The bankers' new clothes Admati, Anat; Admati, Anat; Hellwig, Martin
2014., 20130215, 2013-02-15, 2014-03-23, 20130101, ♭2013, 2013
eBook
What is wrong with today's banking system? The past few years have shown that risks in banking can impose significant costs on the economy. Many claim, however, that a safer banking system would ...require sacrificing lending and economic growth.The Bankers' New Clothesexamines this claim and the narratives used by bankers, politicians, and regulators to rationalize the lack of reform, exposing them as invalid.
Admati and Hellwig argue we can have a safer and healthier banking system without sacrificing any of the benefits of the system, and at essentially no cost to society. They show that banks are as fragile as they are not because they must be, but because they want to be--and they get away with it. Whereas this situation benefits bankers, it distorts the economy and exposes the public to unnecessary risks. Weak regulation and ineffective enforcement allowed the buildup of risks that ushered in the financial crisis of 2007-2009. Much can be done to create a better system and prevent crises. Yet the lessons from the crisis have not been learned.
Admati and Hellwig seek to engage the broader public in the debate by cutting through the jargon of banking, clearing the fog of confusion, and presenting the issues in simple and accessible terms.The Bankers' New Clothescalls for ambitious reform and outlines specific and highly beneficial steps that can be taken immediately.
The portrayal of Greece by the international press during the financial crisis has been seen by many independent observers as very harsh. The Greeks have often been blamed for a myriad of ...international political problems and external economic factors beyond their control. In this original and insightful work George Tzogopoulos examines international newspaper coverage of the unfolding economic crisis in Greece. American, British, French, German and Italian broadsheet and tabloid coverage is carefully analysed. The Greek Crisis in the Media debates and dissects the extent to which the Greek response to the financial crisis has been given fair and balanced coverage by the press and questions how far politics and national stereotypes have played their part in the reporting of events. By placing the Greek experiences and treatment alongside those of other EU members such as Portugal, Ireland, Italy and Spain, Tzogopoulos examines and highlights similarities and differences in the ways in which different countries tackled the challenges they faced during this crucial period and explores how and why the world's media reported these events.
Why did the Eurozone crisis prove to be so difficult to resolve? Why was it resolved in a manner in which some countries bore a much larger share of the pain than other countries? Why did no country ...leave the Eurozone rather than implement unprecedented austerity? Who supported and who opposed the different policy options in the crisis domestically, and how did the distributive struggles among these groups shape crisis politics? Building on macro-level statistical data, original survey data from interest groups, and qualitative comparative case studies, this book argues and shows that the answers to these questions revolve around distributive struggles about how the costs of the Eurozone crisis should be divided among countries, and among different socioeconomic groups within countries. Together with divergent but strongly held ideas about the “right way” to conduct economic policy and asymmetries in the distribution of power among actors, severe distributive concerns of important actors lie at the root of the difficulties of resolving the Eurozone crisis as well as the difficulties to substantially reform European Monetary Union (EMU). The book provides new insights into the politics of the Eurozone crisis by emphasizing three perspectives that have received scant attention in existing research: A comparative perspective on the Eurozone crisis by systematically comparing it to previous financial crises, an analysis of the whole range of policy options, including the ones not chosen, and a unified framework that examines crisis politics not just in deficit-debtor, but also in surplus-creditor countries.
This open access book explores a special species of trouble afflicting modern societies: creeping crises. These crises evolve over time, reveal themselves in different ways, and resist comprehensive ...responses despite periodic public attention. As a result, these crises continue to creep in front of our eyes. This book begins by defining the concept of a creeping crisis, showing how existing literature fails to properly define and explore this phenomenon and outlining the challenges such crises pose to practitioners. Drawing on ongoing research, this book presents a diverse set of case studies on: antimicrobial resistance, climate change-induced migration, energy extraction, big data, Covid-19, migration, foreign fighters, and cyberattacks. Each chapter explores how creeping crises come into existence, why they can develop unimpeded, and the consequences they bring in terms of damage and legitimacy loss. The book provides a proof-of-concept to help launch the systematic study of creeping crises. Our analysis helps academics understand a new species of threat and practitioners recognize and prepare for creeping crises.
After the Crash Sharyn O'Halloran, Thomas Groll
10/2019
eBook
The 2008 crash was the worst financial crisis and the most severe economic downturn since the Great Depression. It triggered a complete overhaul of the global regulatory environment, ushering in a ...stream of new rules and laws to combat the perceived weakness of the financial system. While the global economy came back from the brink, the continuing effects of the crisis include increasing economic inequality and political polarization. After the Crash is an innovative analysis of the crisis and its ongoing influence on the global regulatory, financial, and political landscape, with timely discussions of the key issues for our economic future. It brings together a range of experts and practitioners, including Joseph Stiglitz, a Nobel Prize winner; former congressman Barney Frank; former treasury secretary Jacob Lew; Paul Tucker, a former deputy governor of the Bank of England; and Steve Cutler, general counsel of JP Morgan Chase during the financial crisis. Each poses crucial questions: What were the origins of the crisis? How effective were international and domestic regulatory responses? Have we addressed the roots of the crisis through reform and regulation? Are our financial systems and the global economy better able to withstand another crash?After the Crash is vital reading as both a retrospective on the last crisis and an analysis of possible sources of the next one.
This paper examines the aftermath of postwar financial crises in advanced countries. We construct a new semiannual series on financial distress in 24 OECD countries for the period 1967-2012. The ...series is based on assessments of the health of countries' financial systems from a consistent, real-time narrative source, and classifies financial distress on a relatively fine scale. We find that the average decline in output following a financial crisis is statistically significant and persistent, but only moderate in size. More important, we find that the average decline is sensitive to the specification and sample, and that the aftermath of crises is highly variable across major episodes. A simple forecasting exercise suggests that one important driver of the variation is the severity and persistence of financial distress itself. At the same time, we find little evidence of nonlinearities in the relationship between financial distress and the aftermaths of crises.
Publics increasingly use social media during crises and, consequently, crisis communication professionals need to understand how to strategically optimize these tools. Despite this need, there is ...scarce theory-grounded research to understand key factors that affect how publics consume crisis information via social media compared to other sources. To fill this gap, an emerging model helps crisis managers understand how publics produce, consume, and/or share crisis information via social media and other sources: the social-mediated crisis communication model (SMCC). This study tests essential components of the SMCC model through a 3 (crisis information form) x 2 (crisis information source) x 2 (crisis origin) mixed-design experiment (N = 338). The findings indicate the key role of crisis origin in affecting publics’ preferred information form (social media, traditional media, or word-of-mouth communication) and source (organization in crisis or third party), which influences how publics anticipate an organization should respond to a crisis and what crisis emotions they are likely to feel when exposed to crisis information.
Inequality is a charged topic. Measures of income inequality rose in the USA in the 1990s to levels not seen since 1929 and gave rise to a suspicion, not for the first time, of a link between radical ...inequality and financial instability with a resulting crisis under capitalism. Professional macroeconomists have generally taken little interest in inequality because, within the parameters of traditional economic theory, the economy will stabilize itself at full employment. In addition, enlightened economists could enact stabilizing measures to manage any imbalances. The dominant voices among academic economists were unable to interpret the causal forces at work during both the Great Depression and the recent global financial crisis. In Inequality and Instability, James K. Galbraith argues that since there has been no serious work done on the macroeconomic effects of inequality, new sources of evidence are required. Galbraith offers for the first time a vast expansion of the capacity to calculate measures of inequality both at lower and higher levels of aggregation. Instead of measuring inequality as traditionally done, by country, Galbraith insists that to understand real differences that have real effects, inequality must be examined through both smaller and larger administrative units, like sub-national levels within and between states and provinces, multinational continental economies, and the world. He points out that inequality could be captured by measures across administrative boundaries to capture data on more specific groups to which people belong. For example, in China, economic inequality reflects the difference in average income levels between city and countryside, or between coastal regions and the interior, and a simple ratio averages would be an indicator of trends in inequality over the country as a whole. In a comprehensive presentation of this new method of using data, Inequality and Instability offers an unequaled look at the US economy and various global economies that was not accessible to us before. This provides a more sophisticated and a more accurate picture of inequality around the world, and how inequality is one of the most basic sources of economic instability.
We find that emerging markets appeared to be somewhat insulated from developments in U.S. financial markets from early 2007 to summer 2008. From that point on, however, emerging markets responded ...very strongly to the deteriorating situation in the U.S. financial system and real economy. Our regression “event study,” focusing on 15 types of news, indicates that a range of financial and real economic news emanating from the US had statistically and economically large impacts on 14 emerging markets and several news events uniformly moved markets. Policy measures taken in emerging markets to insulate themselves from global financial developments proved inadequate in the face of the credit crunch and decline in international trade that followed the Lehman bankruptcy in September 2008.
Since 2008, economic policymakers and researchers have occupied a brave new economic world. Previous consensuses have been upended, former assumptions have been cast into doubt, and new approaches ...have yet to stand the test of time. Policymakers have been forced to improvise and researchers to rethink basic theory. George Akerlof, Nobel Laureate and one of this volume's editors, compares the crisis to a cat stuck in a tree, afraid to move. In April 2013, the International Monetary Fund brought together leading economists and economic policymakers to discuss the slowly emerging contours of the macroeconomic future. This book offers their combined insights.The contributors consider the lessons learned from the crisis and its aftermath. They discuss, among other things, post-crisis questions about the traditional policy focus on inflation; macroprudential tools (which focus on the stability of the entire financial system rather than of individual firms) and their effectiveness; fiscal stimulus, public debt, and fiscal consolidation; and exchange rate arrangements.
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