Thursday, July 31st, 2008
Last week I had a fascinating conversation with a friend of mine who is an anarchist. We tend to discuss international capitalism and he always wants to convince me that it is possible to create a society without capitalism. When I asked him about what that would mean he ...
Posted in Books | 10 Comments »
Tuesday, April 22nd, 2008
Puzzling Complexity
The global financial architecture is very complex. Despite increasing liberalization of financial markets, increased system risk and integration of the economies through the financial markets in the last 30 years, there is no single World Financial Authority regulating the financial markets, as Alexander, Eatwell and Dhumale have suggested.
Instead what ...
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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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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 ...
Posted in Memo | 1 Comment »
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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Monday, April 14th, 2008
Kern Alexander, Rahul Dhumale and John Eatwell published a book in 2004 called "
Posted in Books | 4 Comments »