Some of the authors at Education News sent me a neat infographic after reading one of my previous posts on the higher education bubble. Click here to see it. The accumulation of debt by US students to pay for their education is such that the sum of total student debt exceeds the sum of total credit card debt in the US! My fear is that the UK will eventually head in the same direction, with ever-increasing tuition fees being paid for by an ever-increasing student debt.
As an undergraduate, I was taught about the failure of Herstatt Bank in 1974 and Herstatt risk. This bank was only the 35th largest bank in Germany at the time so why would anyone be interested in studying its failure? Herstatt failed because of its involvement in risky foreign exchange business. When it closed its doors on 26 June 1974, counterparty banks (mainly in New York) had not received dollars due to them because of time-zone differences - this is known as settlement risk. The cross-jurisdictional implications of its failure resulted in the Bank for International Settlements setting up the Basel Committee on Banking Supervision and Herstatt's failure was a key reason for the establishment of real-time gross settlements systems, which ensures that payments between two banks are executed in real time. The Bank of England's Ben Norman has an interesting post on Herstatt over at the Bank's new blog ( Bank Underground ). As well as giving an excellent overview of