Hisakado M.,Standard and Poors |
Mori S.,Kitasato University
Journal of Physics A: Mathematical and Theoretical | Year: 2012
In this paper, we discuss a voting model with two candidates, C 0 and C 1. We consider two types of voters - herders and independents. The voting of independents is based on their fundamental values, while the voting of herders is based on the number of previous votes. We can identify two kinds of phase transitions. One is an information cascade transition similar to a phase transition seen in the Ising model. The other is a transition of super and normal diffusions. These phase transitions coexist. We compared our results to the conclusions of experiments and identified the phase transitions in the upper limit of the time t by using the analysis of human behavior obtained from experiments. © 2012 IOP Publishing Ltd. Source
Hisakado M.,Standard and Poors |
Mori S.,Kitasato University
Physica A: Statistical Mechanics and its Applications | Year: 2015
In this paper, we discuss a voting model in which voters can obtain information from a finite number of previous voters. There exist three groups of voters: (i) digital herders and independent voters, (ii) analog herders and independent voters, and (iii) tanh-type herders. In our previous paper Hisakado and Mori (2011), we used the mean field approximation for case (i). In that study, if the reference number r is above three, phase transition occurs and the solution converges to one of the equilibria. However, the conclusion is different from mean field approximation. In this paper, we show that the solution oscillates between the two states. A good (bad) equilibrium is where a majority of r select the correct (wrong) candidate. In this paper, we show that there is no phase transition when r is finite. If the annealing schedule is adequately slow from finite r to infinite r, the voting rate converges only to the good equilibrium. In case (ii), the state of reference votes is equivalent to that of Kirman's ant colony model, and it follows beta binomial distribution. In case (iii), we show that the model is equivalent to the finite-size kinetic Ising model. If the voters are rational, a simple herding experiment of information cascade is conducted. Information cascade results from the quenching of the kinetic Ising model. As case (i) is the limit of case (iii) when tanh function becomes a step function, the phase transition can be observed in infinite size limit. We can confirm that there is no phase transition when the reference number r is finite. © 2014 Elsevier B.V. All rights reserved. Source
News Article | August 14, 2015
Angola’s credit-rating outlook was cut to negative by Standard & Poor’s, which predicted the country’s fiscal deficit will widen in the face of lower oil prices. S&P affirmed Angola’s B+ rating, four steps below investment grade, the company said in a statement on Friday. “The negative outlook indicates that we could lower our long-term rating on Angola if the country’s external or fiscal positions continue to deteriorate over the next year,” S&P said. Angola, Africa’s largest crude producer after Nigeria, relies on the fuel to generate about 70 percent of taxes and 95 percent of export income. As the price of oil plunged more than 50 percent in the past 12 months, the government slashed this year’s budget by a quarter, cut fuel subsidies and froze hiring. Government spending accounted for more than a third of Angola’s $129 billion gross domestic product in 2014.
News Article | August 12, 2015
Ecuador’s credit rating was cut one level by Standard & Poor’s as falling oil prices sap government revenue and increasing political unrest limits officials’ ability to implement economic policies. S&P lowered the country’s long-term sovereign rating to B, five levels below investment grade, from B+, the company said today in a statement. The outlook is stable, S&P said. President Rafael Correa has struggled to find financing this year to offset a plunge in the price of crude, the Andean country’s biggest export. Attempts to raise taxes and cut spending have met with resistance and led to nationwide protests against government policies in recent months. “The downgrade reflects that tensions between Ecuador’s government and society have risen following the fall of global oil prices, limiting the government’s ability to implement fiscal measures,” S&P analysts Delfina Cavanagh and Joydeep Mukherji said in the statement. “A prolonged period of low oil prices could result in persistently large fiscal and current account deficits.”
News Article | August 11, 2015
Warren Buffett’s Berkshire Hathaway Inc. may be downgraded by Standard & Poor’s after agreeing to buy manufacturer Precision Castparts Corp. for about $37.2 billion. Buffett’s company was put on CreditWatch Negative because of “uncertainty around the funding of the acquisition and how it may affect current cash resources and leverage metrics at the holding-company level,” the ratings firm said in a statement Tuesday on Omaha, Nebraska-based Berkshire. “To fund the acquisition, Berkshire is likely to use some of the capital resources available at its insurance companies.” Buffett, 84, has built Berkshire over the past five decades into a sprawling conglomerate, largely by using premiums held at insurance units to fuel his stock picks and acquisitions. Its operations now include power companies, retailers, manufacturers and one of the largest U.S. railroads. The deal for Precision Castparts is among his biggest ever and a rare instance of using debt to finance a deal. Berkshire has a AA rating from S&P, the third-highest of 10 investment-grade levels. The company was stripped of its AAA rating in 2010, a year in which Buffett cut the cash pile and took on additional debt to buy railroad BNSF. It was later lowered one step further in 2013 after S&P revised its criteria for evaluating insurance companies. Buffett has long said that he likes to keep a sizable financial cushion to deal with major claims at Berkshire’s insurance operations. The company had more than $66 billion in cash as of June 30, about $23 billion of which he plans to use for the Precision Castparts deal. He said Monday after announcing the deal that he plans to borrow the remaining $10 billion. The target company, which makes turbine blades and fasteners for aircraft, also has more than $4 billion of debt. S&P said it expects to update or resolve the CreditWatch listing within 90 days following discussions with Berkshire management. The ratings firm said it could affirm or lower the rating, after its review. Buffett didn’t immediately return a message left with an assistant seeking comment on S&P’s stance. The cost of insuring Berkshire’s debt through credit-default swaps rose to 59.14 basis points at 4:57 p.m. in New York from 59.07 last week. The price is still below its average since Dec. 31. The swaps climb when perceived credit risk increases. Both Moody’s Investors Service and Fitch Ratings affirmed their ratings on Berkshire after the Precision Castparts deal was announced. Moody’s has an Aa2 rating on Buffett’s company, the third-highest possible, while Fitch gives Berkshire the fourth-best rank. In a note Tuesday, Moody’s said that the transaction would improve Berkshire’s earnings and cash flows, while diminishing financial flexibility in the near-term. Fitch said Monday that Buffett’s company will be approaching limits for leverage after the Precision Castparts deal is completed, and another similarly financed transaction could put pressure on the ratings.