dependent load effect reached significance in the middle of the retention period (TANOVA, p<0.05) (figure 3). Our results show a complex and load-dependent interaction of pre-stimulus DMN activity and theta power during retention, varying over time. While at a more global, load-independent view pre-stimulus DMN activity correlated positively with theta power during retention, the correlation was inversed during certain time windows in high-load trials, meaning that in trials with enhanced pre-stimulus DMN activity theta power decreases during retention. Since both WM performance and DMN activity are markers of mental health our results could be important for further investigations of psychiatric populations.

Prestimulus default mode activity influences depth of processing and recognition in an emotional memory task

Low self-referential thoughts are associated with better concentration, which leads to deeper encoding and increases learning and subsequent retrieval. There is evidence that being engaged in externally rather than internally focused tasks is related to low neural activity in the default mode network (DMN) promoting open mind and the deep elaboration of new information. Thus, reduced DMN activity should lead to enhanced concentration, comprehensive stimulus evaluation including emotional categorization, deeper stimulus processing, and better long-term retention over one whole week. In this fMRI study, we investigated brain activation preceding and during incidental encoding of emotional pictures and on subsequent recognition performance. During fMRI, 24 subjects were exposed to 80 pictures of different emotional valence and subsequently asked to complete an online recognition task one week later. Results indicate that neural activity within the medial temporal lobes during encoding predicts subsequent memory performance. Moreover, a low activity of the default mode network preceding incidental encoding leads to slightly better recognition performance independent of the emotional perception of a picture. The findings indicate that the suppression of internally-oriented thoughts leads to a more comprehensive and thorough evaluation of a stimulus and its emotional valence. Reduced activation of the DMN prior to stimulus onset is associated with deeper encoding and enhanced consolidation and retrieval performance even one week later. Even small prestimulus lapses of attention influence consolidation and subsequent recognition performance. Hum Brain Mapp, 2015. © 2015 Wiley Periodicals, Inc.

Empirical Analysis of Credit Risk Regime Switching and Temporal Conditional Default Correlation in Credit Default Swap Valuation: The Market liquidity effect

In this paper, we extend the debate concerning Credit Default Swap valuation to include time varying correlation and co-variances. Traditional multi-variate techniques treat the correlations between covariates as constant over time; however, this view is not supported by the data. Secondly, since financial data does not follow a normal distribution because of its heavy tails, modeling the data using a Generalized Linear model (GLM) incorporating copulas emerge as a more robust technique over traditional approaches. This paper also includes an empirical analysis of the regime switching dynamics of credit risk in the presence of liquidity by following the general practice of assuming that credit and market risk follow a Markov process. The study was based on Credit Default Swap data obtained from Bloomberg that spanned the period January 1st 2004 to August 08th 2006. The empirical examination of the regime switching tendencies provided quantitative support to the anecdotal view that liquidity decreases as credit quality deteriorates. The analysis also examined the joint probability distribution of the credit risk determinants across credit quality through the use of a copula function which disaggregates the behavior embedded in the marginal gamma distributions, so as to isolate the level of dependence which is captured in the copula function. The results suggest that the time varying joint correlation matrix performed far superior as compared to the constant correlation matrix; the centerpiece of linear regression models.

The Optimal Response to Default: Renegotiation or Extended Maturity?

This paper reinforces the argument of Harding and Sirmans (2002) that the observed preference of lenders for extended maturity rather than renegotiation of the principle in the case of loan default is due to the superior incentive properties of the former. Specifically, borrowers have a greater incentive to avoid default under extended maturity because it reduces the likelihood that they will be able to escape paying off the full loan balance. Thus, although extended maturity leaves open the possibility of foreclosure, it will be preferred to renegotiation as long as the dead weight loss from foreclosure is not too large.

US Corporate Default Swap Valuation: The Market Liquidity Hypothesis and Autonomous Credit Risk

This paper develops a reduced form three-factor model which includes a liquidity proxy of market conditions which is then used to provide implicit prices. The model prices are then compared with observed market prices of credit default swaps to determine if swap rates adequately reflect market risks. The findings of the analysis illustrate the importance of liquidity in the valuation process. Moreover, market liquidity, a measure of investors. willingness to commit resources in the credit default swap (CDS) market, was also found to improve the valuation of investors. autonomous credit risk. Thus a failure to include a liquidity proxy could underestimate the implied autonomous credit risk. Autonomous credit risk is defined as the fractional credit risk which does not vary with changes in market risk and liquidity conditions.