globalization and financial crisis impacts on scale, distribution, efficiency and democracy
Post on 18-Jan-2016
227 Views
Preview:
TRANSCRIPT
Globalization and Globalization and Financial CrisisFinancial Crisis
Impacts on Scale, Distribution, Impacts on Scale, Distribution, Efficiency and DemocracyEfficiency and Democracy
US Current account balanceUS Current account balance
Fixed and Floating Exchange Fixed and Floating Exchange RatesRates
Quantitative easingQuantitative easing FloatingFloating
Impact on exports?Impact on exports? FixedFixed
LiberalizationLiberalization
Theories about Financial Theories about Financial StabilityStability
EMHEMH FIHFIH
HedgeHedge SpeculativeSpeculative PonziPonzi
EMH or FIH?EMH or FIH?
How long is a stock held?How long is a stock held?
1970s and before1970s and before NowNow
High speed tradingHigh speed trading
Understanding the Risks of Understanding the Risks of Currency Speculation Currency Speculation (investorguide.com)(investorguide.com)
Currency speculation involves buying, Currency speculation involves buying, selling and holding currencies in order to selling and holding currencies in order to make a profit from favorable fluctuations make a profit from favorable fluctuations in exchange rates…. It is estimated that in exchange rates…. It is estimated that 95% of forex participants are currency 95% of forex participants are currency speculators, with players that include speculators, with players that include large multinationals, investment banks, large multinationals, investment banks, hedge funds and professional traders.hedge funds and professional traders.
$5 trillion per day$5 trillion per day
Financial LiberalizationFinancial Liberalization
What is it?What is it? Why did we pursue it?Why did we pursue it?
What is current status?What is current status?
Asian flu (1997)Asian flu (1997) Real estate bubbleReal estate bubble Financial speculation, Soros Financial speculation, Soros
and devaluationand devaluation Impacts of devaluation on Impacts of devaluation on
debtdebt Impacts on trade Impacts on trade
competitorscompetitors IMF role: interest rates, IMF role: interest rates,
taxes, government taxes, government spending, bailoutsspending, bailouts
Malaysia’s responseMalaysia’s response
Current CrisisCurrent Crisis
DeregulationDeregulation Increasingly concentrated wealthIncreasingly concentrated wealth Obscure financial instrumentsObscure financial instruments Biophysical limitsBiophysical limits Positive feedback loopsPositive feedback loops Profound failure of economic theoryProfound failure of economic theory
Contributing Factors to Contributing Factors to Financial CrisisFinancial Crisis
LeverageLeverage Moral HazardMoral Hazard Adverse selectionAdverse selection
Contributing Factors to Contributing Factors to Financial CrisisFinancial Crisis
SpeculationSpeculation Inelastic supplyInelastic supply Inelastic demandInelastic demand Concentrated wealthConcentrated wealth Full and unequal planetFull and unequal planet
‘‘Innovative’ financial instrumentsInnovative’ financial instruments Credit derivatives ($1.14 quadrillionCredit derivatives ($1.14 quadrillion$700 $700
trillion)trillion) Credit default swaps (naked) (~$25 trillion?)Credit default swaps (naked) (~$25 trillion?)
Mortgage backed securitiesMortgage backed securities Collateralized debt (mortgage) obligationsCollateralized debt (mortgage) obligations
Systemic risk and correlationSystemic risk and correlation
EE ExplanationsEE Explanations
Biophysical limitsBiophysical limits OilOil FoodFood
Positive and negative pigsPositive and negative pigs ““you cannot permanently pit an absurd you cannot permanently pit an absurd
human convention, such as the human convention, such as the spontaneous increment of debt [compound spontaneous increment of debt [compound interest] against the natural law of the interest] against the natural law of the spontaneous decrement of wealth spontaneous decrement of wealth [entropy]”[entropy]”
Energy and WorkEnergy and Work
Positive Feedback Loops and Positive Feedback Loops and Self-fulfilling PropheciesSelf-fulfilling Prophecies
Speculative bubbles and positive Speculative bubbles and positive feedback loopsfeedback loops
Pro-cyclical monetary systemsPro-cyclical monetary systems Is the global economy a complex Is the global economy a complex
system or equilibrium systme?system or equilibrium systme? Liberalization increases likelihood Liberalization increases likelihood
of FIHof FIH
Finance and DistributionFinance and Distribution
Concentrated wealth and speculationConcentrated wealth and speculation Too big to failToo big to fail Too big to jailToo big to jail Growth rates greater than economic Growth rates greater than economic
growthgrowth
Policy OptionsPolicy Options
Tobin TaxTobin Tax Speculation taxSpeculation tax Restricting capital flowsRestricting capital flows Forcing banks to hold more reservesForcing banks to hold more reserves Reducing leverageReducing leverage Higher marginal tax brackets and Higher marginal tax brackets and
more equitable distributionmore equitable distribution Problems with national approachesProblems with national approaches
top related