Archive for April, 2008
Monday, April 21st, 2008
Cole Kendall has created a very well-researched series of articles on the US Housing Market on his blog Understanding the Market.
As an introduction, he asks How Many Houses are there in the US?:
The US has around 125 million houses. Of these, around 109 million houses are occupied year-round, 75 million ...
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Sunday, April 20th, 2008
When academics, analysts and scholars analyze the causes and remedies for the current credit crisis, most of them analyze macro-economic trends such as exchange rate movements, or micro-economic changes such as Basel II.
How the global financial architecture evolved and how that influences the probability of crisis is very rarely discussed. ...
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Sunday, April 20th, 2008
Below is a list of articles and quotes that discuss whether the Federal Reserve Bank was responsible for the housing bubble and the subsequent subprime crisis:
Eric Englund writes in April 22nd 2006 the article "The Federal Reserve and Housing: A Cluster of Errors?" warning about the link between interest rates ...
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Saturday, April 19th, 2008
George Reisman, who is associated with the Mises Institute, has written an interesting article called "Our Financial House of Cards". As a student of Ludwig von Mises, he exemplifies the thinking of the Austrian School of Economics which is, like many libertarians, highly skeptical of government intervention in markets.
(This skepticism ...
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Thursday, April 17th, 2008
To speak about systemic risks only makes sense when analyzing a large system, such as the international financial markets. The financial markets are the quintessential traders of risk, because risks from investments, macro- and micro-economic policy, technological innovation and behaviour of market participants is constantly assessed and priced.
The existence of ...
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Thursday, April 17th, 2008
In their book "Global Governance of Financial Systems" the authors try to define the various dimensions of Systemic Risk. The CMAP (click on the picture to see the full picture) outlines the main concepts that the authors introduce.
Systemic risk is defined as...
a negative externality that imposes costs on society ...
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Tuesday, April 15th, 2008
In commenting the G7/FSF-report, Bill Cara makes an exemplified critique in the tradition of the American Populist movement:
The G-7 meetings are ‘potentially’ the most important in the world. This is the gathering of Finance/Treasury Ministers and Central Bankers of historically the seven most economically powerful nations.
There is a big gap, ...
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Tuesday, April 15th, 2008
French Finance Minister Christine Lagard has compared the recent FSF-report released by the G7 Finance Ministers last week to the Plaza Accord (as quoted by Christopher Swann in an article at Bloomington):
The April 11 statement was "not very different'' from the importance of the 1985 Plaza Accord.
The Plaza Accord reached ...
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Monday, April 14th, 2008
Alexander, Eatwell and Dhumale make this causal explanation for the need of Global Financial Governance (p. 14):
In the post-Bretton-Woods-Era, banks and financial instutions have adopted innovative financial instruments to diversify earnings and to hedge against credit and market risk.
[Is this really the case? Wasn't it rather to hedge primarily ...
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Monday, April 14th, 2008
When defining Financial Stability, the authors of the book on "Global Financial Governance" stated that financial stability is a "public good [which] will never be provided adequately by the market without regulatory intervention" (p. 18).
In the traditional meaning, a public good does not necessarily need public intervention or regulation, it ...
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