Asian financial crisis

The Asian Financial Crisis 1995–98: Birth of the Age of Debt
by Russell Napier
Published 19 Jul 2021

The Asian Financial Crisis 1995–98 Birth of the Age of Debt Russell Napier Contents About the author Introduction and Acknowledgements Part One: Learning the hard way - a beginner’s guide Part Two: The road to devaluation Part Three: Devaluation and crisis Part Four: The bottom Publishing details Praise for The Asian Financial Crisis 1995–98 A combination of applied and highly practical economics that through reality bridges the gap between policy theory and actual implications and results, but more it is also a travelogue and a diary

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This book charts the battle between the new financial capitalism and the various other forms of capitalism that existed then and still exist across Asia. The Asian financial crisis was for many a victory for financial capitalism over the various forms of Asian capitalism. This book will explain why in fact there was no such victory. Asian capitalism adapted but fundamentally did not change. In north Asia in particular their form of social capitalism was strengthened by the confrontation in 1998 that left them with significantly undervalued exchange rates and benefiting from the new debt-charged consumption growth of the developed world. The Asian financial crisis set the scene for an age of debt in the developed world and this brought crises that have forced developed governments to confront financial capitalism in their own backyards.

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Alan Bond went spectacularly bankrupt just a few years after the Bond Centre was completed. This was not the only casualty associated with the Bond Centre. After Bond’s demise, the building became the Lippo Centre and the Lippo Group of Indonesia was almost mortally wounded in the Asian financial crisis. Of the two towers of the building, one was named the Peregrine Tower after the stockbroking company that was to be one of the more high-profile casualties of the Asian financial crisis. Local Feng Shui experts suggested that it was the shape of the glass koala that brought such bad luck to those that were associated with this building. Perhaps they were right, but during the time I occupied the rear of the koala, there was little good luck to be had anywhere in Asia.

How Asia Works
by Joe Studwell
Published 1 Jul 2013

The rewards of obedience Mahathir’s attacks on the multilateral institutions, and Malaysia’s belated, temporary reintroduction of capital controls in 1998, turned him into the ‘bad boy’ of the Asian financial crisis.68 The Thai government, by contrast, remained the star pupil of the IMF and World Bank. That Thailand has fallen farther than any other country in the region since the crisis is an unfortunate comment on this status. Thailand was also the country where the Asian financial crisis began. Uniquely among south-east Asian states, Thailand was never colonised. None the less, the country has a long history of accepting bad advice. From the time of the Bowring Treaty with Britain in 1855 until 1926, Thailand was persuaded by British negotiators to run the lowest import tariff in Asia – just 3 per cent.

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It turned out that too much of Brazil’s earlier growth had been generated by debt that did not translate into a more genuinely productive and competitive economy. Beginning in 1997, with seven economies that have expanded at least 7 per cent a year for a quarter century – Japan, Korea, Taiwan, China, Malaysia, Indonesia and Thailand – east Asia entered a period of reckoning of its own, as the Asian financial crisis took hold. By this point Japan had long since become a mature economy that faced a new set of post-developmental structural problems, ones it showed much less capacity to address than the original challenge of becoming rich. Korea, Taiwan and China, however, were still in the developmental catch-up phase.

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The process was one which has also been observed in Latin America and, more recently, in Russia. The detail of how financial liberalisation went wrong in south-east Asia is explored on a journey to Indonesia’s capital Jakarta, where a new financial district grew like a mushroom in the run-up to the Asian financial crisis. The countries covered I have made a number of simplifications in this book so as not to dilute its central messages and to enable its story to be told (endnotes excepted) in just over 200 pages. One of these involved choosing which east Asian countries to leave out of the narrative. Since the book is about developmental strategies that have achieved a modicum of success, the region’s failed states do not appear.

The Rise and Fall of Nations: Forces of Change in the Post-Crisis World
by Ruchir Sharma
Published 5 Jun 2016

The optimism of the preceding boom inspired many Thais to begin borrowing heavily to buy real estate, creating a bubble that when pricked helped trigger the Asian financial crisis of 1997–98. The same story unfolded in Malaysia, where at the peak of its boom in 1995, investment reached 43 percent of GDP, the second-highest level ever recorded in a large economy, behind only China today. Guided by the authoritarian and increasingly megalomaniacal hand of its then prime minister, Mahathir Mohamad, some of the investment proved useful in the end. The vast new international airport that Malaysia opened at the height of the Asian Financial Crisis in 1998, which was criticized as another example of vainglorious overspending, is no longer too big for current demand.

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In 2007, just before the financial crisis hit, the pace of growth was slowing in only one emerging economy out of every twenty. By 2013, that ratio was four out of five, and this “synchronized slowdown” was in its third year, the longest in recent memory. It had carried on longer than the synchronized slowdowns that hit the emerging world after Mexico’s peso crisis in 1994, or the Asian financial crisis in 1998, or the dot-com bust in 2001 or even the crisis of 2008.4 As the sluggishness spread, the old hunt for the next emerging-world stars gave way to a realization: Economic growth is not a God-given right. Major regions of the world, including the Byzantine Empire and Europe before the Industrial Revolution, have gone through phases stretching hundreds of years with virtually no growth.

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South Korea is another ethnically uniform culture that once embraced its homogeneity as a source of cohesion in politics and discipline in the workforce. But it has been changing much faster than Japan in the face of a similarly stark decline in its working-age population. The shock of the Asian financial crisis of 1997–98 forced South Korea to rethink its cloistered ways. While there were about a quarter-million immigrants in South Korea before the crisis, since the year 2000 the immigrant population has increased 400 percent to 1.3 million, compared to an increase of just 50 percent in Japan. South Korea’s government now promotes multiculturalism as official policy.

The Globalization Paradox: Democracy and the Future of the World Economy
by Dani Rodrik
Published 23 Dec 2010

With very few exceptions economists were busy singing the praises of financial innovation instead of emphasizing the hazards created by the growth in what came to be known as the “shadow banking system,” a hub of unregulated finance. Just as in the Asian financial crisis, they had overlooked the danger signs and ignored the risks. Neither of the crises should have come as a total surprise. The Asian financial crisis was followed by reams of analysis which in the end all boiled down to this: it is dangerous for a government to try to hold on to the value of its currency when financial capital is free to move in and out of a country.

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in Susan Collins and Robert Lawrence, eds., Brookings Trade Forum: 1999 (Washington, DC: Brookings Institution, 2000). 10 For an elaboration of the Sachs argument, see Steven Radelet and Jeffrey Sachs, “The Onset of the East Asian Financial Crisis.” in Paul Krugman, ed., Currency Crises, (Chicago: University of Chicago Press for the NBER, 2000). The story of the Asian financial crisis and the debates around it is well told in Paul Blustein, The Chastening: Inside the Crisis That Rocked the Global System and Humbled the IMF (New York: Public Affairs, 2001). 11 Arthur I. Bloomfield, “Postwar Control of International Capital Movements,” American Economic Review, vol. 36, no. 2, Papers and Proceedings of the Fifty-eighth Annual Meeting of the American Economic Association (May 1946), p. 687. 12 John Maynard Keynes, “Activities 1941–1946: Shaping the Post-war World, Bretton Woods and Reparations,” in D.

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But all of a sudden international banks and investors decided they were no longer safe places to leave their money in. A precipitous withdrawal of funds ensued, currencies took a nose-dive, corporations and banks found themselves bankrupt, and the economies of the region collapsed. Thus was born the Asian financial crisis, which spread first to Russia, then to Brazil, and eventually to Argentina, bringing down with it Long-Term Capital Management (LTCM), the formidable and much-admired hedge fund, along the way. I might have congratulated myself for my prescience and timing. My book eventually became a top seller for its publisher, the Washington-based Institute for International Economics (IIE), in part, I suppose, because of the IIE’s reputation as a staunch advocate for globalization.

China's Superbank
by Henry Sanderson and Michael Forsythe
Published 26 Sep 2012

See also state-owned enterprises (SOEs) Africa, outstanding loans of $13.7 billion in African loans and China’s eventual involvement in African domestic politics to protect its assets, including oil and energy supplies Asian financial crisis, provided stimulus (25 trillion yuan) to 18 provinces with proposed projects Asian financial crisis and centralization of banking system Asian financial crisis and lending (5 trillion yuan) to Chinese companies through 10,000 LGFVs assets and total loans (2011) assets of over 6 trillion yuan (2011) bad assets (15 billion yuan) were purchased from Industrial & Commercial Bank of China bad debt (100 billion yuan) removed (2004) bad loans (2 billion yuan) were bought from Tianjin FAW Xiali Automotive Co. and replaced with new market capitalization ($2 billion) Beijing Olympic Games stadiums and sports facilities, loan (43.4 billion yuan) provided for bond issuer, country’s biggest bond market plunged and National Development and Reform Commission stopped approving bonds (Aug. 2011) bonds (vs. deposits) are bought by China’s commercial banks bonds are sold into the global market at a fraction of the cost of other global banks bonds are sold with a sovereign credit rating to raise funds with a zero-risk weighting bonds have maturity of 20 years CDB backed a secret raid by Aluminum Corp. of China to acquire stock in Rio Tinto CDB has independence from government for investment decisions and its functions as a commercially driven institution “CDB would be out of business in a matter of days if banks stopped buying the bonds” central government liabilities are hidden by CDB selling bonds to commercial banks which use people’s savings to buy the bonds which earn a higher yield for absolutely zero risk Chinese companies benefit from nearly all loans for foreign development Chinese companies depend on low-interest CDB financing for their operations in both China and across the globe Chinese government stands behind CDB’s debts and lending Citigroup, CDB’s attempt to buy stake in commercial bank (2008), state-owned companies such as Huawei, ZTE, Chery Auto, and Sinohydro receive billions of dollars in loans from CDB for their overseas expansion companies such as Huawei in telecom, carmaker Chery Auto, state-owned oil Sinopec, and dam makers Sinohydro Group have markets created for them by CDB “credit-default swaps” trade below other global banks credit reforms, CDB went through three (3) debt based bank creating liabilities (trillions of yuan) for the state debt-for-equity shares (48 billion yuan), UBS Warburg disposed of debt payments: 33 percent of LGFVs generated insufficient cash flow to make debt payments; and 68 percent reported returns on capital less than the benchmark lending rate debt (trillions of yuan) was given to the Ministry of Finance to backstop (2004) dim sum bonds in Hong Kong European Union trade action against CDB financing financed infrastructure growth in coastal regions of the country financial crisis (2008) and ($2 trillion) stimulus by CDB and state banks to keep the Chinese economy going by building roads, bridges, subways and stadiums, x funding for Congo’s road and rail networks, and mining, energy, agriculture, and manufacturing industries funding for long-term infrastructure projects Ghana’s loan of $3 billion global energy loans by date and amount Good Housekeeping Seal of Approval, CDB loans have the government’s Huawei and ZTE, lines of credit worth $45 billion to investment will stimulate growth land prices fell (2011) and LGFVs are unable to pay principal of bank loans land prices fell (2011) and Yunnan Highway Construction was unable to pay the principal of the outstanding bank loan (90 billion yuan) only interest land/property bubbles, LGFVs have created one of the world’s biggest land value in the future is leveraged into large up-front loans lending for power, road construction, railways, petrochemicals and telecommunications LGFV model, invented LGFV model of financing Light Manufacturing in Africa report (2011) line of credit (5.6 billion yuan) to Hebei Bohai Investment Co.

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CDB joint venture (12 billion yuan) with Tata Motors’ Jaguar Land Rover CDB loan to construct a $200 million factory in Venezuela Chiang Kai-shek, Generalissimo Chi Jianxin (head of CADF) China Africa, China is criticized for being the new colonialist in Africa’s products and resources, China’s demand has pushed prices up for Angola is China’s second largest oil supplier bad loans were taken off the books (2004) pushing the burden out into the future so that the government could report low levels of debt and a strong balance sheet during the Asian financial crisis banking system became insolvent during the Asian financial crisis (2008) banking system was recapitalized by Zhu and bad assets were taken off the bank books (1994) banks were restructured and recapitalized with 4 trillion yuan (2005) CDB lines of credit ($92.4 billion) to China’s leading wind, solar, and telecommunications companies central government lost its share of tax revenue (1978–1994) Chinese firms grow by tying access to money to contracts for Chinese companies Chinese oil companies are selling a portion of their Venezuelan crude on the world market clean energy, $51.1 billion was invested into coal fuels 80 per cent of power plants in crude oil from overseas, buys more than half its debt level (March 2012) debt level of 71 percent of GDP (2010) economic growth (2012), sixth straight quarterly decline in economic growth averaged 9 percent a year for the last three decades economic zones in Nigeria, Mauritius, Egypt, Algeria, Zambia, and Ethiopia farmers (50 million) lost their land and received only a fraction of the fair market price as cities expanded farmers move from agrarian low-productivity jobs to high-productivity urban jobs farmers (60 percent) were not satisfied with their land compensation farmers (60 million) will be uprooted for urbanization in next two decades focus on extraction of oil and metals from Africa to fuel its insatiable thirst for raw materials foreign investment of $54 billion (2008) four AMC companies were set up to take the bad loans; the Ministry of Finance put 10 billion yuan into each one; and the AMCs then issued 1.4 trillion yuan in bonds to Chinese banks infrastructure spending doubled (2002) investment-to-GDP ratio was 49 percent which was below that of Mongolia and Sierra Leone land is used as collateral and as source of income to repay loans so local governments must acquire it cheaply and sell it at a profit local government financing vehicles (LGFVs) NPL made up 40 percent of the total lending (1990s) oil demand pushed oil prices up 27.1 percent (2000 and 2007) oil in the Americas, is a major trader of (Venezuelan) private equity funds ($30 billion), state-owned companies invested in private equity has grown at a compound annual rate of 40 percent renewable energy industry renewable energy law (2006) and feed-in tariffs sovereign wealth fund ($332 billion) state banking system has trillions of yuan of debt stimulus package of 4 trillion yuan (2008) tax collection reforms (1994), Zhu Rongji’s centralized urbanization of the country urbanization was driving force behind economic growth and LGFVs China-Africa Development Fund (CADF) Africa-focused investment fund agreement with Xinjiang Goldwind Science & Technology for wind turbine development in Africa plus a line of credit ($6 billion plus another $35 billion yuan) CDB funding of China is criticized as being the new colonialist in Africa China’s demand for Africa’s products and resources has pushed up prices cotton-processing factory in Malawi economic zones in Nigeria, Mauritius, Egypt, Algeria, Zambia, and Ethiopia Egypt’ s Suez Trade Park, funding of for every investment it sets up a joint venture offshore in the Cayman Islands French couldn’t compete against Chinese companies in building railways and power grids fund takes only minority stakes in projects alongside other Chinese investors and aims for Chinese firms to give capital and technology and experience to local partners glass factory in Ethiopia holds 45 percent of joint venture leather factory in Ethiopia set up with $37 million in capital investment of $2.5 billion for Huajian’s expansion into Ethiopia joint venture with Brilliance Auto in building automobile assembly plants in Egypt and other African countries joint venture with Chery Group to invest in automobile assembly plants in some African countries joint venture with China FAW in building an auto assembly plant in South Africa joint venture with China First Auto Works in a $100 million truck and passenger car plant in South Africa joint venture with China Merchants Group in a container port in Lagos, Nigeria joint venture with China National Agricultural Development Group jointly invested in a sisal project in Tanzania joint venture with China North Vehicle Corporation and Baotou Bei Ben Heavy-Duty Truck Corporation in heavy-duty commercial trucks in South Africa joint venture with Chinese enterprises in leather processing plant in Ethiopia joint venture with Jiangsu Qiyuan Group in building a cement plant in Ethiopia joint venture with Jidong Development Group in a $220 million cement plant in South Africa joint venture with Shenzhen Energy Investment Co. for construction of Ghana Power Station Phase I joint venture with Sinohydro and Jinan Yuxiao Group in a cement production base in Mozambique private equity investors in Africa provides equity financing and CDB comes with the checkbook for debt venture in Ghana, hold 40 percent of shares in venture with Chery Auto (carmaker) to set up factories in Africa Wesizwe Platinum in South Africa, 45 percent stake with Chinese metals company Jinchuan Group in West African office in Ghana, and offices in South Africa, Ethiopia, and Zambia “win-win” solution China–Africa Development Fund China Banking Regulatory Commission China CAMC Engineering Co.

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The Japanese “samurai” bonds did not end well, and in 1998 and 1999, international investors were losing millions of dollars with the collapse of a local investment trust, Guangdong International Trust and Investment Corp., in southern China. It was the first default since the Communists came to power in 1949, and shocked foreign investors out of their notion that the central government would bail out every local government debt. At the same time, the country’s banks were saddled with dud loans to state-owned companies. The Asian financial crisis in 1998 that started in Thailand and spread throughout the region couldn’t have come at a worse time. For CDB, though, the Asian crisis was an opportunity. The founding of these special-purpose vehicles, which came to be known as local-government financing vehicles, or LGFVs, had its roots in the restrictions imposed on local governments.

Trade Wars Are Class Wars: How Rising Inequality Distorts the Global Economy and Threatens International Peace
by Matthew C. Klein
Published 18 May 2020

This is what the United States did for much of the nineteenth century, when it imported mainly British capital to boost domestic investment to levels much higher than it could have otherwise achieved without squeezing American workers. More recently, except for a brief period in the late 1980s, South Korea consistently imported more than it exported in the decades from independence in 1948 until the Asian Financial Crisis in 1997. Korea is also one of the few countries to transition successfully from poor to rich. Norway, which was once one of the poorest countries in Western Europe, imported massive amounts of foreign savings in the form of large current account deficits in the 1970s to pay for the development of its offshore oil and natural gas fields.

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With the notable exception of Taiwan, which bought $70 billion in foreign exchange reserves in the 1980s—equivalent to a year’s worth of economic output—most countries outside Latin America did not think that they had much to learn from the experience. Taiwan, of course, was unusual in that the government knew that it could never access emergency loans from the IMF if it ever ran into trouble.23 The Asian Financial Crisis of 1997–98 changed everything. For years, Indonesia, South Korea, Malaysia, the Philippines, and Thailand had attracted substantial financial inflows from savers in North America, Europe, and Japan. All were growing rapidly—Korea’s living standards had already converged to those in New Zealand and Spain, while Malaysia was at Central European levels of development—and all had maintained stable exchange rates against the U.S. dollar in the 1990s.

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Sources: Federal Reserve Board; Matthew Klein’s calculations The problem was the rest of the world’s voracious demand for dollar-denominated assets. In addition to inflating the mortgage debt bubble, overabundant foreign financing also savaged America’s terms of trade as trillions of dollars of uneconomic asset purchases distorted the U.S. exchange rate. Between the start of 1997—the eve of the Asian Financial Crisis—and the beginning of 2002, the dollar appreciated by more than 20 percent against the currencies of its trading partners. While the dollar declined from then until 2008, it consistently remained far above its 1988–96 average. To the misfortune of American workers, the overvaluation of the dollar meant that American consumers would prefer to buy goods made abroad at the expense of domestic manufacturing.39 The rest of the world’s unwillingness to spend—which in turn was attributable to the class wars in the major surplus economies and the desire for self-insurance after the Asian crisis—was the underlying cause of both America’s debt bubble and America’s deindustrialization.

When China Rules the World: The End of the Western World and the Rise of the Middle Kingdom
by Martin Jacques
Published 12 Nov 2009

The main downside with such a strategy is that the savings which have underpinned China’s huge level of investment might be undermined as savers go abroad in search of rates of return far in excess of the paltry levels they can find at home, thereby denying the country the funds for investment that it has hitherto enjoyed, with the inevitable consequence that the growth rate would decline. In addition, a floating renminbi would be vulnerable to the kind of speculative attack suffered by the Korean won, Thai baht and Indonesian rupiah in the Asian financial crisis.43 Although Zhu Rongji, the then Chinese premier, intended to begin the liberalization of the capital account in 2000, the Asian financial crisis persuaded him that such a change would be imprudent. The present global financial turmoil only goes to confirm the wisdom of the Chinese leadership in continuing to regulate the capital account, despite persistent calls from the West to deregulate.

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The marginalization of the US is also manifest in the Chiang Mai Initiative, first agreed in 2000 on the proposal of the Chinese,37 which involves bilateral currency swap arrangements between the ASEAN countries, China, Japan and South Korea, thereby enabling East Asian countries to support a regional currency that finds itself under attack. The agreement was a direct product of the Japanese proposal for an Asian Monetary Fund during the Asian financial crisis,38 which was strongly opposed at the time by both the United States (on the grounds that it would undermine the IMF) and China (because it came from Japan). China has since swallowed its opposition - no doubt in large part due to the strengthening position of the renminbi - while the United States, weakened by the IMF debacle in the Asian financial crisis, has not resisted.39 If ASEAN has provided the canvas, it is the diplomatic involvement and initiative of China that has actually redrawn the East Asian landscape.

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Cheung, eds, The Globalization of Chinese Food (London: RoutledgeCurzon, 2002) Xie, Andy, Asia/Pacific Economics, report for Morgan Stanley, November 2002 Xinran, What the Chinese Don’t Eat (London: Vintage Books, 2006) Xu, Gary Gang, Sinascape: Contemporary Chinese Cinema (Oxford: Rowman and Littlefield, 2007) Yahuda, Michael, ‘The Evolving Asian Order: The Accommodation of Rising Chinese Power’, in David Shambaugh, ed., Power Shift: China and Asia’s New Dynamics (Berkeley: University of California Press, 2005) ——Hong Kong: China’s Challenge (London: Routledge, 1996) Yan Xuetong, ‘The Rise of China in Chinese Eyes’, Journal of Contemporary China, 10:26 (2001) Yardley, Jim, ‘After the Fury in Tibet, Firm Hand Trembles’, International Herald Tribune, 18 March 2008 ——‘China Offers Defense of Its Darfur Stance’, International Herald Tribune, 8-9 March 2008 ——and Somini Sengupta, ‘Beijing Blames the Dalai Lama’, International Herald Tribune, 19 March 2008 Yoshino, Kosaku, Cultural Nationalism in Contemporary Japan (London: Routledge, 1992) Yu Bin, ‘China and Russia: Normalizing Their Strategic Partnership’, in David Shambaugh, ed., Power Shift: China and Asia’s New Dynamics (Berkeley: University of California Press, 2005) Yu Yongding, ‘China’s Macroeconomic Development, Exchange Rate Policy and Global Imbalances’, unpublished paper, Asahi Shimbun Symposium, October 2005 ——‘China’s Rise, Twin Surplus and the Change of China’s Development Strategy’, unpublished paper, Namura Tokyo Club Conference, Kyoto, 21 November 2005 ——‘China’s Structural Adjustment’, unpublished paper, Seoul Conference, 2005 ——‘The Interactions Between China and the World Economy’, unpublished paper, Nikkei Simbon Symposium, 5 April 2005 ——‘Opinions on Structure Reform and Exchange Rate Regimes Against the Backdrop of the Asian Financial Crisis’, unpublished paper, Japanese Ministry of Finance, 2000 Zakaria, Fareed, The Post-American World (London: Allen Lane, 2008) Zha Daojiong, ‘China’s Energy Security and Its International Relations’, China and Eurasia Forum Quarterly, 3:3 (2005) Zhang, Peter G., IMF and the Asian Financial Crisis (Singapore: World Scientific, 1998) Zhang Wei-Wei, ‘The Allure of the Chinese Model’, International Herald Tribune, 1 November 2006 Zhang Yunling, ed., Designing East Asian FTA: Rationale and Feasibility (Beijing: Social Sciences Academic Press, 2006) ——East Asian Regionalism and China (Beijing: World Affairs Press, 2005) ——and Tang Shiping, ‘China’s Regional Strategy’, in David Shambaugh, ed., Power Shift: China and Asia’s New Dynamics (Berkeley: University of California Press, 2005) Zhao Suisheng, ed., Chinese Foreign Policy: Pragmatism and Strategic Behavior (New York: M.

Manias, Panics and Crashes: A History of Financial Crises, Sixth Edition
by Kindleberger, Charles P. and Robert Z., Aliber
Published 9 Aug 2011

Schaaffhausen Bank, Cologne 162–4, 218 ABN-AMBRO 120–1 accommodation (finance) bills 52, 62, 72, 73, 226 Wisselruiti 62, 66, 159 accountancy firms (CPAs) 120, 149–50 adaptive expectations theory 39 Adelphia Communications 20, 119, 134–5, 144 adjustable-rate mortgages (ARMs) 259 AIG 24, 87, 121, 185 Åkerman, Johan 158, 161, 162, 164–5 Albania 52, 109, 264, 268–9 Aldrich Commission, 1910 (US) 219 Alliance Capital 137 Allied Irish Bank 124 Alsace, 1827–28 crisis 161, 204 American Civil War, 1861–65 124, 164 see also United States American Express 144 Ames, Oakes 139 Amsterdam 152, 159–60, 163, 224 1772 crisis 159–60 1799 crisis 210–11 see also Bank of Amsterdam; Holland Arthur Andersen 22–3, 120, 131, 139 André, Alfred 165 Andréadès, A. 50, 226, 306n44 Angelis, Tino De 122 arbitrage/arbitrageurs 21, 31, 155 Argentina 21, 24, 278 1980s crisis 98–9, 234 2001 crisis 156, 233 Baring crisis, 1890 and 100, 166, 207 art, as an investment 12, 20 Arthur Andersen 22, 23, 120, 131–2 Ashton, T.S. 58, 72, 214 Asian Financial Crisis, 1997 1, 3, 4, 8, 27–8, 85, 170, 184, 186, 223, 233, 278 IMF and 104, 234 asset-backed securities (ABS) 74, 149 asset price bubbles 2, 56, 108, 170–1, 173, 177, 178, 183, 187–8, 229, 285 1985–89 (Japan) see Japan 1985–89 (Nordic countries) 1, 5, 27, 157 1990s (United States) see United States 1997 Asian Financial Crisis see Asian Financial Crisis international contagion of 154ff in NASDAQ stocks see United States, 1990s asset price bubble see also bubbles asset prices 2, 13, 14, 15, 25, 30, 88, 109, 112, 115 economic activity and 107–8 monetary policy and 115–16 see also real estate prices Australia 37, 124, 164, 168, 307n54 gold discoveries 60, 164 Austria (Austria-Hungary) 21, 63 1869 crisis 165 1873 crisis (krach) 82, 151, 165–6 1931 crisis 168, 252, 253 Baubanken 63 Austrian National Bank 82 Ayr Bank 58, 81, 96, 142 Babson, Roger 90 Bagehot, Walter 41, 67, 84, 214, 216, 239–40, 263, 304–5n22, 327n41 on lenders of last resort 223, 224, 225, 226, 227, 228, 235, 243, 253 on Malthus 51 Baker, James 256 Ball, Sir John 73 Balzac, Honoré de 55, 141, 144 Banca d’Italia 167 Bank Act 1844 (England and Wales) 81, 82, 91, 102, 206 Bank Act 1845 (Scotland) 81 Bank of America 4, 86, 132, 195, 262–3 Bank of Amsterdam 66 Bank of Credit and Commerce International (BCCI) 124–5 Bank of England 16, 66, 72, 77, 83, 142, 211 1763 crisis 235 1772 crisis 96, 224, 226, 235 1836–39 crisis 82, 236 1890 Baring crisis and 100–1, 166, 206–7, 208, 238 1995 Baring crisis and 16, 123–4 and Northern Rock 86 discount rates 82, 102, 103, 196, 216, 225, 226, 234 East India Company and 159 as lender of last resort 214, 217, 235 South Sea Bubble and 104, 200–1 ‘W banks’ and 103, 226 bank failures 3, 4, 168–9, 232, 278 Bank of France 51, 89, 91, 92, 93, 204, 217, 218, 225, 235–6, 241, 245, 246, 249 Bank of England, loans to 105, 162, 236, 237, 238–9 bank holidays 23, 191–3, 201, 202 Bank for International Settlements (BIS) 242, 243, 244, 249–50, 251, 252, 254 Bank of Japan 22, 36, 102, 113, 114, 115, 173, 176, 188, 284, 285, 289 Bank of Lending, Amsterdam 66 Bank of Mexico 5, 6, 179, 253, 285–6 Bank of New York 82, 150 Bank of Thailand 6, 180, 286 Bank of the United States 44, 219, 224 Bankers Trust Co. 150 Banking School, on money supply 65ff, 92, 102, 215–16 banking system 78, 80, 198 central banks 15, 19, 44, 64, 77–8, 81–2, 83, 90, 115, 178, 191 clearing-houses 63, 203–4 investment banks 4, 9, 23, 56, 71, 74, 86, 119, 130, 149–51, 182, 183, 194, 257ff, 300–1 swindles/fraud and 117ff see also individual banks bankruptcies 15, 16, 59, 85–6, 105, 133, 148, 151, 157, 162, 164, 180 Banque Adam, Paris 168 Banque de Crédit Maritime, Trieste 76 Banque Générale (Banque Royale) 62 Banque du Havre 217 Banque de Lyon et de la Loire 75, 76, 146, 311n38 Banque Oustric, Paris 168 Banque de Paris et des Pays Bas (Paribas) 77 Banque de Savoie 218 Baring Brothers 236 Baring crisis, 1890 21, 100, 166, 200 Baring crisis, 1995 16, 123–4 Baring loan, 1819 55 Baruch, Bernard 100 Basel Agreement, 1961 249 Baubanken (Austria) 63 Bear Stearns 25, 85ff, 121, 192, 222, 262, 263, 267, 297 Belmont, Auguste 235 Benedict, Ruth 59 Bernanke, Ben 222, 223 Bernard, Samuel 159 Beyen, J.W. 53 Biddle, Nicholas 162 bills of exchange 19, 62, 63, 64, 66, 71ff, 78, 202, 224, 235, 310n21 bimetallism 19, 54 Black Friday, 1745 201 Black Friday, 1866 165 Black Friday, 1869 41 Black Monday 1987 202, 227 Black Thursday, 1929 see Great Depression Blanqué, Pascal 81 Bleichröder, Gerson von 144 Blodgett, Henry 22, 119, 137–8, 151 Blunt, Charles 151 Blunt, John 142, 143, 144 Boesky, Ivan 152 Böhme, Helmut 237 bonds 1, 5, 20, 45, 50, 57, 89, 95, 98, 100, 130 Brady 177, 178, 189, 285 junk 20, 45, 70–1, 128, 129 Panama Canal 219 Bonelli, Franco 167, 222, 240 Bontoux, Eugène 74–5, 76, 100 Bouchard, Charles 151 Boutwell, George S. 219 Bouvier, Jean 75 Brady Bonds 177, 178, 189, 285 Braine, G.T. 226 Braudel, Fernand 41 Brazil 45, 48, 96, 156, 160, 253 1982 crisis 94, 157 1998 depreciation 98 Brennan, Robert B. 47, 138 Bretton Woods system 171, 187, 246ff, 250, 256, 283 brewery companies 49 Brunswick Bank 55 Bubble Act 1720 (GB) 53, 57, 88 bubbles 59, 74, 84ff, 96, 102, 108, 111, 113, 121, 126, 142–8, 170ff, 185ff asset price see asset price bubbles Mississippi Bubble, 1720 57, 158ff South Sea see South Sea Bubble, 1720 see also crises; manias bucket/boiler shops 46–7, 144 Buenos Aires Drainage and Waterworks Company 100 Burj Dubai 107 Caldwell, Rogers 44 call money 63, 69, 74–5, 80 canals 11, 28, 55, 58, 62 Canary Capital 137 capital flows 31, 162, 247–8 cross-border 2, 157, 170, 186, 187, 190, 230, 231, 248, 276, 277, 279, 280, 281, 282, 290 venture capital 12, 56, 181, 182, 183 see also money movements Carswell, John 47 Cassenscheine (Austria) 63 central banks 19, 21, 64, 77–8, 81–2, 83, 90, 115, 191, 224, 226 cooperation between 193, 243 and the ‘Bagehot doctrine’ 263 and Basel Agreement 249 and the ‘lender of last resort’ 213ff, 276 and international money flows 249, 250 see also individual banks certificates of deposit (CDs) 63, 65, 138 Chalmers, George 159 Chicago 46 real estate booms 111–12 Chicago Mercantile Exchange 77 Chicago School see monetarists China 62–3, 85, 229, 285 Citibank/Citicorp/Citigroup 43, 138, 151, 193 City of Glasgow Bank 155 Clapham, Sir John 41, 48, 142, 164, 211, 225, 226, 227, 235, 236, 238 Clark, Edward 197 clearing-house certificates 203ff Clifford & Co. 58 cobweb model 48 Cole, Arthur H. 320n21 collateralized mortgage obligations (CMOs) 258–9 commodity prices copper 43, 51 increases in 3, 8, 21, 31, 50 oil 3, 4, 13, 125, 251 stability of 98–9 volatility in 1, 3, 50, 51 Compagnie des Indes 158 Compagnie d’Occident 142 Comptoir d’Escompte (France) 51, 166, 218 conditionality 252 condominiums, investment in 12, 45 consumption theory 49 contagion domestic 20 international 1, 20–1, 154ff; of asset price bubbles 170ff transmission mechanisms 156ff Continental Illinois Bank 16, 94, 103, 210 Cooke, Jay 21, 44, 50, 165–6 copper prices 43, 51 Corn Laws (GB) 100, 164 corn prices 100 corruption see swindles/fraud corso forzoso (Italy) 165 cotton 155–6 CPAs (certified public accountants) 149–50 crashes see crises Crédit Agricole (France) 164 Credit Anstalt, Vienna 55, 142, 168, 243 credit-default swaps (CDSs) 121, 264 credit expansion 62ff, 69 destabilization and 82–3, 84–5 Great Depression and 78–80 impact of 290–4 manias and 12, 13, 14, 28, 33–5, 46 new bases for 62ff swindles/fraud and 117–53 Crédit Foncier (France) 164 Credit Foncier and Mobilier (GB) 97 Crédit Lyonnais 3, 218 Crédit Mobilier (France) 164 credit-rating agencies 149–50, 260 Credit Suisse First Boston 152 Crimean War, 1854–56 50–1, 164 crises 1–8 1763 54, 58, 62, 66, 73, 96, 152, 159–60, 196 1772 58, 96, 142, 160, 224 1808–9 48, 101 1816 160–1 1825 16, 58, 83, 88, 92, 102, 105, 161, 196, 199–200, 217 1836–39 102, 103, 155, 161–2, 206, 226 1847 58–9, 91, 92, 96–7, 100, 161, 162, 195, 196–7, 215, 225 1857 51, 73, 82, 89, 92, 101, 105–6, 142, 145, 147–8, 164, 197, 203, 205–6, 219, 226, 227–8, 239 1864–66 82, 97, 164 1873 21, 52, 82, 89, 97, 101, 112, 139, 144, 165–6, 197–8, 202, 220, 228, 238 1884 198 1907 21, 63, 82–3, 97, 167, 202 1929 see Great Depression 1980s 1, 3, 4, 7, 34, 98 1987 (Black Monday) 202, 227 1990s/2000 1–3, 4, 5–6, 7, 24, 85, 170–1 2006–2009 1, 7–8, 9, 10, 85, 86, 108, 116, 120, 170, 191, 200, 210, 222, 257–72, 286–8, 297–8, 299, 301 causes of 21, 27, 32–3, 53, 99–104, 154–6, 157–8 currency crises 4, 11, 231; see also individual countries as cyclical 26 development of 84 financial distress and 84–5, 90–4 historical survey 234–9 international contagion of 1, 21, 154–6 Minsky model of 18–19, 26–36 modern prevalence of 233–4, 273ff policy implications 15–18 warnings of 84–6 see also bubbles; manias; panics crisis management 15–18, 191–212 by central banks 191, 235–9 domestic 23–4, 213ff interventionist 199–212 by lender of last resort 198–9 domestic 213ff international 229ff monetarist view on 19, 199–200 non-interference 191–3 crony capitalism 126, 253 Countrywide Financial 4, 86, 262–3, 270 currency board arrangements 98 currency crises 4, 11, 231 see also individual countries Currency School on money supply 19, 65ff Currie & Co. 207 Darmstäder und Nationalbank (Danatbank) 142, 168, 244 Davillier, J.

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The counterpart of this change in the Mexican trade balance was that there was a money flow to the United States (a modest preview of the events that would occur in 1997 following the Asian Financial Crisis and the massive turnaround in the trade balances of the Asian countries). In effect the flow of money from Mexico to the United States led to an increase in the prices of US securities. The second aspect was that the Federal Reserve eased its monetary policy and reversed its tightening policy of 1994. An alternative starting date for the onset of the bubble is the summer of 1998, following the Asian Financial Crisis, the financial debacle in Moscow and the collapse of Long-Term Capital Management.

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The first crisis wave was in the early 1980s when Mexico, Brazil, Argentina, and ten other developing countries defaulted on their $800 billion of US dollar-denominated loans. The second wave occurred in the early 1990s and engulfed Japan and three of the Nordic countries – Finland, Norway, and Sweden. The Asian Financial Crisis that began in mid-1997 was the third wave; Thailand, Malaysia, and Indonesia were involved initially and subsequently South Korea, Russia, Brazil, and Argentina tumbled. In retrospect the financial crisis that impacted Mexico during its presidential transition at the end of 1994 was the forerunner for the crisis in Southeast Asia thirty months later.

Breakout Nations: In Pursuit of the Next Economic Miracles
by Ruchir Sharma
Published 8 Apr 2012

Huang says Deng was virtually alone in his understanding that rising regional inequality was a necessary political risk, at least in the short term. He also clearly knew that the boom in these coastal zones would serve as a magnet to rural migrants. The congress in 1997 coincided with the onset of the Asian financial crisis and the collapse of currencies across the region. As falling global demand idled plants around the country, Beijing began to downsize bloated state factories, laying off tens of millions, and sold many small state firms to private owners. It also privatized the real estate sector, allowing individual property ownership for the first time.

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Stock markets should rise in value when the economy is growing, but in recent decades in the emerging world, they often have not. A case in point was South Korea, where the benchmark KOSPI index peaked in 1989, while the economy continued to grow at a 6 percent pace until the outbreak of the Asian financial crisis in 1997. Companies saw the stock market as a place to raise quick money, not as a basic measure of the company’s long-term value. Emerging-market companies focused on getting big—more employees, more sales, more market share—and didn’t pay much attention to whether all that revenue was generating bottom-line profit, the metric stock market investors care about most.

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South Korea, with a GDP of $1.1 trillion and a population of forty-eight million, is twice the size of Taiwan ($505 billion and twenty-three million) and is pulling away as a competitive force: in 2006 the total value of the South Korean stock market surpassed Taiwan’s for the first time, and it is now considerably larger, at $1 trillion versus $700 billion. Intriguingly, the family dynasties that still dominate the top-thirty Korean companies, and that were widely seen as the heart of a severe “crony capitalism” problem at the depths of the Asian financial crisis in 1998, have reformed so dramatically that they are now a core strength for the local economy. Hyundai, spoofed a decade ago for its authoritarian management style, impenetrable bookkeeping, and laughably bad cars, is now a world-beater. Taiwan, meanwhile, sticks to the narrow niche of banging out goods sold under the “made in” label of other countries.

Blindside: How to Anticipate Forcing Events and Wild Cards in Global Politics
by Francis Fukuyama
Published 27 Aug 2007

Hurricane Katrina, for example, was one of the most fully predictable and scenario-tested natural disasters in American history, but that fact still did not lead to appropriate preparatory actions or adequate crisis responses on the part of responsible officials at the local, state, or federal levels. The following section, “Cases: Looking Back,” looks more closely at some historical examples of surprise—upside as well as downside—and asks why the social and economic impacts of emergent technologies and events like the collapse of the former Soviet Union and the 1997–98 Asian financial crisis were not anticipated. David Landes, Bruce Berkowitz, and David Hale draw on their knowledge of history and policy to pinpoint those institutional, and not just personal, failures that prevented policymakers and others from properly anticipating major events of the time. 2990-7 ch01 fukuyama 4 8/8/07 2:12 PM Page 4 francis fukuyama The third section discusses potential future cases of surprise.

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So too is appreciating the differences between an intelligence failure and policy frailties whose sources lie elsewhere. Without an understanding that such things can happen, we are certain to be blindsided in the future. 2990-7 ch05 hale 7/23/07 5 12:09 PM Page 42 Econoshocks: The East Asian Crisis Case David Hale T he East Asian financial crisis of 1997–98 was one of the most dramatic economic events of the twentieth century. A region that had enjoyed several years of robust economic growth was suddenly plunged into a financial crisis that produced widespread bankruptcies and sharply higher unemployment. The crisis brought down one of Asia’s oldest dictators, Indonesia’s Suharto, and helped to topple a democratically elected government in Thailand.

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They found that such crises tended to be more severe in developing countries than in industrial ones. One of the best examples of such a crisis was Chile in 1983, but they found similar examples in Argentina (1981), Brazil (1987), Colombia (1983), Finland (1983), Mexico (1994), Peru (1985), and Turkey (1984). Despite this evidence, on the eve of the East Asian financial crisis few believed that the region was vulnerable to major financial shocks. East Asian countries, after all, had but modest budget deficits and generally low infla- 2990-7 ch05 hale 46 7/23/07 12:09 PM Page 46 david hale tion. The Reinhart-Kaminsky paper therefore did not produce much discussion in East Asia because most of the crises they reviewed had been in Latin America, and East Asia was free of Latin America’s problems with large fiscal deficits.

Global Governance and Financial Crises
by Meghnad Desai and Yahia Said
Published 12 Nov 2003

Since the 1970s, the re-emergence of financial crises has been accompanied by a revival in national protectionism, but in a much weaker form than in the 1930s. 74 Andrew Gamble In general, the territorial conception of world order has been less influential than in some earlier periods (Gamble and Payne 1996). It retains considerable power, however, as shown in the Asian financial crisis, when several states responded to the serious situation facing them by reasserting their national sovereignty. Malaysia, in particular, sought to insulate its economy from external pressures, resorting to exchange controls amongst other measures. But despite the extreme nature of the financial crisis which engulfed many economies in East Asia, as well as subsequently in Latin America, there was no general retreat to protectionism and the crisis measures proved temporary; states have sought to negotiate their way back into the global economy.

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Many have constantly predicted the eruption of a major financial crisis which will finally destroy the political basis for the continuance of the post-1945 liberal economic order in the same way that the 1929–31 crisis finally destroyed the nineteenth-century liberal economic order. But it has not so far happened and the liberal economic order has even survived its greatest test so far, the Asian financial crisis. Territorial order, however, remains an indispensable characteristic of the contemporary world order, because of the continuing importance and relevance of national jurisdictions within it. In moments of extreme crisis in the system, the possibility of a resort to national jurisdictions and national sovereignty remains a possibility.

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For a time decline fever which had long afflicted Britain gripped the United States and the superiority of the German and particularly the Japanese models of capitalism were much trumpeted. But the roles were reversed in the 1990s and the century ended with the Anglo-American model apparently back on top. The Asian financial crisis was one of the most significant events in promoting this reversal. It raised the question of whether the different models that flourished in the decades since 1945 were the product of the era of national protectionism and US hegemony in the global economy and has gradually been undermined as the logic of the global capitalist economy has reasserted itself.

The Shifts and the Shocks: What We've Learned--And Have Still to Learn--From the Financial Crisis
by Martin Wolf
Published 24 Nov 2015

But it is impossible to look back at the developments of the past three decades without concluding that, notwithstanding the failures and disappointments, the general direction has been towards more accountable governments, more market-oriented economies, and so towards more cooperative and positive-sum relations among states.11 The creation of the World Trade Organization in 1996 is just one, albeit particularly important, sign of these fundamentally hopeful developments. Yet much has also gone wrong. During the 1990s, and particularly during the Asian financial crisis of 1997–98, I became concerned that the liberalization of the 1980s and 1990s had brought forth a monster: a financial sector able to devour economies from within. I expressed those concerns in columns for the Financial Times written in response. This suspicion has hardened into something close to a certainty since 2007.

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If the financial and monetary authorities managed to sustain the pegged exchange rate, despite the depression, adjustment would then occur via falling nominal wages and prices (what the Eurozone calls ‘internal devaluation’), emigration and a write-down of the bad debt of insolvent banks, non-financial companies, households and possibly even the government. In time, with competitiveness restored and debt restructured, the economy would recover. This used to happen in the nineteenth century. It has happened, more recently, in small open economies, such as Hong Kong after the Asian financial crisis and the Baltic states after the crises that began in in 2007. This is, in effect, the old gold-standard mechanism. If, however, the authorities let the peg go, the adjustment would be accompanied by a depreciation of the nominal exchange rate. That would obviate debt deflation and the need to cut nominal wages and prices.

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The latter have suffered huge financial crises, big recessions, and correspondingly large rises in fiscal deficits and debt. This is the sort of picture we used to see in emerging and developing countries: one crisis came on the heels of another, notably the Latin American debt crisis of the 1980s, the ‘Tequila crisis’ in Mexico and then other Latin American countries in the mid-1990s, the Asian financial crisis of 1997–98, and the crises in Russia (1998), Brazil (1998–99) and Argentina (2000–01). But emerging countries suffered far fewer banking crises in the 2000s than in the 1980s and 1990s, largely because few had experienced big credit booms in the earlier 2000s. That left them in a good position to expand domestic credit in response to the crises of 2008 and 2009.

13 Bankers: The Wall Street Takeover and the Next Financial Meltdown
by Simon Johnson and James Kwak
Published 29 Mar 2010

In this situation, borrowing in U.S. dollars only increased the vulnerability—fears that a country is in trouble can become self-fulfilling as foreign bankers and bondholders scramble to pull their money out first, triggering the defaults that they were afraid of. For the first nine months of 1997, the Korean economy grew at an impressive rate of around 6 percent.14 In July, however, the “Asian financial crisis” broke out in Thailand as a crisis of confidence caused a collapse in the local currency, the baht. Overleveraged companies saw their debts double practically overnight (because their debts were in foreign currencies, the amount they owed doubled when the value of the Thai baht fell by half) and were forced to default, causing mass bankruptcies and layoffs.

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Peter Orszag, Clinton economic adviser and director of Rubin’s Hamilton Project, became head of the Office of Management and Budget; Gary Gensler, treasury undersecretary for domestic finance under Summers (and former Goldman partner), became head of the CFTC; Mary Schapiro, first head of the CFTC under Clinton and later head of the Financial Industry Regulatory Authority, the financial industry’s chief self-regulatory body, became head of the SEC; Neal Wolin, treasury deputy counsel and general counsel under Rubin and Summers, became deputy treasury secretary; Michael Barr, special assistant and deputy assistant secretary in the Rubin Treasury, became assistant secretary for financial institutions; Jason Furman, director of the Hamilton Project after Orszag, became deputy director of the NEC; and David Lipton, treasury undersecretary for international affairs during the Asian financial crisis and later Citigroup executive, also became one of Summers’s deputies at the NEC. Even President Obama’s chief of staff, Rahm Emanuel, had a similar background, having worked both as a Clinton adviser and as an investment banker at Wasserstein Perella. Geithner’s counselors as treasury secretary included Lee Sachs from the Clinton Treasury (and most recently a New York hedge fund) and Gene Sperling, Rubin’s successor as director of the NEC (and most recently a highly paid adviser to a Goldman Sachs philanthropic project).

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Based on total assets belonging to firms in the same chaebol, Hanbo was number 14 in 1995, up from number 28 in 1994. 10. See Donald Kirk, Korean Crisis: Unraveling of the Miracle in the IMF Era (New York: Palgrave, 2001), chapter 8. 11. See Stephan Haggard, The Political Economy of the Asian Financial Crisis (Washington: Peterson Institute for International Economics, 2000), 56–57. 12. Sung Wook Joh, “Korean Corporate Governance and Firm Performance” (working paper, 12th NBER seminar on East Asian Economics, 2001). 13. Joh, “Corporate Governance and Firm Profitability,” supra note 4. See also Jae-Seung Baek, Jun-Koo Kang, and Kyung Suh Park, “Corporate Governance and Firm Value: Evidence from the Korean Financial Crisis,” Journal of Financial Economics 71 (2004): 265–313. 14.

Super Continent: The Logic of Eurasian Integration
by Kent E. Calder
Published 28 Apr 2019

Normalized international ties with Iran, a traditional friend of India, could also help meet India’s rapidly increasing energy needs, if ethnic tensions in Balochistan or linkages to the Saudi-Iranian rivalries do not complicate that equation.42 The Lehman Shock: Financial Crisis in the West, the Rise of China, and the Eurasian Crossover Point The emergence of a Grand Chessboard across Eurasia, characterized by deepening yet volatile interdependence, was laid by the two critical junctures outlined above— China’s Four Modernizations and the collapse of the Soviet 62 chapter 3 Union. Although these junctures set the basic trajectory, through the historic transformations in continental political-economic structure that they provoked, the fateful long-term global implications remained muted for more than a decade. China, which emerged only minimally affected by the Asian financial crisis of the 1990s due to its extensive capital controls, continued to rise gradually in economic terms following the crisis, powered by heavy and rising exports to the United States. The pace of China’s ascent, however, was slower than during the 1980s and early 1990s. Meanwhile, the US and Europe also grew steadily, powered first by the dot-com boom of the late 1990s, and later by the steady housing construction of the early 2000s, as well as the expansion of government spending entailed by the Afghanistan and Iraq conflicts.

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Meanwhile, the US and Europe also grew steadily, powered first by the dot-com boom of the late 1990s, and later by the steady housing construction of the early 2000s, as well as the expansion of government spending entailed by the Afghanistan and Iraq conflicts. Chinese growth was much more dependent on the US market than it had been before the early 1990s, although declining slowly from its Asian financial crisis peak. Quietly, however, the seeds of major change in the economic trajectories of the United States and China, major protagonists of the Crossover Points, were being laid. America’s government debt, fueled by post-9/11 spending on two ongoing conflicts, was rising.43 Increased welfare spending, inspired demographically by the retirement of the Baby Boomer generation, was compounding the fiscal challenge.

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Japan, however, faces rising long-term competition for Gulf supplies, not only from China, but also from Korea and the Association of Southeast Asian Nations (ASEAN). Those three actors take most of the flow eastward from the Gulf that does not go to Japan. Asia’s overall share of Persian Gulf exports, which is close to twice what any other region of the world procures, has risen considerably since the Asian financial crisis of 1997–1998 —from 50 percent in the depths of the crisis to over 70 percent two decades later.19 Asia’s share of Gulf energy exports fell, to be sure, during the crisis itself, dipping slightly from 56 percent of regional exports in 1996 to less than 52 percent by 1998 –1999. Yet Asia’s share rebounded thereafter, as local economies began to recover, exceeding 60 percent of the Persian Gulf ’s total exports by 2003.

The New Ruthless Economy: Work & Power in the Digital Age
by Simon Head
Published 14 Aug 2003

But it has been globalization defined as a sharpening of international competition that is most often seen as a threat to U.S. jobs and wages, and so as a leading cause of inequality in the United States. In the mid-1990s the Asian tiger economies such as South Korea and Indonesia displaced Germany and Japan as the United States' global nemesis, threatening U.S. jobs and incomes. But then the Asian financial crisis of 1998-1999 exposed major flaws in the Asian tiger economies, and these economies also faded as agents of competitive globalization.8 However, even before the Asian financial crisis cut the ground from under competitive globalization, many economists had 3 4 THE NEW RUTHLESS ECONOMY concluded that this variant of globalization could not account for the stagnation of U.S. wages and the growth of inequality in the United States.9 Competitive globalization is overwhelmingly a phenomenon of manufacturing, with U.S. workers supposedly losing jobs and earnings to makers of cheap imports in the developing world, or to multinational corporations relocating their plants overseas.

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With the coming retirement and aging of the baby boom generation certain to strain existing programs such as Social Security and Medicare, the use of the tax system to support the working middle class is likely to run up against the fiscal buffers sooner rather than later—and particularly if the slowdown of 2001-02 portends a period of slower growth for the U.S. economy, with lower tax revenues. Another drawback of failing to identify and remedy the causes of inequality is that the opportunity to do so is left open to those advocating policies that are damaging and ill conceived. Before the Asian financial crisis put paid to it in the fall of 1998, there was, for example, a theory of "globalization" that looked beyond the American shores for the causes of inequality within the United States. With the improbable duo of Pat Buchanan and Lester Thurow as its leading protagonists, this version of globalization had the American middle class diminished by the emergence of new industrial economies in the Third World.23 Because this theory had the potential to feed protectionist sentiment in Congress and among the voting public, the then-MIT economist Paul Krugman wrote a series of furious polemical essays, published in 1997 under the tide "Pop Internationalism," exposing the muddled economics of the new globalism.24 Krugman 183 184 THE NEW RUTHLESS ECONOMY won the technical argument, but it was the Asian financial crisis that really showed Buchanan and Thurow's Third World economies to have feet of clay.

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With the improbable duo of Pat Buchanan and Lester Thurow as its leading protagonists, this version of globalization had the American middle class diminished by the emergence of new industrial economies in the Third World.23 Because this theory had the potential to feed protectionist sentiment in Congress and among the voting public, the then-MIT economist Paul Krugman wrote a series of furious polemical essays, published in 1997 under the tide "Pop Internationalism," exposing the muddled economics of the new globalism.24 Krugman 183 184 THE NEW RUTHLESS ECONOMY won the technical argument, but it was the Asian financial crisis that really showed Buchanan and Thurow's Third World economies to have feet of clay. The protectionist virus has inhabited the American polity since its birth, always available to a public suffering through hard times. But public opinion is the indispensable catalyst of beneficial change, as the politics of health care demonstrate.

Zero-Sum Future: American Power in an Age of Anxiety
by Gideon Rachman
Published 1 Feb 2011

When the United States and Europe were hit by their own financial crises in 2008, it was well noted in Asia that the policies pursued seemed to be the exact opposite of those urged on Asia a decade earlier—interest rates were slashed, banks were bailed out, governments indulged in massive deficit spending. A second major consequence of the Asian financial crisis was that it encouraged countries in the region to build up huge foreign reserves to give themselves defenses against future waves of speculation. By 2008, when the global financial crisis hit, China’s reserves alone were almost $2 trillion. Cash piles of that sort gave Asian policy makers a huge boost in confidence when dealing with their Western counterparts. Finally, the Asian financial crisis hastened a transfer of power within the Asian continent itself. The countries that were affected worst were Thailand, Indonesia, and South Korea, and the fallout extended to other Southeast Asian tigers such as Singapore and Malaysia.

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The years of rapid growth had gone, but Japan remained a wealthy and orderly country, the second-largest economy in the world throughout the period, a title only ceded to China in 2010. As America’s closest Asian ally, Japan was comfortable with the “unipolar moment.” And, as a major exporting power, Japan had little reason to question the merits of globalization. The Asian financial crisis of 1997–98 gave some of Japan’s neighbors much more reason to ask fundamental questions about how the international capitalist system was working. In a sequence of frightening events that prefigured the global financial crisis of 2008, a series of Asian economies were hit by capital flight, collapsing currencies, defaulting loans, folding businesses, and, finally, catastrophic-sounding collapses in economic output.

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The first part of the Asian story had been about the rise of Japan in the postwar era. Then came the first Asian tigers—South Korea, Taiwan, and Singapore. By the time I moved to Bangkok in 1992, the action had shifted to Southeast Asia. Thailand for a time was the fastest growing economy in the world. Growth did return to Thailand and Southeast Asia, after the Asian financial crisis, but the world’s attention had moved on. By 1999, it was clear that the really world-shaking developments were taking place in China and India. As the citizen of a Southeast Asian nation, Kishore Mahbubani could have regarded this as a worrying development. Instead he chose to rejoice in the rise of Asia as a continent.

Getting Back to Full Employment: A Better Bargain for Working People
by Dean Baker and Jared Bernstein
Published 14 Nov 2013

The world economy has never fit this textbook story very well, but there were periods, such as the early and mid-1990s, when capital flowed from rich countries to developing countries. The United States in these years ran a trade deficit, but a relatively modest one. This situation changed with the onset of the East Asian financial crisis of 1997, when investors pulled money not only out of East Asia but from the developing world as a whole. The dollar soared in value against the currencies of the countries in the region, partly because the countries needed to export more to repay money borrowed to get through the crisis, but partly because they wanted to accumulate massive amounts of foreign exchange to protect themselves against future crises.

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This swamps any plausible increase in productivity even with a very effective program of improved education and infrastructure. The drop in the dollar from its peak in the last decade has brought the non-oil trade deficit almost down to where it was before the run-up in the dollar in the late 1990s.[40] In 1996, before the East Asian financial crisis sent the dollar soaring, the non-oil deficit was less than 0.3 percent of GDP. It peaked at 3.7 percent of GDP in 2004, three years after the peak of the dollar, and had fallen back to 0.8 percent of GDP in 2012, following the dollar back to its former level. But counting oil, for which the United States paid far more in 2012 than it did in 1997, the trade deficit is still large.

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While there are many policies, such as improving education and infrastructure, that will increase the economy’s productivity, even in a best-case scenario these strategies can have only a marginal impact on the trade balance in the near term. The trade deficit was relatively modest until the late 1990s, when the East Asian financial crisis led to a run-up in the value of the dollar. While the dollar has since reversed much of this gain, it needs to fall still further. Lowering the value of the dollar is not a difficult task economically; the problem is political. Powerful domestic interest groups benefit from an overvalued dollar, and getting it down to a level consistent with more balanced trade will mean overcoming the opposition of these special interests

Meltdown: How Greed and Corruption Shattered Our Financial System and How We Can Recover
by Katrina Vanden Heuvel and William Greider
Published 9 Jan 2009

. … Naomi Klein: As Doug Henwood said, crises are not new, and we may be in uncharted territory but we have experienced these bursting bubbles before. I want to talk about two recent crises that have something to teach us. One of them is the Asian financial crisis in 1997–98, and the other is the Argentina economic meltdown in December 2001. In The Shock Doctrine, I have a chapter about the Asian financial crisis. It’s called “Let it Burn,” and the reason why it’s called that is because the very same banks that have been so anxious to get bailouts from U.S. taxpayers at the time were saying that what Asia needed—this is a quote—“what Asia needs is more pain.”

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It would be better if we got it right the first time, but that is expecting too much of this president and his administration. View from Asia WA L D E N B E L L O September 24, 2008 Manila Many Asians absorb what is happening in Wall Street with a combination of déjà vu, skepticism and “I-told-you-so.” For many, the Wall Street crisis is a replay, though on a much larger scale, of the 1997 Asian financial crisis, which brought down the red-hot “tiger economies” of the East. The shocking absence of Wall Street regulation brings back awful memories of the elimination of capital controls by East Asian governments, which were under pressure from the International Monetary Fund and the U.S. Treasury Department.

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Because, of course, Citibank, Goldman, Morgan Stanley, went into Asia after the crisis reached bottom and bought up the crown jewels of the Asian tiger economies. What I want to read you from the book is something Alan Greenspan said at the time. He said that what he thought was being witnessed with the Asian financial crisis was “a very dramatic event towards a consensus of the type of market system which we have in this country,” this country being America. In other words, Greenspan thought that the crisis was a lesson being taught to the Asian tigers for daring to protect their national industry. And, of course, the I.M.F. imposed structural adjustment programs that forced them to lower those barriers, which allowed the very Wall Street firms at the center of this crisis to go in and engage in what the New York Times Magazine at the time called “the world’s biggest going out of business sale.”

The End of the Free Market: Who Wins the War Between States and Corporations?
by Ian Bremmer
Published 12 May 2010

Suharto supported the creation of state-owned banking, power, utility, and telecommunications companies and a complex network of politically connected private companies in timber, oil, gas, mining, textiles, cigarettes, and agriculture. Even today, many of the country’s best-connected businessmen use close personal ties with powerful political officials to block the market reforms that would burden them with genuine competition. In addition, the 1997 Asian financial crisis forced even greater state intervention after the government had to bail out most of the country’s largest banks. A decade later, the state still owns majority or large minority shares in many of them. Current President Susilo Bambang Yudhoyono has worked to ensure that his economic team includes committed free-market-minded professionals, and he has risked public anger by reducing government subsidies for fuel and sugar.

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The national oil and gas company Petronas owns all of Malaysia’s natural hydrocarbon resources and manages them through production-sharing contracts with foreign investors. Petronas has investments in more than thirty countries, from Argentina to Algeria to Mozambique to Uzbekistan to Australia. During the Asian financial crisis, Petronas acted on government instructions to bail out several state-owned or state-linked companies, one of which reportedly belonged to former Prime Minister Mahathir Mohammad’s son Mirzan Mahathir. Khazanah Nasional, Malaysia’s sovereign wealth fund, owns a substantial stake in the CIMB (Commercial International Merchant Bankers) Group of banks and other large companies.

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No, because governments use the tools provided by state capitalism to accomplish political goals, not to serve the public welfare. This system allows them to minimize the political risks they face by maximizing their control over activities that generate substantial amounts of wealth. That’s not a formula for producing more efficient or more equitable economic performance. China emerged strong from the Asian financial crisis of the late 1990s at least in part because its leadership supplemented stimulus spending with measures designed to further liberalize the Chinese economy—especially by privatizing urban housing ownership, turning a government benefit into a market commodity. The result was increased corporate investment and a spike in consumer spending.

Crashed: How a Decade of Financial Crises Changed the World
by Adam Tooze
Published 31 Jul 2018

On “Black Tuesday,” October 11, 1994, in one single session of frantic currency trading, the ruble lost more than a quarter of its value against the dollar. It was not until 1995 that Russia’s economy stabilized. A modest revival fueled by large imports of foreign capital enabled Russia to catch its breath, only to be thrown off balance yet again by the Asian financial crisis of 1997.3 Struggling to hold the exchange rate, the Russian central bank introduced exchange controls and begged an emergency IMF loan.4 But in August 1998 Yeltsin’s government lost its grip. On August 17 Moscow devalued and declared a ninety-day moratorium on the payment of foreign debts owed by Russian banks.

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But they also threw a shadow of doubt over those central banks that had not been so favored. The shutdown in the money market was affecting the entire financial system. Where were major emerging market central banks to get their dollars from? For a nation like South Korea to have approached the IMF was out of the question given live memories of the Asian financial crisis of 1997–1998.25 So on October 29 the Fed’s favor was extended to four key emerging market central banks: Brazil, Korea, Mexico and Singapore.26 All told, fourteen central banks would be included in the program.27 The total amount outstanding on the network of dollar swap lines reached its peak in December 2008 at $580 billion.

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Ten years on from the emerging market debt crises of 1997–1998, what was impressive about 2008 was the policy response across the emerging economies. At the UN General Assembly meeting in New York in September 2008 it was the Latin Americans who were the most vociferous. But in responding to the crisis, it was “emerging Asia” that set the pace. I In the summer of 1997 the Asian financial crisis had started in Thailand and had spread from there across Southeast Asia to Indonesia, Malaysia and Singapore, before ricocheting two thousand miles to the northeast to unleash havoc in South Korea. After a year of severe recession, by 2000 Thailand, Indonesia, Malaysia and Korea were all growing again.

In FED We Trust: Ben Bernanke's War on the Great Panic
by David Wessel
Published 3 Aug 2009

As Lehman’s problems deepened, the Treasury secretary’s style occasionally brought him into conflict with Geithner, his partner in managing the crisis. Geithner’s approach — at least when he was at the New York Fed — was more disciplined, calmer, and politically savvy. A veteran of the U.S. Treasury’s management of the Asian financial crisis of the 1990s, Geithner had learned at the side of Clinton’s agile Treasury secretary, Bob Rubin. Rubin placed a high premium on what his then-deputy Lawrence Summers called “preserving optionality” — deferring final decisions until they had to be made and avoiding any public statement that could limit his political wiggle room.

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But even after that bubble burst, and a recession ensued, the Greenspan Fed managed to get the economy going again by aggressively cutting interest rates — and the United States avoided the misery that followed the bursting of a real estate and stock market bubble in Japan. Bush was right. Greenspan was a rock star — at least at that moment. He had steered the U.S. economy around the Asian financial crisis in 1998, two wars with Iraq, and the September 11 attacks. To economists, bond traders, and businessmen, he was a hero. “No one has yet credited Alan Greenspan with the fall of the Soviet Union or the rise of the Boston Red Sox, although both may come in time as the legend grows,” Princeton’s Alan Blinder, a former Fed vice chairman, and Ricardo Reis wrote in a 2005 evaluation of Greenspan that pronounced him “amazingly successful.”

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Derivatives allowed investors to hedge their bets, making them comfortable with positions they might once have shunned. Hedge funds and other huge pools of capital reduced volatility by pouncing when markets push an asset price even slightly out of line. That was all to the good, but recalling the 1987 stock market crash and the 1998 Asian financial crisis, Summers observed presciently: “Some of the same innovations that contribute to risk spreading in normal times can become sources of instability following shocks to the system as large-scale liquidations take place.” (Translation: Everyone was counting on always being able to quickly sell any newfangled financial instrument.)

China's Great Wall of Debt: Shadow Banks, Ghost Cities, Massive Loans, and the End of the Chinese Miracle
by Dinny McMahon
Published 13 Mar 2018

During most booms, people are not only blind to the risks but they devise explanations for why risks don’t even exist. People assumed the subprime mortgage crisis couldn’t happen, because the United States had never experienced a nationwide decline in housing prices. During the dot-com boom, the delusion was that the new economy had done away with the business cycle. Before the Asian financial crisis, it was assumed that Asian values had created a new, more sustainable type of economic growth. In China, people’s faith in the security of their investments isn’t based on some pseudoscientific theory that somehow things are different this time; their confidence is rooted in the knowledge that someone will bail them out should the need arise.

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Throughout history, construction of the tallest skyscraper in the world has been synonymous with the imminent onset of economic crises, an association that goes back to an 1873 financial crisis, when the completion of the 142-foot-tall Equitable Life Building in New York—the tallest building of its day—coincided with the five-year Long Depression, best recalled for wiping out dozens of U.S. railway companies. Since then, every major crisis has had its monument: New York’s Empire State and Chrysler Buildings were well under way when the Great Depression hit, in 1929. The Petronas Towers in Kuala Lumpur were finished in 1997, just as the Asian financial crisis ravaged East Asia. And the Burj Khalifa—which currently stands as the world’s tallest building—was a work in progress when, in 2009, Dubai’s government was forced to turn to a neighboring emirate for a bailout. China isn’t building the world’s tallest building. That honor goes to Saudi Arabia.

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Even Shenyang, which has neither the financial sector nor the white-shoe law firms that usually flock to prestige office buildings, isn’t the sort of city that typically builds supertall skyscrapers. It’s difficult to say with great certainty why skyscraper construction works so well as an early-warning system for economic crises. The Long Depression, Great Depression, Asian financial crisis, and Dubai’s debt crisis have very little in common, except that they all followed long booms. Like the proverbial canary in the coal mine, skyscrapers seem to signal the presence of two potentially toxic elements in the economic ecosystem that, at the tail end of a boom, are typically in ample supply, namely, hubris and an excess of money.

The Great Surge: The Ascent of the Developing World
by Steven Radelet
Published 10 Nov 2015

Researchers at the World Bank estimate that upward of 150 million people have been lifted above the extreme poverty line because of social protection and safety net programs.9 Indonesia provides a good example of these forces. Today it is the world’s fourth most populous country, with 250 million people. Poverty began to fall in the 1970s, and continued to do so through the mid-1990s until the Asian financial crisis erupted in 1997. At that point, the number of extreme poor rose for about three years, but it has been falling ever since. Like so many other countries, Indonesia’s poverty reduction was ignited in the rural areas. The government introduced deliberate strategies to support agriculture, including distributing new varieties of seeds and fertilizers as part of the Green Revolution, ensuring favorable prices for small rice farmers, and building an extensive network of rural roads to connect markets.

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In the 1950s and 1960s, the Soviet Union was seen as an economic juggernaut that was sure to outperform the West, just as China is seen today. During my years in Indonesia, I regularly heard the story that people wanted development, and they didn’t care much about democracy. But when the Asian financial crisis erupted in 1997, citizens seized the opportunity to rise up, at great personal risk, and throw out Suharto. It turned out, contrary to the old argument, that Indonesians cared a lot about personal freedoms and holding their leaders accountable. They had just been afraid to say so. They didn’t see a trade-off: they wanted both democracy and development.

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The government, and a few select cronies, maintained strict control over oil, gas, gold, tin, timber, and other mineral resources, but it created more extensive opportunities in agriculture and manufacturing. Suharto’s government followed the lead of South Korea, Taiwan, Thailand, and Singapore by stimulating economic growth while imposing firm political control. It was only in the late 1990s, with the threat of Communism (and unquestioned US support) waning and the Asian financial crisis exploding, that Suharto fell and Indonesian democracy took root. Indonesia is just one example. The details of the story lines differ across other developing countries, but the themes are similar. Most of today’s developing countries were under some kind of colonial rule until a few decades ago, and had been for a century or more.

Firefighting
by Ben S. Bernanke , Timothy F. Geithner and Henry M. Paulson, Jr.
Published 16 Apr 2019

Central bank target interest rates for each country (month-end) Source: Bloomberg Finance L.P. U.S. STRATEGY The IMF provided substantial aid to countries affected by the crisis, outpacing its response to the Asian financial crisis in 1997. Increase in IMF lending commitments from start of Asian and global financial crises Sources: International Monetary Fund; authors’ calculations based on Lowery et al. (forthcoming) Note: Start date for new IMF lending for the Asian financial crisis (AFC) is July 1997 and for the global financial crisis (GFC) is Sept. 2008. SDR data were converted to U.S. dollars at $1.355820 per SDR (the rate on July 31, 1997) for the AFC and $1.557220 per SDR (the rate on Sept. 30, 2008) for the GFC.

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adjustable-rate mortgages, 17 AIG and acceleration of crisis, 22 and arsenal for dealing with future crises, 119 and expansion of crisis, 75, 157 and instability of financial system, 84 and Lehman failure, 61–62, 64, 66, 71 management firings, 73 and onset of financial crisis, 33 and policy responses to crisis, 97, 163, 179 and politics of crisis management, 9 and post-crisis reforms, 115, 116 rescue of, 71–75 and TARP, 86, 92–95, 101 and taxpayer profit from rescue, 208 Ally Bank, 102 Alt-A mortgages, 37 American Economic Review, 18 American Recovery and Reinvestment Act, 104, 105, 124, 163, 186 Archstone-Smith, 40 Asian financial crisis, 198 Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility (AMLF), 77, 163, 168, 208, 217n asset-backed securities, 21, 150, 168, 169 Asset Guarantee Program (AGP), 178, 217n asset purchases, 87. See also Troubled Assets Relief Program (TARP) auto industry, 92, 95, 97, 103, 105, 107–8 backstops and arsenal for dealing with future crises, 120–21 and Bear Stearns rescue, 50 and causes of financial crisis, 4–5 and Fannie Mae/Freddie Mac conservatorship, 57 and Lehman failure, 67 and onset of financial crisis, 2 and policy responses to crisis, 170–73 and TARP, 88 Bagehot, Walter, 34, 36, 39, 48–49, 119 Bair, Sheila, 81, 88, 90–91 Baldwin, James, 7 bank holding companies, 78, 88, 157, 173, 209 Bank of America and causes of financial crisis, 4 and Countrywide sale, 40 and expansion of crisis, 157 and federal asset guarantees, 178 government investment in, 176, 177 and Lehman failure, 66–67 and onset of financial crisis, 155 and policy responses to crisis, 97 and post-crisis reforms, 115 private capital raised during crisis, 175, 181 and stress tests, 180 and TARP, 95, 96 and taxpayer profit from rescue, 208 Bank of England, 35, 89, 155, 196, 197 Bank of Japan, 196 Bank of New York Mellon (BoNY), 39–40, 175, 176, 181 bankruptcies, 69, 73, 74, 95.

Big Debt Crises
by Ray Dalio
Published 9 Sep 2018

Taken together, these bubble pressures and Indonesia’s dependence on foreign financing, combined with the weakened conditions of related countries, created an unsustainable situation. The Depression Phase Eventually the dynamic turned, producing a self-reinforcing bust and a balance of payments/currency crisis, which ran from 1997 to 1998. High debt levels left Indonesia vulnerable to a shock—which came in the form of the 1997 Asian financial crisis. Indonesia suffered a fall in foreign funding (with capital inflows falling by 13% of GDP), leading to a tightening (policy makers hiked short rates by 43%) and a meaningful decline in the currency (real FX fell by 110%)—which coincided with self-reinforcing declines in GDP (falling by 14%), and in stock prices (falling by 89%).

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Taken together, these bubble pressures and Korea’s dependence on foreign financing, combined with the weakened conditions of related countries, created an unsustainable situation. The Depression Phase Eventually the dynamic turned, producing a self-reinforcing bust and a balance of payments/currency crisis, which ran from 1997 to 1998. At its pre-crisis peak, debt service reached 42% of GDP, making Korea vulnerable to a shock—which came in the form of the 1997 Asian financial crisis. Korea suffered a fall in foreign funding (with capital inflows falling by 9% of GDP), leading to a tightening (policy makers hiked short rates by 14%) and a meaningful decline in the currency (real FX fell to -50%)—which coincided with self-reinforcing declines in GDP (falling by 8%), in stock prices (falling by 75%) and in home prices (falling by 13%).

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The Depression Phase Eventually the dynamic turned, producing a self-reinforcing bust and a balance of payments/currency crisis, which ran from 1997 to 1998. At its pre-crisis peak, debt service reached 45% of GDP, making Malaysia vulnerable to a shock—which came in the form of the 1997 Asian financial crisis. Malaysia suffered a fall in foreign funding (with capital inflows falling by 5% of GDP), leading to a tightening (policy makers hiked short rates by 4%) and a meaningful decline in the currency (real FX fell by 24%)—which coincided with self-reinforcing declines in GDP (falling by 9%), and in stock prices (falling by 83%).

The Long Game: China's Grand Strategy to Displace American Order
by Rush Doshi
Published 24 Jun 2021

Zhang Yunling writes that joining multilateral organizations allowed China to “demonstrate its benign intentions by exercising self-restraint and displaying a willingness to be restrained” and, crucially, that “this idea has led directly to actions such as not devaluing the Renminbi during the 1997 Asian Financial Crisis, joining the TAC-SEA [an ASEAN document], and largely letting ASEAN states dictate the norms regarding the South China Sea dispute.”20 Similarly, a book from the Central Party School Press summarizing China’s foreign policy strategy indicates China pursued a policy of self-constraint (自我约束) and “accepting constraint” from others in these bodies (接受约束) to reassure neighbors and confirms that multilateral concessions—like signing an ASEAN South China Sea Code of Conduct—were part of this strategy.21 In another article, Zhang Yunling makes clear that this “good neighbor policy” was part of a grand strategy to blunt American encirclement: China has pursued a strategy of maintaining amicable relationships with neighbors (mulin youhao, wending zhoubian) to hedge against downturns in Sino-U.S. relations.

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Chinese diplomats also worked to wield the organization to inoculate China against American power (especially economic sanctions), all while simultaneously using the platform APEC provided to reassure China’s neighbors that Beijing was not a threat. As a partial consequence, APEC has been ineffective in promoting trade liberalization and generally irrelevant during the Asian Financial Crisis and the 2008 Global Financial Crisis. Alternative Explanations What might explain China’s participation in APEC? China does not appear to have been a sincere participant in the organization. APEC was not particularly “thick.” It had only a weak secretariat, avoided trade negotiations, operated on consensus rather than a more efficient set of rules for decision-making, had scant monitoring mechanisms, and did not have binding decisions—and China worked against improvements on each of these items, sometimes standing alone.

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When China reduced its import tariff rate from 36 percent to 23 percent in the 1990s, Wang claims that “China chose to declare this initiative in the [APEC] Osaka meeting to demonstrate China’s determination to play a role in Asia and to integrate into the international community” and show that China has a “constructive attitude.”76 During the Asian Financial Crisis, President Jiang made speeches at APEC highlighting China’s decisions to further cut tariffs, to not devalue its currency, and to provide financial assistance to Asian countries in order to demonstrate, in his words, that “the Chinese government has assumed a highly responsible attitude” even though “China has paid a high price” for these decisions.77 These policy decisions, especially the decision not to devalue, cost roughly $10 billion but gained China considerable support in Asia.

Foolproof: Why Safety Can Be Dangerous and How Danger Makes Us Safe
by Greg Ip
Published 12 Oct 2015

I asked a Fed governor that fall: should the Fed repeatedly intervene when the market was in trouble? Well, I remember her answering, it’s a central bank’s duty to act when the financial system is threatened. In the following decades, I saw a fiscal crisis convulse interest rates and the dollar in my native Canada, an exchange rate crisis erupt in Europe in 1992, the Asian financial crisis, the near failure of Long-Term Capital Management in 1998, and then the rise and fall of the technology bubble. By 2007, I was looking for the next crisis everywhere: in home prices, leveraged buyouts, the trade deficit. I was not, however, looking for catastrophe. I had by now developed a deep respect for the authorities’ ability to counteract mayhem; I assumed that the economy, though it might get bumped around a bit, would come out okay.

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As the coming chapters will show, the most important factor was the sense of safety that resulted from years of successfully fighting crisis and recession. The twenty-five years before the global financial crisis were unusually peaceful for the economy; recessions were rare and mild, inflation was low and stable, and periodic financial crises, whether the stock market crash of 1987 or the Asian financial crisis of 1997, were contained by the global fire brigades—the Fed, the Treasury, and the International Monetary Fund. Economists called this era the “Great Moderation,” and credited it to changes in how businesses operated—using fewer inventories, for example—and a more disciplined, more nimble Federal Reserve, able to snuff out both inflation and recession.

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The Brady bond program was a crucial step back toward health for America’s big banks. It also gave birth to the emerging market bond industry. As a result, emerging economies would henceforth borrow not from banks, with the attendant risks to banks’ solvency, but from the capital markets. This didn’t eliminate sovereign debt crises such as the Asian financial crisis, but it made them less likely to be a threat to America’s financial system; American banks’ exposure to Mexico in 1994, and East Asia in 1997, was far smaller than in 1982. A similar feat was accomplished with securitization. Banks had always been able to sell individual loans, usually to other banks.

Age of Greed: The Triumph of Finance and the Decline of America, 1970 to the Present
by Jeff Madrick
Published 11 Jun 2012

A large body of American opinion supported this development, and was mostly uncriticized by mainstream economists and the media. The acquiescence to ideology occurred even when markets lurched from financial crisis to crisis under Greenspan’s tenure—a stock market crash in 1987, a thrifts crisis in 1989, the collapse of junk bonds by 1990, a derivatives crisis in 1994, the Mexican peso collapse of 1994, the Asian financial crisis of 1997, the failure of Long-Term Capital Management and the Russian default on debt in 1998, and the severe stock market crash of 2000. Speculative binges enabled by both stimulative monetary policy and regulatory neglect preceded all these collapses. Levels of speculation rose to ever more dangerous heights each time.

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When Russia, its citizens increasingly refusing to pay taxes, defaulted in 1998, Soros’s funds (by then he had opened more funds) lost up to $2 billion in direct Russian investments and another $2 billion on the Russian ruble. The Russian investment was driven more by Soros’s political views than by his financial acumen. The year before, however, Soros made hundreds of millions of dollars in the Asian financial crisis by selling Asian currencies in much the same way he sold the British pound. The Asian currencies had pegged their levels to the U.S. dollar, and held the peg far too long. The nations attracted an enormous amount of capital because they paid high interest rates, but ultimately the lid would burst, Soros felt.

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Secrecy was at the core of Meriwether’s strategies; the price advantages were small, and if competitors knew them, the advantages disappeared quickly. Many were trying to find out what LTCM was doing and copying it outright, exactly as some hedge fund managers and others on Wall Street tried to emulate Soros and Paul Tudor Jones. In 1997, the financial devastation created by the Asian financial crisis also took its toll and LTCM made only 17 percent on its capital that year, its historical relationships no longer holding. In 1997, by contrast, the S&P 500 was up 31 percent as high-technology stocks were taking off. In early 1998, LTCM decided to give a large portion of its capital back to its original investors because profitable opportunities were so hard to find.

The Making of Global Capitalism
by Leo Panitch and Sam Gindin
Published 8 Oct 2012

But both the grand principles and the local clientelism and patronage were totally embedded in local notables and balances of power.”83 This was the “crony capitalism” that the IMF would demand be extirpated in exchange for its emergency loan packages after the Asian financial crisis erupted in 1997. And when the contagion from that crisis spread to Russia the following year, it was the IMF’s very public despair at not being able to do anything about this “crony capitalism” in the Russian case that led it to pull back from its emergency lending, sparking the Russian government’s default in August 1998 on its foreign debt (which at $61 billion represented 17 percent of Russian GDP). Yet until then the pretence had been maintained. In August 1997, just as the Asian financial crisis reared its head and exactly a year before the Russian default, the IMF executive board proudly affirmed that its staff had “assisted its member countries in creating systems that limit the scope . . . for undesirable preferential treatment of individuals and organizations.”84 However hard this was to credit, what was true was that, in terms of the making of global capitalism—the main objective that structural adjustment was actually designed to foster—there had been real success.

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Instead, this global financial volatility left the developing countries of Asia, Africa, and Latin America increasingly dependent on the crisis-management role of the US empire, as Chapter 10 shows. In the 1990s, at the same time as the US was called upon to act as the global policeman against human rights violations by “rogue states,”48 so was it also expected to put out financial conflagrations around the world. In the wake of the 1997–98 Asian financial crisis, with the US Treasury now explicitly defining its role in terms of “failure containment” rather than “failure prevention,” the cover of Time pictured Alan Greenspan of the Federal Reserve and Robert Rubin and Lawrence Summers of the US Treasury beneath the banner “THE COMMITTEE TO SAVE THE WORLD.”49 Conjured up here was an image of the American state as a global “executive committee of the bourgeoisie” (as Marx famously called the capitalist state).

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The US Treasury now insisted, as a centerpiece of the IMF agreement, that the ceilings on foreign investment be lifted from 26 to 50 percent.49 Notably, the negotiations took place right in the midst of the country’s presidential election campaign—and all the candidates were required to assent to the conditions before the IMF would declare the rescue package was in place. Its success in this respect led the US economist Rudi Dornbusch to quip on a subsequent American television panel that “the positive side” of the Asian financial crisis was that South Korea “was now owned and operated by our Treasury.”50 The knowing chuckle he elicited from the other pundits may have had less to do with what this said about the extent of imperial power at the end of century than with what it implied about the shifting hierarchy of state apparatuses within Washington itself: after all, it used to be the State Department or Pentagon, rather than the Treasury, that could lay claim to the South Korean franchise.

The Barefoot Investor: The Only Money Guide You'll Ever Need
by Scott Pape
Published 22 Nov 2016

Over the past 128 years we've had: the First World War the Great Depression a global flu pandemic that infected 500 million people and killed 100 million people the Second World War multiple recessions … (You draw breath, and change hands .) the Korean War the Vietnam War the Gulf Wars the 1987 stock market crash the Asian financial crisis … (You change hands again .) the Tech Wreck the 9/11 terrorist attacks the Asian tsunami, which killed 230 000 people the Global Financial Crisis (GFC) Brexit and, of course, Trumpit. Sounds like a terrible time to invest, right? Well, it wasn't. Over that time, if you'd invested a single dollar — $1 — in the Aussie sharemarket, it would be worth a staggering $194 439 today.

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Here's another way to explain it: Let's say you invested $100 000 in a no-brainer index fund (that automatically buys all the companies that make up a sharemarket index, and tracks the market), and then headed off to the Thai island of Ko Pha Ngan and did nothing but drink buckets of whisky on the beach for the next 30 years. When you return, your $100 000 investment would be worth $2 351 916. On the other hand, if you'd diligently read the Wall Street Journal each morning — hired a financial advisor to pick the latest hot share funds; spent your nights stressing about the 1987 crash, the Asian Financial Crisis and the Global Financial Crisis; and basically behaved like everyone else — 30 years later you'd have … $297 415. That's a difference of $2 054 501. Bucket-boy won by doing absolutely nothing. He read the gossip pages rather than the business pages. Even better, he can now retire and earn $100 000 a year — every year — from his shares, and he'll never run out of money.

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Even better, he can now retire and earn $100 000 a year — every year — from his shares, and he'll never run out of money. Remember, I'm not plucking these figures out of the air. The Dalbar study is one of the longest running and most respected research pieces in the finance world. The study found that there were four years when investors really screwed things up: 1987 (the stock market crash) 1997 (the Asian financial crisis) 2000 (the Tech Wreck) 2008 (the Global Financial Crisis). In other words, the damage is done when people check their accounts and go ‘Sell! Sell! Sell!' the minute there's a downturn. So, is a crash coming? Yes, sooner or later. But the world will not end. Just remember … throughout history the sharemarket has never, ever failed to move higher.

Aerotropolis
by John D. Kasarda and Greg Lindsay
Published 2 Jan 2009

Air Force base named U-Tapao, and in China, near the border with Macau. Back in the United States, he was involved with airports in the Inland Empire of California, and in Fort Worth, advising H. Ross Perot, Jr. (the son of the presidential candidate). The pair abroad were never built, scuttled by the Asian financial crisis and the whims of party chairmen. The ones closer to home had better luck, sprouting new appendages from their surrounding cities and nudging Kasarda toward the aerotropolis. Back in Kinston, signs of trouble had begun to surface. In 1998, FedEx announced it would add a hub somewhere in the state.

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The Thais already had a plan on the shelf for converting a Vietnam-era American bomber base to civilian use. Given the chance to get it right this time, Kasarda spent the next six years drafting blueprints and wooing Thailand’s prime minister at the time, until the whole thing was scuttled in the chaos of the Asian financial crisis. From 1985 until 1996, Thailand’s really was the fastest-growing economy in the world, surging 9 percent annually—faster even than China or India today. Reforms had slashed tariffs and opened the door to foreign investors like Toyota, which moved there for cheap labor, followed by the Big Three.

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But a team of American architects, developers, technologists, and engineers are convinced they’ve cracked the code, creating a template for cities that are green, humane, dense, smart, and able to be cloned. Their prototype is Stan Gale’s $35 billion aerotropolis rising from the Yellow Sea: New Songdo City. Instant Cities New Songdo didn’t set out to be green. Its original purpose was one John Kasarda would have applauded: a weapon for fighting trade wars. In the aftermath of the Asian financial crisis, the International Monetary Fund handed South Korea a $58 billion bailout, with conditions. One was a command to seek foreign investment. By then, however, its manufacturing base was decamping to China—70 percent of its factories left over the next decade. Trade between the two countries didn’t exist in 1980, but twenty-five years later China would be its largest trading partner.

The Quest: Energy, Security, and the Remaking of the Modern World
by Daniel Yergin
Published 14 May 2011

“Price will hold up,” the oil minister from Kuwait said confidently after the decision was announced. “The rise is a very reasonable one.” That judgment was widely shared. An observer described market conditions as nothing less than “the alignment of OPEC’s economic stars.” But, in the heavens above, the stars were silently moving.2 “ESSENTIALLY ALL GONE”: THE ASIAN FINANCIAL CRISIS During the course of the Jakarta conference, two of the delegates to the meeting were taken to dinner by the head of the local International Monetary Fund office. He told them in no uncertain terms that the currency crisis that had begun a few months earlier was only the beginning of a far more devastating crisis—and that the Asian economic miracle was about to crash on the rocks.

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Treasury Secretary Robert Rubin called an “engulfing world crisis.” An immense rescue effort, mobilizing very large financial resources, was mounted to prevent Brazil from going down. It worked. Brazil was spared. By the spring of 1999, the panic and contagion were over.3 THE JAKARTA SYNDROME The Asian financial crisis had generated enormous economic ruin. As a result, the assumptions at the end of 1997, embodied in the Jakarta agreement, were all wrong. By implementing the Jakarta agreement, OPEC had been increasing its output—just as demand was falling. Now there was way too much oil in the world. When there was no more room in storage tanks, seagoing tankers that normally transported oil were turned instead into floating storage.

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Observers began to write about an “oil war” for market share between the two countries that had taken the lead in founding OPEC—Venezuela, now ignoring quotas; and Saudi Arabia, insisting that they be observed. That was the battle that culminated in the November 1997 Jakarta meeting and was resolved with the agreement that all exporters could produce flat out, which by now they were all more or less already doing. 12 But by then the Asian financial crisis had already begun to trigger an oil price collapse, ravaging the budgets of the oil-exporting countries. At this point, Venezuela recognized that it could no longer afford its market share strategy. In March 1998 Venezuela, Saudi Arabia, and non-OPEC Mexico met in Riyadh and worked out a set of production cutbacks for exporters, OPEC and non-OPEC alike.

The Rise of Carry: The Dangerous Consequences of Volatility Suppression and the New Financial Order of Decaying Growth and Recurring Crisis
by Tim Lee , Jamie Lee and Kevin Coldiron
Published 13 Dec 2019

Index Page numbers followed by f indicate figures; t indicate tables. anti-carry crashes, 170 anti-carry regimes, 165, 171–172, 210, 212 carry regime similarities to, 173–175 monetary perspective on, 168–170 signs of end of, 215 AQR Capital, 79 arbitrage, covered interest parity principle and, 21 Asian financial crisis, 23–25 global financial crisis compared with, 30 asset prices business cycle and, 126 carry regime and, 204 distortion of, 7 inflation of, 113–114 options and, 147 recessions and declines in, 6 assets under management (AUM), 74 by sovereign wealth funds, 75 Australia capital inflows, 40, 40f, 42 credit and net claims, 40, 40f credit growth, 40f, 41 interest rate spreads and, 41–42, 60–61 Australian dollar, 30 capital flows into, 62 returns on, 97, 97f bailouts, 197–199, 203 Bain and Company, 80 balance of payments, Turkey, 45 Bank for International Settlements (BIS), 15, 17, 22 carry portfolio position comparison with, 63, 63t on corporate use of carry strategies, 80 currency liquidity data, 62 net claims data, 41 Bank of Japan (BOJ), 26, 216 quantitative easing policies by, 31 Bank of Korea, 197 bank runs, 218 banking system, money creation by, 109 bank-run dynamics, 65 Bhattacharya, Utpal, 142 bid-ask spread, 158–159, 167 big breaks, 184 BIS.

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See Bank of Japan Brazil, 19, 39, 55n6, 65–66 current account, 31 Brazilian real, 11, 30, 66 Bretton Woods system, 218 Brownian noise, 97, 97f Bruno, Valentina, 80–81 bubble-boom economies, carry bubble conditions and, 39 business cycle carry and global, 2 carry bubbles and, 127–134 carry crashes and, 127–134 carry influence on, 57, 69 carry regime and, 125–127 money supply and, 125–126 Caballero, Ricardo, 59 call options, 146–147 Cambridge Associates, 79 capital asset pricing model, 99 Capital in the Twenty-First Century (Piketty), 219 221 222 capital inflows, Australia, 40, 40f, 42 capitalism, 195, 219, 220 carry central banks’ role in, 5–8 compensation incentives for, 70–72 corporate use of, 80–83 as cumulative advantage, 181–184 defining, 2 as flow from weak to strong, 179–181 global business cycle and, 2 hedge funds as agents of, 72–73 insidious structural aspects of, 200–205 leverage importance to, 70–72 lost opportunity to lean against, 220 as luck compounded, 184–186 monetary policy and, 3 as naturally occurring phenomenon, 88 necessary amounts of, 174 omnipresence of, 190–191 as power, 191–192 as rent-seeking, 175–177 rise of, 1 volatility, 86 carry bubbles, 6, 7 business cycle and, 127–134 credit bubbles and, 37–38, 41 credit demand and, 114 disguised, 134–140 economic indicators distorted by, 44–45 economic problems obscured by, 44 inflation and, 39 monetary conditions and, 39 nonmonetary assets and, 169 Ponzi schemes and, 140–143 as risk mispricing, 142 Turkey, 42–46 carry crashes, 6 Asian financial crisis and, 23–25 bailouts limiting losses from, 203 business cycle and, 127–134 carry trade returns and, 36 deflation and, 7, 170 deflation shock and, 121–124 in emerging economies, 201 incentive changes and, 84 inevitability of, 34–35, 108 leverage and, 96–98 liquidity and, 128 money supply and, 122–123 INDEX of 1998, 25–26 Turkey, 42–46 Turkish lira, of 2018, 45 of 2008, 30, 31 Volmageddon, 98, 161 yen melt-up and, 23–24 carry portfolios backtesting, 65–67 BIS data comparison with, 63, 63t constructing, 49–50 lessons from historical study of, 64–65 losses in, 51–56, 54f carry regime, 2 anti-carry regime similarity to, 173–175 asset prices and, 204 business cycle and, 125–127 central bank policies and, 86–89, 107, 208, 210 central bank power and, 123 central banks and collapses of, 215–216 central banks weakened by, 7 debt levels and, 168 defining, 107–108 deflation and, 113–121, 203, 210, 213 development of, 127, 134 economic growth and, 209 economic imbalances from, 201 financial market structure and, 7 fragility of, 201 monetary equilibrium and, 169 monetary growth and, 169 monetary perspective on, 168–170 money in, 108–113 nonmonetary assets and, 112, 114, 122 resource allocation and, 114–115 risk mispricing and, 134–140 S&P 500 importance to, 86–87, 87f theoretical alternative to, 166–168 vanishing point and, 116, 195, 209–210 volatility signs of ending, 214–218 carry trade.

…

See European Union euro area crisis, 113 euro-funded carry trade, 31 European Central Bank, 31, 104, 113, 136, 198, 216 European Union (EU), 198 evolution, cumulative advantage and, 188–190 exchange rate risk, 12–13 of dollar carry trade, 17 exchange rates carry strategy returns and stability of, 52 currency carry trades and, 9, 10 INDEX exchange-traded funds (ETFs), 111–112 exchange-traded notes (ETNs), 90, 92 Facebook, 185 financial assets loss of moneyness of, 215 US household holdings of, 118, 118f financial crises, volatility spikes in, 52 financial institutions, carry growth and growth of, 69 financial markets, 1 carry and structures of, 7 carry as cumulative advantage mechanism in, 183 central bank stabilization of, 5–6 desires of, 193–195 increasing complexity of, 57 financial volatility, suppression of, 1 Ford, Harrison, 184 foreign exchange markets carry trades on, 2 central banks and, 11, 13, 20 forward exchange rates, interest rates and, 10 funding currencies, 10 melt-up in, 23–24 volatility in, 215 futures VIX, 90–92 volatility bets with, 89 gamma, 149–150 selling, 152–153 for S&P 500, 154, 154f gates, 72 GDP carry regime and, 115–116 growth in, 56 profits as share of, 139 US personal net worth in relation to, 137, 138f global business cycle, carry and, 2 global capitalism, 195 global economy, carry dominance of, 69 global financial crisis of 2007–2009, 1 Asian financial crisis compared with, 30 carry bubble after, 136 credit bubbles and, 36 currency and equity carry trade correlations and, 59 225 dollar carry trade collapse during, 17 experimental monetary policies during and after, 113 government guarantees for funds during, 113 as last chance to lean against carry, 220 short-term interest rate collapse after, 62 yen currency carry trade and, 28, 29 global financial markets carry dominance of, 69 complexity of, 127 transformation of, 83–84 global monetary policy, carry effects on, 3 global volatility, 99, 101 globalization, of moral hazard, 195–200 gold bugs, 113–114 gold prices, 113 government policies, carry trade returns and, 48 Greenspan, Alan, 26 hard money, 113 Heathcote, Gilbert, 179 Hedge Fund Research (HFR), 73 hedge funds as agents of carry, 72–73 carry trading by, 73–75 compensation structure, 73 employee compensation and, 73 growth of industry, 73–74, 83, 194 leverage usage by, 73, 74 liability categories for, 72 HFR (Hedge Fund Research), 73 high-frequency trading firms (HFTs), 84 Hungarian forint, 34 IMF (International Monetary Fund), 14, 16, 198 implied volatility, 57, 90, 164, 167–168 anti-carry regime and, 171–172 realized volatility relationship to, 158 income streams, from carry trades, 2 India, 19 industrial production growth, 56 inflation alternative monies and, 211 anti-carry crashes and, 170 anti-carry regimes and, 211, 212 asset price, 113–114 226 inflation (continued) carry bubbles and, 39 interest rates and, 110–111 information ratio (IR), 49 institutional liabilities, 69–70 insurance, 34–36 interest rates Australia and spreads of, 41–42, 60–61 bailouts and, 198–199 covered interest parity principle and, 21 credit demand and, 110 currency carry returns and differentials in, 60–62 currency carry trades and, 9, 10 forward exchange rates and, 10 global financial crisis of 2007–2009 and, 62 inflation and, 110–111 in Japan, 23 profit share and, 139 spreads in, 60–62, 60f, 81 Turkey, 12–13 UIP and, 47, 48 US Federal Reserve and, 14, 137, 208 International Monetary Fund (IMF), 14, 16, 198 investment banks, proprietary trading by, 77 IR (information ratio), 49 Italian lira, 60 Japan currency carry trades and, 17–18, 27 current account surplus, 27 foreign reserves holdings, 26 interest rates, 23 net short-term foreign assets of banks in, 28–29, 28f Lehman Brothers, 104, 140, 197 collapse of, 29 leverage, 3 carry and importance of, 70–72 carry crashes and, 96–98 carry growth and, 7 in carry trades, 33–35 constant, 93 in currency carry trades, 11 equity and, 93–94 hedge fund usage of, 73, 74 INDEX risk controls and, 65 trade dynamics and, 65 leveraged buyouts, as carry trades, 78–80 liquidity, 3–4 carry crashes and, 128 carry existence and, 190 carry trades providing, 35–36 central banks and, 110–111 currency carry trade and provision of, 88 of emerging currencies, 62 negative pricing of, 166–168 short squeezes on, 165 S&P 500 premiums for providing, 161 volatility curves expressing price of, 164 liquidity backstop, 86 liquidity provision trades, 84 return-to-risk ratio of, 165 liquidity swaps, 104–105, 196–198 lock-ins, 185 Long-Term Capital Management (LTCM), 23, 25, 27, 74 Lucas, George, 184 Madoff, Bernard, “Bernie,” 140–141 market corrections, 79 market discipline, 199, 200 market making, 84, 158–159 market risk, 99 mean reversion, 152, 154f, 155, 164 Microsoft Office, 185 Ministry of Finance of Japan (MOF), 26 mispricing of risk, 21, 35–37, 132, 134–140, 142 MOF (Ministry of Finance of Japan), 26 momentum, selling optionality and, 153 monetary conditions anti-carry regime and, 174 carry bubbles and, 39 monetary equilibrium, carry regime and, 169 monetary growth, carry regime and, 169 monetary policy carry effects on, 3 moral hazard and, 208 money.

Brilliant, Crazy, Cocky: How the Top 1% of Entrepreneurs Profit From Global Chaos
by Sarah Lacy
Published 6 Jan 2011

Li Peng wrote it in cal igraphy on a sheet of paper, sliding it to Shi with al the gravitas of a Chinese Premier. Who was Shi to say no? Like China back in the mid-1990s, he had ambitions of grandeur that weren’t quite backed up yet. Just as Shi’s business was at its broadest and most overleveraged, the late-1990s Asian financial crisis hit. Goodbye, 72-floor Giant Tower. Goodbye Giant, in fact. Shi liquidated everything he owned and drove his Mercedes—his last asset—from Shenzhen to Shanghai, sel ing it for as much cash as he could get when he arrived. It was just as wel , because he was out of gas anyway and couldn’t afford more.

…

Suharto talked a good game to the West by vehemently opposing communism during the Cold War, and the United States gave him a lot of aid and diplomatic support in return. Under Suharto, Indonesia posted three decades of strong economic growth, but unfortunately al of that was undone in the disastrous late 1990s Asian financial crisis. Every company and crony under Suharto was al owed to operate a bank, leading to an orgy of interlending that made the financial crash especial y hard on Indonesia.1 “Not only did regular godfathers have banks, Suharto’s children had banks, Suharto’s bribe-gathering foundations owned banks and different factions of the military had banks,” according to Joe Studwel ’s book Asian Godfathers.2 Things got worse as the banks began to col apse, and the Indonesian government lent bil ions to tycoons who moved most of that money to Singapore, leaving the government with a hodgepodge of assets worth nothing close to their paper value.3 Time Asia estimated the Suhartos’ family fortune to be $15 bil ion, and he was accused of misappropriation of funds, but he never stood trial because of his declining health.

…

See ARPA Africa, chal enges of. See also Rwanda Agassi, Shai Airtel Alex. Brown investments Alibaba Group Almeida, Alberto Amazon.com: Jeff Bezos Kindle powerhouse Zappos purchase AmDocs Animation Lab AOL Apple: as competitor as innovator as technology icon vis-à-vis Tencent ARPA Asian financial crisis Asian Godfathers (Studwel ) Assis, Rogerio Assis, Zica Atlantic Monthly, The AT&T Baidu Bakshi, Naren Bakuramutsa, Nkubito Manzi Barnes & Noble, in China BBC Beleza Natural Bel Labs Benchmark Capital Better Place Bezos, Jeff Blonde 2.0 Boo-box Borgos dos Santos, Eliane Borgos dos Santos, Sidnei Brain Platinum Brazil: business opportunities crime and safety issues culture and economics entrepreneurship in exemplars of innovation Marco Gomes story Breslin, Abigail BRIC countries Brin, Sergey BS Construtora Buffett, Warren Bug Bureau of Labor Statistics BuscaPe Bush, George W.

What's Next?: Unconventional Wisdom on the Future of the World Economy
by David Hale and Lyric Hughes Hale
Published 23 May 2011

This prompted a period of rapid and in many cases injudicious growth in lending, which ultimately led to the collapse of a number of “second-tier” financial institutions (including several banks owned by Australian state governments) and “near-death” experiences for two of the four major banks in the early 1990s. These experiences, together with some subsequent smaller ones (including those arising from the Asian financial crisis later in the decade), imparted a greater degree of caution on the part of Australian bank managers than turned out to be the case in the United States or Britain. Australian banks were also arguably under less pressure than their peers in other countries to adopt lower credit standards in pursuit of higher shareholder returns.

…

Australia’s relatively mild experience with the downturn in international trade was also aided by a decline of more than 25 percent in the trade-weighted value of the Australian dollar between mid-2008 and the first few months of 2009, although this decline has since been more than entirely reversed. This echoed the role that large swings in the value of the Australian dollar had in cushioning the impact of the Asian financial crisis on Australia’s trade in the 1990s. There is little doubt that if China’s response to the downturn in its economy had been less effective, Australia’s experience with the financial crisis would have been less benign. It also follows that if China were to experience a more sustained downturn at some point in the future, the impact on Australia may be greater than that of the North Atlantic financial crisis turned out to be.

…

Most economists, international banks, and governments do not like the idea of the Tobin tax proposal because they feel that it would be difficult to implement and may even add instability to foreign exchange markets. The Recent Financial Crises Have Renewed Interest in the Tax When currency speculation became controversial again during the 1997–1999 Asian financial crisis, the idea of a Tobin tax was revived as part of the antiglobalization movement. Again, the idea was deemed by the official Group of Eight (G-8) circles as not worth considering. The idea went against the grain of the free market ideology, which advocates liberalizing financial markets and encourages the free flow of capital.

Crude Volatility: The History and the Future of Boom-Bust Oil Prices
by Robert McNally
Published 17 Jan 2017

Other factors included simmering tensions in Iraq and a potential shortage of heating oil in the United States. THE GHOST OF JAKARTA The unexpected price increase in 1996 and 1997 averted a full clash between Venezuela and other OPEC members.9 But later in 1997 the Asian financial crisis hit, abruptly hurting oil demand, and threw OPEC and other oil producers back into crisis mode. The Asian financial crisis had its origins in the aforementioned strong growth, which had attracted massive capital inflow that was channeled into a real estate bubble. In July 1997 the Thai currency (baht) collapsed, triggering other Asian currency and banking collapses that mushroomed by year-end into widespread economic downturn and bankruptcies.10 But as OPEC prepared to meet in Jakarta in November 1997, producers’ minds were less focused on the gathering Asian crisis than on the oil price spike that had preceded it.

…

Achnacarry Agreement, 86–88, 90, 94, 101 Adelman, Morris, 110, 111, 151, 264n69 administered price system, 121, 136–41, 146–47, 155 Ahn, Daniel, 238 airlines, 188, 191–92 Alaska, 125 Allegheny River, 12–14 American Petroleum Institute, 55 Anglo-American Petroleum Agreement, 94 Anglo-Persian Oil Company. See British Petroleum anticompetitive practices, 54 antitrust legislation, 36, 92 Arabian Light: as marker crude, 137; OPEC price increase of, 130–31; prices compared to U.S., 131 Arab Oil embargo of 1973, 112, 130–37, 139, 140 Aramco. See Saudi Aramco Asian financial crisis, 162–63 Asian “Tigers,” 161–62 As-Is Agreement, 87–88, 90, 94, 101 Athens, 180–81 automobiles, 176; post-World War II increase in, 106; U.S. early manufacturing of, 42–43 Badri, Abdalla Salem el-, 209–10, 211 Bahrain, 88, 257n89 Bakken region, 203, 217, 232, 275n41, 280n29 Barnett shale, 202 barrels, 245n20 Black Giant field, 75, 85, 201; martial law in Texas after, 74, 74; oil industry impact of, 72–74, 76, 107 Bodman, Samuel, 189 boom-bust cycles, 2, 6, 212; future responses to, 240; history of, 3, 17–18; nature of, 223, 223–24; oil prices during U.S., 4, 38, 54, 168; origin of, 16; overview of, 226; swing producer and, 228; Texas Era management and, 107, 108–9; in 2008, 190–92; U.S. economy impacted by oil’s, 152–53; after World War I, 50–56.

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See Organization of the Petroleum Exporting Countries Oregon, 51–52 Organisation for Economic Co-operation and Development (OECD), 145–46, 146, 209, 266n3 Organization of the Petroleum Exporting Countries (OPEC), 1, 18, 84, 273n66, 276n51; in 1970s, 3; in 1990s, 160–61; administered price system by, 121, 136–41, 146–47, 155; Arabian Light price increase and, 130–31; Asian financial crisis reaction from, 162–63; basket price, 165–66, 173, 173, 269n37; cheating within, 150; conflict within, 121, 122, 149; demise of, 8; domination of, from 1970–1980, 122, 123–44; evolution of, in 1980s, 159; formation of, 103, 120; global spare capacity of, in 2003, 172; “Goldilocks” period for, 168–69; industry share of, 120, 147, 169; Iranian revolution and, 140–41; Jakarta debacle of 1997 and, 162–63, 172; market control in future for, 228–29; market upheaval in 1980s and, 145–47; nationalization response from, 137, 264n57; oil price control of, 2, 129, 174–75; oil prices during, era, 4; price war of 2014, 209–11; production cuts assumptions for, 206–7; production cuts for shale competition by, 208; production cuts in 2008 and 2009, 194; production cut strategy and, 121–22; production shares of, 120, 147, 167, 169, 208, 208–9; quota cooperation in 1960s of, 122; quotas in 2011, 198; quota system in 1980s, 148–49; quota system return in 2009, 193–94; Saudi Arabia in, after Gulf War, 159; Saudi Arabia power within, 197–98, 278n103; Saudi Aramco negotiations with, 129; Seven Sisters bargaining with, 127; Seven Sisters struggle with, 120; on shale production, 204–5; spare capacity of, in 2003, 172; supply and demand strategy of, 149; as swing producer, 229; TRC and Seven Sisters compared with, 155–56; U.S. relationship with, 125, 129–30, 154–55; Venezuela conflict with, 161 Pan-American, 86 Pan-Arabism, 117 Parra, Francisco, 89, 103, 122, 125, 156, 169, 269n37 “peak oil”: early fears of, 46; foreign oil supply and fears of, 84; predictions of, 178–80, 271n34; theories of, 177–78 Pennsylvania, 13–15, 44 Pennsylvania drillers, 25–26, 31, 44, 102, 181–82, 194 Pennsylvania Railroad, 23, 24, 246n59 Pennsylvania Rock Oil Company, 12 Pérez Alfonzo, Juan Pablo: Middle Eastern producers courted by, 118–19; as OPEC founder, 120; production cuts strategy of, 121–22; as quota system proponent, 1, 117–18; resignation of, 122 Persian Gulf, 95–96, 102–3, 106, 144, 159, 165, 258n111 petroleum.

State-Building: Governance and World Order in the 21st Century
by Francis Fukuyama
Published 7 Apr 2004

Getting Good Government: Capacity Building in the Public Sector of Developing Countries (Cambridge, MA: Harvard Institute For International Development). Gwartney, James, and Lawson, Robert et al. 2002. Economic Freedom of the World; 2002 Annual Report (Washington, DC: Cato Institute). Haggard, Stephan. 2000. The Political Economy of the Asian Financial Crisis (Washington, DC: Institute for International Economics). Haggard, Stephan, and Kaufman, Robert R. 1995. The Political Economy of Democratic Transitions (Princeton University Press). Haggard, Stephan, and McCubbins, Mathew D. 2001. Presidents, Parliaments, and Policy (Cambridge, England: Cambridge University Press).

…

“The Political Economy of the Rent-Seeking Society,” The American Economic Review 64(3): 291–303. 128 bibliography Kupchan, Charles A. 2002. The End of the American Era: U.S. Foreign Policy and the Geopolitics of the Twenty-first Century (New York: Knopf). Lanyi, Anthony, and Lee, Young. 1999. Governance Aspects of the East Asian Financial Crisis (College Park, MD: IRIS Working Paper 226). Levitt, Barbara, and March, James G. “Chester I. Barnard and the Intelligence of Learning,” in Oliver Williamson, ed. 1990. Organization Theory from Chester Barnard to the Present (New York: Oxford University Press). Levy, Brian. 2002. Patterns of Governance in Africa (Washington, DC: World Bank).

Red Roulette: An Insider's Story of Wealth, Power, Corruption, and Vengeance in Today's China
by Desmond Shum
Published 6 Sep 2021

I found a buyer who agreed to purchase our shares at forty times our initial investment, once the blackout period ended. That meant a profit of more than $450 million. But Whitney refused. She thought Ping An’s stock price wouldn’t stop rising. She and I had fundamentally different perceptions about risk. She never saw a potential downside to holding assets, but I’d lived through the Asian Financial Crisis of 2007. She and the rest of her generation of Chinese entrepreneurs had never experienced a downturn. If there was a down cycle, it was always followed by a V-shaped recovery and a huge bounce back. I, however, wanted to limit our downside risk. Six months after Ping An listed on the Shanghai Stock Exchange, I convinced Whitney that we needed to sell.

…

We’d met in the 1990s, after I first returned to Hong Kong. We spent a lot of late nights together in Hong Kong’s Lan Kwai Fong entertainment district and on Beijing’s Bar Street. I considered him one of my best pals. Ding Yi had worked for a Swiss bank and a Chinese investment firm, made a fortune, and then lost it during the Asian Financial Crisis in 2007. His wife represented an international metals-trading company that did business in China. At one point, his wife’s firm got tangled up in a business dispute. Then a Chinese bank paid the police to arrest his wife and hold her hostage, a common occurrence on the mainland. After the police tossed her in a village lockup in faraway Xinjiang in the northwest corner of China, Ding Yi spent years trying to free her.

…

Airport Cities World Conference, 193–94 Airport City Logistics Park, 129–36, 144, 169 approvals, permissions, and wooing officials, 131–36, 139–41, 148–49, 179, 181 “a hat” and the Five-Year Plans, 133 Li Peiying and, 142–43, 181, 192, 197–98, 268 Li Ping and, 143, 145 Party committee at, 196 Shum and Whitney personal investment in, 141, 145, 197–99 Zhang and family and, 131–32, 134 Zhou Liang helping with, 179 Alibaba, 56, 195, 209 Arab Spring, 196 Art of the Deal, The (Trump), 35 Art of War (Sun Tzu), 176 AsiaInfo, 49–53, 76 Asian Financial Crisis (2007), 248 Aspen Institute, 180, 181, 231, 251 Barboza, David, 235–36, 244, 280 Beijing, 70, 108–9 artists and elites in, 163 Beijing Hotel, 64, 135, 172 CCP officials’ homes in, 96 CCP owned property, 94 Chaoyang District, 224 ChinaVest’s office in, 58–59 China World Hotel, 246 CPPCC chapter in, 187 CCP headquarters, Zhongnanhai, 173, 210, 261 Diaoyutai State Guesthouse, 47–48 five-star hotels in, 228 Four Seasons residence, 249, 267 Friendship Store building, 210 Genesis Beijing project, 1, 223–32 Grand Hyatt hotel, 66, 79, 81, 180 Half Moon Café, 59 Hard Rock Cafe, 59 Huadu Hotel, 224, 225 Jia Qinglin as mayor, 206, 207 Kempinski Hotel, 61 Legation Quarter, 96 Lei Garden restaurant, 109 Moutai Club, 207–8, 209, 264 Oriental Plaza, Shum and Whitney’s apartment in, 113, 159 Oriental Plaza, Zhang and Whitney’s offices in, 64, 76, 94, 99, 268 Palm Springs apartments, 159 prosecution of mayor Chen, 56–57 real estate prices in, 225 Shum as ChinaVest rep in, 47–48, 54, 55, 57–61 Shunyi District, 121, 122–25, 129, 130, 138, 145, 175, 192 Shunyi’s CCP officials, 121, 122–25, 127, 128, 131, 143, 145, 148–49, 151, 159, 174, 193, 199, 207 (see also Li Ping; Sun Zhengcai) unexplained disappearances in, 2 Wangfu Hotel, 75 Wen Jiabao’s home in, 94, 96–97 Yue Ting restaurant, 79, 109 Beijing Capital International Airport, 1, 122, 124–28 Airport City Logistics Park, 125, 129–36, 159–60 Group, 223, 224 Beijing Diamond Jewelries Co., 89, 90 Beijing Tourism Group, 223, 224 Biggs, Barton, 45 Bo Xilai, 97, 239, 240, 241, 263 death of Neil Heywood and, 241–42 purge and jailing of, 241–43, 259 Bo Yibo, 97, 240, 241 “Briefing on the Current Situation in the Ideological Realm” (CCP), 253 Bulgari, 228 Shum hotel project and, 228–29, 232, 238–39, 251 Bureau Chief Gang (Chuzhang Bang), 136 Bush, George H.

World Cities and Nation States
by Greg Clark and Tim Moonen
Published 19 Dec 2016

Property taxes are the main source of income for local authorities – including Seoul. Although national tax guidelines are relatively flexible for Seoul, which has more room for manoeuvre than other Korean cities, its autonomy only applies to a narrow range of taxes, and has been declining since the Asian financial crisis. As a result, Seoul’s 2016 city budget of 24 trillion Won ($19 billion), although rising steadily over the previous four years, is still less than half of Tokyo’s on a per capita basis – see Table 5.2 (Seoul Metropolitan Authority, 2016b). Seoul is more than 80% budget independent, but national tax revenue outweighs local tax by a factor of 4 to 1 and the central government indicates how most money should be spent.

…

As China’s budget and expenditure have grown, Hong Kong has been a key source of international capital, and its financial know-how has helped China to manage its financial resources and risks more prudently. Changes in the relationship since the 1997 handover The difficult years after the 1997–8 Asian Financial Crisis posed a big challenge for the Chinese central government to prove the success of the ‘one country, two systems’ model. For the most part, it has kept its promise to uphold the mandate and treat Hong Kong as a separate country from an immigration and currency standpoint, with more liberal media laws in keeping with its commercial and banking status.

…

Beijing’s interpretation of electoral provisions in the Basic Law, and later its commitment to universal suffrage by 2017, provided a degree of certainty about the process of constitutional reform in a way which did not hinder flows of foreign investment into Hong Kong, given the city’s democratic advantages (China Daily, 2004). Many commentators wrongly predicted a decline in Hong Kong’s international hub status, due to political uncertainty and the Asian financial crisis. But the city’s post‐1997 status as a globalised gateway to mainland China has actually fostered an expansion of international influence and urban investment. The city responded by proactively sponsoring a new cycle of redevelopment to strengthen and diversify its services offering. As a result of the 2003 Closer Economic Partnership Arrangement (CEPA), Hong Kong goods and services were able to access mainland markets, boosting patterns of integration.

GDP: A Brief but Affectionate History
by Diane Coyle
Published 23 Feb 2014

On one side of the Atlantic, there was a good deal of agonizing among economic policymakers: computers were available for any business in any country to use, so why did the productivity benefits of the computer revolution appear to be confined to the United States? On the American side of the Atlantic, there was a sense of triumphalism about the superiority of the U.S. economy and its “New Paradigm,” with its Silicon Valley heroes and soaring stock market. Shocks like the 1995 Mexican near-default, the 1997–1998 Asian financial crisis and the collapse of Long Term Capital Management, and even the technology stock crash of 2001 and the horrors of 9/11 that year, were shrugged off after brief periods of crisis management. The economy appeared to be strong enough to weather anything, and GDP continued to expand for years to come, after a mild and brief downturn in 2001.

…

Above all, the loss of perspective about the purpose of business, which is not at all the maximization of short-term profit or even shareholder value, but rather delivering goods and services to customers (in ways they might not even know they want), in a mutually beneficial transaction. Profit and share price increases are a side effect, not a goal.3 Finally, the tragic downfall, the nemesis. By the mid-2000s, despite the turmoil of the earlier Asian financial crisis and dot-com bust (in 2001), so-called Anglo-Saxon capitalism appeared triumphant. Its dominance was trumpeted by popular authors such as Thomas Friedman in his books The Lexus and the Olive Tree and The World Is Flat. The message was: this is an uncomfortable ride but deal with it because global capitalism is sweeping the whole world before it.

The End of Alchemy: Money, Banking and the Future of the Global Economy
by Mervyn King
Published 3 Mar 2016

Such a high level of saving was exacerbated by the policy from 1980 of limiting most families to one child, making it difficult for parents to rely on their children to provide for them in retirement.19 Asian economies in general also saved more in order to accumulate large holdings of dollars as insurance in case their banking system ran short of foreign currency, as happened to Korea and other countries in the Asian financial crisis of the 1990s. In most of the advanced economies of the West, it was the desire to spend that gained the upper hand, as reflected in falling saving rates. Napoleon may (or may not) have described England as a nation of shopkeepers, but it would be more accurate to say that it is a nation that keeps on shopping.

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Even if the former could be imposed by the central authorities on countries in the euro area – and there are few signs that this would be a popular development – to extend the same degree of integration to countries outside the euro area would surely shatter the wider union. For the foreseeable future, the European Union will comprise two categories of member: those in and those not in the euro area. Arrangements for the evolution of the European Union need to reflect that fact. Such issues are a microcosm of broader challenges to the global order. The Asian financial crisis of the 1990s, when Thailand, South Korea and Indonesia borrowed tens of billions of dollars from western countries through the IMF to support their banks and currencies, showed how difficult it is to cope with sudden capital reversals resulting from a change in sentiment about the degree of currency or maturity mismatch in a nation’s balance sheet, and especially in that of its banking system.

…

Abe, Shinzo, 363 ABN Amro, 118 Acheson, Dean, 368 Ahmed, Liaquat, The Lords of Finance, 158 AIG, 142, 162 alchemy, financial, 5, 8, 10, 40, 50, 91, 191–2, 257, 261, 263–5, 367, 369; illusion of liquidity, 149–55, 253–5; maturity and risk transformation, 104–15, 117–19, 250–1, 254–5; pawnbroker for all seasons (PFAS) approach, 270–81, 288, 368 Ardant, Henri, 219 Arrow, Kenneth, 79–80, 295 Asian financial crisis (1990s), 28, 349, 350 Asian Infrastructure Investment Bank, 349–50 Australia, 74, 259, 275, 348 Austria, 340, 341 Austro-Hungarian Empire, 216 Bagehot, Walter, 212, 218, 335; Lombard Street (1873), 94–5, 114–15, 188, 189, 190, 191–2, 202, 208, 251, 269 Bank for International Settlements, 31, 255, 276, 324 Bank of America, 103–4, 257 Bank of England, 169, 217, 275, 280, 320–1; Bank Charter Act (1844), 160, 198; during crisis, 36, 37–8, 64, 65, 76, 118, 181–3, 184, 205, 206; Financial Policy Committee, 173; garden at, 73–4; gold reserves, 74, 75, 77, 198; governors of, 6, 12–13, 52–3, 175–6, 178; granting of independence to (1997), 7, 166, 186; history of, 92, 94, 156–7, 159, 160, 180–1, 186, 188–201, 206, 335; inflation targeting policy, 7, 167, 170, 322; Monetary Policy Committee (MPC), 173, 329–31; as Old Lady of Threadneedle Street, 75; weather vane on roof, 181 bank runs, 37–8, 93, 105–8, 187–92, 253–4, 262 Bankia (Spanish bank), 257–8 banking sector: balance sheets, 31, 103–4; capital requirements, 137–9, 255–6, 258, 280; commercial and investment separation, 23, 98, 256, 257; creation of money by, 8, 59–63, 86–7, 91, 161, 253, 263; as dangerous and fragile, 8, 23, 33, 34, 36–7, 91–2, 105, 111, 119, 323–4; deposit insurance, 62, 107–8, 137, 254–5, 328; European universal banks, 23–4; and ‘good collateral’, 188, 190, 202–3, 207, 269; history of, 4–5, 18–19, 59–60, 94–5, 187–202, 206–7; implicit taxpayer subsidy for, 96–7, 107, 116–17, 191–2, 207, 254–5, 263–4, 265–6, 267–8, 269–71, 277; interconnected functions of, 95–6, 111–12, 114–15; levels of equity finance, 103, 105, 109, 112, 137–9, 173, 202, 254–9, 263, 268, 280, 368 see also leverage ratios (total assets to equity capital); liquidity support stigma, 205–7; misconduct scandals, 91, 100, 118, 151, 256; narrow and wide banks, 263–5, 266–7, 279; political influence of, 3, 6, 288–9; recapitalisation of (October 2008), 37–8, 201; taxpayer bailouts during crisis, 4, 38, 41, 43, 93, 94, 106, 118, 162, 243, 247, 261, 267–8; ‘too important to fail’ (TITF), 96–7, 99, 116–17, 118, 254–5, 263–4, 279–80; vast expansion of, 23–4, 31–3, 92–4, 95, 96–9, 115–18; visibility of, 92–3, 94; see also alchemy, financial; central banks; liquidity; regulation Banque de France, 159 Barclays, 95 Barings Bank, 137, 193 ‘behavioural economics’, 132–4, 308, 310 Belgium, 201, 216, 340 Benes, Jaromir, 262 Bergsten, Fred, 234 Berlusconi, Silvio, 225 Bernanke, Ben, 28, 44, 91, 158, 175–6, 183, 188, 287 bills of exchange, 197–8, 199 bitcoins, 282–3 Black, Joseph, 56 Blackett, Basil, 195–6 Blair, Tony, 186 Blakey, Robert, The Political Pilgrim’s Progress (1839), 251–3 Blinder, Alan, 164 BNP Paribas, 35 Brazil, 38 Brecht, Bertolt, The Threepenny Opera (1928), 88, 93 Bremer, Paul, 241 Bretton Woods system, 20–1, 350, 352 British Empire, 216, 217 Bryan, William Jennings, 76, 86–7 Buffett, Warren, 102, 143 building societies, 98 Bunyan, John, Pilgrim’s Progress (1678), 251 Cabaret (film, 1972), 52, 83 Cambodia, 246 Cambridge University, 12, 83, 292–3, 302 Campbell, Mrs Patrick, 220 Campbell-Geddes, Sir Eric, 346 Canada, 116, 167, 170 capitalism, 2, 5, 8, 16–21, 42, 155, 366; as best way to create wealth, 17, 365–6, 369; and end of Cold War, 26–7, 365; money and banking as Achilles heel, 5, 16–17, 23–6, 32–9, 40–1, 50, 369–70; Schumpeter’s ‘creative destruction’, 152; see also market economy Carlyle, Thomas, 16 Carney, Mark, 176 Caruana, Jaime, 324 central banks, 156–9; accountability and transparency, 158, 168, 169–70, 175–6, 178–80, 186, 208; and ‘constrained discretion’, 169–70, 186; creation of ‘emergency money’, 48, 65–6, 71, 86, 172, 182–3, 189, 196–7, 201–7, 247, 275; during crisis, 36–9, 64, 65, 76, 113, 118, 158, 159, 162, 181–4, 205, 206, 335; and disequilibrium, 46–7, 171–2, 175, 208, 329–32; exclusive right to issue paper money, 160, 165, 283; and expectations, 28, 176–8, 304; forecasting by, 179–80, 304–5; future of, 207–10; gold reserves, 74–5, 77, 198; history of, 159–60, 161–2, 180–1; independence of, 5–6, 7, 22, 71, 165–7, 169–70, 185–6, 209–10, 357; industry of private sector watchers, 178; integrated policy framework, 187, 208–9, 288; as ‘lenders of last resort’ (LOLR), 94–5, 109–10, 163, 187–97, 202–7, 208, 259, 268, 269–70, 274–5, 288; and ‘macro-prudential policies’, 173–5, 187; monetary policy rules, 168–9; and money supply, 63, 65–6, 76, 86–7, 162, 163, 180–4, 192, 196–201; pawnbroker for all seasons (PFAS) approach, 270–81, 288, 368; in post-crisis period, 43–4, 63, 76, 162–3, 168–9, 173, 175, 179–80, 183–6; printing of electronic money by, 43, 52, 359; proper role of, 163, 172, 174–5, 287; and swap agreements, 353; see also Bank of England; European Central Bank (ECB); Federal Reserve central planning, 20, 27, 141 Chiang Mai Initiative, 349 ‘Chicago Plan’ (1933), 261–4, 268, 273, 274, 277–8 China, 2–3, 22, 34, 77, 306, 322, 338, 357, 362–3, 364; banking sector, 92, 93; export-led growth strategy, 27–8, 319, 321, 323–4, 356; falling growth rates, 43–4, 324, 363; medieval, 57, 68, 74; one child policy in, 28; problems in financial system, 43–4, 337, 362–3; savings levels in, 27–8, 29, 34; trade surpluses in, 27–8, 46, 49, 319, 321, 329, 364 Chou Enlai, 2 Churchill, Winston, 211, 366 Citigroup, 90, 99, 257 Clark, Kenneth, 193 Clinton, President Bill, 157 Cobbett, William, 71–2 Cochrane, John, 262 Coinage Act, US (1792), 215 Cold War, 26–7, 68, 81–2, 350, 365 Colley, Linda, 213–14 communism, 19, 20, 27 Confucius, 10 Cunliffe, Lord, 178, 193 currencies: break-up of sterling area, 216; dollarisation, 70, 246, 287; ‘fiat’, 57, 283; during government crises, 68–9; monetary unions, 212–18, 238–49 see also European Monetary Union (EMU, euro area); optimal currency areas, 212–13, 215, 217, 248; ‘sterlingisation’ and Scotland, 244–7, 248; US dollar-gold link abandoned (1971), 73; virtual/digital, 282–3; see also exchange rates cybercrime, 282 Cyprus, 363–4 Czech Republic, 216 Debreu, Gerard, 79–80, 295 debt, 140; bailouts as not only response, 343–4; as consequence not cause of crisis, 324–5; forgiveness, 339–40, 346–7; haircut on pledged collateral, 203, 204, 266, 269, 271–2, 275, 277–8, 280; household, 23, 31, 33–4, 35; importance of for real economy, 265–6; as likely trigger for future crisis, 337–8; and low interest rates, 337; quantitative controls on credit, 173, 174–5; rise in external imbalances, 22–3, 24–5, 27–31, 33–4, 45–7, 48–9, 236, 306–7, 319–24, 329–30, 338, 364; and rising asset prices, 23, 24, 31–2; role of collateral, 266–7, 269–81; see also sovereign debt decolonisation process, 215 deflation, 66, 76, 159, 164, 165 demand, aggregate: ‘asymmetric shocks’ to, 213; disequilibrium, 45–9, 316, 319–24, 325–7, 329–32, 335, 358–9; in EMU, 221, 222–3, 229, 230, 236; during Great Stability, 319–24; and Keynesianism, 5, 20, 41, 293, 294–302, 315–16, 325–6, 327, 356; and monetary policy, 30, 41–9, 167, 184–5, 212–13, 221, 229–31, 291–2, 294–302, 319–24, 329–32, 335, 358; nature of, 45, 325; pessimism over future levels, 356, 357–60; price and wage rigidities, 167; and radical uncertainty, 316; rebalancing of, 357, 362–3, 364; saving as source of future demand, 11, 46, 84–5, 185, 325–6, 356; as weak post-crisis, 38–9, 41–2, 44–5, 184–5, 291–2, 337, 350, 356–60 democracy, 26–7, 168, 174, 210, 222, 318, 348, 351; and euro area crisis, 224–5, 231, 234–5, 237–8, 344; and paper money, 68, 77; rise of non-mainstream parties in Europe, 234–5, 238, 344, 352 demographic factors, 354, 355, 362 Denmark, 216–17, 335 derivative instruments, 32–3, 35–6, 90, 93–4, 97–8, 100, 101, 117, 141–5; desert island parable, 145–8 Dickens, Charles, 1, 13–14, 233 disequilibrium: and aggregate demand, 45–9, 316, 319–24, 325–7, 329–32, 335, 358–9; alternative strategies for pre-crisis period, 328–33; and central banks, 11–12, 46–7, 171–2, 175, 208, 329–32; continuing, 42, 45–8, 49, 171–2, 291, 334–5, 347, 353, 356–70; coordinated move to new equilibrium, 347, 357, 359–65; definition of, 8–9; euro area at heart of, 248, 337; and exchange rates, 319, 322–3, 329, 331, 364; high- and low-saving countries (external imbalances), 22–3, 24–5, 27–31, 33–4, 45–7, 48–9, 236, 307, 319–24, 329–30, 338, 364; in internal saving and spending, 45–8, 49, 313–16, 319–21, 324, 325–6, 329–30, 356; and ‘New Keynesian’ models, 306; the next crisis, 334–5, 336–8, 353, 370; and paradox of policy, 48, 326, 328, 333, 357, 358; and stability heuristic, 312–14, 319–21, 323, 331, 332; suggested reform programme, 359–65 division of labour (specialisation), 18, 54–5 Doha Round, 361 Domesday Book, 54, 85 dotcom crash, 35 ‘double coincidence of wants’, 55, 80, 82 Douglas, Paul, 262 Draghi, Mario, 225, 227, 228 Dyson, Ben, 262 econometric modelling, 90, 125, 305–6 economic growth: conventional analysis, 44–5, 47; as low since crisis, 11, 43–4, 290–2, 293, 324, 348, 353–7; origins of, 17–21; pessimism over future levels, 353–7; in pre-crisis period, 329, 330–1, 351–2; slowing of in China, 43–4, 324, 362; stability in post-war period, 317–18 economic history, 4–5, 15–21, 54–62, 67–77, 107–9, 158–62, 180–1, 206–7, 215–17, 317–18; 1797 crisis in UK, 75; 1907 crisis in US, 159, 161, 196, 197, 198, 201; 1914 crisis, 192–201, 206, 307, 368; 1920-1 depression, 326–7; 1931 crisis, 41; ‘Black Monday’ (19 October 1987), 149; Finnish and Swedish crises (early 1990s), 279; German hyperinflation (early 1920s), 52, 68, 69, 86, 158–9, 190; Latin American debt crisis (1980s), 339; London banking crises (1825-66), 92, 188–90, 191–2, 198, 201; panic of 1792 in US, 188; see also Great Depression (early 1930s) The Economist magazine, 108–9 economists, 78–80, 128–31, 132–4, 212, 311; 1960s evolution of macroeconomics, 12, 16; forecasting models, 3–4, 7, 122–3, 179–80, 208, 305–6; Keynes on, 158, 289; see also Keynesian economics; neoclassical economics Ecuador, 246, 287 Egypt, ancient, 56, 72 Eliot, T.S., Four Quartets, 120, 290 emerging economies, 39, 43, 337, 338, 361; export-led growth strategy, 27–8, 30, 34, 319, 321, 324, 349, 356; new institutions in Asia, 349–50; savings levels in, 22–3, 27–8, 29, 30; ‘uphill’ flows of capital from, 30–1, 40, 319; US dollar reserves, 28, 34, 349 ‘emotional finance’ theory, 133–4 Engels, Friedrich, 19 Enron, 117 equity finance, 36, 102, 103, 140, 141, 143, 266, 280; and ‘bail-inable’ bonds, 112; in banking sector, 103, 105, 109, 112, 137–9, 173, 202, 254–9, 263, 268, 280, 368 see also leverage ratios (total assets to equity capital); and limited liability, 107, 108, 109 European Central Bank (ECB), 137, 162, 166, 232, 339; and euro area crisis, 203–4, 218, 224–5, 227–8, 229, 231, 322; and political decisions, 218, 224–5, 227–8, 231–2, 235, 344; sovereign debt purchases, 162, 190, 227–8, 231 European Monetary Union (EMU, euro area), 62, 217–38, 337–40, 342–9, 363–4; creditor and debtor split, 49, 222–3, 230–1, 232–7, 338, 339–40, 342–4, 363–4; crisis in (from 2009), 138, 203–4, 218, 223–31, 237–8, 276, 338, 339–40, 3512, 368; disillusionment with, 234–5, 236, 238, 3444; divergences in competitiveness, 221–3, 228, 231, 232–3, 234; fiscal union proposals (2015), 344; at heart of world disequilibrium, 248, 337; inflation, 70, 221–2, 232, 237; interest rate, 221–2, 232, 237, 335; launch of (1999), 22, 24–5, 218, 221, 306; main lessons from, 237; and political union issues, 218, 220, 235, 237–8, 248–9, 344, 348–9; ‘progress through crisis’ doctrine, 234; prospects for, 232–3, 345–6; sovereign debt in, 162, 190, 224, 226–8, 229–31, 258, 338, 339–40, 342–4; transfer union proposal, 224, 230, 231, 233, 234, 235, 237, 344; unemployment in, 45, 226, 228, 229–30, 232, 234, 345; value of euro, 43, 228–9, 231, 232, 322 European Stability Mechanism (ESM), 228 European Union, 40, 235–6, 237–8, 247, 248–9, 348–9; no-bailout clause in Treaty (Article 125), 228, 235–6; Stability and Growth Pact (SGP), 235, 236 Exchange Rate Mechanism (ERM), 219, 220 exchange rates: and disequilibrium, 319, 322–3, 329, 331, 364; and EMU, 222, 228–9, 338–9, 363–4; exchange controls, 21, 339; fixed, 20–1, 22–3, 24–5, 72–3, 75–6, 339, 352, 353, 361; floating, 21, 338, 353, 361–2; and ‘gold standard’, 72–3, 75–6; risk of ‘currency wars’, 348; and wage/price changes, 213 Federal Deposit Insurance Corporation (FDIC), 62, 137, 328 Federal Open Market Committee, 179 Federal Reserve, 45, 65, 74, 137, 157–8, 162, 168–70, 175, 178–9, 320; in 1920s/30s, 192, 326–7, 328, 349; during crisis, 39, 76, 107, 113, 183, 184; discount window, 206; dual mandate of, 167–8; opening of (1914), 60, 62, 159–60, 194–5, 196, 197 Ferrer, Gaspar, 193 Field, Alexander, 355 Financial Conduct Authority, UK, 260 financial crises, 11–12, 34; and demand for liquidity, 65–6, 76–7, 86, 106, 110, 119, 148, 182, 187–92, 194, 201–7, 253–4, 367; differing causes of, 307, 316–17, 327–8; frequency of, 2, 4, 20, 92, 111, 316–17; and ‘gold standard’, 75, 165, 195; and Minsky’s theory, 307–8, 323; narrative revision downturns, 328, 332–3, 356, 357, 58–9, 364; the next crisis, 334–5, 336–8, 353, 370; as test beds for new ideas, 49–50; see also economic history financial crisis (from 2007): articles and books, 1–2, 6; central banks during, 36–9, 64, 65, 76, 113, 118, 158, 159, 162, 181–4, 205, 206, 335; desire to blame individuals, 3, 89–90; effects on ordinary citizens, 6, 13, 41; the Great Panic, 37–8; interest rates during, 150–1, 181, 335; LIBOR during, 150–1; liquidity crisis (2007-8), 35–8, 64–5, 76, 110; money supply during, 181–3; parallels with earlier events, 90–2, 193; post-crisis output gap, 42, 291, 337; short-term Keynesian response, 39, 41, 48, 118–19, 326, 328, 356; ‘small’ event precipitating, 34–5, 323; unanswered questions, 39–43; underlying causes, 16–17, 24–5, 26–39, 40, 307, 319–26, 328; weak recovery from, 43–4, 48, 291–2, 293, 324, 337, 355, 364, 366 financial markets, 64–5, 113, 117–18, 141–5, 149, 184, 199–200, 314–15; basic financial contracts, 140–1; desert island parable, 145–8; and radical uncertainty, 140, 143, 144–5, 149–55; ‘real-time’ trading, 153–4, 284; see also derivative instruments; financial products and instruments; trading, financial financial products and instruments, 24, 35–6, 64, 99–100, 114, 117, 136–7, 258, 278, 288; see also derivative instruments Finland, 159, 279 First World War, 88–9, 153, 164, 178, 200–2, 307; financial crisis on outbreak of, 192–201; reparations after, 340–2, 343, 345–6 fiscal policy, 45, 184, 347–8, 352, 358; and Keynesianism, 78, 181, 292, 300, 356; in monetary unions, 222–3, 235; short-term stimulus during crisis, 39, 118–19, 356 Fisher, Irving, 163, 261 fractional reserve banking, 261 France, 93, 201, 216, 219, 221, 236, 248, 348, 364; and euro area crisis, 228–9, 231, 236, 322; occupation of Ruhr (1923), 340; overseas territories during WW2, 242; revolutionary period, 68, 75, 159 Franklin, Benjamin, 58, 127 Friedman, Milton, 78, 130, 163, 182, 192, 262, 328 Fuld, Dick, 89 futures contracts, 142, 240–1, 295–6 G20 group, 39, 255, 256, 351 G7 group, 37–8, 351 Garrett, Scott, 168–9 Geithner, Timothy, 267 George, Eddie, 176, 330 Germany, 93, 161, 162, 184, 219, 322, 341, 357; Bundesbank, 166, 219, 228, 232; and EMU, 219–22, 224, 227, 228, 230, 231–2, 234–6, 248, 338, 340, 342–3, 345; export-led growth strategy, 222, 319, 363–4; hyperinflation (early 1920s), 52, 68, 69, 86, 158–9, 190; Notgeld in, 201–2, 287; reunification, 219, 342; trade surpluses in, 46, 49, 222, 236, 319, 321, 356, 363–4; WW1 reparations, 340–2, 343, 346 Gibbon, Edward, 63, 164 Gigerenzer, Professor Gerd, 123, 135 Gillray, James, 75 global economy, 349–54, 361; capital flows, 20–1, 22, 28, 29, 30–1, 40, 319, 323; rise in external imbalances, 22–3, 24–5, 27–31, 33–4, 45–7, 48–9, 236, 307, 319–24, 329–30, 338, 364; see also currencies; exchange rates; trade surpluses and deficits Goethe, Johann Wolfgang von, Faust, 85–6 ‘gold standard’, 72–3, 75–6, 86, 165, 195, 200–1, 216–17, 348, 352 Goldman Sachs, 98, 109, 123, 257 Goodwin, Fred, 37, 89 Grant, James, 327 Great Depression (early 1930s), 5, 16, 20, 158, 160, 226, 348, 355; dramatic effect on politics and economics, 41; Friedman and Schwartz on, 78, 192, 328; and ‘gold standard’, 73, 76; US banking crisis during, 90–1, 108, 116, 201 Great Recession (from 2008), 6, 38–9, 163, 290–2, 326 Great Stability (or Great Moderation), 6, 22, 45–7, 71, 162, 208, 305, 313–14, 318–24, 325–6; alternative strategies for pre-crisis period, 328–33; monetary policies during, 22, 25, 46–7, 315 Greece, 216, 221, 222, 225–31, 338–40, 364; agreement with creditors (13 July 2015), 230–1, 346; crisis in euro area, 223–4, 225–7, 229, 230–1, 236, 258, 338–40; debt restructured (2012), 226–7, 229, 236, 339, 343–4, 346; national referendum (July 2015), 230; sovereign debt, 224, 226–7, 339–40, 342–4, 346–7; Syriza led government, 229, 235 Greenspan, Alan, 157–8, 164, 175, 317 Gulf War, First (1991), 238 Hahn, Frank, 79 Halifax Bank of Scotland (HBoS), 37, 118, 206, 243 Halley, Edmund, 122 Hamilton, Alexander, 188, 202, 215 Hankey, Thomas, 191–2 Hansen, Alvin, Full Recovery or Stagnation?

The Death of Money: The Coming Collapse of the International Monetary System
by James Rickards
Published 7 Apr 2014

Other examples of unrestricted warfare include cyberattacks that can ground aviation, open floodgates, cause blackouts, and shut down the Internet. Recently, financial attacks have been added to the list of asymmetric threats first articulated by Wang and others. Unrestricted Warfare spells this out in a chapter called “The War God’s Face Has Become Indistinct.” It was written not long after the 1997 Asian financial crisis, which cascaded into the global financial panic of 1998. Much of the distress in Asia was caused by Western bankers suddenly pulling hot money out of banks in emerging Asian markets; the distress was compounded by bad economic advice from the Western-dominated IMF. From an Asian perspective, the entire debacle looked like a Western plot to destabilize their economies.

…

The fact that these policies favored free-market capitalism and promoted the expansion of U.S. banks and corporations in global markets did not go unnoticed. By the early 2000s, the Washington Consensus was in tatters due to the rise of emerging market economies that viewed dollar hegemony as favoring the United States at their expense. This view was highlighted by the IMF response to the Asian financial crisis of 1997–98, in which IMF austerity plans resulted in riots and bloodshed in the cities of Jakarta and Seoul. Washington’s failure over time to adhere to its own fiscal prescriptions, combined with the acceleration of Asian economic growth after 1999, gave rise to the Beijing Consensus as a policy alternative to the Washington Consensus.

…

Abe, Shinzo, 160–61, 260–61 Abenomics, 261, 264, 297 Abraham, 217 Adenauer, Konrad, 116 Afghanistan, 55 Aid, Matthew, 53 AIG, 77 Air-Sea Battle, 44, 63 Akerlof, George, 83, 84, 87 Albania, 136 Aldrich, Nelson, 199 allocated gold transactions, 275 Alpert, Dan, 245 Al Qaeda, 19, 27 alternative funds, 299–300 Ambinder, Marc, 63 American Airlines, 18, 20, 21, 24, 25, 26, 27–28, 35, 36 Ames, Paul, 143 ANZ Bank, 227 Arab Spring, 3 Argentina, 261, 290 ARPANET, 174 Articles of Agreement, IMF, 199, 212–14, 235 Asian financial crisis, 45, 120 Åslund, Anders, 142 asset swaps, 80–81 Associated Press, 59 asymmetric markets, 83–88 Atta, Mohamed, 24–25 Australia, 281 autonomous agents, 266 Azerbaijan, 233 Aziz, Shaukat, 31 Backus, David K., 74 backwardation, of gold futures contracts, 285 Bahrain, 58, 152 Baker, James, 177 Balko, Radley, 294 bank deposit risk, 218–19 bank failure risk, 218 Bank for International Settlements (BIS), 213, 276–78 banking risk, 11–12 Bank of England (BOE), 159–60, 161–62, 223, 230 Bank of Japan (BOJ), 160, 161–62 Bank of the United States, 199 barter, 254–55 Bear Stearns, 77, 103 Beijing Consensus, 118, 120–21 BELLs (Bulgaria, Estonia, Latvia, Lithuania), 140–146 economic responses to 2008–9 crisis and subsequent recovery in, 142–46 euro peg/conversion in, 141, 144–45 Berlin Consensus, 121–27 cooperative labor-management relations pillar of, 123–24 efficient labor pillar of, 124–25 innovation and technology pillar of, 122 low-corporate-tax-rates pillar of, 122 low-inflation pillar of, 122–23 positive business climate pillar of, 125–26 Bernanke, Ben, 262 cheap-dollar policy of, 129, 157–59 deflation and, 76, 77 information’s role in efficient markets, analysis of, 84, 85–86, 87 London speech of, 158–59 Tokyo speech of, 129, 157–58 bin Laden, Osama, 19–20, 37 bitcoin, 254 Black Death, 115 Black Monday, 270 Blackstone Group, 51–52 Bloomberg, Michael, 294–95 Bloomberg News, 101, 145 Boeing Corporation, 58–59 Boesky, Ivan, 18 bond markets, 180 Bosnia, 136 Brazil, 139.

Crisis Economics: A Crash Course in the Future of Finance
by Nouriel Roubini and Stephen Mihm
Published 10 May 2010

The panic spread to Indonesia, Korea, and Malaysia. Like Thailand, each of these countries saw its currency depreciate and its debt explode. The costs of bailing out the economy ended up on the backs of taxpayers; millions of those same taxpayers plunged into poverty in the ensuing contraction. Russia’s turn came in 1998. Buffeted by the Asian financial crisis and the declining price of oil, Russia’s economy entered a tailspin. Doubts grew about its ability to maintain the value of the ruble and its commitment to honor its debts. In the summer of 1998 investors fled the country, and the value of the ruble collapsed. The Russian government defaulted on debt owed to its citizens and stopped payments on most of the debt owed to foreign creditors.

…

While these measures are somewhat staggering to contemplate, they were not as crazy as some of the other options that had been contemplated during the crisis. For example, the Federal Reserve could have intervened directly in the stock markets, buying up unwanted equities. This tactic had been deployed during the Asian financial crisis of 1998, when monetary authorities in Hong Kong purchased 5 percent of the shares being traded on the local stock exchange. The measure was widely criticized at the time, but it managed to forestall a foreign exchange crisis by frustrating the attempts of some large hedge funds to pull off a “double play,” shorting both the currency and the stock market.

…

Indonesia has displayed resilience not only as an economy but also as a nation. It has a remarkably diverse and far-flung population, attributes that might cast doubt on its ability to make the transition to a world-class economy. Yet the country has left behind the legacy of a military dictatorship and has recovered from multiple setbacks. Though the Asian financial crisis in 1997, the tsunami in 2004, and the emergence of radical Islam have all done damage, Indonesia continues to move forward at an impressive rate. While Indonesia’s per capita GDP remains low compared with that of other aspirants to BRIC status, it has remarkable potential. It depends far less on exports than do its Asian peers (never mind Russia), and its markets in timber, palm oil, coal, and other assets have attracted major foreign investment.

Stigum's Money Market, 4E
by Marcia Stigum and Anthony Crescenzi
Published 9 Feb 2007

On a well-constructed hedge, residual spread risk is far less than the market risk inherent in the position hedged. Thus, whenever hedging does not eliminate position risk, it at least substantially reduces it. Still, there have been occasions where the residual risk has resulted in substantial losses. One of these was during the Asian financial crisis in 1998, particularly after Russia defaulted on its debts. Some dealers had “hedged” their holdings in corporate bonds by shorting Treasuries, but they incurred steep losses when panicky investors sold corporates and bought Treasuries, causing credit spreads to widen substantially (Figure 10.2).

…

The reason is that we’ve got a pure dealer market. The retail buyer, who is scared and going short, is simply not there.” An environment such as this prevailed in late 2005 and early 2006 when investors were unsure about when the Fed might end its interest rate hikes. Other examples include the Asian financial crisis in 1998 when yield spreads fluctuated wildly between Treasuries and other segments of the bond market, as well as between Treasuries of varying degrees of liquidity, despite their equal credit quality. Finally, to determine where relative value lies among different maturity sectors of the market, the portfolio manager must explicitly predict interest rates and the slope of the yield curve over at least the time span of his planning horizon.

…

Today, note traders must weigh variables that literally stretch across the globe. Luckily for traders of U.S. notes, most of what moves the Treasury note market emanates from the United States, although this does not mean that simply following the U.S. picture will suffice. The large amount of volatility seen during the Asian financial crisis of 1997–1998 and the Russian default of 1998 is clear evidence of the very large impact that events abroad can have on the U.S. Treasury market. Still, the influence doesn’t cut both ways as much as some think. Goldberg and Leonard showed this in a study that analyzed the effects of economic news on U.S. and German yields during the period January 3, 2000, to June 2, 2002.10 The study found that U.S. economic data had a greater effect on German 2- and 10-year yields than many German releases did and that German and euro-area economic announcements were far less influential on yields in the U.S.

Obliquity: Why Our Goals Are Best Achieved Indirectly
by John Kay
Published 30 Apr 2010

The reputation of financial economics has never recovered from the blow of the virtual collapse of Long-Term Capital Management, a sophisticated practitioner of the risk models outlined in chapter twelve, and the involvement of two Nobel Prize winners, Robert C. Merton and Myron Scholes. The fund built huge positions on the basis of estimated mispricings, relying on its models to control its exposures. When the Asian financial crisis blew up in 1997, the fund managers extended their positions. They believed their own models. Their failure was a precursor of the much larger failures that would follow a decade or so later. At the banks a decade later, as in Iraq, evidence and models were used to confirm what was already asserted to be true rather than to challenge the validity of prior assumptions.

…

Abacha, Sani ABB accounting acquisitions and mergers adaptation aggregates agriculture Airbus Airbus 380 Allen, Bill ambulance response times analgesics anesthetics Ansoff, H. Igor anthologies, literary anthropomorphization anti-inflammatory drugs Apple Apprentice, The arbitrage Archimedes architecture Aristotle Arrow, Kenneth art Art of the Deal, The (Trump) art experts artificial intelligence Asian financial crisis (1997) aspirin assets authority Autobiography (Mill) aviation industry Balboa, Vasco de Bankers Trust banking industry Barnevik, Percy Basel agreements (1987) basic goals Bear Stearns Beckham, David Bell, Alexander Graham bell curve Bengal Bentonville, Ark.

The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer
by Dean Baker
Published 15 Jul 2006

The market response should have been that the banks that judged risk poorly take a financial hit, and the particular individuals who exercised bad judgment on loans should perhaps lose their jobs. In a free market, there is no place for a supranational institutional like the IMF to rewrite the rules to ensure that creditors are protected. The IMF provided the same sort of service in the East Asian financial crisis in the fall of 1997. In that situation, the IMF forced governments in the region to assume the responsibility to repay loans that banks made to private companies. The problem facing the foreign banks was that these countries had no well-developed bankruptcy laws, so there was no mechanism through which foreign banks could collect on loans made to companies that were essentially bankrupt at the time.

…

“Improving Opportunities and Incentives for Saving by Middle- and Low-Income Households,” Washington, DC: Brookings Institution. [http://www.brookings.edu/views/papers/200604hamilton_2.htm] Gill, I, T. Packard, and J. Yermo. 2005. Keeping the Promise of Social Security in Latin America, Stanford, CA: Stanford University Press. Goldstein, M. 1998. The Asian Financial Crisis: Causes, Cures, and Systematic Implications. Washington, DC: Institute for International Economics: 26-44. Hacker, J. 2002. The Divided Welfare State: The Battle Over Public and Private Social Benefits in the United States. New York: Cambridge University Press. Himmelstein, D., E. Warren, D.

War and Gold: A Five-Hundred-Year History of Empires, Adventures, and Debt
by Kwasi Kwarteng
Published 12 May 2014

The Chinese government had not developed a comprehensive system of public welfare provision, although it was often suggested that many of the most inefficient state companies, by supplying jobs and salaries to workers, offered a crude form of welfare provision. As a final tribute to the success of his programme of public spending, Zhu declared that he was ‘very proud’ of his adoption of an ‘expansionary fiscal policy’. This policy, in his opinion, had ensured that China ‘not only overcame the impact of the Asian financial crisis, but was able to use the opportunity to achieve unprecedented economic growth’.37 In a sense, the Chinese had acted more consistently with Keynesian principles than many other governments would in later crises. Keynes had been brought up in the late Victorian era. His basic assumption had been that governments would try to balance their budgets.

…

Prescott, The 1990s in Japan: A Lost Decade, Working Papers 607, Federal Reserve Bank of Minneapolis, Minneapolis, MN, 2000, p. 1. 22Krugman, Depression Economics, pp. 94–6. 23Ibid., pp. 94–5. 24Matthew Bishop, Economics: An A–Z Guide, London, 2009, p. 67. 25Philip Coggan, Paper Promises: Money, Debt and the New World Order, London, 2011, p. 125. 26Krugman, Depression Economics, pp. 144, 141. 27Xiao-Ming Li, ‘China’s Macroeconomic Stabilization Policies Following the Asian Financial Crisis: Success or Failure?’, Asian Survey, vol. 40, no. 6 (November–December 2000), pp. 938–57, at p. 938. 28Economist, ‘East Asia’s Whirlwind Hits the Middle Kingdom’, 14 February 1998. 29Economist, ‘China’s Currency’, 12 August 1999. 30Business China, ‘Devaluing the renminbi’, 2 February 1998. 31New York Times, ‘China Won’t Reduce Value of Currency, Official Says’,1 December 1997. 32James Kynge, China Shakes the World: The Rise of a Hungry Nation, London, 2006, pp. 27–8. 33Economist, ‘China Pedals Harder’, 11 June 1998. 34Zhu Rongji, Zhu Rongji Meets the Press, Hong Kong, 2011, p. 172. 35Ibid., p. 241. 36Ibid., p. 259. 37Ibid., p. 262. 38New York Times, ‘U.S.

…

T., ‘British Opinion on the Gold Standard’, Quarterly Journal for Economics, vol. 39, no. 2 (February 1925), pp. 184–95. Le Monde, ‘Réunion des ministres des finances à la Haye: Les Douze ont progressé vers l’union monétaire’, 1 December 1991. Li, Xiao-Ming, ‘China’s Macroeconomic Stabilization Policies Following the Asian Financial Crisis: Success or Failure?’, Asian Survey, vol. 40, no. 6 (November–December 2000), pp. 938–57. Los Angeles Times, ‘Fears of Dot-Com Crash, Version 2.0’, 16 July 2006. Martin Jr, William McChesney, ‘Toward a World Central Bank?’, Basle, Switzerland, Per Jacobsson Foundation Lecture, given 14 September 1970.

A Pelican Introduction Economics: A User's Guide
by Ha-Joon Chang
Published 26 May 2014

Those who resisted this inevitability were derided as the ‘modern Luddites’, who think they can bring back a bygone world by reversing technological progress (see above). Book titles like The Borderless World, The World Is Flat and One World, Ready or Not summed up the essence of this new discourse. The beginning of the end: the Asian financial crisis The euphoria of the late 1980s and the early 1990s didn’t last. The first sign that not everything was fine with the ‘brave new world’ came with the financial crisis in Mexico in 1995. Too many people had invested in Mexican financial assets with the unrealistic expectation that, having fully embraced free-market policies and having signed the NAFTA, the country was going to be the next miracle economy.

…

Too many people had invested in Mexican financial assets with the unrealistic expectation that, having fully embraced free-market policies and having signed the NAFTA, the country was going to be the next miracle economy. Mexico was bailed out by the US and the Canadian governments (who didn’t want a collapse in their new free-trade partner) as well as by the IMF. In 1997, a bigger shock came about with the Asian financial crisis. A number of hitherto successful Asian economies – the so-called ‘MIT economies’ (Malaysia, Indonesia and Thailand) and South Korea – got into financial troubles. The culprit was the bursting of the asset bubbles (asset prices rising well above their realistic levels, based on unrealistic expectations).

…

Allowing workers to bargain as a group, rather than as individuals who may compete against each other, trade unions help workers extract higher wages and better working conditions from their employers.3 In some countries, trade unions are considered counter- productive, blocking the necessary changes in technologies and work organization. In others, they are seen as natural partners in any business. When Volvo, the Swedish vehicle manufacturer, bought the heavy construction equipment arm of Samsung in the aftermath of the 1997 Asian financial crisis, it is said to have asked the workers to set up a trade union (Samsung had – and still has – an infamous ‘no-union’ policy). The Swedish managers didn’t know how to manage a company without a trade union to talk to! Like cooperatives, trade unions are membership organizations, in which decisions are made according to the one-member-one-vote rule.

Billion Dollar Whale: The Man Who Fooled Wall Street, Hollywood, and the World
by Tom Wright and Bradley Hope
Published 17 Sep 2018

Asian economies like Thailand and South Korea had been through a decade of heady growth, and bankers worked long hours, partied in the bars and fleshpots of Wanchai, the city’s entertainment district, and took jaunts to Hong Kong’s outer islands in private yachts on the weekends. By 1997, however, the party atmosphere was souring. After 156 years of colonial rule, Britain was handing Hong Kong back to China. The Asian financial crisis was in full swing, the result of years of reckless borrowing to finance investments in property and other risky sectors. It was a typical financial bubble, and when speculators like George Soros attacked the region’s overvalued currencies, angering Malaysia’s then prime minister, Mahathir Mohamad, foreign banks were forced to book losses on loans that went bad.

…

Low, however, had an even bigger target, confiding in Ambassador Otaiba that he hoped to deepen Najib’s relationship with President Obama. For years, ties between Malaysia and the United States had been lukewarm at best. Former Prime Minister Mahathir Mohamad was confrontational toward the United States, bashing “Western imperialism” and blaming “Jewish” financiers for the Asian financial crisis in the late 1990s. Western governments decried the jailing of Anwar Ibrahim for sodomy as a political vendetta. On an official visit to Kuala Lumpur, Vice President Al Gore urged the “brave people of Malaysia” to push for democracy, infuriating Mahathir. By the time Najib came to power, no sitting U.S. president had visited Malaysia since Lyndon B.

…

The Southeast Asian city-state of five million people, located on a tropical island near the equator, was positioning itself as the “Switzerland of the East,” complete with banking secrecy laws modeled on Switzerland’s. For a while, business flourished as Asia’s economies powered ahead, generating scores of new millionaires. After the Asian financial crisis took hold in the late 1990s, slashing the stock holdings of rich Asians, Brunner was recalled to Switzerland to head the bank’s international business. But he had developed a taste for the lifestyle in Asia, with its servants and drivers, and he was back in Singapore by 2006, residing in a modern apartment with a pool and outdoor whirlpool bath within walking distance of the city’s botanical gardens.

Stakeholder Capitalism: A Global Economy That Works for Progress, People and Planet
by Klaus Schwab
Published 7 Jan 2021

Only after the Second World War did Indonesia become an independent nation, free from this one-sided trade and foreign occupation. And even then, it endured another four decades of authoritarian and isolationist rule before entering its liberal and democratic era. Finally, Indonesia's first attempt to benefit from global markets backfired in 1997, when the Asian financial crisis pushed its economy in a severe recession: starting in Thailand, speculators massively bet against the ability of Southeast Asian nations to maintain their currency pegs, leading to severe devaluation, a soaring public debt, and an economic recession from Indonesia to Malaysia to the Philippines.

…

For the West and a handful of Asian countries such as Japan, that period started immediately after the Second World War and lasted until the 1980s. For the East, and more broadly the so-called emerging markets, that period started somewhere in the 1990s, and even then, it was severely threatened during the 1997 Asian financial crisis. In countries such as Indonesia, Ethiopia, and Vietnam it is still ongoing, though the COVID crisis caused more than a hiccup. Taken together, globalization during this period did structurally raise wages for a large majority of workers and allowed records amounts of people to become part of the middle class, while allowing a more selected crop to rise even further.

…

Møller–Mærsk (Denmark), 167–168, 199–201, 202–207, 208, 213, 215 Appellate Judges (World Trade Organization), 197 Apple Computer, 126, 137 Apple (US), 59, 127, 128, 137, 209, 211 Arab Spring (2011), 40 Ardern, Jacinda, 219, 220–223, 236 Argentina “reefer ships” (1870s) bringing wealth to, 104, 110 “21st century socialism” of, 225 Artificial intelligence (AI), 143–144, 145, 161 ASEAN nations Chinese economy and emerging markets of, 63–66, 70–72 environmental degradation and economic growth of, 72 IMF forecast on 2020 economic growth of, 71 as an international community stakeholder, 178 national income inequality increasing in, 40 tech unicorns in the, 66, 67fig “The Asian Century,” 70–71fig Asian countries capitalism vs. communism ideological battle in, 7 post-war economy of, 6 severe financial crisis (1997) in, 16, 98, 109 WHO on unsafe air (2019) in, 72 Asian financial crisis (1997), 16, 98, 109 Asian Tigers GDP growth contributions (1980s) by, 13 globalization and economic growth of, 98 influence on China's economy by, 57 shift to producing goods for export, 58 See also Hong Kong; Singapore; South Korea; Taiwan AT&T monopoly, 127, 135 Audi (German manufacturer), 9 Aufstehen movement (Germany), 88 Australia efforts to reduce emissions in, 166–167 mining exports to China, 64 Austrian populist parties (2000, 2017–2019), 84fig Auto industry city of Detroit, 110–111 Ford Motor Company, 33 lack of regulatory scrutiny of the, 136 Mercedes, 9 Automation Dansk Metal's industrial robots, 115, 117 labor market and challenge of, 115–126 Axis nations (World War II), 5 B Baby boom (1950s and 1960s), 8, 9, 105, 135, 154, 160 Bah, Aziz, 238 Bai Chong-En, 225–226 Baidu (US), 143 Bain, 66 Baker, George Pierce, 11 Baldwin, Richard, 64, 113 Bandung entrepreneurs story (2012), 93–94 Bangladesh unsafe air (2019), 72 Bank of America, 214, 215, 249 Bank of England, 162 Bay of Pigs, 76 Belgium declining income inequality in, 41 digital economy embraced by, 113–114 economic loss due to closed car plants in, 111 First Industrial Revolution spreading to, 131 stakeholder approach solving disagreements in, 195 stakeholder concept adopted in, 174 Bell Company.

Stakeholder Capitalism: A Global Economy That Works for Progress, People and Planet
by Klaus Schwab and Peter Vanham
Published 27 Jan 2021

Only after the Second World War did Indonesia become an independent nation, free from this one-sided trade and foreign occupation. And even then, it endured another four decades of authoritarian and isolationist rule before entering its liberal and democratic era. Finally, Indonesia's first attempt to benefit from global markets backfired in 1997, when the Asian financial crisis pushed its economy in a severe recession: starting in Thailand, speculators massively bet against the ability of Southeast Asian nations to maintain their currency pegs, leading to severe devaluation, a soaring public debt, and an economic recession from Indonesia to Malaysia to the Philippines.

…

For the West and a handful of Asian countries such as Japan, that period started immediately after the Second World War and lasted until the 1980s. For the East, and more broadly the so-called emerging markets, that period started somewhere in the 1990s, and even then, it was severely threatened during the 1997 Asian financial crisis. In countries such as Indonesia, Ethiopia, and Vietnam it is still ongoing, though the COVID crisis caused more than a hiccup. Taken together, globalization during this period did structurally raise wages for a large majority of workers and allowed records amounts of people to become part of the middle class, while allowing a more selected crop to rise even further.

…

Møller–Mærsk (Denmark), 167–168, 199–201, 202–207, 208, 213, 215 Appellate Judges (World Trade Organization), 197 Apple Computer, 126, 137 Apple (US), 59, 127, 128, 137, 209, 211 Arab Spring (2011), 40 Ardern, Jacinda, 219, 220–223, 236 Argentina “reefer ships” (1870s) bringing wealth to, 104, 110 “21st century socialism” of, 225 Artificial intelligence (AI), 143–144, 145, 161 ASEAN nations Chinese economy and emerging markets of, 63–66, 70–72 environmental degradation and economic growth of, 72 IMF forecast on 2020 economic growth of, 71 as an international community stakeholder, 178 national income inequality increasing in, 40 tech unicorns in the, 66, 67fig “The Asian Century,” 70–71fig Asian countries capitalism vs. communism ideological battle in, 7 post-war economy of, 6 severe financial crisis (1997) in, 16, 98, 109 WHO on unsafe air (2019) in, 72 Asian financial crisis (1997), 16, 98, 109 Asian Tigers GDP growth contributions (1980s) by, 13 globalization and economic growth of, 98 influence on China's economy by, 57 shift to producing goods for export, 58 See also Hong Kong; Singapore; South Korea; Taiwan AT&T monopoly, 127, 135 Audi (German manufacturer), 9 Aufstehen movement (Germany), 88 Australia efforts to reduce emissions in, 166–167 mining exports to China, 64 Austrian populist parties (2000, 2017–2019), 84fig Auto industry city of Detroit, 110–111 Ford Motor Company, 33 lack of regulatory scrutiny of the, 136 Mercedes, 9 Automation Dansk Metal's industrial robots, 115, 117 labor market and challenge of, 115–126 Axis nations (World War II), 5 B Baby boom (1950s and 1960s), 8, 9, 105, 135, 154, 160 Bah, Aziz, 238 Bai Chong-En, 225–226 Baidu (US), 143 Bain, 66 Baker, George Pierce, 11 Baldwin, Richard, 64, 113 Bandung entrepreneurs story (2012), 93–94 Bangladesh unsafe air (2019), 72 Bank of America, 214, 215, 249 Bank of England, 162 Bay of Pigs, 76 Belgium declining income inequality in, 41 digital economy embraced by, 113–114 economic loss due to closed car plants in, 111 First Industrial Revolution spreading to, 131 stakeholder approach solving disagreements in, 195 stakeholder concept adopted in, 174 Bell Company.

Models. Behaving. Badly.: Why Confusing Illusion With Reality Can Lead to Disaster, on Wall Street and in Life
by Emanuel Derman
Published 13 Oct 2011

Solid-to-vapor is an apt summary of the evanescence of value, financial and ethical, that has taken place throughout the great and ongoing financial crisis that commenced in 2007. The United States, the global evangelist for the benefits of creative destruction, has favored its own church. When governments of emerging markets complained that foreign investors were fearfully yanking capital from their markets during the Asian financial crisis of 1997, liberal democrats in the West told them that this was the way free markets worked. Now we prop up our own markets because it suits us to do so. The great financial crisis has been marked by the failure of models both qualitative and quantitative. During the past two decades the United States has suffered the decline of manufacturing; the ballooning of the financial sector; that sector’s capture of the regulatory system; ceaseless stimulus whenever the economy has wavered; taxpayer-funded bailouts of large capitalist corporations; crony capitalism; private profits and public losses; the redemption of the rich and powerful by the poor and weak; companies that shorted stock for a living being legally protected from the shorting of their own stock; compromised yet unpunished ratings agencies; government policies that tried to cure insolvency by branding it as illiquidity; and, on the quantitative side, the widespread use of obviously poor quantitative security valuation models for the purpose of marketing.

…

Index absence as presence absolutes: and Derman’s four questions fiat money example and irreducible nonmetaphor and love and desperation and nature of theories and passions and perfection and and Spinoza’s answers to Derman’s questions Spinoza’s emotions theory and Tetragrammaton and abstractions accuracy: of economic/financial models of theories action: at a distance freedom of understanding and adequate causes Adonai, African Resistance Movement airplane models Akiva, Rabbi algebra: fundamental theorem of aliyah, aliyah register alpha: CAPM and Amichai, Yehuda Ampère, André-Marie analogies analytic continuation Anderson, Carl antiparticles apartheid apartments: valuing of Apple stock arithmetic: fundamental theorem of artists’ models Asian financial crisis assumptions: in financial models Modelers’ Hippocratic Oath and rules for using models and types of models and unconscious Atlas Shrugged (Rand) atomic physics axioms/axiomatization bad. See evil bailouts bare electrons Barfield, Owen Bedazzled (film) Begin, Menachem behavior, human: adequate knowledge and EMM as assumption about explanations for and humans as responsible for their actions and idolatry of models Law of One Price and laws of pragmamorphism and Ben-Gurion, David Bernoulli, Daniel Bernstein, Jeremy beta: CAPM and Betar (Brit Yosef Trumpeldor) binocular diplopia birds Black, Fischer Black-Scholes Model Merton and Blake, William Bnei Akiva (Sons of Akiva) Bnei Zion (Sons of Zion) body-mind relationship Bohr, Aage Bohr, Niels bonds: financial models and See also type of bond Boyle’s Law Brahe, Tycho brain Brave New World (Huxley) Brownian motion bundling of complex products cage: moth in perfect calibration Cape Flats Development Association (South Africa) Capital Asset Pricing Model (CAPM) capitalism caricatures: models as cash.

The Moral Animal: Evolutionary Psychology and Everyday Life
by Robert Wright
Published 1 Jan 1994

The impetus behind it is strong largely because individual states see that their long-term interest lies in plugging into the system. But when the system hits a downturn, they would be better off if somehow they could magically become less plugged in—temporarily, at least. Modern China survived the early ravages of the 1997 Asian financial crisis in good shape partly because its currency was not easily converted into other currencies. Even so, China stuck to its plans for convertibility, because in the long run you’re better off plugged in. China, of all nations, should know. Its epic mistake—the mistake that got it labeled an underachiever—was unplugging from the system beginning in the late fourteenth century.

…

At work here was a general principle: as commerce expands, enmeshing more and more people, it gives them a shared interest in protecting it from friction and disruption. Today, as commerce swamps the borders of nation-states, there are many sources of potential friction and disruption. One is trade disputes, which carry the threat of trade wars. Another, put on display during the Asian financial crisis of the late 1990s, is lack of “transparency,” of good financial data about ostensibly healthy nations—a shortcoming that can lead finally to a panicked and ruinous exit of foreign investment. Both of these problems raise the “trust” barrier to non-zero-sum gain. And trust barrier generally get breached by governance in one sense or another.

…

Still, if what authority these bodies do have exists in response to increasingly non-zero-sum relations among nations, and if technology is very likely to sustain this trend, then it doesn’t take a wild-eyed visionary to imagine more and more authority migrating to the global level. Indeed, the Asian financial crisis, by reminding the world of its interdependence, brought calls for stronger international authority from such non-wild-eyed people as the chairman of the U.S. Federal Reserve Board. As the New York Times summarized the post-Asia conventional wisdom, “only the most dogmatic free market ideologues think the increasingly integrated global economy can get by without a super-national organization to serve as financial watchdog, scold, mediator and lender of last resort.”

Nonzero: The Logic of Human Destiny
by Robert Wright
Published 28 Dec 2010

The impetus behind it is strong largely because individual states see that their long-term interest lies in plugging into the system. But when the system hits a downturn, they would be better off if somehow they could magically become less plugged in—temporarily, at least. Modern China survived the early ravages of the 1997 Asian financial crisis in good shape partly because its currency was not easily converted into other currencies. Even so, China stuck to its plans for convertibility, because in the long run you’re better off plugged in. China, of all nations, should know. Its epic mistake—the mistake that got it labeled an underachiever—was unplugging from the system beginning in the late fourteenth century.

…

At work here was a general principle: as commerce expands, enmeshing more and more people, it gives them a shared interest in protecting it from friction and disruption. Today, as commerce swamps the borders of nation-states, there are many sources of potential friction and disruption. One is trade disputes, which carry the threat of trade wars. Another, put on display during the Asian financial crisis of the late 1990s, is lack of “transparency,” of good financial data about ostensibly healthy nations—a shortcoming that can lead finally to a panicked and ruinous exit of foreign investment. Both of these problems raise the “trust” barrier to non-zero-sum gain. And trust barrier generally get breached by governance in one sense or another.

…

Still, if what authority these bodies do have exists in response to increasingly non-zero-sum relations among nations, and if technology is very likely to sustain this trend, then it doesn’t take a wild-eyed visionary to imagine more and more authority migrating to the global level. Indeed, the Asian financial crisis, by reminding the world of its interdependence, brought calls for stronger international authority from such non-wild-eyed people as the chairman of the U.S. Federal Reserve Board. As the New York Times summarized the post-Asia conventional wisdom, “only the most dogmatic free market ideologues think the increasingly integrated global economy can get by without a super-national organization to serve as financial watchdog, scold, mediator and lender of last resort.”

What Would the Great Economists Do?: How Twelve Brilliant Minds Would Solve Today's Biggest Problems
by Linda Yueh
Published 4 Jun 2018

One difference between Latin America and Europe is that the latter had more stable institutions such as well-regarded central banks, which emerged from the debacle with their reputations more or less intact, whereas in Latin America the crisis led to a loss of confidence in their economic systems and investors pulled out for the long term. This is in line with North’s theory that good institutions persist and breed prosperity even through crises. The third-generation financial and currency crisis took place in Asia in 1997–98. What distinguishes the Asian financial crisis from the first two is that it was a financial crisis that led to a currency crisis. When foreign investors suddenly pulled their money from Thailand after years of capital inflows into the country, it led the Thai baht to collapse. There was a ‘sudden stop’ of cash inflows that had been lent to Thai businesses.

…

What was surprising about the third-generation crisis was that it affected Asian economies, which, unlike Latin America in the early 1980s, were viewed as growing well and did not have huge trade or fiscal deficits. Yet the five economies initially involved were mired in crises that hurt their growth for years. The other worrying trait of the third-generation crisis was contagion, the impact of the Asian financial crisis also being felt in emerging economies around the world. It affected Russia in 1998, Turkey in 1999 and Brazil and Argentina by the early 2000s. This was not because these economies traded much with or invested a great deal in the affected Asian nations, but probably because investors became indiscriminately wary of all developing markets, plunging those economies into crisis too.

…

Ricardian equivalence David Ricardo’s theory that rational people know that the government debt will have to be repaid at some point in the form of higher taxes so they save in anticipation and do not increase current consumption that boosts growth. second-generation currency crisis The collapse of the European exchange rate mechanism (ERM) in 1992. STEM Science, technology, engineering and mathematics. third-generation financial and currency crisis The Asian financial crisis of 1997–98. Wall Street Crash See Great Crash. World Bank A Bretton Woods institution focused on alleviating poverty. WTO (World Trade Organization) An intergovernmental organization formed in 1995 that regulates international trade, which was preceded by the General Agreement on Tariffs and Trade (GATT), in force since 1947.

The Great Economists: How Their Ideas Can Help Us Today
by Linda Yueh
Published 15 Mar 2018

One difference between Latin America and Europe is that the latter had more stable institutions such as well-regarded central banks, which emerged from the debacle with their reputations more or less intact, whereas in Latin America the crisis led to a loss of confidence in their economic systems and investors pulled out for the long term. This is in line with North’s theory that good institutions persist and breed prosperity even through crises. The third-generation financial and currency crisis took place in Asia in 1997–98. What distinguishes the Asian financial crisis from the first two is that it was a financial crisis that led to a currency crisis. When foreign investors suddenly pulled their money from Thailand after years of capital inflows into the country, it led the Thai baht to collapse. There was a ‘sudden stop’ of cash inflows that had been lent to Thai businesses.

…

What was surprising about the third-generation crisis was that it affected Asian economies, which, unlike Latin America in the early 1980s, were viewed as growing well and did not have huge trade or fiscal deficits. Yet the five economies initially involved were mired in crises that hurt their growth for years. The other worrying trait of the third-generation crisis was contagion, the impact of the Asian financial crisis also being felt in emerging economies around the world. It affected Russia in 1998, Turkey in 1999 and Brazil and Argentina by the early 2000s. This was not because these economies traded much with or invested a great deal in the affected Asian nations, but probably because investors became indiscriminately wary of all developing markets, plunging those economies into crisis too.

…

Ricardian equivalence David Ricardo’s theory that rational people know that the government debt will have to be repaid at some point in the form of higher taxes so they save in anticipation and do not increase current consumption that boosts growth. second-generation currency crisis The collapse of the European exchange rate mechanism (ERM) in 1992. STEM Science, technology, engineering and mathematics. third-generation financial and currency crisis The Asian financial crisis of 1997–98. Wall Street Crash See Great Crash. World Bank A Bretton Woods institution focused on alleviating poverty. WTO (World Trade Organization) An intergovernmental organization formed in 1995 that regulates international trade, which was preceded by the General Agreement on Tariffs and Trade (GATT), in force since 1947.

End This Depression Now!
by Paul Krugman
Published 30 Apr 2012

—Robert Lucas, presidential address to the American Economic Association, 2003 GIVEN WHAT WE know now, Robert Lucas’s confident assertion that depressions were a thing of the past sounds very much like famous last words. Actually, to some of us they sounded like famous last words even at the time: the Asian financial crisis of 1997–98 and the persistent troubles of Japan bore a clear resemblance to what happened in the 1930s, raising real questions about whether things were anywhere near being under control. I wrote a book about those doubts, The Return of Depression Economics, originally published in 1999; I released a revised edition in 2008, when all of my nightmares came true.

…

academic sociology, 92, 96, 103 AIG, 55 airlines, deregulation of, 61 Alesina, Alberto, 196–99 American Airlines, 127 American Recovery and Reinvestment Act (ARRA): cost of, 121 inadequacy of, 108, 109–10, 116–19, 122–26, 130–31, 212, 213 Angle, Sharron, 6 anti-Keynesians, 26, 93–96, 102–3, 106–8, 110–11, 192 Ardagna, Silvia, 197–99 Argentina, 171 Arizona, housing bubble in, 111 Asian financial crisis of 1997–98, 91 asset-backed securities, 54, 55 auction rate securities, 63 Austerians, 188–207 creditors’ interests favored by, 206–7 supposed empirical evidence of, 196–99 austerity programs: alarmists and, 191–95, 224 arguments for, 191–99 economic contraction and, 237–38 in European debt crisis, 46, 144, 185, 186, 188 as ineffective in depressions, xi, 213 state and local governments and, 213–14, 220 unemployment and, xi, 189, 203–4, 207, 237–38 Austrian economics, 150 automobile sales, 47 babysitting co-op, 26–28, 29–30, 32–33, 34 Bakija, Jon, 78 balance of trade, 28 Ball, Laurence, 218 Bank for International Settlements (BIS), 190, 191 Bank of England, 59 Bank of Japan, 216, 218 bankruptcies, personal, 84 bankruptcy, 126–27 Chapter 11, 127 banks, banking industry: capital ratios in, 58–59 complacency in, 55 definition of, 62 deregulation of, see deregulation, financial European, bailouts of, 176 government debt and, 45 “haircuts” in, 114–15 incomes in, 79–80 lending by, 30 money supply and, 32 moral hazard in, 60, 68 1930s failures in, 56 origins of, 56–57 panics in, 4, 59 political influence of, 63 receivership in, 116 regulation of, 55–56, 59–60, 100 repo in, 62 reserves in, 151, 155, 156 revolving door in, 86, 87–88 risk taking in, see risk taking runs on, 57–58, 59, 60, 114–15, 155 separation of commercial and investment banks in, 60, 62, 63 shadow, 63, 111, 114–15 unregulated innovations in, 54–55, 62–63, 83 Barro, Robert, 106–7 Bebchuck, Lucian, 81 Being There (film), 3 Bernanke, Ben, 5, 10–11, 32, 76, 104, 106, 151, 157, 159–60, 210 recovery and, 216–19 on 2008–09 crisis, 3–4 “Bernanke Must End Era of Ultra-low Rates” (Rajan), 203–4 Black, Duncan, 190 Blanchard, Olivier, 161–63 Bloomberg, Michael, 64 BNP Paribas, 113 Boehner, John, 28 bond markets: interest rates in, 132–41, 133 investor confidence and, 132, 213 bonds, high-yield (junk bonds), 115, 115 bond vigilantes, 125, 132–34, 138, 139, 140 Bowles, Erskine, 192–93 Brazil, 171 breach of trust, 80 Bretton Woods, N.H., 41 Broder, David, 201 Brüning, Heinrich, 19 Buckley, William F., 93 Bureau of Labor Statistics, U.S.

Economic Gangsters: Corruption, Violence, and the Poverty of Nations
by Raymond Fisman and Edward Miguel
Published 14 Apr 2008

Those who were best positioned to change a corrupt system liked it fine just the way it was. Given the system’s benefits to Indonesia’s insiders, it should come as no surprise that political and economic reform had stalled and that serious reform attempts materialized only at 39 CH A PTER TW O the end of Suharto’s rule. As the Asian financial crisis erupted in late 1997 and Suharto still clung to power, the IMF tried to impose some discipline on Suharto’s cronies. As a condition of the IMF relief package, state-sanctioned monopolies were supposed to be dismantled and government-owned banks were to stop funneling money into well-connected businesses.

…

Perhaps not impressed by his automotive and management expertise, a number of top executives soon quit, leaving a manage- 40 SU H A RTO , I N C. ment vacuum at the company. Nonetheless, the Wall Street Journal reported in 1998 that Tommy’s stake in Lamborghini was sold at a significant profit, even under the distressed circumstance facing Tommy after the Asian financial crisis. So, was the Lamborghini purchase a frivolous investment financed by Daddy’s money? Or a calculated purchase by a savvy investor with expertise in fast cars? Based on our findings, it appears that Indonesian investors thought much of Tommy's value came more from connections rather than business smarts.

Brave New World of Work
by Ulrich Beck
Published 15 Jan 2000

The dynamic of the knowledge society favours the concentration and globalization of capital, precisely because the decentralizing power of networks is brought into play, while ‘there is at the same time differentiation of work, segmentation of workers, and disaggregation of labour on a global scale … Labour loses its collective identity, becomes increasingly individualized in its capacities, in its working conditions, and in its interests and projects.’24 The fixed location of labour means that working people are losers in the struggle to distribute the global risks of globalization. The Asian financial crisis and its consequences shed a bright light upon the previously darkened side of the economic world risk society. Not only do they provide a most striking example of organized irresponsibility; they have also made it clear that whole countries and groups of countries can become victims of global ‘casino capitalism’.

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The neoliberal paradigm of politics may be said to involve an immanent contradiction: the power of the state and its institutions is supposed to be meticulously captured and applied to the breaking of that power. This is in a world where the collapse of national institutions in the 1990s has led to truly devastating human tragedies and civil wars in Somalia, East Africa, Yugoslavia, Albania and parts of the former Soviet Union, and now to the threat of turmoil resulting from the South-East Asian financial crisis. Even if the weakening of central state power cannot be solely or primarily attributed to the new influence of global markets, it nevertheless appears that under their pressure a hidden vacuum of state power and legitimacy may suddenly and brutally become apparent. At a more detailed level too, one can study how the neoliberal revolution undermines its own foundations.

China's Disruptors: How Alibaba, Xiaomi, Tencent, and Other Companies Are Changing the Rules of Business
by Edward Tse
Published 13 Jul 2015

Profits jumped even more over the same period, up nearly seven times for state-owned companies, but up nearly 23-fold for non-state ones. The Chinese entrepreneurs have thrived, in part, because they created companies able to change as China changed. Many of them first set up businesses when the economy was still dominated by the state, which set most prices and appointed most company leaders. They survived the Asian financial crisis of the late 1990s. They fought off competition from the flood of foreign companies that arrived after China entered the World Trade Organization in the 2000s. And they rode out the worldwide downturn that followed the global financial crisis during the late 2000s and early 2010s. Throughout all of this, China’s entrepreneurs created an economy largely outside the direct control of the government.

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A123 Systems, 130 ABN AMRO, 150 Abrami, Regina M., 93–94 Adidas, 195 Africa, rise of Chinese business in, 137 agriculture, 43, 109 Airbnb, 129 Airbus, 73, 110, 213 air-conditioning business, 12–13 Alcatel, 84, 102 Alibaba.com, 34, 39, 57 Alibaba Group, 10, 11, 33–40, 41, 49, 52, 53, 60, 62, 72, 80, 83–85, 87, 99, 100, 101, 136, 139, 148, 151, 153, 162, 184, 185, 191, 194, 197, 201, 215, 222, 225 innovation by, 94 interest in American companies, 135 IPO of, 33, 85, 90 lending transformed by, 39, 149–50 overseas listing of, 85, 89 sales by, 33–34 share listing of, 61 Sina Weibo purchased by, 87–88 start of, 37 water quality mapped by, 170 Alipay, 35–36, 39, 78, 88, 99, 192 Alta Devices, 123 Aluminum Corporation of China, 119 Amazon, 57, 68, 69, 95 Amazon.cn, 57 AMC Entertainment, 120 Amelio, William, 126, 127 Andersen Consulting, 95 Angola, 137 Apple, 67, 68, 69, 89, 112, 128 Asian financial crisis of 1990s, 16 B2B business, 36, 38, 39, 184 BAIC, 133 Baidu, 11, 39, 52, 81, 82, 83–84, 87, 88, 139, 158, 161, 191, 225 copyright violations by, 114 founding of, 49 innovation by, 94 IPO of, 50 overseas listing of, 89 Bain & Co., 151, 159 Barra, Hugo, 197 Beijing Zhongkuan, 45 Biden, Joe, 93 Bill and Melinda Gates Foundation, 109 BlackBerry, 136 Blackstone Group Asia, 224 BMW, 180 Boeing, 73, 110, 213 Booz & Company, 25, 178 Bosch Siemens, 196 Boston Consulting Group, 20, 25 brand development, 122 brand loyalty, 19–20 Brazil, 68, 139 Broad Group, 20, 54, 63, 148, 216–18, 221, 225 Broad Sustainable Building, 217 Broad Town, 216 Brown, Shona L., 182–83, 185–86, 187 BYD, 20, 76, 134 C2C market, 34–35, 184 C919, 110–11 Caixa Seguros, 123 cars, 12, 20, 44, 74, 76, 123, 130–34 Chang, Gordon, 9 Chang’an, 133 Changhong, 76 Chen, Steve, 112 Chen Dongsheng, 45, 54, 55, 148, 168–69 Chengdu, 24 Chen Haibin, 12, 155–56 Chery, 134, 138 China, People’s Republic of: agricultural output in, 43, 109 authoritarian rule in, 22–23 billionaires in, 8, 10, 45, 48 buying-power in, 19 consuming classes, 72–77, 74, 151 critics of, 8–9 debt in, 78, 80, 167 Deng’s reforms in, 17, 27, 28, 42–43, 47, 132, 140, 148, 166, 167, 176 earthquake in, 217 economic growth in, 8, 25, 70–71, 77–79, 97, 154, 165, 209–10 exports of, 9, 44, 48, 79, 104, 109, 133, 134–36, 140, 152, 188, 214 foreign currency reserves of, 22 founding of, 3 high-net-worth individuals in, 150, 151 housing privatized in, 48–49 hybrid government of, 71, 167, 210, 212, 213–16 innovation in, 93–116 institutional development in, 166, 195, 221 logistics costs in, 78 monthly wages in, 98 multinationals invited into, 46–51, 70, 71, 72–77, 188–90, 192, 195, 197–201, 222–23 number of companies by ownership in, 15 opportunities in, 41, 49–50, 115–16, 140–41, 180–81, 203–30 outbound investment from, 28, 120–24, 121, 138–39, 140 per capita GDP of, 113 per capita income in, 229 pioneers of 1980s in, 46 R&D spending in, 106–7, 107, 121, 122, 192, 193 revenues by company type in, 15 rising urban class in, 96 scale of, 71–72, 83, 85, 180–81 traded goods of, 109 trends shaped by, 18–19 U.S. and European investment in, 181, 223 as world’s biggest manufacturer, 19 China Auto Rental, 194–95 China Banking Regulatory Commission, 149 China Development Bank, 138 China Entrepreneurs Forum (CEF), 145, 169, 171, 223 China Food and Drug Administration, 155 China Guardian Auction Company, 45 China Investment Corporation, 149 China Merchants Bank, 205 China Mobile, 102, 212 China National Offshore Oil Corporation, 120 China Pages, 37 China Post, 100 China Resources Enterprise, 180 China Smart Device Innovation Fund, 113 China Telecom, 102 China Unicom, 102 China UnionPay, 36, 78 Chinese Academy of Sciences, 44 Chinese Academy of Sciences Computer Technology Research Institute New Technology Development Company, 54 Chinese People’s Political Consultative Conference, 81 Chongqing, 193, 224 Chu, Gary, 196 Cisco, 105 Citic Pacific, 123 climate change, 25, 29, 227, 229 clothes, 9 Club Med, 194 Cold War, 23 Coming Collapse of China, The (Chang), 9 Commercial Aircraft Corporation of China (COMAC), 110–11, 213 Communist Party, China, 22, 42, 44, 55, 77, 211, 218, 220, 226 purge of, 4 “competing on the edge,” 181–86, 188 computers, 9, 11, 125–28, 178 Congo, 137 Consumption Promotion Month, 73 copyright, 114 corporate flexibility, 190, 191–92 costs, controlling of, 97 counterfeiting, 75 creative destruction, 163 Ctrip, 113 Cultural Revolution, 4, 42, 43, 54, 207 Daimler, 180 Dalian Wanda, 48, 88, 120, 172 Datascope Corporation, 123 decision-making, 23, 58, 190–91, 211 Decorvet, Roland, 196 Dell, 95, 96, 126, 128 Deng Xiaoping: reforms of, 17, 27, 28, 42–43, 47, 132, 140, 148, 166, 167, 176 southern tour of, 44 Detroit Electric, 133 Development Research Center, of the State Council, 45 DHgate.com, 12, 57 Dian Diagnostics, 155–57 Diaoyu, 181 Digital China, 148 Ding Xuedong, 149 D’Long, 13 Dongfeng, 133 dotcom bubble, 37 Drivetrain Systems International, 133 eBay, 34, 40 e-commerce, 10, 11, 20, 38, 39, 78, 81–84, 88–89, 96–97, 99, 225 Economist Intelligence Unit, 140 education, 27 rising standards of, 98 Eisenhardt, Kathleen M., 182–83, 185–86, 187 Emerald Automotive, 133 energy, 9, 19, 25, 29, 42, 115, 119, 137, 186, 216–17 energy-efficient buildings, 216 engineering, 27 entrepreneurs, 56, 199–201, 226–28, 229–30 ambition of, 55, 57–61 boundaries pushed by, 26–27 everyday life changed by, 164–65 Gang of ’92, 45–46, 54 innovation by, 93–116 international talent of, 196–97 1980s generation of, 51–53 origins of, 42–46 overseas, 139 pride of, 55, 57 reforms sought by, 145–49 shared heritage of, 55, 61–64 strengths of, 24–26 see also specific entrepreneurs environment, 60, 168, 169–70 Epic Games, 135 Ericsson, 101, 102, 105 European Union, R&D spending in, 107 EV71 virus, 109 Evergrande Real Estate, 48 Export-Import Bank of China, 138 Facebook, 83, 87, 94, 222 Fanfou.com, 53 Feng Lun, 45–46, 148 finance, 149–53, 157, 162, 163, 186, 192–93 deregulation of, 164, 212–13, 229 1st Dibs, 135 Fisher & Paykal, 7 Fisker Automotive, 130 Food and Drug Administration, U.S., 123 Forbes, 10 Ford Motor Company, 123, 131, 133 Forever 21, 195 Fosun, 123, 138, 148, 155, 156, 194 Foursquare, 129 Foxconn, 112 Gang of ’92, 45–46, 54, 148, 168–69 Gao Feng Advisory Company, 25 Gavekal Dragonomics, 73 Geely Auto, 12, 44, 76, 123, 131–34, 138, 175, 185, 212 General Mills, 196 General Motors, 133, 137, 179 Gerke, Roland, 196 Germany, 121, 216 doctorates in, 108 global financial crisis, 73, 78 Global Solar Energy, 123 Golden Monkey, 194 Goldman Sachs, 37, 136 Gome Electrical Appliances, 13 Google, 83, 87, 112, 127, 128, 197 Great Firewall of China, 82 Great Leap Forward, 3–4 Great Wall Technology, 76, 126 Guo Guangchang, 148 Guo Wei, 148 Haier, 3, 5–8, 10, 47, 49, 58–60, 76, 84, 94, 98, 100, 101, 175, 185, 187, 200, 208, 224 Hainan, 46 Hangzhou Wahaha Group, 52, 76 Harvard Business Review, 93–94 health-care system, 12, 153–57, 162, 163, 212 Hengan International, 12, 53, 175–78, 199, 200 Hershey, 194 Hertz Global Rental, 194–95 Hewlett-Packard, 125, 128 Hoffman-La Roche, 155 Home Depot, 180 Honda, 133 Honeywell, 190, 192, 196 Hong Kong, 68, 214, 223–24 Hong Kong Stock Exchange, 68, 86, 177 hospitals, 154–56, 212 Household Responsibility System, 43 Huang Guangyu, 13 Huang Nubo, 45, 63, 168 Huawei Technologies, 11, 20, 43–44, 47, 54, 60, 67, 75, 84, 89, 122, 128, 136, 138, 139, 140, 175, 200, 222 innovation by, 94, 101–5 Hui Ka Yan, 48 Hu Jintao, 147 Hutchison Telecom, 103 Hyundai, 133 IBM, 125, 127–28, 129, 178 ICBC, 149 ICQ, 85 IDG, 85–86 India, 68 infrastructure, 71, 78, 79, 82, 83, 85, 99, 105, 111, 114, 137–38, 153, 163, 164, 166, 188, 191, 192, 210, 223, 224 Innovation Works, 111–12 Intel Capital, 113 interest-rate liberalization, 40, 152–53 Internet, 27, 81–90, 82, 135–36, 161, 186, 197, 209–10, 218–19, 221–22 iPhone, 68, 69, 94 iQiyi.com, 162 Japan, 94, 121, 141, 216 R&D spending in, 107 JD.com, 84, 87 revenue of, 89 Jialing, 76 Jiang Jianqing, 149 Johnson & Johnson, 175 Joyo.com, 12, 57, 68 Jumei.com, 206 “just-in-time” production system, 94 Kan, Michael, 69 Kandi Technologies Group, 133 Kao, 175 KFC, 180 Kimberly-Clark, 12, 175 Kingsoft, 68 Kirby, William C., 93–94 Konka, 76 Koo, Victor, 158–59, 160, 218 Krugman, Paul, 9 Kutcher, Ashton, 129 Lardy, Nicholas, 17 Lau, Martin, 136 Lau, Ricky, 225 Lee, Hudson, 196 Lee, Kai-fu, 111–12 legal infrastructure, 114 Legend, 44 Legend Holdings, 112, 126 Lei Jun, 11, 12, 57, 67, 81, 112, 162, 197, 226 Lenovo, 11, 20, 44, 54, 67, 75, 89, 112, 139, 140, 148, 171 expansion by, 124–29, 130 revenue of, 125–26, 127, 128 Leung, Antony, 224 Levi’s, 195 Li, Richard, 85–86 Li, Robin, 11, 49, 50, 64, 81, 88, 139 liberalization, 44, 55, 71, 72, 75, 78–79, 152, 154, 166–67, 178, 181, 210, 211, 223 of interest rates, 40, 152–53 Li Dongsheng, 148 Liebherr, 5–6 Lifan, 76 Li Ka-shing, 85 Li Keqiang, 210, 215 Lin Bin, 68 Li Shufu, 12, 44, 47, 131–34, 138, 175, 185 Little Emperors, 51–53 Liu Chuanzhi, 54, 171 Liu Junling, 96 Liu Mingkang, 149 Loncin, 76 L’Oréal, 205 Lu Guanqiu, 130 Lyft, 135 Ma, Jack, 10, 33–40, 41, 47, 50, 54–55, 60–61, 62–63, 64, 86, 136, 148, 197, 201, 221 background of, 36–37 environmental work of, 60, 168, 169–70 and U.S.

A Game as Old as Empire: The Secret World of Economic Hit Men and the Web of Global Corruption
by Steven Hiatt; John Perkins
Published 1 Jan 2006

We lost market share, and we couldn’t raise our prices as much as we should have. Even without the imports, the market was already very competitive here. There were many tire retreading companies—a few big ones, and many small ones. Especially after we joined the WTO in 1995–96, the industry started to have real problems. “Then with the Asian financial crisis of 1997, there was devaluation, and the price of imported goods went up. At first we thought that devaluation would help us, that imported tires would become expensive, but that never happened. The prices of imported tires remained low—and our costs went up! We got caught in operating losses that accumulated over the years, and the business failed.

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As activists increasingly combined their efforts across nations to shine light on the negotiating process, elected officials felt the pressure and were ultimately convinced to reject the MAI at the OECD conference in 1998. Its defeat marked one of the first and most important successful global movements of people and governments against an international trade or investment agreement. At the same time, the devastating reality of these investment rules was on full display as the East Asian financial crisis took hold and began to spread. From 1998 to 1999, nations that had once been characterized as the “East Asian tigers” because of their thriving economies suddenly crashed when the IMF restricted the ability of their governments to regulate which sectors of their economies received foreign investments and how long and in what quantities the investments had to stay.

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Electoral Victories Across the globe, peoples’ movements for global justice have swept in elected officials representing their views. These officials have then brought resistance into the institutions of corporate globalization. Walden Bello of Thailand’s Focus on the Global South describes how, in the midst of the East Asian financial crisis, public pressure led Prime Minister Mohamad Mahathir of Malaysia to break with the IMF and impose capital controls, saving the country from the worst effects of the crisis. According to Bello, Mahathir’s defiance of the IMF was not lost on Thaksin Shinawatra, who ran for prime minister of Thailand on an anti-IMF platform and won.

After the New Economy: The Binge . . . And the Hangover That Won't Go Away
by Doug Henwood
Published 9 May 2005

On the left, dependency theory gave this position some ideological cover, and today's debates are often filled with similar sentiments. Among NGOs and intellectuals working on development issues, there is talk of apartheid South Africa and Smith s Rhodesia as models of a possible autarkic dehnking from the world economy, and admiration for Mahathir's capital controls in Malaysia during the 1997-98 Asian financial crisis. It's often overlooked that Mahathir is a repressive bigot, and that the Southern African examples were part of strategies to sustain horrible societies. Any "progressive" alliance with national capitalism in the name of resistance to international capitaHsm can get very smelly. In the U.S., the Citizens Trade Campaign has taken support from the troglodytic textile tycoon Roger MiUiken.^ That's bad enough, but Na-derite trade rhetoric about how the World Trade Organization threatens U.S. sovereignty is pretty bad too; the world has sufiered from too much U.S. sovereignty and could do with a Uttle less.

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"Debtor Nation: Borrowing Levels Reach a Record, Sparking Debate," Wall Street Journal, ]u1y 5, p. CI. Aaron, David, 160 accounting. New Era, 17—22 Allen, Woody, 75 Aim, Richard, 114 Amazon.com, 30—31 Americanization of global finance, 217-225 Americans with Disabilities Act, 101 analysts, stock, 194-200 anriglobalization movement, 160,178,180, 229 AOL Time Warner, 229 Asian financial crisis (1997), 222, 225 Atwater, Wilbur, 107 AT Kearney, 153 Avalon, Frankie, 198 Badgett,M.V. Lee, 100 Balboa, Rocky, 198 Balibar, Etienne, 172-173, 239 bankruptcy, not in economists' models, 193 Barlow, Maude, 162 Bartiromo, Maria, 189-190 Baudrillard,Jean, 26 Becker, Gary, 94, 97 BeUo,Walden, 185 benefits, targeting of, 141-142 Berle,Adolph,212,213 bibhometrics "globahzarion," 145—146 "New Economy," 4 biotechnology, pubUc subsidy, 6 Biotic Baking Brigade, 239 birth weight, 81 Blodget, Henry, 195 Boesky, Ivan, 214 Bono, 177 book value, 232 border cultures, 172 Brady bonds, 221 brands, 17,18-19 Brand DNA, 18 Bretton Woods, 219 brokers productivity of, 64-66 salaries, 202 Brown & Co., 187 Buchanan, Pat, 151,173, 239 Burbach, Roger, 175 business, trust in, 32 Business Week cheerleading 1960s, 7-8 1990s, 32 New Economy poll, 31—32 California electricity crisis, 34,200 Silicon Valley income distribution, 105 Index California Public Employees Retirement System, 214 capital, measuring, 57 capitalism collective (Berle),213 as international, 167 periodizing, 175-176 capital account liberalization, 218 capital flight, 220 capital gains, 89,203 Cappelli, Peter, 76 caring professions, discrimination and, 96 Carrying Capacity Network, 162 Casarini, Luca, 160 Casey Bill, 232 Castells, Manuel, 26,147 Catholic social teaching, 140 Cavanagh,John, 162 cellular phone industry, 198 Center on Budget and Policy Priorities, 89-90 central banks.

10% Less Democracy: Why You Should Trust Elites a Little More and the Masses a Little Less
by Garett Jones
Published 4 Feb 2020

A Brief History of Sovereign Default Europeans saw the political power of bondholders in recent years in Greece, where in the aftermath of the European debt crisis, individual investors, banks, and international lending agencies placed strong pressure on the Greek government to curb spending, increase taxes, and sell off government assets in order to create enough free cash flow to start repaying the Greek government’s massive debts. Lenders became reformers. Sovereign bondholders similarly became de facto reformers during the 1997 Asian financial crisis and even earlier in the 1980s during the Latin American debt crisis. The pattern is now almost routine: a financial crisis hits, the economy weakens, and governments instantly lose tax revenue because people cut back on spending (fewer sales taxes) and people get laid off (fewer income taxes).

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Index Acemoglu, Daron: “Democracy Does Cause Growth”, 13 Akkerman, Mark, 168 Alemán, Eduardo: on elections years in Argentina, 36 Alesina, Alberto: on control of central banks, 42–43; on economic independence of central banks, 45–46; on income growth and central bank independence, 48, 49; on inflation and central bank independence, 45–47, 58–59; influence of, 49–50, 58; on political independence of central banks, 45–46, 47; on unemployment and central bank independence, 48 Almond, Gabriel: on education, 109 altruism, 28, 139 American Convention on Human Rights (1969): Article 23 of, 95–96 American Medical Association: on physicians treating themselves or immediate families, 115 Argentina: election years in, 36; term length of politicians in, 37–38 Aristotle: on democracy, 181, 183; on the mean, 182; on middle class and political power, 182, 183; on mixed form of government, 181; on oligarchy, 183; on polity, 183 Arkansas: redrawn legislative districts in, 38–39 Ash, Elliott: on opinions of appointed judges, 69, 72–73; on opinions of elected judges, 72–73 Asian Development Bank, 133 Asian financial crisis of 1997, 133 Athenian democracy, 13, 39, 181 austerity policies, 132, 141 Austro-Hungarian Empire: sovereign debt of, 125 autocracy vs. democracy, 18–19, 25–26, 145 Bade, Michael: on central bank independence (CBI), 44–45 Bank of England, 41, 71 Bank of Japan, 41 Barro, Robert: on economic growth and democracy, 21–23, 193n18; on economic growth and inflation, 23, 24 Bastiat, Frédéric: on bad vs. good economists, 29 Baumgartner, Frank, 37 Becker, Gary, 60 Beckman, Ludvig, 97 before-and-after comparisons, 12, 15, 22, 78–79 Bell, Mark: on peace and democracy, 15–16 Bentham, Jeremy: on rights, 103 Besley, Tim: on elected regulators and prices, 87; on elected vs. appointed electricity regulators, 83–84 Blackstone’s Commentaries on the Laws of England, 75 Blinder, Alan: Advice and Dissent, 92, 100; on central bank independence, 59–60, 61, 92; Central Banking in Theory and Practice, 59–60; on diminution of democracy, 92–94; on Federal Reserve, 63–64, 92, 94; “Is Government Too Political?”

Vulture Capitalism: Corporate Crimes, Backdoor Bailouts, and the Death of Freedom
by Grace Blakeley
Published 11 Mar 2024

As a result, they implemented measures at both the national and international level to promote financial globalization.63 These measures were generally described as deregulatory policies, but it is better to think of the process of financial liberalization as a “ ‘reregulation’ that required greater state intervention and cooperation.”64 These policymakers did not, of course, intend to cause the financial crisis of 2008. But they could have seen it coming. The Asian financial crisis of the 1990s had demonstrated very clearly the dangers of allowing “hot money” to flow rapidly across borders without safeguards.65 Joseph Stiglitz had pointed out that “capital account liberalization was the single most important factor leading to the [Asian] crisis.”66 And in its wake, there was a renewed attempt to place limits on financial globalization in some quarters.

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The Asian financial crisis of the 1990s had demonstrated very clearly the dangers of allowing “hot money” to flow rapidly across borders without safeguards.65 Joseph Stiglitz had pointed out that “capital account liberalization was the single most important factor leading to the [Asian] crisis.”66 And in its wake, there was a renewed attempt to place limits on financial globalization in some quarters. But these attempts were stymied by an alliance of international financial institutions, politicians in the rich world, and bureaucrats within the international financial organizations. The response to the Asian financial crisis was simply to blame poor countries for economic mismanagement and shore up the neoliberal orthodoxy that had led to the crash in the first place.67 As long as it was enriching and empowering Western financial institutions, the state was not going to stand in the way of financial globalization.

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By 2004, per capita GDP across sub-Saharan Africa was less than half of what it was in 1974.161 As a result, the size of these nations’ debts only increased relative to their GDP. The programs also sharply increased inequality, as well as pushing millions of people further into poverty.162 In East Asia, in the wake of a financial crisis that had had devastating consequences for both economic and human development, structural adjustment added insult to injury. The Asian financial crisis of 1997 was the direct result of financial globalization, pushed by Western states and the international financial institutions they dominated, yet the blame was placed on the governments of the Asian countries themselves.163 Many of these states had managed to achieve impressive rates of growth and poverty reduction, in part through the support that had been provided by the state to certain industrial sectors.164 As Joseph Stiglitz points out, these countries had succeeded precisely because they defied many Washington Consensus policies pushed by the IMF.165 Yet the crisis was used by the international financial institutions as a stick with which to beat these economies into submission.

The Great Stagnation
by Tyler Cowen
Published 24 Jan 2011

Let me list a few:• The savings and loan crisis of the early 1980s • The failure of Continental Illinois (then a major U.S. bank) in 1984 • The stock market crash of 1987—Black Monday, a 22.5 percent drop in one day • The bursting of the real estate bubble in the late 1980s • The Mexican financial crisis of 1994 • The Asian financial crisis of 1997-1998 • The Long-Term Capital Management (a hedge fund) crisis of 1998 • The bursting of the dot.com bubble in 2001 In each case, it seemed initially that something really terrible was happening to the economy. When all was said and done, however, these events ended up looking like smaller problems.

A Brief History of Neoliberalism
by David Harvey
Published 2 Jan 1995

Fishman, ‘The Chinese Century’, New York Times Magazine, 4 July 2004, 24–51. 18. H. French, ‘New Boomtowns Change Path of China’s Growth’, New York Times, 28 July 2004, A1 and A8. 19. K. Bradsher, ‘Big China Trade Brings Port War’, International Herald Tribune, 27 Jan. 2003, 12. 20. S. Sharma, ‘Stability Amidst Turmoil: China and the Asian Financial Crisis’, Asia Quarterly (Winter 2000), www.fas.harvard.edu/~asiactr/haq/2000001/0001a006.htm. 21. Hale and Hale, ‘China Takes Off’, 40. 22. H. Liu, ‘China: Banking on Bank Reform’, Asia Times Online, atimes. com, 1 June 2002. 23. K. Bradsher, ‘A Heated Chinese Economy Piles up Debt’, New York Times, 4 Sept. 2003, A1 and C4; K.

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Salerno, J., ‘Confiscatory Deflation: The Case of Argentina’, Ludwig von Mise Institute, http://www.mises.org? fullstory.aspx? control=890. Sharapura, S., ‘What Happened in Argentina?’, Chicago Business Online, 28 May 2002, http://www.chibus.com/news/2002/05/28/Worldview. Sharma, S., ‘Stability Amidst Turmoil: China and the Asian Financial Crisis, Asia Quarterly (Winter 2000), www.fas.harvard.edu/~asiactr/haq/2000001/0001a006.htm. Shi, L., ‘Current Conditions of China’s Working Class’, China Study Group, 3 Nov. 2003, http://www.chinastudygroup.org/index.php? action=article& type. Sommer, J., ‘A Dragon Let Loose on the Land: And Shanghai is at the Epicenter of China’s Economic Boom’, Japan Times, 26 Oct. 1994, 3.

Second World: Empires and Influence in the New Global Order
by Parag Khanna
Published 4 Mar 2008

Because defiant militaries carried national legitimacy, ASEAN’s inauspicious beginnings saw it grappling with Sukarno’s aggressive Indonesian “Konfrontasi” policy toward Malaysia, followed by conflicts in Vietnam and Cambodia.1 For decades, it remained an anticolonial bloc in which the United States boosted military rule to counter agrarian Marxism (tripling the size of the Thai military, for example). Like the EU, ASEAN experienced its Bosnia-like moments after the Cold War: the Asian financial crisis, Indonesian forest-fire haze, the East Timor intervention, and the SARS outbreak. Each tested the coherence and utilty of ASEAN, and spurred the rapid development of collective mechanisms for trade integration and combating terrorism, environmental decay, transnational crime, and disease.

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To break free of America’s strategic encirclement, China is picking off ASEAN members one by one and pulling them into its neotribute system such that the individual ties each enjoys with China are now more powerful than the ties among themselves. “ASEAN countries kowtow to China not only to avoid being on China’s bad side,” a Thai diplomat and former ASEAN official explained, “but on the promise that China will not abandon them in times of need, as the U.S. did during the Asian financial crisis.” ASEAN is now synonymous with China’s multitiered periphery: Singapore, Malaysia, and Brunei as the wealthiest partners; Thailand, Indonesia, and Vietnam as economic and strategic assets; and Burma, Cambodia, Laos, and the Philippines as third-world clients. With all of them, China is granting greater market access and sustaining trade deficits (which have brought record profits to ASEAN businesses) in exchange for raw materials, defense agreements, and diplomatic pledges to lean its way.4 Like Europeans in the Maghreb, Chinese baby-boomers are buying retirement properties from Penang to Bali, enlarging a greater Chinese co-prosperity sphere for the twenty-first century.

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The former spice route sultanate of Malacca now blends Portuguese colonial architecture with computer assembly plants, while Kuala Lumpur residents can purchase gourmet foods at Carrefour, the paragon brand of first-world grocery shopping. Leadership can make much of the difference anywhere in the world, and while Venezuelans are stuck with Hugo Chávez, Malaysians had Mahathir bin Mohamad. Mahathir and his advisers were convinced that globalization was dangerous unless it was steered. During the Asian financial crisis, they bucked the international strictures that ravaged the Thai and Indonesian economies, instead imposing capital controls to keep the Malay ringgit afloat. As second-world leaders increasingly realize that globalization requires strong management to avoid uncontrollably exacerbating existing disparities, they are more likely to emulate Malaysia than Argentina.

The New Map: Energy, Climate, and the Clash of Nations
by Daniel Yergin
Published 14 Sep 2020

You end up at a wire mesh fence around a small tangle of pipes with a built-in stepladder. You’re there—the SH Griffin #4 natural gas well. The sign on the fence tells the date—DRILLED IN 1998. That was not exactly a great time to be drilling a well. Oil and gas prices had cratered with the Asian financial crisis and the ensuing global economic panic. But SH Griffin #4 would change things more than anyone could have imagined at the time. The well was drilled mainly with standard technology, but also with experimentation and ingenuity, despite considerable skepticism. The small band of believers working on the well were convinced that somehow you could extract natural gas from dense shale rock in a way that was commercially viable—something that the petroleum engineering textbooks said was impossible.

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As the decade proceeded, the economy rebounded, the foundations of a market economy were taking shape, and optimism came with it. There was talk of a chudo—a Russian economic miracle—invoking the “economic miracles” in Western Europe and Japan after World War II.8 But then in August 1998, the Asian financial crisis engulfed Russia. The ruble collapsed, as did oil prices, drying up government revenues. The new economy stopped working and people weren’t paid. The credibility of the Yeltsin presidency was shattered. Yeltsin himself was a spent force. * * * — In 1976, the Leningrad Evening News reported that a previously unknown local “judoist” had won a judo competition and had “for the first time joined the ranks of champions.”

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See also carbon emissions; greenhouse gas emissions (GHG) Aizenberg, Eitan, 256 Akerson, Daniel, 333 Alaska, 20, 33, 69 Alawites, 207, 242, 245 Alberta, Canada, 46–47, 48, 60 Alekperov, Vagit, 76 Al-Falih, Khalid, 279 Algeria, 87 Algiers Accord, 280 Alibaba, 362 Aliyev, Ilham, 121 Al Jazeera, 306 al-Jihad, 263, 264 Allison, Graham, 131 Al Qaeda, 216, 249, 264–66 and the Gulf War, 237 Amerada, 18 American Journal of Public Health, 417 Annam kingdom, 137 Ansar Allah, 249–50 Aphrodite field, 256 Apple, 358, 368 Arab-Israeli War (1967), 204–5 Arab League, 239 Arab nationalism, xvii, 199–200, 203–5, 215 Arab oil embargo (1973), 53, 59 Arab Spring, 22, 91, 236–43, 248–52, 254, 429–30 Arak nuclear reactor, 226 Aramco. See Saudi Aramco Arctic petroleum reserves, 111–14 artificial intelligence (AI), 174, 349, 354, 357, 364, 369, 424, 429 Arya, Atul, 412 Asia, 38, 163, 398, 402, 412, 416. See also specific countries such as China Asia International Infrastructure Bank (AIIB), 182 Asian financial crisis of 1998, 75 Asquith, Herbert, 196 Assad, Bashar al-, 241–42, 243–45, 269 Assad, Hafez al-, 242 Association of Southeast Asian Nations (ASEAN), 148–50, 168–69, 169n Astana International Financial Center, 177 Ataturk, Mustafa Kemal, 201–2 Australia, 38, 114, 167, 169, 189, 281 Austria, 30 Austro-Hungarian Empire, 196, 200 automobile industry automobile manufacturing, 42, 132 and autonomous vehicles, 347–57, 368–69, 373 Auto-Tech advances, xviii, 366–73, 415, 427 Chinese market for U.S. cars, 171 See also electric vehicles Azerbaijan, 71, 74, 109, 120–23, 207, 281 Ba’athists, 207, 211–13, 216–17, 242, 268 Bab al-Mandeb, 251 Badri, Ibrahim Awad al-, 268 Baghdadi, Abu Bakr al-, 268–9, 271 Bahrain, 240–41, 306 Bai Meichu, 139–41, 150 Baker, James, 215 Bakken shale, 19–20, 21–22, 49 Balfour Declaration, 199 ballistic missiles, 226–27 Bank of England, 384 Banna, Hasan al-, 259–60 Barkindo, Mohammad Sanusi, 280–81, 319 Barnett Shale, 5–7, 14, 19, 23, 24 Barra, Mary, 333–34, 370 Bashneft, 76 battery technology, 327–34, 341, 344–46, 403, 429 Bazhenov formation, 98 Beckman, Robert, 145, 146 “Beijing consensus,” 116 Belarus, 74 Belt and Road Initiative (China), xvi, 134, 177–90, 185 Ben Ali, Zine el Abidine, 236 Benghazi, Libya, 239 Bernanke, Ben, 26 Bhatt, Alia, 342 Biden, Hunter, 110 Biden, Joe, 110, 237, 392 Bin Laden, Osama, 263–64, 265 biomass and biofuels, 394, 408, 410 BlackRock, 385 Black Sea, 122 Blue Stream pipeline, 85 Boko Haram, 270 Bolshevik Revolution, 69, 72, 79 Bolsonaro, Jair, 44–45 Bosporus strait, 122 Boston, Massachusetts, 112–13 BP, 15, 76, 386 Brazil, 38, 44–45, 56–57, 320 Breakthrough Energy Coalition, 403 BRIC era, 56–57, 76–77, 273 Britain and the United Kingdom and Brexit, 343 and carbon emission reduction, 388 and Central Asian economic ties, 177 and First Sino-Japanese War, 154 and Iranian Revolution, 207 and Iraqi oil infrastructure, 232 and Middle East colonialism, 194–200, 197 and Nasser’s Arab nationalism, 203–4 and Syrian civil war, 247 and the Thucydides Trap, 131, 154 and Ukrainian independence, 80 as “workshop of the world,” xvi, 132 Brookings Institution, 59 Brouillette, Dan, 320 Brunei, 33, 143, 169n Budapest Memorandum, 95 Burgan oil field, 24 Burisma, 110 Burkan missiles, 251–52 Burns, Larry, 351–52, 368 Burns, William, 225, 238 Bush, George H.

Barometer of Fear: An Insider's Account of Rogue Trading and the Greatest Banking Scandal in History
by Alexis Stenfors
Published 14 May 2017

Sociologists sometimes mention professions such as undercover police officers, but also traders. Banks are in the business of taking risk in order to make money. However, not all bankers like taking risk. Banks, therefore, need to hire professionals who are willing to actively take risk. These people are called traders. Around the time of the 1997 Asian financial crisis, there was one chaotic Friday I will never forget. People were panicking and as a result were trading frenetically. As soon as I had traded with someone, or someone had traded with me, the Reuters Dealing screen and the switchboard lit up like a Christmas tree with incoming calls from banks, brokers and sales people requesting, even demanding, prices.

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INDEX ABN Amro Bank, 59 Accenture, ‘rogue trading’ definition, 249 Accept, Breaker album, 110–11 ACI (Association Cambiste Internationale/Forex), 174, 181; ‘Dealing Certificates’, 216; Model Code, 227 actual funding rates, public knowledge, 97 Adoboli, Kweku, 250 Agius, Marcus, 77, 284 Almunia, Joaquín, 221 American Psycho, 239–40, 250 Aragon, 25 arbitarge, 31; opportunities, 27 Aros, 25 Asian financial crisis 1997, 260 ATM queues, image of, 109 average opinions, expectation of, 102 Bäckström, Urban, 117 Bailey, Andrew, 280 ‘banging the close’, 209 Bank of America, 2, 11, 153, 164, 188, 191, 223; Merrill Lynch rescue/takeover, 49, 67, 161–3, 193; rescue of, 10 Bank of England, 38, 55, 222; Exchange Joint Standing Committee, 179; inflation target, 39 Bank of Japan, 33, 81, 175–6 Bank of Tokyo-Mitsubishi, 153, 223 banking, competitive deregulation, 114; incentive structures literature, 252; post 2008 reforms, 254; risk taking essence, 281; staff ‘cost centres’, 95; see also, central banks; financial markets; money markets banks: access to money indicators, 96; cash hoarding, 45; change attempts post-scandals, 283; credit departments, 253; derivatives main users, 121; Eurodollar market made, 117, 125; fines, 236; LIBOR hiding, 105; LIBOR perceptions, 79; LIBOR quotes, 99; markets abuse, 14; profit maximizing, 80; public trust need, 284; reputational damage, 168; ‘special’ sector, 173; risk management systems, 46 Banque pour l’Europe du Nord, 113 Barclays Bank, 59, 98, 105, 153, 192–3, 210, 220, 223; Capital securities unit, 98; interest rate derivatives traders, 77; 2012 fines, 76; US dollar LIBOR trial, 139 Basel Accord 1988, 137; perverse effect, 138 BBA, banking lobby, 180, 183; BBAIRS creation, 118; big banks dominated, 107; -LIBOR trademark, 181 Bear Stearns, 49, 105, 272 ‘beating the market’, 267 Becker, Gary, 254 behavioural finance, study of, 196, 200–1, 255; ‘disruption effect’ concept, 258 benchmarks: financial instruments, 122; manipulation of, 14; manipulation criminalised, 282 Berlin Radio Show, 111 bid-offer spreads, 42–3, 62, 112, 132, 139, 146, 219, 223, 228–9; collusive practices, 223; FX market, 192; prices tight, 201; round figures, 218; secretly agreed, 220 BIS (Bank for International Settlements), 130 blame, individualised, 236; shifting, 68 Bloomberg, 50, 86, 88, 98, 151, 195, 283; indicative prices, 62 BNP Paribas, 193, 223; investment funds freeze redemptions, 50 Böll, Heinrich, 235 bonds selling, 21; trading desks, 215 bonuses, 164, 273; curbing partial solution, 280; stricter rules on, 280 ‘book’, traders, 26 Borough Market, London, 7, 101, 245 borrowing rates, low-balling, 99 bribes, forms of, 91 brokers, 143; best guess, 88; false information transmission, 89; role of, 141; traders pressure on, 90; -traders relation, 86–7, 89; use of, 132 Buffett, Warren, 15, 251 bulls/bears, early experiences formed, 31 Bush, George W., 45 buy and sell orders, 208 ‘call-outs’, 24; symptom assessing, 25 ‘Can do More’, 144 Canada: dollar, 33; Foreign Exchange Committee, 179 Canary Wharf, London, 6 Cantor Fitzgerald, London office, 264 capital controls, abolishment, 133 Carr Futures, World Trade Centre office, 264 cash markets, importance loss, 139 cash squeezes, year-end, 44 cash-settled derivatives; benchmark need, 122–3; made market, 133 cassettes, history of, 110–11 CDOs (collateralised debt obligations), 11 central bank, 151; -banks unique relationship, 173; foreign exchange interventions, 233; inflation rate target, 70; LIBOR key variable, 53, 151; LIBOR use, 152; money pumping, 50; power, 174; power overestimated, 49, 54; price stability goal, 51; repos, 175; tips, 176; transparency, 40, 166–7; unexpected interest rate moves, 41; weakening of, 114 Channel 4 News, 11 Chase Manhattan, 131 Chemical Bank (JPMorgan Chase), 30 CIBOR (Copenhagen Interbank Offered Rate), 28, 78–9 Citibank, 29, 30, 58, 101, 153, 155, 182, 188, 193, 220, 223; benchmark manipulation fine, 160; ‘Scandi’ desk, 33; Tokyo dealing room, 196 CME (Chicago Mercantile Exchange), 123, 1288; Eurodollar futures, 126 collateral types, central banks lowering, 50 competition law, UK and EU, 222 complex structured products, valuation inability, 50 compliance departments banks, 253; post-scandals increase, 283 Cooke, Mr Justice, 282 copycat behaviour, market making, 202–3 Cosmopolis, 250 counterparties, confirmations, 18 Countrywide, 49 CPI, Inflation index, 149 credit: default swap market, 99; officers, 95; rating agencies, 96; risk, 137; risk measure for, 55 Crédit Agricole Indosuez, 37, 44, 58–9, 134, 155 Crédit Suisse, 153, 193, 221, 223; First Boston, 127 creditworthiness: ‘image problem’, 51; judgments on, 225; signals, 98, 99 cross-currency basis swap, LIBOR-indexed, 62 CRSs, 129 Darin, Roger, 115 dealing relationships, informal reciprocal, 227 dealing rooms, internal monitoring increase, 283 deceptive behaviour, LIBOR banks, 105; quotes post-crisis pressure, 106 Del Missier, Jerry, 77 Den Danske bank, 178 derivatives, ‘abstract’, 123–4; benchmark use, 150; borrowing and lending idea, 138; concrete type, 121; growing market, 79; interest rates, 30; LIBOR-indexed, 28, 71, 80, 104, 129; new instruments, 18; textbook explanation, 119–20; trade tickets, 141’usefulness’ of, 131 derivatives market: benchmark need, 119; LIBOR importance, 37; Scandanavia, 27 Deutsche Bank, 153, 193, 223; LIBOR controls deceptions, 183; LIBOR fine, 83 Diamond, Bob, 77 Dillon Read, 49 ‘discount windows’ lowering, 50 ‘dishonesty’, 249 Donohue, Craig, 128 dot-com bubble, 104 downgrades, credit rating agencies, 96 Dresdner Bank, 17, 155, 197 Duffy, Terry, 128 Easton Ellis, Bret, American Psycho, 236 economic data releases, examples of, 38 efficient market hypothesis, 195, 200–1; unrealistic assumption, 196 ‘emerging markets’, trading desks, 37 ERM (European Exchange Rate Mechanism) crisis, 31–2 Ermotti, Sergio, 213 EURIBOR (Euro Interbank Offered Rate), 14, 76–8, 126, 130; derivatives, 145; new unpredictability, 62; pre-Euro, 148 euro, the: Eurozone crisis, 109; launch of, 36 eurocurrency market, 113; central bank weakening, 111; deregulated, 114; Eurodollars, see below; fast growth of, 112; LIBOR derivatives replaced, 134 Eurodollar market, 113, 133, 152; advantages, 112; banks made, 117, 125; contracts standard maturity dates, 126; financial deregulation prompt, 116; futures, see below; gradual reduction of, 136; history of, 111; LIBOR rate making, 117, 129; rapid growth of, 115 Eurodollar futures, 125, 128, 265; bets on, 146; rationale for, 129; success of, 127 Euromoney, 135 European Banking Federation, 180 European Central Bank (ECB), 50, 109, 145 European Commission, 221 Euroyen LIBOR futures contract, 127 ‘Events’ central bank meetings, 40 excessive lending, inflationary fears, 114 exclusivity, self-perception, 269 expectations, games of, 103; overpriced stock, 104 ‘expert judgments’, banks LIBOR quotes, 278 Fama, Eugene, 195 ‘fat fingers’ errors, 253 FBI, USA, 192–3 FCA (Financial Conduct Authority), 183–4, 188, 219, 282; Fair and Effective Markets Review, 222; prohibited individuals list, 285 fear, rumours of, 266 Federal Reserve, see USA FIBOR (Frankfurt Interbank Offered Rate), 19, 127 financial crisis, Asia 1997, 36 financial crisis 2007–8; decent culture erosion explanation, 279; familiar analysis of, 114; financial market illuminating, 275; -LIBOR implications, 52, 111; money markets freeze, 109 financial markets: cartels, 222; deregulation 115–16; instruments liquidity, 43; misconceptions, 236; self-regulated, 113, 171; see also, money markets Finers Stephens Innocent, 3 Finland: USSR collapse impact, 20; USSR Winter War, 65 ‘firm policy’, interbank spread choosing, 229 fixed exchange rates, sustainability, 32 flat switch, 92–5 flow traders, 143 Forex, 1995 exam, 223; reciprocity endorsed, 227 FRAs (forward rate agreements), 28, 75, 91, 129–30; growth of, 148 Friday dress policy, 135 FSA (Financial Services Authority), UK, 1–2, 67, 77, 98, 105, 124, 163, 180, 243; prohibition orders, 4; suspension, 5 ‘Full Amount’ call, weakness indicator, 143 funding costs:, averages, 104; LIBOR signalling, 97; -market liquidity relation, 44 futures contracts: agricultural, 120; cash-settled, 125; transparent exchanges, 63 FX (foreign exchange) market, 172, 196, 245; bank price influence, 212; big banks domination/market concentration, 193, 195, 210, 212, 223, 234; ‘clear the decks’, 210; ‘community’, 190; ethical problem, 213; global banks 2014 fines, 188; interbank spread survey, 228; interest rate markets joining, 31; Japanese banks borrowing, 33; London ‘banging the close’; 209; non-public information grey zone, 224; order books, 7; reciprocity, 224; scale of significance, 126, 192, 232; spot market desk, 214, 217; standardised norms, 194; swap market, see below; ‘The Cartel’, 220; traders, see below; turnover scale, 212 FX swap market, 134, 137, 145, 146; interest rate speculation, 133; Japanese traders, 34; lower credit risk, 137, 144; 9/11 trading, 265; spot-prices, 31, 227 FX traders, 191; club mentality, 269; desks, 30; respect among, 269; secret code us, 219; ‘techniques’, 204; varied backgrounds, 216 Gelboim, Ellen, 153 gentlemen’s agreements, 141 ‘getting married to your position’, trading attitude, 257–8 global merchandise exports, growth, 112 Goldman Sachs, 49, 140, 193, 223, 272 Goodhart, Charles, 173 Greece, 2015 ATM queues, 109 Greenspan, Alan, 15, 51, 173–4 Greenwald, Bruce, 225 guilt, feelings of, 78, 169, 243, 259 Häyhä, Simo (‘White Death’), 65 ‘Hambros’, 194 Harley, Dean, 231 Hayes, Tom, 8, 13, 72, 92–3, 115, 238; prison sentence, 12 HBOS, 183 headhunters, 160 HELIBOR (Helsinki Interbank Offered Rate), 28 Hester, Stephen, 284 Hintz, Brad, 10 HSBC, bank, 27, 153, 155, 188, 193, 208, 213, 223; FCA fine, 219; FX trading, 116, 187; Group Management Training College, 187; Stockholm, 31 Hull, John, 150 Hunger Games series, 255 Hyogo Bank default, 33 ICAP, 86, 101, 175; LIBOR fine, 85 ICMA (International Capital Market Association), 174 IKB bank, 50; rollover problems, 49 illiquidity, temporary, 43 Indonesia, financial crisis, 36 Industrial Bank of Japan, 34 ‘industry’, financial, 154–5 information: LIBOR delays problem, 49, 54; big banks superior, 210 instincts, 226 interbank money market, 38; central bank influence, 39; efficiency estimate change, 109; lending fall, 111; LIBOR, see below interest rate(s): benchmarks, 14; central banks forecasts, 166; changes impact of, 38; derivatives, 17, 174; hedging, 128; movement, 42; short-term, 28, 133; swaps sizes, 142 International Code of Conduct and Practice for the, 216 International Monetary Market (IMM), 72; contracts conventions, 126; LIBOR fixings, 73–4 investment banks, risk takers, 272 Ireland, Financial Regulator, 4, 168, 281 IRS, interest rate swap, 129–30; short-term, 140 ISDA (International Swaps and Derivatives Association), 174; fix, 14 Japan: bank sector/system: crisis, 47, 81; dollars difficulty period, 34; fear premium, 36; Financial Services Agency, 101; FX market concentration, 193; FX ‘premium’, 35–6; safe perception change, 33; unique derivatives market, 36; yen market, 8, 45 JP Morgan/JP Morgan Chase, 92, 105, 153, 178, 188, 192–3, 220–3 Kahneman, Daniel, 255 Kerviel, Jérôme, 250 Keynes, J.M., General Theory of Employment, 102 Kipling, Rudyard, 127 KLIBOR (Kuala Lumpur), 37 Knight, Angela, 107 Lapavitsas, Costas, 6–7 layering, 204 Leeson, Nick, 250 ‘legacy issues’, 236 Lehman Brothers, 2, 10, 48–9, 59, 105, 162, 272; bankruptcy filing, 160; collapse of aftermath, 96 Lewis, Ken, 164 LIBOR, 19, 28, 76–7, 104, 127, 130, 147, 209, 234, 265; anti-competitive process, 186; banking lobby regulated, 180–1; ‘barometer of fear’, 96; benchmark significance, 192, 225; central banks perfection assumption, 49; controls deception, 184; crisis-induced ‘stickiness’, 106; crucial price, 13; daily individual quotes, 97; derivatives, see below; ‘Eurodollar futures’ origin, 126; FCA regulated, 282; ‘fear’ index, 15; fixing panels, see below; future direction of, 38; inaccuracy possibilities, 74; interbank money market gauge, 39; jurisdiction issue, 115; manipulation, 7, 12, 14, 78; manipulation impossibility assumption, 81; market-determined perception, 88, 149; mechanism, 104; minute change importance, 73; new unpredictability, 62; 1980s invention, 111; objective process ‘evidence’, 148; perception of, 119; players as referees, 80; post 2007 interest, 53; pre-2013 unregulated, 118; predicting difficulty, 70; regulatory oversight lack, 179; retail credit impact, 277; sanctioned secrecy, 181–2; savings and borrowings dominance, 107; scandal breaking, 81; state measure use, 151; three-months, 71; ‘too big to fail’, 279; use of limited post-scandal, 278 LIBOR derivatives market, 8, 45, 137–8, 232; autonomous development of, 111; banks made, 125; ‘community’, 190; -FX connected, 189; imaginary money market, 148; increased abstraction of, 144–6 LIBOR panel banks, 74–5, 79, 98, 118, 172, 282; -LIBOR implications, 52 big banks dominated, 173, 179–80; fixing process, 75; membership criteria, 184–5; punishment idea, 108; post-scandal membership, 186 LIBOR scandal, 77, 152, 167, 245; correctness attempts, 277; post- definition unchanged, 278; breaking of, 81; Wall Street Journal on, 238 LIBOR-OIS spread(s), 51, 54–5, 99, 151 LIFFE, 126–7 liquidity: and credit crunch 2008, 2; credit issues, 45; informal norms need, 284; provision ‘duty’ 229; risk, 42–3, 55, 70 Lloyds Bank, 153, 183; LIBOR fine, 83 long/short positions, 26 Lukes, Steven, 186 makers, price, 24 Malaysia, financial crisis, 36 Mankell, Henning, 235 ‘marked to market’ trading books, 62 market, the financial: ‘colour’ 202; ‘conventions’, 228–33; ‘courtroom’, 171; interbank spread choosing ‘image’, 229; liquidity risk, 42–3; making, see below; perfections of, 15; relationships dependent, 225–6; risks limits management failure, 281 market makers/making, 24, 72, 117, 201, 206, 217, 226–7, 257; ‘ability’, 185; cash-settled derivatives, 133; failure to manage, 281; NIBOR IRS, 132; profession of, 200; two-way price quoting, 228; visibility of, 202 Martin Brokers, 85 Mathew, Jonathan, 139 McAdams, Richard, 231 McDermott, Tracey, 282 Meitan Tradition, 100, 175 Merita Bank, 56 Merrill Lynch, 2–3, 8–9, 12, 46, 49, 59–60, 62, 64, 69, 92–3, 96, 140, 153, 155, 160–1, 164, 188, 272, 285; Bank of America takeover, 67; bonuses, 10, 162–3; financial centre, 48; International Bank Limited Dublin, 4; mismarking, 68; risk taking encouraged, 281; silence rule, 242 Midland Montagu (Midland Bank Stockholm Branch), 20, 22–3, 27, 29; Stockholm, 22, 29 ‘Millenium bug’ fears, LIBOR impact, 44 mismarking, 9 mistakes, fear of, 26 Mollenkamp, Carrick, 98 ‘monetary transmission mechanism’, 39 money market(s): decentralised, 224; freeze, 110; international basis, 112; ‘risk premium’, 42; stable illusion-making, 106; -state link, 224 Moody’s, 96 morals, 66; morality, 69 Morgan Stanley, 49, 193, 223, 272 mortgage bonds, 21 NASDAQ stock exchange, transparency, 220 New York 2001 attacks, 263 New York Times, 4, 9, 11, 163, 241, 243 NIBOR (Norwegian Interbank Offered Rate), 28, 72, 130–1; fixing dates, 76; inaccurate fixing, 74; IRS market, 132; new unpredictability, 62; one month IRS market, 136 nicknames, use of, 25–6 Nordbanken, nationalised, 27 Nordic bank branches, 30 Norges Bank, NIBOR use, 152 Norinchukin Bank, 153 Northern Rock, Newcastle queues, 109 Norway, banking system, 131 ‘objective’ fact, LIBOR, 149 ‘off-balance-sheet’, trading, 137–8 official interest rate, predicting, 38 OIS (overnight index swap), 51; see also LIBOR-OIS one month IRS market, 136 OPEC (Organization of the Petroleum Exporting Countries), US dollar surpluses, 113 options desk, FX, 214 ‘over-the-counter’ trades, 63 derivatives, 129, 134; interest rate options, 130; markets, 227 Philippines, financial crisis, 37 Philips, cassette launch, 111 PIBOR (Paris Interbank Offered Rate), 19, 127 post scandals, reforms, 282 price(s), as interactions, 200; brokers indications role, 87; ‘resolution hypothesis’, 218 primary dealers, 175, 178 privacy, individual rights to, 167 Rabobank, LIBOR fine, 83, 153, 282 RBC, bank, 223 RBS, bank, 92, 153, 185, 188, 192, 220–1, 223, 284; LIBOR scandal fine, 83 reciprocity: -and trust, 226, 284; informal agreements, 228 regret, fear of, 258 regulatory arbitrage: Eurodollar market prompting, 118; platform for, 114 ‘reputation’, 185 respect, among traders, 267 Reuters, 19, 79, 151; Dealing, 41, 195, 260; Dealing 2000–2, 29, 34, 194; indicative prices, 62; screen price, 53 risk, 135; buzz of, 261–2; limits breaking, 274; ‘loss aversion’, 255; managers, 253; organizational limits, 250; pressures for, 63 risk taking: addictive, 262; enjoyment of, 260; fear control, 263; increase, 73; individualistic, 262; reward anticipation, 254; reward interpretation, 259; supervision need, 253 risk takers, 270; respect among, 268–9 Robert, Alain, 260 ‘rogue traders’, 1, 237; ‘bad apples’ narrative, 237, 240, 246, 279; fame, 252; fascination with, 246; losses, 259; ranking list, 250; risk list, 251; scandals, 258; stigma, 247 rogue trading, 274; definitions, 249; labelling, 248; risk link, 250 Royal Bank of Canada, 153 RP Martins, 153 rules of the game, loyalty to, 25 ‘run-throughs’, 87–9, 226–7 Russia, financial crisis, 36 Ryan, Ian, 3, 9, 68 Sanford C.

The Fourth Revolution: The Global Race to Reinvent the State
by John Micklethwait and Adrian Wooldridge
Published 14 May 2014

AARP, 124 absolutism, 32, 43 academies, 212, 214 Adams, John, 249, 250, 251, 254, 261, 269–70 Adonis, Andrew, 131 affirmative action, 79, 88 Africa, Chinese businesses in, 152 African National Congress, 254 agriculture: in emerging world, 238 subsidies for, 185, 237–38 Agriculture Department, U.S., 108, 237–39 airports, privatization of, 235 Ai Weiwei, 34 Alton Locke (Kingsley), 58 American Federation of State, County and Municipal Employees, 114 American Medical Association, 204 American Revolution, 6–7, 44, 45, 46, 264 Amtrak, 235 Anderson, Chris, 191 Antholis, Bill, 218 Arab League, 253 Arab Spring, 144 Aravind Eye Care System, 203, 204 Archer Daniels Midland, 238 Argentina, economy of, 120 Army, U.S., 182 Arnold, Matthew, 58 Asia: aging population of, 165 economic crisis of 1997 in, 142–43 pensions in, 141–42 in sixteenth and seventeenth centuries, 34–36 Asquith, Herbert, 61 Australia: civil service in, 215 overlapping areas of government responsibility in, 108 “Austrian school,” 83 automobile industry, 189, 190, 191 Bagehot, Walter, 128 Balázs, Étienne, 40 Balcerowicz, Leszek, 96 ballot initiatives, 127 Bangalore, India, 201, 218 Bank of England, 43 Barboza, David, 162 Bartlett, Bruce, 121 Baruch, Bernard, 233 “basic minimum,” 87 Baumol, William, 19, 110, 178–79, 187, 222 Baumol’s disease, 19, 109–11, 174, 178–79, 183, 222 Becker, George, 84 Beijing, 34–35 Belgium, 228 Bell, Daniel, 157 Bentham, Jeremy, 49, 57, 85 Berggruen, Nicolas, 124, 129, 131, 159 Berlin, Isaiah, 48, 226, 228 Berlin Wall, 253 Berlusconi, Silvio, 12, 128, 196, 227 Bertelsmann Foundation, 143 Best Party, 261 Bevan, Aneurin, 75 Beveridge, William, 74, 75, 78, 90, 97, 245 Beveridge Report, 74 bike sharing, 216–17, 219 Bildt, Carl, 175 Bill of Rights, English (1689), 43 Bill of Rights, U.S., 226, 250 Bismarck, Otto von, 6, 7, 60, 174–75 Blair, Tony, 96, 194, 262 on small government, 95, 211–14 Bleak House (Dickens), 50 Bloom, Nick, 191 Bloomberg, Michael, 196–97, 217 Bloomberg Businessweek, 129–30 Boao Forum for Asia, 153 Bodin, Jean, 29 Boer War (1899–1902), 61 Böhlmark, Anders, 176 Bolsa Família, 206 Booth, Charles, 66 Boston, Mass., 210 Boston Consulting Group, 172 Boston Tea Party, 240 Bourbon Restoration (1814), 46 Bo Xilai, 154, 218 Brandeis, Louis, 263 Brazil, 13, 18, 96, 153 entitlement reform in, 17, 206 breakaway nations, 260 Bright, John, 56 British Airways, 94 British Gas, 94 British Medical Association, 114 British Rail, 213 British Telecom, 94, 234 Brown, George, 134 Brown, Gordon, 99, 130, 215 Brown, Jerry, 10, 91, 106, 119, 125, 219 fiscal reforms of, 118, 129–30 Brown, Pat, 105–6, 124–25 Buchanan, James, 84, 262 Bureau of Corporations, 72 Bureau of Land Management, 236 Bush, George H.W., 95 Bush, George W., 10, 98, 164, 177, 198, 255, 262 business sector: globalization and, 191, 193 innovation in, 194 productivity in, 18–19 reinvention of, 189–92 technology and, 191 Butler, R.A., 75 California, 105–32 ballot initiatives in, 127 Baumol’s disease and, 109–11 constitution of, 107 deficit in, 118–19 education in, 111 as exemplar of Western state failures, 106–7 fiscal reform in, 129–30 old and well-off as primary beneficiaries of public spending in, 122–23 outdated governmental system of, 107–8 pensions in, 113, 115, 119–20, 130 political polarization in, 124–25 population of, 108 prison system in, 112–13 proliferation of regulation in, 116 Proposition 13 in, 91, 92, 107 public contempt for government in, 106, 112 public-sector unions in, 112–15, 120 special interest groups in, 112–15 taxes in, 116, 129 unfunded liabilities in, 119, 129, 130 California Board of Barbering and Cosmetology, 116 California Correctional Peace Officers Association (CCPOA), 112–13 California Environmental Quality Act (1970), 117 California Public Policy Center, 119 California Teachers Association, 113 Cameron, David, 130–31, 158, 199, 215 Canada, 199 Capio, 171–72 capitalism, 50–54 democracy’s presumed link to, 261–62 inequality and, 262–63 state, see state capitalism as supposedly self-correcting, 70 Capitalism and Freedom (Friedman), 86 Cardoso, Fernando Henrique, 96 Carlino, Gerald, 218 Carlyle, Thomas, 44, 57 Carney, Mark, 215 Carswell, Douglas, 260 Carter, Jimmy, 198 Carville, James, 97 Castiglione, Baldassare, 33 Catholics, 38 Cato Institute, 238 Cavendish, William, 31, 40 Cavendish family, 31, 47 Cawley, James, 204 CCTV cameras, 182, 226 Center on Budget and Policy Priorities, 124 Central Party School, 150, 156 Central Provident Fund, 140 Centre for Policy Studies, 92 centrism, 95, 98 Chamberlain, Joseph, 66 Charles I, King of England, 31 Charles II, King of England, 32, 38, 42 Charlie and the Chocolate Factory (Dahl), 228 charter schools, 212, 214, 215 Chartists, 51, 58 checks and balances system, 226, 250, 255–56, 265 Chidambaram, Palaniappan, 96 Child, Josiah, 39 Childs, Marquis, 169 China, Imperial, 37 bureaucracy of, 37, 40–41 innovation disdained by, 41 in seventeenth century, 34–36 trade with West rejected by, 41 China, People’s Republic of: aging population of, 164, 183 Asian-state model in, 136–37, 145, 149, 152, 156 Communist ideology in, 63, 145 corruption in, 4, 18, 148, 149, 186 Cultural Revolution in, 156 economy of, 3, 146, 163 education in, 147, 148–49, 164 efficiency of government in, 146, 153, 159 elitism in, 161–62 governmental changeover in, 159 health care in, 164 health insurance in, 141, 156 India contrasted with, 146, 153 lack of public confidence in, 13 leadership training in, 105 local government in, 160–61, 217–18 long-term outlook of, 159 mandarin tradition of, 138, 156, 157 meritocracy in, 156–63, 164, 254 pensions in, 156, 183 Singapore as model for, 145 slowing of economic growth in, 164 social-service NGOs in, 158 state capitalism in, 64, 149–56, 234 state-owned enterprises (SOEs) in, 150–52, 154–55 urban population increase in, 149 U.S. contrasted with, 147, 153 Western democracy seen as inefficient by, 145 China Executive Leadership Academy in Pudong (CELAP), 1–5, 18, 145, 153, 156 China Mobile, 151 China Youth Daily, 148 Chongqing, China, 218 Christensen, Clayton, 203 chronic diseases, 183, 200, 204 Internet and, 209 Chua, Amy, 143 Churchill, Winston, 68, 75, 247 cities: population growth in, 149, 218 working relationships between, 218–19 Citizens United decision, 240 Civil War, English, 6, 31, 38, 43 Clark, Joseph, 77 class struggle, 62–63 Clinton, Bill, 10, 95, 96–97, 98, 142, 217 Clinton, Hillary, 162 Coase, Ronald, 84, 229 Cobbett, William, 49 Cobden, Richard, 56 Code for America, 216 Coggan, Philip, 263 Cohen, Jared, 210–11 Cohen, Leonard, 185 cold war, 76, 252 Colloquies on Society (Southey), 224–25 commerce, nation-state and, 33 Committee on Social Thought, 83 Common Sense (Paine), 44 Communist Party, Chinese, 63, 145, 153 elitism in, 161–62 as meritocracy, 156–57 Organization Department of, 151 Communists, communism, 7, 8, 63–64, 71, 77, 134, 137, 145, 225 successes of, 90–91, 252 compassion, 61 “compassionate conservatism,” 98 competitive advantage, 189 Condorcet, Nicolas de, 222 Confederation of Medical Associations in Asia and Oceania, 204 Congo, 22 Congress, U.S., 16, 100, 228 approval ratings of, 11 dysfunction in, 256 lobbies and, 238–40, 257 Congressional Budget Office, 15, 242 Congress Party, India, 162 Conservative Party, British (Tories), 11, 69, 75 conservatives, conservatism, 10 “compassionate,” 98 see also Right Constitution, U.S., 108, 109, 256 Fourteenth Amendment of, 120 Constitution of Liberty, The (Hayek), 92 consumer choice, 191 consumption taxes, 123–24 Corn Laws, 50, 238, 240 corruption, 185–86 crime, Western state and, 181–82 Crimean War, 65 Croly, Herbert, 71 Cromwell, Oliver, 32 Cromwell, Thomas, 6, 37 crony capitalism, 72, 112, 155, 234, 237–38, 246, 269 Cultural Revolution, 156 Czech Republic, 252 Darwin, Charles, 59 Das, Gurcharan, 13 Davies, Mervyn, 215 decentralization, 216–19 defense, spending on, 16 Defense Department, U.S., 20 deficits, deficit spending, 14, 100, 118–22, 177, 231–32, 241 unfunded liabilities and, 119, 232 democracy: in Asian-state model, 17 big government as threat to, 251, 264–69 as central tenet of Western state, 5, 8, 16–17, 22–23, 136, 141, 221 Founding Fathers and, 226, 250, 265 Fourth Revolution and, 249–70 globalization and, 262 imperfections of, 17, 127–28, 141, 143–44, 145, 226–27, 247–48, 251, 269 income inequality and, 263 in India, 136, 146 individual freedom as threatened by, 226, 250–51 nation-states and, 259, 262 presumed link to capitalism of, 261–62 as presumed universal aspiration, 261–62 as rooted in culture, 262 scarcity and, 247–48 self-interest and, 250, 260 short-term vs. long-term benefits in, 260–61, 264 special-interest groups and, 16–17, 111–15, 247, 251 strengths of, 263 twentieth-century triumph of, 252 twenty-first-century failures of, 252–61 uneven history of, 249–50 welfare state as threat to, 22, 142 Democracy in America (Tocqueville), 252 Democracy in Europe (Siedentop), 251 Democratic Party, U.S., 97, 240 spending curb approved by, 12 spending cuts opposed in, 100, 255 Democratic Review, 55 Deng Xiaoping, 142 Singapore as inspiration to, 145 Denmark, 22, 210 disability insurance in, 244 “flexicurity” system in, 173, 176 innovation in, 220 1980s financial crisis in, 176 reinvention of welfare state in, 173–74 Depression, Great, 69–70, 85 Detroit, Mich., 218–19 bankruptcy of, 14, 119 Detter, Dag, 236 Dicey, A.V., 57 Dickens, Charles, 50, 57–58 Dirksen, Everett, 192–93 disability-insurance reform, 244 Discovery Group, 211 discretionary spending, 195 diversity, 214–16 DNA databases, 182 Dodd-Frank Act (2010), 117, 239 Doncaster Prison, 214 Downey, Alan, 177 Drucker, Peter, 198 Dubai, 144, 217 Dukakis, Michael, 95 Dundase family, 49–50 East India Company, 36, 40, 47, 48, 50, 56, 150, 240 Eastman Kodak, 190–91 École Nationale d’Administration, 194 economic-freedom index, 174 Economist, 86, 97 Edison, Thomas, 179 education, 7, 9, 16, 48, 58, 197 charter schools in, 212, 214, 215 in China, 147, 148–49, 164 cost/outcome disparities in, 194–95 declining quality of, 111 diverse models for, 214–15 government domination of, 10 international rankings of, 19, 148, 206–7 preschool, 123 reform of, 58–59, 212 in Sweden, 171, 176–77 technology and, 179–80 voucher systems for, 171, 176–77, 220 in welfare state, 68, 69 Education Act (British, 1944), 75 Egypt, 155 failure of democracy in, 253, 262 Mubarak regime overthrown in, 144, 253 Eisenhower, Dwight, 77 elections, U.S., cost of, 257 electrocardiogram (ECG) machines, 205 elitism, 135, 136, 138–39 in Chinese Communist Party, 161–62 in U.S., 162 welfare state and, 77–78 Emanuel, Rahm, 216 emerging world: agriculture in, 238 as failing to grasp technological change, 18 innovation in, 17 lack of public confidence in, 13 local government in, 217 need for reform in, 14 urban population shift in, 218 “End of History, The” (Fukuyama), 262 Energetically Autonomous Tactical Robot (EATR), 182 Enlightenment, 42 entitlement reform, 95, 217, 234, 241–46 beneficiaries’ responsibilities and, 245 conditionality in, 17, 206, 244 disability insurance and, 244 globalization and, 245 information revolution and, 245 in Latin America, 17, 206, 244 means testing and, 243, 245 transparency and, 244–45 entitlements, 9, 10, 15, 16, 79, 100, 127, 141, 222, 228 aging population and, 124, 183–84, 232, 241–42 middle class and, 11, 17 pensions as, 79, 184, 243 as unfunded liabilities, 245–46, 264, 265 universal benefits in, 124, 141, 243–44 equality: capitalism and, 262–63 liberal state and, 69 of opportunity vs. result, 79, 228 sexual, 169 welfare state and, 68–69, 74, 79, 222 Western state and, 221 Equality (Tawney), 69 Erdogan, Recep Tayyip, 13, 254 Estonia, 121, 210 Euclid, 31, 33 eugenics, 67–68, 78, 169 euro, 99, 100, 258 euro crisis, 12, 100, 126, 130, 258–59 Europe: age of conquest in, 36–37, 39 compulsory sterilization in, 78 contest for secular supremacy in, 38–39 democracy’s failures in, 258–59 dysfunctional political systems in, 126 economic crisis in, 126 Enlightenment in, 42 government bloat in, 98–99 mercantilist policies in, 40 national consolidation in, 38–39 old-age dependency ratio in, 14–15 postwar era in, 78 public spending in, 99–100 revolutions of 1848 in, 54 technocratic bent in, 76–77, 259 transnational cooperation in, 76 wars of religion in, 34, 38 welfare state in, 75 European Atomic Energy Community, 76 European Central Bank, 258–59 European Coal and Steel Community, 76 European Commission, 254 European Economic Community, 76 European parliament, 258 European Union, 13, 16, 17, 76, 99, 108, 109, 258–59, 260 Extraordinary Black Book, The (Wade), 49 Exxon, 154 Fabians, 8, 21, 67, 72, 73, 96, 134, 169, 220 Facebook, 190–91 Falklands War, 94 Farrell, Diana, 132 fascism, 8, 71, 77, 252 Fatal Conceit: Errors of Socialism, The (Hayek), 134 Federal Communications Commission, 73 Federalist Papers, 5, 265 Federal Register, 117 Ferdinand II, King of Aragon, 37 filibusters, 256 financial crisis of 2007–8, 100, 164, 263 financial-services industry, 239 Finer, Samuel, 27, 276 Finland, 210 innovation in, 220 1990s financial crisis in, 176 fiscal crisis, as incentive for change, 198 Fisher, Antony, 81–82, 90, 92, 280 “flexicurity,” 173, 176 Ford, Henry, 189, 191, 201 fossil fuels, government subsidies for, 239 Foster, William, 58 Founding Fathers, 108 democracy and, 226, 250, 265 liberal state and, 44–45, 222 Fourteenth Amendment, 120 Fourth Revolution, 5 Asian-state competition as impetus for, 17, 163–64, 247 decentralization and, 216–19 democratic reform and, 249–70 diversity and, 214–16 entitlement reform and, see entitlement reform failure of current model as impetus for, 14–17 freedom and, 247, 248, 268, 270 government efficiency in, 233 ideological foundation of, 21, 28, 221–23, 232 information revolution and, 245, 246–47 infrastructure and, 232 innovation and, 219–20 monetary and fiscal reform in, 266–67 pluralism in, 211–14 as postbureaucratic, 211 pragmatism and, 18–19, 232–33 privatization and, 234–37 security and, 232 small government as principle of, 232, 264–69 subsidy-cutting and, 237–41 technology and, 18, 19–20, 233, 266–67 France, 43, 78 deficit spending in, 14 expanded bureaucracy in, 60 government bloat in, 12 pension age in, 16 public spending in, 75, 99–100 ruling elite of, 194 state capitalism in, 235 Francis I, King of France, 37 Fraser Institute, 174 fraternity, welfare state and, 74, 79 Frederick the Great, King of Prussia, 38 freedom: balance between security and, 230–31 as central tenet of Western state, 8, 23, 46, 68–69, 222, 256 core elements of, 223–24 democracy as threat to, 226, 250–51 diminished concept of, 225–27, 228–29 Fourth Revolution and, 247, 248, 268, 270 Hobbes and, 33 as ideological basis of liberal state, 69, 223–26 Mill and, 47–48, 55, 222, 224, 228, 250, 256, 268 necessary constraints on, 223 welfare state as threat to, 22, 74, 222, 265 see also rights Freedom House, 143, 252 free markets, 49, 59, 142 Friedman as evangelist for, 84, 86 Thatcher and, 93 free trade, 50, 54, 57 Mill’s espousal of, 55 French Revolution, 6, 44, 45–46, 249 Friedman, Milton, 81–87, 89, 93, 106, 128, 171, 280 background of, 82 big government as target of, 82, 84–85, 88 as free-market evangelist, 84, 86 Nobel Prize of, 82, 86, 91 Reagan and, 86 “Road to Hell” lecture of, 84 single currency opposed by, 99 Thatcher-Reagan revolution and, 8, 28, 97, 100 Friedman, Thomas, 163 Friedrich, Carl, 265 Fukuyama, Francis, 142, 143, 256, 262 Future of Freedom, The (Zakaria), 143 G20 countries, 15 Galbraith, John Kenneth, 85, 86 Galtieri, Leopoldo, 94 Galton, Francis, 68 Gardels, Nathan, 124 Gaskell, Elizabeth, 57 Gates, Bill, 97 Gazprom, 152, 153, 154 Geely, 150 General Electric (GE), 205, 243 General Motors (GM), 189, 190, 191, 233 General Theory of Employment, Interest and Money, The (Keynes), 70 Geometry (Euclid), 31 George III, King of England, 11, 41 Germany, Federal Republic of (West Germany), 75, 78, 232, 265 Germany, Imperial, 6, 60–61 Germany, Nazi, 71, 232 Germany, unified, 12, 22, 173, 186, 212 gerrymandering, 13, 106, 113, 125, 256–57, 264, 267 see also rotten boroughs Gillray, James, 227 Gladstone, William, 7 economizing by, 51–52, 224 small government as principle of, 51–52, 60 tax policy of, 51 globalization, 10, 191, 193 democracy and, 262 entitlement reform and, 245 government and, 10, 96, 200–207 health care and, 200–201 national determination and, 259–60, 262 Glorious Revolution (1688), 43 GOATs (Government of All the Talents), 215 Godolphin, Sidney, 31 Golden Dawn party, 259 Goldman Sachs, 120 Goldwater, Barry, 80, 86 Google, 189–90, 191, 233 Gore, Al, 95, 131, 198 government: anti-innovation bias of, 194–95, 212, 219 bloat in, 9–11, 18–19, 89–90, 98, 177, 222–23, 227, 229–30, 231, 233 centralization bias of, 192–93, 212, 216 challenges to reform in, 196–98 coercive power of, 198 efficiency of, 18–21, 37, 89, 187, 198–99, 213, 233, 247, 255 entrenched workforce of, 193–94 globalization and, 200–207 in-house bias of, 192, 212 local, 216–19, 267 public contempt for, 106, 112, 227–28, 230, 233, 251, 261 sunset clauses and, 118, 246, 266 technology and, 200, 207–11 uniformity bias of, 193–94, 212, 214 volunteerism and, 216 Government Accountability Office, 235 Grace Commission, 198 Gray, Vincent, 210 Great Britain: asylum seekers in, 54 as capitalist state, 50–54 commercial empire of, 39–40 deficit of, 177 education reform in, 58–59, 79, 212, 214–15 falling crime rate in, 181 fiscal reform in, 130–31 government bloat in, 89–90 health-care spending in, 90 landed artistocracy of, 48, 49 liberal revolution in, 46 low public confidence in, 11 national pride in, 61–62 patronage vs. meritocracy in, 50, 52–53, 222 postwar era in, 78 power of Anglican Church in, 48 public spending in, 9, 75 wars of, 6 “winter of discontent” in, 93 Great Depression, 69–70, 85 Great Exhibition of 1851, 54 Great Society, 77, 192 Great Western Railway, 65 Greece, 16 economy of, 120, 259 public-sector employees in, 115 public spending in, 99 Green, T.H., 61 Green River Formation, 236 Grenville family, 49–50 Grillo, Beppe, 12, 227 gross domestic product (GDP), unreliability of, 121 Grote, George, 54 Guangdong, China, 217 Gunpowder Plot (1605), 31 Hagel, Chuck, 256 Hall, Joseph, 35 Halsey, A.H., 88 Hamilton, Alexander, 5, 150 Hamilton, James, 120 happiness, right to, 48, 49 Hard Times (Dickens), 58 Havel, Václav, 252 Hayek, Friedrich, 10, 83, 85–86, 92, 93, 134, 170 Health and Social Security Department, British, 89 health care, 7, 9, 90, 98, 213 aging population and, 15, 183, 242 in China, 164 cost of, 110, 121, 205, 242–43 cost/outcome disparities in, 195 globalization and, 200–201 government domination of, 10 in India, 17, 18, 200–206 labor productivity in, 200 mass production in, 201–3 Obamacare and, 20, 98, 117, 199, 208, 217 role of doctors in, 203–5, 243 single-payer systems in, 205, 233, 243 special interest groups and, 200 in Sweden, 171–73 technology and, 183, 208–9 healthcare.gov, 199 health insurance, 141 health registries, 172, 183, 209 Heath, Edward, 92–93 Hegel, G.W.F., 45, 60–61 71 Helsinki, 220 Heritage Foundation, 92 Hewlett, Bill, 105 Higgins, David, 215 Hilton, Steve, 132 History of the Peloponnesian War (Thucydides), 250 Hitler, Adolf, 71 Hobbes, Thomas, 6, 8, 9, 21, 27–28, 29, 40, 44, 63, 135–36, 181, 219, 268 background of, 30–31 as controversial thinker, 31–32 on human nature, 29–30, 44–45 individual liberty and, 33 as materialist, 33 as royalist, 6, 18, 31–32 social contract and, 32, 34, 42, 222 Hogarth, William, 227 Hollande, François, 12, 16, 153, 184, 194 Holocaust, 78 Homestead Act (U.S., 1862), 62 House of Cards (TV show), 227 House of Commons, 127 House of Representatives, U.S., 97, 127 Howard, Philip, 118, 132, 195 Hu Jintao, 2 Huldai, Ron, 216 Hume, David, 43 Hungary, 254 Huntington, Samuel, 41–42 Hurun Report, 161 Iceland, 261 India, 8, 35, 36 China contrasted with, 146, 153 democracy in, 136, 146 economic stagnation in, 147 education in, 147 health care in, 17, 18, 200–206 infant mortality rate in, 201 lack of public confidence in, 13 local government in, 217–18 nepotism in, 162–63 Thatcherite reform in, 96 as weak state, 37 Indonesia, 142–43 health insurance in, 141 industry, landed aristocracy as opponent of, 48 Industry and Trade (Marshall), 233 information, access to, 210–11, 214 information revolution, 245, 246–47 information technology (IT), 18, 19–20 infrastructure: Fourth Revolution and, 232 spending on, 122, 232 innovation, 219–20 in business sector, 194 government bias against, 194–95, 212, 219 nation-state and, 37, 39 Institute for Energy Research, 236 Institute of Economic Affairs, 82, 92 Institute of Medicine, 204 Institute of Racial Biology, 78 interest groups, 16–17, 90, 111–15 Interior Department, U.S., 236 International Monetary Fund (IMF), 15, 76, 90 Asian financial crisis and, 142–43 Internet, 191, 260 health care and, 208–9 self-help and, 209 Iran, China and, 152 Iraq, 253 Iraq War, 143, 253 Ireland, 38 public spending in, 99–100 Isabella I, Queen of Castile, 37 Islamic world: antiscientific attitudes in, 41 in sixteenth and seventeenth centuries, 35 Istanbul, 35 Italy, 196, 259 pension reform in, 130 politicians’ pay and benefits in, 115 public spending in, 99–100 voter apathy in, 12 It’s Even Worse Than It Looks (Mann and Ornstein), 125–26, 227 Jackson, Andrew, 55 Jacques, Martin, 163 Jagger, Mick, 90 James I, King of England, 31 James II, King of England, 43 Japan, 15, 17, 36 Jarvis, Howard, 91 Jay, Douglas, 77 Jiang Jiemin, 154 Jiang Zemin, 142 Johnson, Boris, 216–17 Johnson, Lyndon, 77, 80, 87 Joseph, Keith, 92, 93 Juncker, Jean-Claude, 128 Kamarck, Elaine, 131–32 Kangxi, Emperor of China, 40 Kansas, 130 Kant, Immanuel, 224 Kaplan, Robert, 144 Kapoor, Anish, 34 Kennedy, Joseph, 73 Kentucky Fried Chicken, 185 Kerry, John, 96 Keynes, John Maynard, 22, 69–70, 76, 97 pragmatism of, 70–71 Keynesianism, 71, 77, 83, 95 counterrevolution against, 82–84 Khan, Salman, 180 Khan Academy, 180 King, Martin Luther, Jr., 79 Kingsley, Charles, 58 Kirk, Russell, 85 Kissinger, Henry, 133, 136 Kleiner, Morris, 118 Knight, Frank, 84 Knowledge Is Power Program (KIPP), 215 Kocher, Robert, 200 Kotlikoff, Laurence J., 120 Kristol, Irving, 87 Kroc, Ray, 185 Labour Party, British, 68, 69, 70, 77, 93, 94–95, 114 laissez-faire economics, 56, 57, 61, 65–66, 70, 71 Laski, Harold, 68, 134 Latin America: economies of, 8 entitlement reform in, 17, 206, 244 Lazzarini, Sergio, 153 Lee Hsien Loong, 135, 138 Lee Kuan Yew, 4, 17, 53, 133–34, 137, 139–41, 143, 144, 145, 147, 156, 170, 183, 244 authoritarianism of, 137, 138 small-government ideology of, 140, 165 Left, 62, 73, 88, 183 government bloat and, 10–11, 98 government efficiency and, 20, 187, 213 and growth of big government, 10, 98, 131, 175, 185, 228, 230, 231 subsidy-cutting and, 234, 237–38 Lehman Brothers, 14 Lenovo, 150 Le Pen, Marine, 259 Le Roy, Louis, 276 Leviathan, 10 Leviathan (Hobbes), 29, 32, 33, 34, 42 Leviathan, Monumenta 2011 (Kapoor), 34 Liberal Party, British, 68, 70 liberals, liberalism: and debate over size of government, 48, 49, 232 freedom as core tenet of, 69, 223–26, 232 right to happiness as tenet of, 48, 49 role of state as seen by, 21–22, 222–23, 226, 232 see also Left; liberal state liberal state, 6–7, 8, 220, 221 capitalism and, 50–54 competition and, 247 education in, 7, 48, 58–59 equality and, 69 expanded role of government in, 56–62 Founding Fathers and, 44–45, 222 freedom as ideological basis of, 69, 223–26, 232, 268 industrial revolution and, 246–47 meritocracy as principle of, 50, 52–53 protection of rights as primary role of, 45 rights of citizens expanded by, 7, 9, 48, 49, 51 rise of, 27–28, 269 small government as principle of, 48, 49, 51–52, 61, 232 libertarian Right, 82 liberty, see freedom Libya, 253 LifeSpring Hospitals, 202–3 Lincoln, Abraham, 62, 92 Lindahl, Mikael, 176 Lindgren, Astrid, 170 Lisbon, Treaty of (2007), 258 Little Dorrit (Dickens), 50 Liu Xiaobo, 166 Livingston, Ken, 217 Lloyd George, David, 62 lobbies, Congress and, 238–40, 257 Locke, John, 42, 43, 45 social contract and, 42, 222 Logic of Collective Action, The (Olson), 111 London School of Economics, 67, 74 Louis XIV, King of France, 38 Lowe, Robert, 58–59 L.

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Göran’s hospital, Stockholm, 171–72, 177, 183 San Bernardino, Calif., 16 bankruptcy of, 14, 128–29 Sanders, Harland, 185 San Francisco, Calif., 210, 218 Sarkozy, Nicolas, 12, 16 Sberbank, 153 Scandinavia, 166 aging population of, 174, 178, 183–84 failure of traditional welfare state in, 175–76 fiscal reform in, 174 pensions in, 171, 173, 184 reinvention of welfare state in, 169–78, 183–84, 186–87, 212, 265–66 social mobility in, 174 women in labor force of, 174 scarcity, democracy and, 247–48 Schmidt, Eric, 210–11 School Medical Service, 62 Schopenhauer, Arthur, 60 Schuck, Peter, 132 Schwarzenegger, Arnold, 125, 129 Securities and Exchange Commission, 72, 73 security: balance between freedom and, 230–31 Fourth Revolution and, 232 as primary duty of nation-state, 29, 30, 32, 37, 39, 181, 222, 268 Ségolène Royal, 194 September 11, 2001, terrorist attacks, 98, 230 Serco Group, 213, 214 sexual equality, 169 shale oil, 236 Shaw, George Bernard, 67–68, 232 Shenzhen, China, 161, 217 Sherman, Alfred, 93 Shetty, Devi, 201–2, 203, 205, 242–43 Sidgwick, Henry, 57, 58 Siedentop, Larry, 251 Silicon Valley, 105, 127 Silk Road, 152 Singapore, 18, 133–34, 144, 145, 155 as authoritarian, 135, 136, 137 as business friendly, 137 civil service of, 138–39 economic success of, 135 as elitist, 135, 136, 138–39 ethnic tensions in, 139–40 as model for Asian state, 4, 17, 134, 142 as night-watchman state, 140 small government of, 135, 140 social insurance model of, 140–41, 242, 243 social safety net in, 140 Singh, Manmohan, 96 Sloan, Alfred, 189, 190 Smartest Kids in the World and How They Got That Way, The (Ripley), 207 Smith, Adam, 43, 224, 237 Snowden, Edward, 230–31 social contract, 8–9, 16, 32, 34, 42, 222, 241 Social Contract, The (Rousseau), 44 social Darwinism, 59–60 Social Democratic Party, Swedish, 170, 175 social insurance, social assistance vs., 140–41, 142, 242 socialism, 59, 67, 96, 134, 224, 268–69 in Sweden, 169 Socialist Case, The (Jay), 77 Social Security, 120, 123, 242 disability insurance of, 244 social services, 68, 69, 74 as rights, 74–75 South Africa, 153, 252, 254 Southey, Robert, 224–25 South Korea, 142–43, 155 Soviet Union, 71, 73, 247 collapse of, 64, 176, 253 as failed state, 90–91 Spain, 130 Spanish Armada, 30–31, 36 special-interest groups, 16–17, 90, 111–15, 178, 200, 223, 239, 247, 251, 257, 258, 269 Spencer, Herbert, 59, 60, 66, 92 Stalin, Joseph, 67, 71 Starr, Kevin, 108 state, Asian model of, 133–66 aging populations as strain on, 164–65 as authoritarian, 136 in China, 1–5, 136–37, 145, 149, 152, 156 as competition for Western state model, 17, 163–64, 247 democracy in, 17 as elitist, 136 improved government as goal of, 137, 165–66 innovation in, 165 meritocracy in, 156–63, 164, 254 nationalism and, 136, 137 Singapore as inspiration for, 4, 17, 134, 142 small-government ideology of, 187 spread of, 144 technology and, 165 welfare state in, see welfare state, Asian model of state, Western model of, 3–5 Asian-state model as competition for, 17, 163–64, 247 Baumol’s disease and, 19, 109–11, 174, 178–79, 183, 222 California as exemplar of failures of, 106–7 crime and, 181–82 decline of public services in, 16 deficit spending in, 14, 100, 118–22, 177, 231–32 democracy as central tenet of, 5, 8, 16–17, 22–23, 136, 141, 221 efficiency in, 18–21, 37, 89, 187, 198–99, 213, 233, 247, 255 equality and, 221 Fourth Revolution in, see Fourth Revolution freedom as central tenet of, 8, 23, 46, 68–69, 222 ideological debate over, 222 as instrument of civilization, 22 interest groups and, 16–17 lack of innovation in, 19–20 liberal revolution in, see liberal state nation-state revolution in, see nation-state old and well-off as primary beneficiaries of public spending in, 122–24 opportunities for reinvention of, 18 outdated systems in, 108–9 proliferation of regulation in, 116–18 proper role of, 21, 28 rights of citizens in, 9 social contract in, 8–9, 16, 32, 34, 42, 222, 241 Thatcher-Reagan half-revolution in, see Thatcher-Reagan revloution welfare-state revolution in, see welfare state, Western model of see also government state capitalism: in China, 64, 149–56, 234 corruption in, 154 as global phenomenon, 152–53, 155, 234–35 innovation suppressed by, 155 investor mistrust and, 154 productivity and, 154, 285 in Russia, 153, 154 State-Owned Assets Supervision and Administration Commission (SASAC), 151, 154 state-owned enterprises (SOEs), 150–52, 154–55, 156 statism, 60–61, 67, 71, 72 elitism and, 77–78 Stein, Herbert, 13 Steinberg, Darrell, 129 sterilization, compulsory, 78 Steuerle-Roeper index, 195 Stewart, Jon, 228 Stigler, George, 84 subsidies, 185, 234, 237–38 sugar industry, 238 Suleiman the Magnificent, 35 Summers, Larry, 110 sunset clauses, 118, 246, 266 Supreme Court, U.S., 226, 240, 250 Sweden, 90, 184 average income in, 173 “black-of-night” banking crisis in, 175–76 blending of capitalism and socialism in, 186 education in, 171, 176–77, 215 fiscal reform in, 170 health care in, 98, 171–73 health registries in, 172, 183, 209 pension system in, 171, 184, 242 privatization in, 236 public debt of, 170–71 public spending in, 169–70 reinvention of welfare state in, 170–71, 212, 265–66 socialism in, 169 Swift, Jonathan, 227 Tawney, R.H., 61, 69, 78, 79, 87 taxes, taxation, 116, 127 consumption, 123–24 obfuscation and, 121–22 U.S., 82, 116–17, 121, 237, 240–41 Taylor, A.J.P., 9 Taylor, Matthew, 210 Teach for America, 216 Tea Party, 63, 243 technocrats, 76–77, 259, 260, 266, 267 technology, 165, 174 as agent for small government, 178 business sector and, 191 crime and, 181–82 education and, 179–80 Fourth Revolution and, 18, 19–20, 233, 266–67 government and, 200, 207–11 health care and, 183, 208–9 war and, 182 Temple, Frederick, 58 Tennessee Valley Authority, 73, 236 Terror (1792–93), 46 Thailand, 142–43 Thatcher, Margaret, 8, 28, 81, 88, 91–92, 97, 130, 133, 181 economic policy of, 93–94 Falklands War and, 94 free-market theory and, 93 Thatcher-Reagan revolution, 106, 177 big government as target of, 82 Friedman and, 8, 28, 82, 97, 100 global spread of, 96 Hayek’s influence on, 92 as incomplete, 8, 82, 97–101, 246, 269 privatization and, 94–95, 234 small-government ideology of, 91–92, 93, 128 Thick of It, The (TV show), 227 Thiel, Peter, 207 Think Long Committee, 129 Thirty Years’ War, 34, 38 Thomas, Norman, 82 Thomas Aquinas, Saint, 29 Thucydides, 250 Tiananmen Square protest, 142 Tilly, Charles, 39 Timbro, 131, 175 Tocqueville, Alexis de, 54–55, 222, 226, 250–51, 252, 256, 267 totalitarianism, 71 Toyoda, Kiichiro, 201 Transparency International, 148 Treasury, U.S., 143 Trevelyan, Charles, 52–53 Tsinghua University, 157 Tullock, Gordon, 84 Tunisia, 253 Turkey, 13, 254 Turner, Ted, 238 tyranny of the majority, 226, 250, 255 unemployment insurance, 123, 244, 245 unfunded liabilities, 14, 119, 120, 129, 130, 232, 245–46, 264, 265 unions, public-sector: innovation blocked by, 20 pay and benefits of, 113–15, 119–20 political power of, 112–15 Unirule Institute of Economics, 154 United Nations, 76, 265 United States: affirmative action in, 79 antiliberal discourse in, 95–96 big government in, 71–72 checks and balances system in, 226, 250, 255–56, 265 China contrasted with, 147, 153 crony capitalism in, 237–38, 246 deficits and deficit spending in, 14, 97, 100, 120, 231, 241 democracy’s failures in, 254–59 education reform in, 212, 214–15 elitism in, 162 entitlements in, 241–42 expanding role of government in, 62, 77 falling crime rate in, 181 financial liabilities of, 15–16, 119–20 financial services industry in, 239 fiscal uncertainty in, 12, 255 government bloat in, 9, 98, 177 in Iraq War, 143 local government in, 217 money politics in, 256–58 national debt of, 120, 241–42 political polarization in, 100, 125–26, 164, 255, 256 postwar era in, 78 privatization in, 234–37 public pessimism in, 11, 126 public spending in, 9, 261 small-government model in, 54–55 state capitalism in, 235–36 taxes in, 82, 116–17, 121, 237, 240–41 Webbs and, 71 welfare reform in, 95 Universal Declaration of Human Rights, 265 Uppsala, University of, 78 Urban Institute, 185 utilitarianism, 49, 57, 58 Van Reenen, John, 191 Veep (TV show), 227 VisionSpring, 203 Voegeli, William, 115 voting rights, 7, 9, 51 voucher systems, 171, 176–77, 220 Wade, John, 49 Wallas, Graham, 77 Wallgren, Britta, 172 Wall Street Journal, 90 Wang Jisi, 164 war, technology and, 182 war on poverty, 87, 88 war on terror, 98, 143 Warren, Earl, 105–6, 124–25 Washington, D.C., 210 Washington, George, 250 Washington consensus, 8, 96, 142, 164 Washington Post, 86 Webb, Beatrice and Sidney, 7, 27–28, 64, 66, 68, 71, 74, 75, 87, 116, 134, 140, 219, 268 collectivism as principle of, 68 as creators of welfare state, 65 eugenics endorsed by, 67–68 national minimum concept of, 68, 69 Stalin admired by, 67 statism and, 67 Weibo, 161 Weiner, Anthony, 227–28 welfare state, Asian model of, 164–65 health-care spending in, 142 social insurance as basis of, 140–41, 142, 242, 243 spending on, Western model vs., 142 welfare state, Western model of, 7–9, 65–80, 88, 221 aging population and, 15, 122–23, 124, 165, 174, 178, 183–84, 232, 241–42 as “all-you-can-eat” buffet, 17, 137, 140, 183, 241 creation of, 27–28, 263, 268–69 dependency and, 129–30 education in, 68, 69 elitism and, 77–78 entitlements in, see entitlements equality and, 68–69, 74, 79, 222 in Europe, 75 expanding public sector in, 76 failure of egalitarian policies in, 87–90 fraternity and, 74, 79 government bloat in, 9–11, 18–19, 89–90, 98, 177, 222–23, 227, 229–30, 231, 233 inefficiency in, 89, 229 interest groups in, 90 Lee Kuan Yew’s criticism of, 17 middle class in, 17, 88, 122 national minimum and, 68, 69 Nordic reinvention of, 169–78, 183–84, 186–87, 212, 265–66 overreaching by, 87, 176, 222, 229–30, 233, 264, 265, 268, 269 perverse incentives created by, 89 poverty and, 68 social assistance as basis of, 140, 142 social services and, 68, 69, 74 as threat to democracy, 22, 142 as threat to freedom, 22, 74, 222 Webbs as creators of, 65, 220 Wells, H.G., 66 Wen Jiabao, 162 Westminster model, 54 When China Rules the World (Jacques), 163 Whitaker, Jeremiah, 34 “Why I Am Not a Conservative” (Hayek), 85 Wilders, Geert, 259 Will, George, 30 Willetts, David, 124 William III, King of England, 43 Williamson, John, 8, 163–64 Wilson, James Q., 198 Wolfson Institute of Preventive Medicine, 209 Woolf, Virginia, 28–29 World Bank, 76 Asian financial crisis and, 143 World Economic Forum, 146, 148 World Forum on Democracy, 252 World Health Organization, 201 World on Fire (Chua), 143 World Trade Organization, 260 World War II, 73–74, 232 Wukan, China, 160 Xi Jinping, 133, 145, 148, 161, 164, 165 Xilai, Bo, 154, 162 Xinmin Weekly, 162 Yang Jianchang, 159–61 Yeltsin, Boris, 253 Ye Lucheng, 151 Yes, Minister (TV show), 194 Yongle, Emperor of China, 36 youth, public spending as biased against, 124 Zakaria, Fareed, 143 Zhang Weiwei, 164 Zheng He, 36 Zingales, Luigi, 128, 239 Zuma, Jacob, 254

How to Stand Up to a Dictator
by Maria Ressa
Published 19 Oct 2022

Finding the balance between stability and change—created by the expectations seeded by leaders—sometimes took generations to bear fruit. After we opened the bureau in 1995, each year brought something new: 1996, the Jakarta Megawati riots, triggered by a woman’s political challenge to Suharto; 1997, the Asian financial crisis and the forest fires in Indonesia, leading to the recurring Southeast Asian haze, a massive environmental and political story. And then in 1998, after nearly thirty-two years in power, Suharto fell, which triggered massive social change and unleashed a kind of violence I had never seen. Interviewing leaders showed me how their weaknesses were embedded in the cultures of the people they led.

…

Around-the-clock coverage with at most three to four hours’ sleep a night. By the time Suharto stepped down in May 1998, 1,400 people had been killed in riots in Jakarta. After he resigned, the violence only escalated, seemingly beyond the military’s control. The target, as in the 1960s, was the ethnic Chinese, because the Asian financial crisis had sparked a scramble for survival, and institutionalized racism spread. In Jakarta and other parts of the country, mob violence became the norm. Neighborhood rivalries turned into urban warfare: men with machetes slicing each other in Jakarta’s streets. The scenes I witnessed of senseless killings and beheadings made me realize how Suharto’s oppression had acted like a pressure cooker, how covering up violence only led to more violence.

The Relentless Revolution: A History of Capitalism
by Joyce Appleby
Published 22 Dec 2009

China’s Mixture of Investment Capital China’s banking system is a mixture of four giant state-owned banks, derivative of the socialist economy; joint-stock commercial banks founded for development purposes in 1994; and city banks. The government owns a majority interest in almost all state banks. Direct foreign investment is large and comprised mainly of long-term commitments. Termed “patient capital,” these commitments allowed China to survive the Asian financial crisis of 1997–1998 much better than most countries in the region. The Chinese are great savers, so interest rates have continued to be low. Private and public savings in China have formed America’s great piggy bank in its twenty-first century spending spree. Corporations in China still have far to go in creating sound organizations.

…

Choe Sang-Hun, “South Korea, Where Boys Were Kings, Revalues Its Girls,” New York Times, October 23, 2007. 47. Robert W. Crandall and Kenneth Flamm, “Overview,” in Crandall and Flamm, eds., Changing the Rules, 114–29; Tony A. Freyer, Antitrust and Global Capitalism (New York, 2006), 6–7. 48. Dick K. Nanto, “The 1997–98 Asian Financial Crisis,” CRS Report for Congress, February 6, 1998 (www.fas.org/man/crs/crs-asia2), 5. 49. “The Time 100,” New York (2000). 50. Thomas L. Friedman, The World Is Flat: A Brief History of the Twenty-first Century (New York, 2005), 128–39; Nelson Lichtenstein, “Why Working at Wal-Mart Is Different,” Connecticut Law Review, 39 (2007): 1649–84; “How Wal-Mart Fights Unions,” Minnesota Law Review, 92 (2008): 1462–1501. 51.

…

Frieden, Global Capitalism: Its Fall and Rise in the Twentieth Century (New York, 2006 [paperback ed., 2007]), 293ff; Robert W. Crandall and Kenneth Ramm, eds., Changing the Rules: Technological Change, International Competition, and Regulation in Communications (Washington, 1989), 10. 17. New York Times, November 17, 2008. 18. Dick K. Nanto, “The 1997–98 Asian Financial Crisis,” CRS Report for Congress, February 6, 1998 (www.fas.org/man/crs/crs-asia2): 5. 19. Claire Berlinski, “What the Free Market Needs,” Los Angeles Times, October 21, 2008. 20. “Modern Market Thought Has Devalued a Deadly Sin,” New York Times, September 27, 2008; Steven Greenhouse and David Leonhardt, “Real Wages Fail to Match a Rise in Productivity,” New York Times, August 28, 2006. 21.

The World's Banker: A Story of Failed States, Financial Crises, and the Wealth and Poverty of Nations
by Sebastian Mallaby
Published 24 Apr 2006

He had reached out to NGO critics; he had impressed his shareholders with a show of dynamism in the Balkans; he had launched the matrix-management reforms. From late 1997, however, Wolfensohn’s attention shifted. The dialogue with NGOs was losing its novelty; the fast progress of Bosnia’s early reconstruction was slowing; the management reforms were beset with frustrations. More to the point, the Asian financial crisis, which spread to Russia in the first half of 1998 and then to Brazil in the second half, forced Wolfensohn to fight for oxygen. So long as currency crises dominated the global agenda, the International Monetary Fund would keep shoving him under. It would design rescue packages in concert with the U.S.

…

Hadn’t the critics been right about the Bank’s destruction of the Brazilian rain forest in the 1980s? Hadn’t they driven the Bank to take the environment seriously and to become more transparent? And didn’t the research literature now show that NGO participation improved projects? Besides, the turmoil of the Asian financial crisis seemed to prove that arrogant Washington institutions still needed to be held to account. Whatever the confusion of the protesters’ placards, they were widely presumed to be onto something. One person who credited the demonstrators with more logic than they exhibited was the World Bank’s sometime chief economist.

…

Congress and, 275–77 International Finance Corporation, 148 International Labor Organization, 35 International Monetary Fund, 4, 71, 123, 199, 207, 249–50, 262 Africa and, 91, 106, 112, 114–15, 217, 220 aid to South Korea by, 192, 194 Argentina and, 363 Asia and, 186–91, 193, 209 Asian financial crisis and, 186–94, 209 Bank and bailouts of, 192, 211 Bosnia and, 363 Brazil and, 210, 363 Comprehensive New Development Framework and, 232, 235, 236 debt relief and, 380 Indonesia and, 186–96, 201 lending policy of, 44–45 loans to Pakistan of, 182 Mobilization for Global Justice protests of, 264–68 origin of, 2, 15 Oxfam’s criticism of, 60 purpose of, 2, 118 riots triggered by, 46 Russia and, 209 Stiglitz’s attack on, 193–95, 210, 266–67 Thailand and, 192–94 Uganda and, 217, 220 Washington Post on, 209 International Rivers Network, 7, 82 Iran: oil in, 351 revolution in, 36–37 Iraq, 123 reconstruction of, 2, 4, 118, 123, 130, 364–67, 389 U.S. invasion of, 362–64 Islam, 11 Izetbegovic, Alija, 128–29, 137 Jackson Hole, Wyo., Wolfensohn’s house in, 116 Jakarta: Bank office in, 177, 179, 183, 191, 202 Wolfensohn’s visit to slum of, 198–99 Jakarta Post, 185 James D.

Currency Wars: The Making of the Next Gobal Crisis
by James Rickards
Published 10 Nov 2011

They set an agenda, assign tasks, utilize staff and reassemble after a suitable interval, which could be a day or month, depending on the urgency of the situation. Progress is reported and new goals are set, all without the normal accoutrements of established bureaucracies or rigid governance. This process was something Geithner learned in the depths of the Asian financial crisis in 1997. He saw it again when it was deployed successfully in the bailout of Long-Term Capital Management in 1998. In that crisis, the heads of the “fourteen families,” the major banks at the time, came together with no template, except possibly the Panic of 1907, and in seventy-two hours put together a $3.6 billion all-cash bailout to save capital markets from collapse.

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INDEX adaptation, complex systems AIG Aldrich, Nelson W. Anatomy of an International Monetary Regime, The (Gallarotti) anchoring currency in economics Andrew, Abram Piatt Applied Physics Laboratory (APL), Washington, D.C., area, and financial war game Argentina Asian financial crisis, 1997 Atlantic theater, euro-dollar relationship Austria autonomous agents, in complex systems Bagehot, Walter bailouts, U.S., of 2008 Baker, James A. bancors bank bailouts, 2008 Bank for International Settlements bank holidays bank lending Bank of England Bank of the United States Banque de France Barro, Robert base money Bear Stearns beggar-thy-neighbor competitive devaluations behavioral economics Belgium Bernanke, Ben on gold and the Great Depression money policies of speech of 2002 Bernstein, Jared bilateral trade relations Black, Fischer black markets black swans (catastrophic events) Blair, Dennis C.

The Despot's Accomplice: How the West Is Aiding and Abetting the Decline of Democracy
by Brian Klaas
Published 15 Mar 2017

Since 1932, Thailand has “democratized” with a “one slow step forward, two quick steps back” approach. The backward pace has recently accelerated, thanks to the rising influence of Beijing in Bangkok. â•… Understanding China’s anti-democratic influence in Thailand requires some longer-term context. In the wake of the Asian financial crisis of the late 1990s, a new political star emerged in the “Land of Smiles”: Thaksin Shinawatra, a police officer turned media mogul who would eventually rise to become the juggernaut in Thai politics. Since the late 1990s, Thailand has been roughly divided into two major political camps known by colorful monikers: the Red Shirts and the Yellow Shirts.

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€ € € 256 INDEX Air Force One, 58 Ajax, 22, 38, 230 Alert, Nunavut, 231 Alfonso IX, King of Léon, 30–1 Algeria, 155 Aliyev, Ilham, 82–5 Allende, Salvador, 45–7 amplification effect, 57 Anaconda Copper, 48 Anglo-Iranian Oil Company, 38 Angola, 112–13 Antananarivo, Madagascar, 7, 85, 86 Apple, 20, 83, 135–6, 145, 151 Arab Spring (2011), 2, 10, 12–16, 18, 65, 94, 124–6, 130, 132–3, 163, 168, 218 Argentina, 34–5, 149, 156 Aristide, Jean-Bertrand, 114–15, 117 Aristogeiton, 28 Aristophanes, 29 Aristotle, 29 Armenia, 59–60, 209 Armitage, Richard, 53 Asghabat, Turkmenistan, 25 Ashkelon, Israel, 102 Asian financial crisis (1997), 196 Abbas, Mahmoud, 100 Abbottabad, Pakistan, 53 Abdullah bin Abdulaziz, King of Saudi Arabia, 172 Abdullah II, King of Jordan, 18, 214 Abidjan, Côte d’Ivoire, 19, 105, 106–7 Abraham, 124 Achilles, 22, 230 Afghanistan, 2, 5, 20, 49, 54, 67, 69, 70, 78, 98, 136–8, 213 1982 arrival of Bin Laden, 78 2001 US-led invasion, 70, 71, 84, 98 2009 presidential election, 70–1 2014 presidential election, 71; power-sharing agreement, 75–6; USAID announces women’s empowerment project, 136–8, 145 Afifi, Omar, 163–4, 247 African-Americans, 176, 207, 250 Ahmadinejad, Mahmoud, 168 Ahmed, Mohammed, 123–4, 126, 130, 224 AIDS (acquired immune deficiency syndrome), 116, 207 257 INDEX al-Assad, Bashar, 120 AT&T, 135 Athena, 22 Athens, 20, 27–30, 31, 156 Australia, 29–30, 112, 153, 156 Azerbaijan, 20, 82–5, 90, 209, 211, 238 Ba’ath party, 63, 72, 77, 124, 128 Badawi, Raif, 16 Baghdad, Iraq, 72 Bahrain, 59, 155, 209, 225 Bangkok, Thailand, 198, 200, 202, 203, 223 Bangladesh, 106 Bardo Museum attack (2015), 131 Barraket Essahel affair (1991), 123, 126, 224 Basra, Iraq, 72, 73 beheadings, 11, 12, 16, 19 Beijing Consensus, 206–7 Belarus, 3, 19, 60–7, 154, 192–5, 205–6, 212, 218, 222 1991 dissolution of Soviet Union; independence, 192–3 1994 presidential election; Lukashenko comes to power, 193–4 1996 Commonwealth with Russia established, 194 2002 proposal for re-integration with Russia, 194 2004 US passes Belarus Democracy Act, 63, 194; referendum on Lukashenko’s third term; Western sanctions, 63 2006 presidential election, 61; EU asset ban on Lukashenko, 63 2010 presidential election, 61–2, 65; Statkevich impris- 258 oned for organizing protest, 61–2, 222 2015 economic crisis, 64; release of political prisoners, 65, 222; presidential election, 64–5; pressured by Russia to host military base, 65, 195 2016 EU suspends sanctions, 65, 67, 195 Belarus Democracy Act (2004), 63, 194 Belgian Congo (1908–60), 42 Belgium, 43–4, 90, 220 Ben Ali, Zine El Abidine, 13, 123–33, 155 benign dictatorship, 215, 220 Benin, 23, 27, 156 Berlin Wall, 35, 201 Bermudo II “the Gouty”, King of Léon, 30, 231 Bever, James, 101 Bhumibol Adulyadej, King of Thailand, 165 Biamby, Philippe, 117 Bible, 179 Big Brother, 180 Bin Laden, Osama, 18, 50, 52–3, 78 Binti Salan Mustapa, Sumiati, 12 Biya, Paul, 121 Black Hawk Down incident (1993), 116 Black Sea Economic Cooperation (BSEC), 211 blackballing, 29 Blagoy, Ivan, 208 Blair, Anthony “Tony”, 6, 92 Blueberry Hill (Fats Domino), 207 Boehner, John, 181 Bohemian Rhapsody (Queen), 121 Boko Haram, 177 Bolivia, 143, 154 INDEX Bolšteins, Ludvigs, 147 Bono (Paul Hewson), 92 Boston University, 111 Botswana, 149 Bourguiba, Habib, 126 BP (British Petroleum), 38 Bradley effect, 176, 250 Brazil, 56, 149, 152, 156 Bremer, Lewis Paul, 72 Brexit, 1 bribery, 170–1 British Broadcasting Corporation (BBC), 94 Brunei, 155, 229 bubonic plague, 6 BudgIT, 171 Buenos Aires, Argentina, 34 Bulgaria, 149 Burkina Faso, 177–8 Burundi, 95 Bush, George Herbert Walker, 115, 121, 190 Bush, George Walker, 54–7, 63, 69, 99, 100, 101, 190, 194, 201 Bush, Sarah, 59 Cairo, Egypt, 9–10, 13, 163–4, 218 California, United States, 26, 188, 209 Cambodia, 59 Cameroon, 121 Canada, 94, 112, 143, 153, 155, 156, 230–1 Caravana de la Muerte, 47 Carnegie Endowment for International Peace, 52, 73 Carothers, Thomas, 52, 73, 141, 144, 189 Carter Center, 89, 238 Carter, James Earl “Jimmy”, 116, 120, 238 Caspian Sea, 84 Castro, Fidel, 49 Castro, Raul, 49 caudillos, 33 Cédras, Raoul, 115–20 censorship, 161–3, 165 Central Intelligence Agency (CIA), 20, 39–49, 59, 98, 201, 207, 208 Chan-ocha, Prayuth, 164, 203 Charles I, King of England, Scotland and Ireland, 31 Chemonics, 58, 138 Chicago, Illinois, 182 Chile, 27, 36, 38, 45–8, 153, 220, 225 Chiluba, Frederick, 190 China, 4, 23–7, 105–6, 109, 168– 70, 176, 190, 191–2, 196–212, 215–16, 218, 221, 223, 229 1958 launch of Great Leap Forward, 24 1990 Deng Xiaoping’s “24-Character Strategy”, 206 1992 propaganda-industry tax introduced, 209 2003 SARS outbreak, 25–6 2013 endorsement of Azerbaijani election, 211; monitoring of Malagasy election, 211 2014 Umbrella Movement protests in Hong Kong, 168–9, 176, 221; rail deal with Thailand, 203 2016 Lunar New Year celebrations, 208; Mong Kok riots, 169 China Central Television (CCTV), 207–9 Chow, Holden, 169 Christianity, 105, 179 Churchill, Winston, 22, 190, 215 259 INDEX Ciftci, Bilgin, 20, 161–3, 165, 176 citizen journalism, 135 citizen participation, 27 Citizens United v.

The Price of Everything: And the Hidden Logic of Value
by Eduardo Porter
Published 4 Jan 2011

These sorts of mutual assistance agreements are typical in many religions, including Christianity, Hinduism, Buddhism, and Islam. Gallup polls in 145 countries have found that people who attend religious services donate more to charity and perform more voluntary service than those who do not. When crises drive people into the arms of God, they embrace Him for the insurance as well as the spiritual solace. When the Asian financial crisis struck Indonesia in 1997, the rupiah lost 85 percent of its value, the price of food nearly tripled, real wages plummeted by almost half, and the study of the Koran soared. Indonesian Muslims study the Koran in communal events called “Pengajian,” in which a teacher lectures and leads the recitation of the religious text.

…

In 2000, AOL could use its pricey stock to take over media goliath Time Warner, which had more than five times its revenue. By October of 2002 the NASDAQ was back where it had been in 1996. In 2010, Time Warner quietly spun off AOL for a tiny fraction of its price a decade before. The dot-com crash was preceded by the Asian financial crisis, with subsidiary bubblettes from Russia to Brazil, when a surge of money into promising “emerging markets” abruptly went into reverse. Similar dynamics caused investors to pummel the Mexican peso during the tequila crisis a few years before. Japan’s Nikkei 225 stock index tripled in real terms between January 1985 and December 1989, only to fall 60 percent over the next two and a half years.

Earth Wars: The Battle for Global Resources
by Geoff Hiscock
Published 23 Apr 2012

Exhibit 3.2 Japanese general trading companies (sōgō shōsha) (turnover in FY ended March 2011) Source: Company reports. Exchange rate: US$ @ 80¥ The trading arms of the big South Korean family-run business groups (known as chaebol) sought to emulate the Japanese, but they, too, were forced to trim their sails after the Asian financial crisis of 1997–1998 and the chaebol restructuring that followed. Of those that remain, SK Networks is the biggest with turnover of $22 billion, followed by Samsung C&T, LG International, Hyundai Corp., and Hanwha Corp. Like the Japanese trading houses, they invest in overseas resources projects.

…

His younger brothers Indra and Nirwan have taken larger roles in recent years. Aburizal, now chairman of the Golkar political party, has seen his family’s business come close to ruin on more than one occasion over the last 20 years, most recently in 2008 after the global financial crisis, and in 1997–1998 when the Asian financial crisis rocked Indonesia’s currency and brought down the Suharto regime. Bakrie continues to carry a heavy long-term debt load, with China Investment Corp. among its creditors. Aburizal Bakrie was an unsuccessful contender to be Golkar’s candidate for the presidency in 2004, and may seek to run again in 2014.

The Butterfly Defect: How Globalization Creates Systemic Risks, and What to Do About It
by Ian Goldin and Mike Mariathasan
Published 15 Mar 2014

Peter Dattels and Laura Kodres, 2009, “Further Action Needed to Reinforce Signs of Market Recovery: IMF,” IMF Survey Magazine: IMF Research, 21 April, accessed 8 January 2013, http://www.imf.org/external/pubs/ft/survey/so/2009/RES042109C.htm. 35. See, for example, William C. Hunter, George G. Kaufman, and Thomas H. Krueger, eds., 1999, The Asian Financial Crisis: Origins, Implications, and Solutions (Norwell, MA: Kluwer Academic). 36. Ortwin Renn, 2008, Risk Governance: Coping with Uncertainty in a Complex World (London: Earthscan), vi. 37. Frank H. Knight, 1921, Risk, Uncertainty, and Profit (Boston: Hart, Schaffner, and Marx); and Larry G. Epstein and Tan Wang, 1994, “Intertemporal Asset Pricing under Knightian Uncertainty,” Econometrica 62 (3): 283–322, quote on 283. 38.

…

Proceedings of the National Academy of Sciences (PNAS) 101 (42): 15124–15129. Hummels, David. 2007. “Transportation Costs and International Trade in the Second Era of Globalization.” Journal of Economic Perspectives 21 (3): 131–154. Hunter, William C., George G. Kaufman, and Thomas H. Krueger, eds. 1999. The Asian Financial Crisis: Origins, Implications, and Solutions. Norwell, MA: Kluwer Academic. IMF (International Monetary Fund) Staff. 2009. “Guidance to Assess the Systemic Importance of Financial Institutions, Markets, and Instruments.” Report to G20 Finance Ministers and Governors. International Monetary Fund, Bank for International Settlements, and Financial Stability Board, October.

The Theft of a Decade: How the Baby Boomers Stole the Millennials' Economic Future
by Joseph C. Sternberg
Published 13 May 2019

The tax was first introduced in 1989 at the low introductory rate of 3 percent. But efforts to boost revenue from the tax always run into a small problem: increasing the consumption-tax rate in a weak economy is a great way to slow economic growth even further. In April 1997, the tax was increased to 5 percent, a move that was blamed, alongside the onset of the Asian Financial Crisis later that year, with tipping Japan into a recession. After he was elected in 2012, Prime Minister Shinzo Abe promised to double the consumption tax, to 10 percent, in two steps. But after the first of those increases, to 8 percent in 2014, Japan suffered yet another recession. The next stage of increase has been delayed, until October 2019 as of this writing.

…

Index Abe, Shinzo/“Abenomics,” 206–207 abortion views, 217n Affordable Care Act/Obamacare “Cadillac tax,” 167, 168 CLASS (Community Living Assistance and Support) program, 169 Congressional Budget Office on, 168 description/problems, 166–170, 186, 233 education loans and, 100 employers and, 66–69 labor costs and, 66–69 Medicaid and, 167 medical-device tax and, 167, 168 Millennial support, 218–219 overtime rule/effects, 68–69 subsidies and, 66, 67n, 167 African economies, 178–179 Alternative Minimum Tax provision and inflation, 169 American Legislative Exchange Council, 159 amortizing mortgage, 120, 120n Anderson, Kristen Soltis, 215 Andreessen, Marc, 41 Asian Financial Crisis, 206 Auerbach, Alan J., 171–172 Autor, David, 35–36 Average is Over (Cowen), 41–42 avocado/coffee controversy, 1–3 “avolatte,” 3 Bagehot, Walter, 130 bailouts with financial crisis, 59 “Basel” standards, 138n Bear Sterns, 11, 128, 129 Benson, Guy, 215 Bernanke, Ben financial crisis/aftermath and, 60, 64, 129, 130, 132, 133, 134 interest rate at/near zero and, 132, 133 Bertelsmann Foundation think tank, 199 birth cohort vs. generations, 7 BNP Paribas bank, 128, 180 Boomers childhood era, 46–47 definition/description, 6, 7, 8 government views, 221–222 near-lifetime employment and, 46–47 numbers, 8 politicians/policy and, 18, 19–21 retirement finances and, 80, 81 working/voting beginnings and, 51 See also specific activities; specific individuals Britain/Millennial housing disposable income and, 178, 188–189 “green belts,” 191 Help-to-Buy programs, 192–193 housing shortage reasons, 191–192 housing shortages, 187–192, 195 interest rates/Bank of England and, 192–193 living with parents, 188 locations/London and, 189n, 190, 195 middle class, 188 overview, 187–195 ownership encouragement/consequence, 192–194 ownership statistics, 190 problems summary, 194–195 rent costs and, 189n “shared ownership,” 192 subsidies/taxes and, 192, 193 zoning/process, 191–192 Britain/Millennials economic growth and, 189 unemployment and, 189 United Kingdom minimum wage and, 184 Brynjolfsson, Eric, 41 Buchanan, Pat, 217 Bunkeddeko, Adem, 219 Burns, Scott, 172 Bush, George W.

Red Flags: Why Xi's China Is in Jeopardy
by George Magnus
Published 10 Sep 2018

Jiang and Zhu presided over an unprecedented and rapid rise in income per head – a compound rate of 9.4 per cent per year between 1993 and 2003 – a negotiated return of Hong Kong to the mainland, and a reboot of China’s relations with the US and other leading countries. They steered China successfully through the Asian financial crisis in 1997–98, albeit not without incident. Some territories adjoining Hong Kong, especially Guangdong, witnessed serious financial difficulties and obliged Beijing to send a fixer, Wang Qishan, to oversee bankruptcies and restructuring.4 Wang became a close associate of President Xi Jinping, ran his anti-corruption campaign, and became vice-president in 2018.

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Xu Huang and Michael Harris Bond, Edward Elgar Publishing, 2012 Yasheng Huang, Capitalism with Chinese Characteristics: Entrepreneurship and the State, MIT Press, 2008 INDEX Unattributed entries, for example geography, refer to the book’s metatopic, China. 1st Five-Year Plan (i) 1st Party Congress (Chinese Communist Party) (i) 5G networks (i) 9/11 (i) 11th Central Committee, third plenum (i) 11th Party Congress (i) 13th Five-Year Plan advanced information and digital systems (i) aims of (i) BRI incorporated into (i) manufacturing and technology (i) pension schemes (i) transport (i) 14th Party Congress (i) 15th Party Congress (i) 18th Party Congress (i), (ii) third plenum (i), (ii), (iii), (iv) 19th Party Congress ‘central contradiction’ restated (i) supply-side reforms (i) Xi addresses (i), (ii), (iii) 21st-Century Maritime Silk Road see Belt and Road Initiative 2000 Olympic Games (i) 2008 Olympic Games (i), (ii) Abe, Shinzō (i) Acemoglu, Daron (i) Action Plan (AI) (i) Addis Ababa (i), (ii) Africa Admiral Zheng (i) BRI concept and (i) Chinese interest in (i) colonialist criticism (i) Japan and (i) loans to (i) metal ore from (i) Silk Road (i) Sub-Saharan Africa (i) ageing trap (i) see also population statistics birth rate (i) consequences of ageing (i) demographic dividends (i), (ii) family structures (i) healthcare (i) ‘iron rice bowl’ (i) mortality rates (i) non-communicable disease (i) old-age dependency ratios (i), (ii), (iii) pensions (i) retirement age (i) Agricultural Bank of China (i) Agricultural Development Bank of China (i) agriculture (i), (ii), (iii) Agriculture and Rural Affairs, Ministry of (i) AI (i), (ii), (iii) AI Innovation and Development Megaproject (i) AI Potential Index (i) Air China (i) Airbus (i), (ii) Aixtron SE (i) Alibaba (i), (ii), (iii), (iv) Alphabet (i) AlphaGo (i), (ii) Alsace-Lorraine (i) Amoy (i) Anbang Insurance (i), (ii), (iii) Angola (i) Angus Maddison project (i) Ant Financial (i), (ii) anti-corruption campaigns 2014 (i) in financial sector (i) Ming dynasty (i) Xi launches (i), (ii), (iii) Apple (i), (ii), (iii) Arab Spring (i) Arabian Sea (i) Arctic (i) Argentina (i), (ii), (iii) Armenia (i) Article IV report (IMF) (i) see also IMF ASEAN (Association of South East Asian Nations) (i), (ii) Asia China the dominant power (i), (ii) Global Innovation Index (i) Obama tours (i) Paul Krugman’s book (i) ‘Pivot to Asia’ (i) state enterprises and intervention (i) Asia-Pacific Economic Cooperation (i) Asian Development Bank (i), (ii) Asian Financial Crisis (1997–98) (i), (ii), (iii), (iv) Asian Infrastructure Investment Bank (i), (ii), (iii), (iv) Asian Tiger economies (i), (ii), (iii), (iv) Atatürk, Mustafa Kemal (i) Australia Chinese investment in (i) Chinese seapower and (i) free trade agreement with (i) immigration rates and WAP (i) innovation statistics (i) pushing back against China (i), (ii) Renminbi reserves (i) Austria (i), (ii) Austria-Hungary (i) automobiles (i), (ii) Babylonia (i) bad debt see debt bad loans (i), (ii) Baidu (i), (ii) Balkans (i) Baltic (i) Baluchistan (i) Bandung (i), (ii) Bangladesh heavy involvement with (i) Indian sphere of influence (i) low value manufacturing moves to (i), (ii) Padma Bridge project (i) Bank of China (i), (ii) Bank for International Settlements (i) banks (i) see also debt and finance; WMPs (wealth management products) assets growth, effects of (i) bad loans problem (i) bank failures (i) central bank created (i) major banks see individual entries non-performing loans (i), (ii), (iii), (iv), (v), (vi) regulators step in (i) repo market (i), (ii) shadow banks (i), (ii), (iii), (iv), (v), (vi), (vii), (viii), (ix) n18 smaller banks at risk (i) Baoneng Group (i) Baosteel (i) BBC (i) Bear Stearns (i) Beijing see also Peking 1993 (i) central and local government (i), (ii), (iii) Mao arrives (i) Olympics (i) pollution (i) price rises (i) US delegation (i) water supply (i) Beijing-Hangzhou Grand Canal (i) Belarus (i) Belgrade (i) Bell (i) Belt and Road Initiative (BRI) (i) debt problems in recipient nations (i) description, size and nature (i) economic drivers (i) financing and funding (i), (ii) first Forum (i) geopolitical drivers and disputes (i) Marshall Plan and (i), (ii) project investment (i), (ii) reordering of Indo-Pacific (i) Silk Road and (i), (ii), (iii) ways of looking at (i), (ii) benevolent dictators (i) Bering Strait (i) big data (i) birth rate (i) see also population statistics Bloomberg (i) Bo Xilai (i) Boeing (i), (ii) bond markets (i) Bosphorus Strait (i) Boxers (i), (ii) Brazil BRICS (i), (ii), (iii) middle income, example of (i), (ii), (iii) US steel imports (i) Bretton Woods (i) Brexit (i), (ii) BRICS (i) ‘Building Better Global BRICs’ (Goldman Sachs) (i) BRICS Bank (i), (ii) Britain (i) Boxer Rebellion (i) Brexit (i), (ii) Hong Kong (i) new claims (i) Renminbi reserves (i) Broadcom (i) Brunei Darussalam (i), (ii), (iii) Brzezinski, Zbigniew (i) Budapest (i) budget constraints (i), (ii) Bulgaria (i) Bund, the (Shanghai) (i) Bundesbank (i) bureaucracy (i), (ii), (iii), (iv) Bush, George W.

The City
by Tony Norfield

This comes about in two ways. Firstly, the US can draw upon the financial resources of the world economy and has much easier access to funds than do other countries. One important aspect of this is the dollar’s high share – around two-thirds – of official foreign exchange reserves. As mentioned earlier, after the Asian financial crisis of 1997–98, many countries in the region – and elsewhere – built up their currency reserves as an insurance policy: if there were another flight of capital in a crisis, they could try to offset the impact by selling these reserves. The US dollar was the reserve currency of choice not only because it was the principal means of payment for trade and finance, but also because many countries had currencies linked to the dollar.

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Gupta, Partha Sarathi 1975, Imperialism and the British Labour Movement, 1914–1964, London: Macmillan Press Newsinger, John 2006, The Blood Never Dried: A People’s History of the British Empire, London: Bookmarks Index Page numbers in bold refer to charts, page numbers in italic refer to charts. 1 per cent, the 76, 102 ABN AMRO 51 ABP 82 Acland, Richard 32 advances 78 Afghanistan 220 Amsterdam 51 Anglo-American euromarkets 40–4 Anglo-American financial relationships 21, 27–8, 36, 59 transition, post-1945 29–30 Anheuser Busch InBev 121 anti-monopoly policies 119–20 Apple 77, 118, 118–19, 121–2, 155 Arab-Israeli War, 1973 55 Asian financial crisis, 1997–98 101, 166–7 Asian Infrastructure Investment Bank (AIIB) 18, 226 asset managers 80–1 austerity 152, 219 Australia 31, 58, 60, 109, 206, 226 automobile production 121 Aviva 82 Bahamas, the 209 balance of payments 187, 188, 200, 203, 207 balance of power 52 bank deposits 93 Bank for International Settlements (BIS) 108, 191, 192, 214 bank loans, international 66 Bank of America 125 Bank of America International xi Bank of England 44, 47, 56–7, 62, 64, 99–100, 116, 158–9, 173 Bank of Japan 157–8 banking capital 136 banks American 132–3, 193 American fragmentation 40 American regulation 36 assets 4, 85, 122–3, 141–4, 143, 214 borrowing 206–8 broking activity 80 business 79–80 Chinese 225–6 City of London trade 45 clients 79 creation of revenue-earning assets 137, 137–8 credit creation 83–5, 86, 104 dealing revenues 146 dealing spreads 191 derivative assets 140–1 Eurodollar deposits in American 41–2 existing loan assets 140 financial assets 139–47, 143 financial power 92 financial services revenues 191–7, 192, 194, 196 fines 79–80 foreign exchange deals 79 foreign exchange turnover 193–5, 194 fund buy backs 198 Hilferding’s analysis 92–5 interest-bearing capital advances 79–80 international assets 108 international business volume 192–3 Islamic 221 lending 142–4, 208–10 leverage ratios 131–4, 133, 134, 138 liabilities 108, 141, 141–4, 143 monopoly position 139 net interest income 138 networks 205–6 offshore operations 208–9 private 116 reserve requirements 40 role of 9, 136 short-term money-market instrument assets 144 start-ups 139 transaction volume 134–5 UK 4, 116, 134, 191–7, 192, 194, 196, 206–10, 214 UK assets and liabilities 141–4, 143 unsecured loans between 46 Banque de France 100 Barclays Bank 4 Barclays Global Investors 125 Barclays-Lehman deal, 2008 125 Barclays plc 123, 125 Bayly, Christopher 30 beer production 121 Belgium 1 Berkshire Hathaway 81–2 Berlin Wall, fall of 63 Bevan, Aneurin 32 Big Bang, the xi, 7, 54, 66–70 BlackRock 80, 125 Blair, Tony 64, 112 bond markets 49, 146 bond ownership 102, 144, 146 bond securities, characteristics 86 booms 104 borrowed money 78 borrowing banks 206–8 bond-market 146 interest rates 146 repo 46 risk 130 UK 201–2, 204–5 UK bank 206–8 BP plc 3, 111–12, 114, 190 Brazil 18, 106, 107, 222 Bretton Woods world monetary system 10, 26–7, 29, 31, 39 break up of 16, 52, 53, 66 BRICS 222–3 British Empire 23–6, 24, 25, 27, 28, 30–3, 52, 105 brokers 68, 80, 96, 99 Browne, John 112 Brown, Gordon 210 Brunei 220 Bündchen, Gisele 164–5 Bundesbank 57, 62 Burn, Gary 43, 74 Bush, George W. xii busts 104 Cameron, David 211, 220–1 Canada 4, 31, 60, 66 capital access to foreign 68 accumulation 19, 149 and financial securities 89–90 and imperialism 19–20 interest-bearing 77–8 manufacturing 43 money-dealing 79 organic composition of 148–9 ownership 93 parasitism 228 productive 90 capitalism crisis 12, 215 and finance 76 financial mechanism of 9 and financial system 8–9 global 4 and monopoly 100 moribund 159–60 and the rate of profit 147–50 and the state 111–15 UK 44–7, 49 capitalist business 74 capitalist market system, and finance xiii capitalist power 86 capitalist production 9 rate of profit measurement 153 capital movement, national controls on 51 capital values, destruction of 151–2 Carlsberg 121 Carney, Mark 213–14 cash flows, financial securities 88 Cayman Islands, the 209, 211 central banks 5, 47, 83, 85, 116 CHAPS 84 Chesnais, François 19–20 Chicago 37, 42, 185, 195 China 2, 15, 171 automobile production 121 bad debt 224 banks 225–6 challenge of 222 challenge to America 17–18 currency trading 225–6 cyber attacks 18 equity market capitalisation and turnover 181, 182 export prices 224–5 FDI 107–8 financial services exports 176–7 foreign direct investments 18 foreign exchange reserves 167, 224 foreign exchange trading 109 FX swap arrangements 225 GDP 106, 106–7, 224 growing financial role 73 military spending 109 millionaires 99 mobile phones 122 New Development Bank funding 18, 222–3 rise of 18, 221–7 and Russia 223 security threat 18 status 110, 111 stock exchange prices 182 stock exchanges 18 US dollar-denominated debt 18, 221 wages 155 China Mobile 222 China Resources Snow Breweries 121 Churchill, Winston 60 as Chancellor of the Exchequer 23, 24–6 Iron Curtain speech 29 ‘City–Bank of England–Treasury’ nexus 54 City bonuses 211 City of London 37, 228 advantages 37, 40, 47, 49–50, 52 casino analogy xii Chinese currency trading 225–6 competitiveness 68 deregulation xii, 7 development 44–7 domination 194–5 earnings 49 and economic policy 8 euromarket 44–5, 47–51 European rivals 46–7, 51 expansion 40 financial system 37–40 geographical scope 37 Gowan’s analysis 11–12 growth 44–5 international reach 4 international role 47–51, 73–4 market 45 networks 205–6 operations 185–212 Panitch and Gindin’s analysis 15 relationship with America 73 role xii–xiii, 45, 49, 69 status 28, 35, 50, 185, 206, 210–11 strength 99–100 Clinton, Bill 122 Clinton, Hillary 18 clipping coupons 97–8 Cold War, the 37 Collateralised Debt Obligations (CDOs) 90, 140 colonial marketing boards 32 commercial capitalists 76 commodities, circulation of 78 Common Agricultural Policy 58 communism, threat of 30 Competition Commission 119–20 constructive parasitism 213–14 cooperation 16, 28 corporate control 183 corporations headquarters 114–15 nationality 111–13 stock market listings 113 cost of living 155 costs 77 Court of Justice, European Union 216 credit bubble 156 credit creation 21, 76, 150–1 banks 83–5, 86, 104 currency dealing costs 162 seigniorage 163–6 and trade 162–3 current account balance, UK 188–90, 189, 190 current account deficit, UK 200, 202, 211, 217 current account deficit, USA 167–8 current account surplus, UK 33, 34, 69 cyber attacks 18 Czech Republic 10 Darling, Alistair 125 dealing costs 162 dealing revenues 146 dealing room screens xi dealing spreads 191 debt crisis 151–2 Deepwater Horizon oil spill 190 de Gaulle, Charles 34, 47 Dell 77 Denmark 1 deregulation 45, 54, 65–70 derivatives 140–1 dealing in 142 definition 141 money-market 141 over-the-counter 185, 195, 196 derivatives markets 135 Deutsche Bank 215 Dollar–Wall Street Regime 12 domestic politics, economics and 217–19 Dubai 172 Dublin, International Financial Services Centre 178 earnings, City of London 49 Economic and Monetary Union (EMU) 59–61 advantages 63 five conditions for membership 64 threat to UK financial power 64–5 UK opt-outs 61–4 Economic Consequences of Mr Churchill, The (Keynes) 23–4 Economic Consequences of the Peace, The (Keynes) 23 economic crises 151–2 economic growth 53, 60–1 economic influence 3 economic output 106 economic policy 8 economic power 101 concentration of 91–2 financial privileges of 7 and financial securities 85–92 global 3–6 hierarchy of 97 manifestation of 88–92 UK 2 economic privilege 104 economic relationships, in global capitalism 4 economics, domestic politics and 217–19 economic system, dysfunctional 8 elevators and escalators 121 employment, financial sector 186 End of History thesis 15–16 English language, role of 37 equity capital, valuation 179 equity markets 179–81, 181–3 capitalisation and turnover 181–3, 181 equity securities 86 eurobonds 41, 47–8 euro crisis, 2010 62, 65 eurocurrency bonds 49 eurodollars 40–1, 43, 48 euro financial system 72–3 euromarkets 28, 40, 51, 52, 66 Anglo-American 40–4 City of London 44–5, 47–51 definition 40 growth 40, 42, 43 interest 41 operation 40–1 origins 42–3 regulation 40–1 scale 43 UK earnings 43–4 European Central Bank (ECB) 64, 65, 72, 100, 159, 173 European Commission 162 European Economic Community (EEC) 33, 34, 57–8 European Free Trade Association (EFTA) 34 European integration 58 European Monetary System 67 European Union 16–17, 21, 54 anti-monopoly policies 120–1 Court of Justice 216 financial policy 69–70 financial services sector integration 72–3 GDP 70 UK membership referendum 218–19 UK opt-outs 61–2 euro system 57 euro, the 162–3, 164, 165, 166 status 72–3, 109 exchange controls, abolition of 54, 66–7 exchange rates 156, 163 Exchange Rate Mechanism (ERM) 57, 62 existing loan assets 140 exorbitant privilege 166–9 Facebook 5, 91 Federal Deposit Insurance Corporation charge (US) 41 Federal Reserve System (US) 40 fictitious capital 87, 88, 90, 91, 183 ownership 92 pricing 147 and securities prices 145 as wealth 147 fictitious deposits 83 finance access to 6 and capitalism 76 and capitalist market system xiii definition 5 and imperialism 8–10 and power 7–8 role of 161 finance capital 92–5 finance ministries 5 financial account, UK 197–200, 199 balance of payments 200 flows 198–9, 199 surplus 199 financial aristocracy 90, 96 financial assets banks 139–47, 143 ownership of 102–3 and profit 137 financial capitalists 78 financial crises 6, 10, 19, 101–2 America and 12 causes 147–8 and profit and profitability 135 financial crisis, 2007–8 20, 65, 72, 132, 134, 154, 157–8, 168, 198, 214 financial dealing 76 financial excess 154 financial institutions, and money-capitalists 76–7 financial market shares 70–3, 71 financial markets, state policy 65–70 financial operations xiii financial parasitism 95–7, 227–8 financial policy American 11, 65–6, 67–8 European Union 69–70 Japanese 67 UK 14, 65–70 financial power 101, 109 American 6, 11–12, 14–15, 55, 170–3, 183 banks 92 EMU threat to 64–5 global 3–6 individuals 90–1 UK 2, 3, 64–5 financial prices 8 financial privilege 7, 22 financial revenues 144–6 financial scandals 216 financial sector 5 employment 186, 213–14 scale 4, 213–14 tax revenues 186 financial sector capitalists 91 financial securities 21, 104 as assets 91–2 and capital accumulation 89–90, 139–40, 179 cash flows 88 cash value 89 characteristics 86 creditors 88–9 and economic power 85–92 markets 89 price 87–8, 145–6, 147 price currency 181 role of 76 and surplus value 144–6 value xi, 87–8 financial services exports 173–9, 175 financial services revenues 190–7, 192, 194, 196 Financial Stability Board 214 financial system 4, 4–5, 20, 104, 227 and capitalism 8–9 growth 75–6 hierarchy 6, 105–11, 111 and imperialism 8–10 state regulation 115–16 Financial Times xii, 75, 214 Top 500 global corporations 3 financialisation 20 First World War 23–6, 29 fixed assets, and profit 137 floating-rate notes 48 Ford Motor Company 5 Ford Motor Credit 5 foreign currency risk 168 foreign direct investment (FDI) American 3, 42 Chinese 18 outward 107–8 and status 107–8 UK 3, 66, 200, 205 foreign exchange deals, banks 79 foreign exchange (FX) market 71, 72, 193–5, 194 foreign exchange trading 108–9, 123 foreign investment revenues 9–10, 22, 189–90 foreign operations, expanding 101 foreign securities 47–8 Fox Broadcasting Company 113 France 2, 4, 13, 63, 93 China policy 226 FDI 107 GDP 106, 107 international banking index 108 international banking position 192, 192 Keynesianism in one country 67 military spending 109 monetary policy 67 seigniorage 165 trade pattern 60–1, 61 Frankfurt 51, 64, 72 free market 13, 15–16 FTSE 100 113 Fukuyama, Francis 15–16 functioning capitalists 77–8 G4S 120 GDP Chinese 224 European Union 70 and status 106 UK 4, 106, 107, 155–6 GE Capital 5 General Electric 5 General Motors 121 Gent, Chris 180 Germany 2, 4, 63, 66, 94–5, 107, 108, 109, 110, 111 China policy 226 domination 64 equity market capitalisation and turnover 181, 182 GDP 106, 107 Hilferding’s analysis 93–95 international banking share 71, 71 reunification 62, 63 seigniorage 165 status 54 trade pattern 60–1, 61 GIC 177 Gindin, Sam 14–17, 18 Glass-Steagall legislation 36 Glencore 122 global capitalism, economic relationships in 4 global finance 2 globalisation 13, 114 global market trading, location 49 global system, centre of gravity 73–4 global value chains 118 Goldman Sachs 161, 222 gold prices 39 gold standard 23–6, 54 Google 5 government debt 87, 89 governments, financial role 5 government spending, cuts 59 Gowan, Peter, The Global Gamble 11–12 Greece 65, 72, 101, 151 greed 148 Group of 5, the 68 Group of 7, the 70, 71 Harper, Tim 30 Harvey, David 19 Healey, Denis 58–9 Heath, Edward 57–8 hedge funds 12, 81, 131 Heineken 121 Helleiner, Eric 12–14, 70 Hilferding, Rudolf 136 Finance Capital 92–5 Holcim 75 Hong Kong 18, 176–7, 206, 209 household debt 103 Howe, Geoffrey 66 HSBC 3–4, 225 idiocy 148 Iksil, Bruno 135–6 imperialism 5–6, 160, 161–84 American 12, 14–15, 166–9 and capital 19–20 currency 162–6 definition 117–18 domination network 21 economic definition 116–17 economic mechanism 117–21 equity markets 179–83 exorbitant privilege 166–9 and finance 8–10 financial power 170–3 financial services exports 173–9, 175 Lenin’s analysis 117–18 methods 117, 118 and monopoly 100, 117–21 parasitism of 97–9 power 126 predatory 19 and the state 119 UK 7–8, 186, 228 imports 155 India 18, 30, 222 GDP 106, 107, 224 individuals, financial power 90–1 Indonesia 101 inflation, 1970s 58 inflation rates 132, 164 innovation 135–6 insurance companies 81–2, 99 insurance premiums 81–2 insurance revenues 191 intellectual property rights 126 interbank market 46 interbank payments, value 84 interbank payment systems 84 interest and interest rates 78, 88, 130, 132, 138, 142 American 168 bond-market borrowing 146 derivatives turnover 195, 196 ERM fiasco 62 euromarkets 41 and profit 156–7 UK 203 interest-bearing capital 77–8 bank advances 79–80 dealing in 79–80 division of labour 99 Lenin’s analysis 98–9 Marx on 95–7 parasitism 95–7 Interest Equalisation Tax (US) 39–40, 48 international banking index 108 international banking share 50, 70–1, 71 international community 117 international companies 112 international finance, drivers 51 international financial revenues, UK 10 International Financial Services Centre, Dublin 178 international financial transactions 98 international investment position, UK 200–1, 201 International Monetary Fund 14, 19, 27, 29, 56, 58–9, 73, 101, 164, 223 investment, advance of money 86–7 investment mandates 80 investment returns 131 Iran 59, 113, 172 Iraq, invasion of, 2003 7, 220 Ireland 4, 178, 205 Islamic bonds 220–1 Islamic finance 22, 219–21 Islamic Finance Task Force 221 Italy 4, 106, 107, 226 Japan 2, 4, 15, 38, 93, 163, 167 equity market capitalisation and turnover 181, 182 financial crisis 71 financial policy 67 foreign exchange trading 109 GDP 106, 107 international banking index 108 international banking share 50–1, 71, 71 Offshore Market 67 seigniorage 165 threat of 29 zaibatsu 94 jobbers 68 Johnson Controls 121 JP Morgan Chase 135–6 Juncker, Jean-Claude 175 Kennedy, John F. 34 Keynesianism in one country 67 Keynes, John Maynard 23–4, 30, 35 labour exploitation of 74 international division of 99 surplus 149 labour costs 98, 118–19, 155 Labour Party Conference, 1956 32 Tanzanian groundnut scheme 32 Lafarge 75 Lafont, Bruno 75 Lear Corporation 121 Lee, Jennie 32 legal tender 115 Lehman Brothers 125, 210 lender of last resort 116 Lend-Lease policy 29 Lenin, V.

Saudi America: The Truth About Fracking and How It's Changing the World
by Bethany McLean
Published 10 Sep 2018

In the spring of 1997, Chesapeake announced that much of the land it had acquired was not productive. The company took a $200 million charge against earnings, which essentially wiped out all the profit it had declared in the previous three years, and the stock plunged 25 percent. The loss coincided with the Asian financial crisis, which sent oil and natural gas prices plummeting. By 1998, Chesapeake was selling for seventy-five cents a share. McClendon and Ward tried to sell the company, but there were no takers. Later, McClendon told Oil & Gas Investor: “To look at the quote machine screen every day back then and think, ‘You’re not even worth one dollar’ was probably the worst period of our careers.”

Fault Lines: How Hidden Fractures Still Threaten the World Economy
by Raghuram Rajan
Published 24 May 2010

An Analysis of Diversified Indian Business Groups,” Journal of Finance 55, no. 2 (April 2000): 867–91. 8 The description of Alphatec is drawn from Mark L. Clifford and Peter Engardio, Meltdown: Asia’s Boom, Bust and Beyond (Paramus, NJ: Prentice-Hall, 2000), 136–38. 9 See Shalendra D. Sharma, The Asian Financial Crisis: Crisis, Reform, and Recovery (Manchester, U.K.: Manchester University Press, 2003), 42. 10 The photograph is widely accessible, for example on the website of the International Political Economy Zone, ipezone.blogspot.com/2007/09/flashback-camdessus-suharto-pic.html, accessed March 10, 2010.

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See income inequality infant-industry protection inflation: in asset prices expectations of Federal Reserve policies and, relationship to unemployment in United States innovation See also technological change institutional economics insurance: bond earthquake livelihood mortgage,See also health insurance; unemployment benefits interest rates: on bank deposits in China consequences of low effects of expectations hypothesis and increases to fight inflation in Japan long-term low levels of on mortgages on savings short-term, spreads of Taylor rule and International Monetary Fund (IMF): Asian financial crisis and conditionality of loans influence of Mexican loans (1994) policy coordination role of reforms in staff of, warnings about trade imbalances Internet: communicating with public through distance education use in hiring investment: bond holders boom in in China in East Asia housing incomes from in managed capitalist systems in physical capital relationship to saving, See also foreign investment investment banks See also banks investment managers, See also hedge funds Jackson Hole Conferences Japan: central bank of competition in consumption in economic growth of education in elevator ladies in employment in energy consumption in exchange-rate policies of export-led growth strategy of exports of, financial bubble and crisis in health care costs in keiretsus in managed capitalism in jobless recoveries: political pressure for economic stimulus during in United States jobs.

Unfinished Business
by Tamim Bayoumi

Bayoumi and Eichengreen (2017): Tamim Bayoumi and Barry Eichengreen, “Aftershocks of Monetary Unification: Hysteresis with a Financial Twist”, International Monetary Fund working paper WP 17/55 (March 2017). Bayoumi and Gagnon (2016): Tamim Bayoumi and Joseph E. Gagnon, “Unconventional Monetary Policy in the Asian Financial Crisis”, Pacific Economic Review, forthcoming. Bayoumi and Masson (1998): Tamim Bayoumi and Paul R. Masson, “Liability-creating Versus Non-liability-creating Fiscal Stabilisation Policies: Ricardian Equivalence, Fiscal Stabilisation, and EMU”, The Economic Journal, Vol. 108, Issue 449 (July 1998), pp. 1026–45.

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Implementation of the Basel Capital Regulatory Framework”, Congressional Research Service, Washington DC, April 2014. Glick and Rose (2016): Reuven Glick and Andrew K. Rose, “Currency Unions and Trade: A Post-EMU Reassessment”, European Economic Review, Vol. 87, Issue C (2016), pp. 78–91. Goldstein (1998): Morris Goldstein, The Asian Financial Crisis: Causes, Cures, and Systemic Implications, Peterson Institute for International Economics, Washington DC, 1998. Goldstein (2017): Morris Goldstein, Banking’s Final Exam: Stress Testing and Bank-Capital Reform, Peterson Institute for International Economics, Washington DC. Goodhart (2011): Charles Goodhart, The Basel Committee on Banking Supervision: A History of the Early Years 1974–1997, Cambridge University Press, Cambridge, 2011.

Extreme Money: Masters of the Universe and the Cult of Risk
by Satyajit Das
Published 14 Oct 2011

Soros; it emerges multiplied, but otherwise unchanged. With other inputs the results are more disappointing—to be blunt, more in line with biology. Mr. Soros gorged on chopped philosophy, mashed economics, and facts and figures swimming in grease. It was too much. Before he knew what was happening out rushed this book.26 During the Asian financial crisis of 1997/8, Mahathir Mohammed, prime minister of Malaysia, also a less benign view of Soros: “All these countries [in East Asia] have spent 40 years trying to build up their economies and a moron like Soros comes along with a lot of money to speculate and ruin things.”27 The Prime Minister made no mention of his own Pharaonic projects funded by borrowings from foreigners.

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Poorly paid, often abused, they work long hours to support extended families back in the Philippines. In the hustle and bustle of Hong Kong’s financial center, they are the only people who smile and laugh. Among them, there is a rare sense of community. Talking about the human effects of the crisis, a friend tells me a story about Indonesia during the Asian financial crisis more than a decade ago. Fluent in Bahasa Indonesia, he overheard a conversation one night outside the hotel where he was staying. A mother and her two daughters were discussing who would sell herself that night to feed the family. The crisis has led to cutbacks in the number of Filipino maids in Hong Kong.

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Alan Greenspan “Banking in the global marketplace” (18 November 1996), Speech to Federation of Bankers Association of Japan, Tokyo. 8. Greenspan, The Age of Turbulence: 360. 9. Alan Greenspan “Do efficient financial markets mitigate financial crises?” (19 October 1999), Financial Markets Conference of the Federal Reserve Bank of Atlanta. 10. Robert Wade “The Asian financial crisis and the global economy” (November 1998) (www.wright.edu); Peter Temple (2001) Hedge Funds: The Courtesans of Capitalism, John Wiley & Sons, Chichester: 141. 11. Yves Smith “Covert nationalization of the banking system” (3 August 2008) (www.nakedcapitalism.com). 12. Martin Wolf “Why banking is an accident waiting to happen” (27 November 2007) Financial Times. 13.

Termites of the State: Why Complexity Leads to Inequality
by Vito Tanzi
Published 28 Dec 2017

See also specific topic constitutions and, 270–72 legal rules and, 252–53 supply-side economics, 33, 74–78, 395, 397 Economics of Our Patent System (Vaughan), 359 The Economist, 77, 203, 343, 355–56, 361, 366 Education entrepreneurs and, 309 income redistribution and, 193 as public good, 180–81 in US, 208 Efficient market hypothesis, 86–87 Einaudi, Luigi, 269, 342 Eisenhower, Dwight, 4, 40, 178 Elizabeth I (England), 215 Elmore, Bartow, 325 Employment entrepreneurs and, 309 quotas, 145–46 role of government, 189–90 stabilization policies and, 237 unemployment compensation, 237–38 “The End of Laissez Faire” (Keynes), 31–32 Energy industry, 17, 167, 283–84 Enron, 127–28, 172–73 Entertainment industry, 345, 348, 353 Entitlements, 50–51 The Entrepreneurial State (Mazzucato), 196 Entrepreneurs corporations and, 308 desires of, 308–9 education and, 309 employment and, 309 government, relationship with, 309–10 historical background, 306–7 income tax and, 308 infrastructure and, 309 laissez faire and, 307–8 obstacles to, 307–8 public resources and, 310 referee, government as, 310 Smith on, 307 taxation and, 309 in UK, 307 in US, 307 Environmental regulations, 147, 182, 183 Index Envy income inequality and, 319–21 poverty and, 216–18 Equitable growth, 310, 312 Esping-Anderson, Costa, 47 Ethical values of market, 398 European Central Bank, 244 European Commission, 113 European Monetary Union, 5, 69, 72, 260, 273 European Union Constitution (proposed), 271 “fake goods” in, 149 intellectual property in, 347 mislabeling of fish in, 149–50 occupational licensing in, 125–26 regulations in, 276 Exchanges, 91–94 asymmetry in, 94 complexity of, 92–94 contracts in, 92–94 Friedman on, 114–15 Hayek on, 93, 112–15 individuals, role of, 112–13 information in, 93, 112–13 Executive compensation in Australia, 364 in Austria, 364 bonuses, 82–83, 85–86 in Denmark, 364 directors, role of, 364–65 in financial institutions, 168–69 income inequality in, 82–83, 85–86, 105–6 increase in, 387, 398 intellectual property and, 348, 363–64 in Japan, 364 in Norway, 364 performance-based compensation, 363–64 in Sweden, 364 in UK, 364 in US, 169, 363, 364 Ex post income distribution, 118, 119 Expropriation, 136 Externalities balancing of, 164 Coase Theorem and, 183–85 correcting or reducing through regulations, 147, 281–82 cross-border externalities, 185–86 drones as, 165 environmental regulations and, 182, 183 federalism and, 183–84 global government and, 120–21 guns as, 165 income inequality and, 321 inter-institutional externalities, 290 431 legal rules and, 255 poverty and, 216–17 public goods and, 181–82 regulations and, 164 smoking as, 164 urbanization and, 91, 163–64 Facebook, 347 “Fake goods,” 149 Fascism, 23, 231, 266–67 Fashion industry, 345 Federalism in Australia, 284 in Brazil, 284 in Canada, 284 externalities and, 183–84 legal rules and, 260 regulations and, 125, 126, 173, 284–85 in US, 260, 284 The Federalist Papers (Madison), 249 Fees, 142 Financial crises complexity and, 156 government intervention and, 156 Great Depression, 22, 26, 31, 253 Great Recession, 76, 109, 318 moral hazard and, 156–57 Southeast Asian financial crisis (1997-1998), 109, 243–44 2007-2008 Financial Crisis. See 2007-2008 Financial Crisis Financial institutions executive compensation in, 168–69 financial penalties against, 158, 169–70 influence on governments, 113–14 regulations and, 126, 155, 157 rents and, 119 sanctions against, 157 “shadow banking,” 108, 119, 242, 329–30 “too big to fail” and, 84, 119, 168, 169 in UK, 157 in US, 126, 157 Financial instruments, complexity of, 106, 107, 108 Financial sector abuses in, 331 asymmetry in, 330–31 complexity of, 329–31 function of, 330 rents and, 330 securitization in, 330 “shadow financial sector,” 243 transaction activity in, 330 The Financial Times, 217, 352 Financial versus real investment, 106–7 432 Fine, Sidney, 18 Fines, 142 Finland Gini coefficient in, 317 marginal tax rates in, 376 Fiscal councils, 72–73, 272 Fiscal drag, 61 Fiscal policy, stabilization policies and, 237 Fiscal rules, 71–72, 272 Fiscal tools, 38 Fischer, Stanley, 113–14 Fisher, Irving, 46–47 Fishing industry, 149–50 Flat taxes, 381–82 Fogel, Robert William, 67–68 Food industry, 114–15, 167 Forbes, 38, 203, 342, 350 Forte, Francesco, 272 “Fracking,” 167, 283–84 France authorizations in, 137, 145 Cour des Comptes, 290 economic planning in, 27 ex post income distribution in, 118 “fake goods” in, 149 financial accountability in, 291 French Revolution, 89, 305 income inequality in, 306 marginal tax rates in, 376 occupational licensing in, 125–26 public spending in, 23–24, 53 regulations in, 279 wealth tax in, 342 welfare policies in, 43, 214 France, Anatole, 400 Francis (Pope), 28, 81 Frazer Institute, 60–61, 173 Free rider problem, 175–76 Free trade, 396–97 Friedman, Milton generally, 7–8, 60–61, 394 on basic minimum income, 212 on countercyclical policy, 61–62 on deficits, 72 on information in exchanges, 114–15 on irrationality, 141–42 on Keynes, 70 on limited role of government, 85, 313–14 on market, 34 on taxation, 367–68 Fundamental law of regulations, 278–79 Galbraith, John Kenneth, 3, 45–48 Gangs, 97–98 Gates, Bill, 196, 326, 356–57 Index Geithner, Tim, 113–14, 156 General Electric, 377 General Theory (Keynes), 46–47 Genetically modified food, 182–83 Germany authoritarian government in, 23 economic planning in, 27 “fake goods” in, 149 Gini coefficient in, 317 laissez faire in, 18 marginal tax rates in, 376 reforms in, 22 “revolving door policies” in, 335–36 unions in, 231 welfare policies in, 218, 219 welfare states in, 20 Gini, Corrado, 19 Gini coefficient.

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See also Soviet Union corruption in, 120 income inequality in, 306, 322 taxation in, 381–82 “Safety nets,” 207–8 Safety-related regulations, 146–47 Samsung Electronics, 347 Samuelson, Paul generally, 3, 56 on discretion, 71 on disincentives, 48–49 on fiscal rules, 272 on public goods, 175, 176–77 on role of government, 110, 400 Sandel, Michel, 34, 80–81 Scalia, Antonin, 251, 274–75, 345, 359 Scandinavia labor participation in, 47 marginal tax rates in, 376 public spending in, 53 regulations in, 174 welfare policies in, 43, 214 Schlesinger, Arthur M., Jr., 32 School of Public Choice, 5–6, 62, 69, 72, 110, 313–14, 396 Schumpeter, Joseph, 111 Scienza delle Finanze (Italian School), 5–6, 63, 65, 178 Second-best regulations, 145–46 Securitization, 330 Self-regulation of market, 94, 133–34 Seligman, Edwin, 380 Sen, Amartya, 7–8, 159–60, 299–300 Seneca, 102 “Shadow banking,” 108, 119, 242, 329–30 “Shadow financial sector,” 243 “Shadow fiscal policy,” 38–39 “Shadow governments,” 202 Sharapova, Maria, 351–53 Shiller, Robert J., 116 Silicon Valley, 344–45 Simons, Henry C., 119 Singapore public spending in, 121–22, 162 regulations in, 174 taxation in, 381 Sinn, Hans-Werner, 20, 108 Slavery, 249–50, 265–66 Smith, Adam generally, 7–9, 12, 189 on constitutions, 270 on dishonesty, 79 on entrepreneurs, 307 on government intervention, 226, 325 on income inequality, 305, 306, 320, 321 individualism and, 89 “invisible hand of market,” 66, 312–13 on limited role of government, 99 on mercantilism, 70, 123 on social consciousness, 312 on specialization, 91–92 Smoking as externality, 164 Social consciousness, growth and, 312 Social contract, 89–91 Social costs of income inequality, 206 Socialism government failures and, 73–74 public ownership and, 135 types of, 28 Socialization of loss, 83–84 Index Social programs. See Welfare policies Social regulations, 146 Social responsibilities of corporations, 398 “Soft budgets,” 71, 138 Solow, Robert, 3, 56 Sony, 347 Sorensen, Theodore, 2–3 Southeast Asian financial crisis (1997-1998), 109, 243–44 South Korea intellectual property in, 347 public spending in, 121–22, 162 Sovereign debt Buchanan on, 64 easy credit and, 106 in Greece, 241 growth in, 64 in Italy, 241 in Japan, 241 size of, 109 stabilization policies and, 241–42, 244–45 Soviet Union. See also Russia Constitution, 266 economic challenges from, 2–3 economic planning in, 26 Keynes on, 27–30, 78 Spain authoritarian government in, 23 bubbles in, 331 contingent liabilities in, 138 influence of conservatives in, 395 marginal tax rates in, 376 Specialization, 91–92 Spending.

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See Marginal tax rates negative income tax, 212 progressive taxes, 52–53, 228, 343–44 rates, 135 reduction of, 77, 87 social contract and, 90–91 social costs of, 189 stabilization policies and, 56–57, 238, 240–41 statutory rates versus effective rates, 367–68, 377 “stealth taxes,” 144 tax expenditures, 52–53, 134, 135, 232–33, 380–81 tax incentives, 135, 380–81 value added taxes income redistribution and, 207, 211, 212 public spending and, 53 revenue growth and, 385 stabilization policies and, 240 voluntariness of, 90–91 wealth tax, 341–42 welfare policies and, 45, 48–49 Tax avoidance Gini coefficient and, 331 globalization and, 369–70 by high net worth individuals (HNWIs), 370, 382 rise in, 379 tax competition, 370, 378 tax evasion versus, 333–34 tax havens, 369–70, 378 tax planning, 368, 369, 381 “Taxman” (song), 53 Taylor, Fred M., 26 Ten Commandments, 79, 328 “Termites of the market,” 119–20, 199 “Termites of the state,” 119–20, 198, 199, 232, 264, 314 Thatcher, Margaret, 33, 59, 64, 77, 87, 98, 180, 398 The Theory of Moral Sentiments (Smith), 312, 321 The Theory of Public Finance (Musgrave), 176–77, 187 Think tanks, 336–38, 394–95 “Third Way,” 395 Tinbergen, Jan, 82, 381 Tobin, James, 4, 56, 272 Tocqueville, Alexis de, 7–8, 89, 210, 400 “Too big to fail” financial institutions and, 84, 119, 168, 169 monopolies and, 79–80 moral hazard and, 138, 156–57 Trade, 34 Trade agreements, 354 Traditional justice, 100 Transaction activity in financial sector, 330 Transparency, public institutions and, 296–97 Transparency International, 120, 297 Truman, Harry, 43 Trump, Donald, 129, 150, 316–17, 335, 340, 345 Tullock, Gordon, 313–14 Tutorial role of government, 65, 141–42, 162, 189–90 2007–2008 Financial Crisis generally, 333 deregulation and, 109 easy credit and, 107–8 globalization and, 237 government intervention and, 156 Southeast Asian financial crisis (1997–1998) compared, 243–44 Ukraine, Gini coefficient in, 317 Unemployment compensation, 237–38 Unions decline in, 398 in Germany, 231 government control of, 23 Hayek on, 231 historical background, 19 importance of, 23 income inequality and decline in, 342 Index in Italy, 23, 231 Keynes on, 230–31 in US, 342 United Kingdom Beveridge Report, 41–43, 50 Brexit, 279 challenges to welfare policies in, 60, 61 economic planning in, 27 entrepreneurs in, 307 executive compensation in, 364 financial institutions in, 157 income inequality in, 315 infrastructure in, 316–17 intellectual property in, 357–58 laissez faire in, 31 limited role of government in, 98 marginal tax rates in, 376, 377 market fundamentalism in, 35–36 Poor Laws, 50 progressive taxes in, 53, 343–44 public goods in, 180 public ownership in, 135 regulations in, 279 “revolving door policies” in, 335–36 stabilization policies in, 59 supply-side economics in, 76–78, 395 taxation in, 53, 371 welfare policies in, 214, 219 welfare state in, 41–42 women’s suffrage in, 20 United States administrative capability of governments in, 67–68 Affordable Care Act, 208, 213, 274–75 Agriculture Department, 126, 127, 194–95 Aid to Dependent Children, 207 authorizations in, 145 balanced budget rules in, 73 bureaucracy in, 233 Census Bureau, 391–92 central bank in, 49, 188, 244 challenges to welfare policies in, 60, 61 Children’s Health Insurance Program, 213 Child Support Program, 213 Clean Air Act, 276 Clean Energy Act, 276 Clean Water Act, 276 Code of Federal Regulations, 126–27, 172, 277 Community Health Centers, 213 Congressional Budget Office, 72–73, 180–81, 380 Constitution generally, 99, 250, 270 amendment of, 250 Bill of Rights, 43–44 445 general principles, 268 intellectual property and, 176, 193, 362 slavery and, 249–50 workers’ rights and, 250 Consumer Financial Protection Bureau, 128 consumption in, 316 contingent liabilities in, 138, 140–41 corporate taxation in, 161 Council of Economic Advisors, 56 Credit Card Accountability Responsibility and Disclosure Act of 2009, 128 Declaration of Independence, 43–44, 99 Defense Advanced Research Project Agency (DARPA), 194–95 Defense Department, 334 defense spending in, 178 dependent workers in, 250 deregulation in, 82 Dodd-Frank Wall Street Reform and Consumer Protection Act, 109, 126, 128 Economic Opportunity Act of 1964, 213 Economic Report of the President (1962), 56, 71 education in, 208 entrepreneurs in, 307 Environmental Protection Agency, 183, 276, 277, 281 executive compensation in, 169, 363, 364 ex post income distribution in, 118 “fake goods” in, 149 Fannie Mae, 138, 140–41 federalism in, 260, 284 Federal Register, 126–27, 277 Federal Reserve Bank, 49, 244 Federal Reserve System, 19, 113, 334 fees and fines in, 142 financial institutions in, 126, 157 financial penalties in, 169–70 “fireside chat,” 43–45, 48, 50 Food and Drug Administration, 276 food stamps, 206, 213, 221 Freddie Mac, 138, 140–41 Full Employment Act of 1948, 49 Gini coefficient in, 317, 391–92 Government Accountability Office (GAO), 290 guns in, 165 Head Start, 213 Health and Human Services Department, 127, 213 health care in, 208, 222–23, 298 income inequality in, 161–62, 208–9, 221, 224, 227, 315–16, 389, 391–92 income redistribution in, 200 446 Index United States (cont.) income tax in, 19, 24–25, 208 infrastructure in, 234, 316–17 intellectual property in, 176, 193, 204, 347, 357–58, 362 Internal Revenue Service, 276, 372 Joint Economic Committee, 2 Justice Department, 126, 169–70 “Keynesian Revolution” in, 42, 56 laissez faire in, 17–19, 30, 31 Landis Report, 57–58 life expectancy in, 390–91 limited role of government in, 98 Low Income Home Energy Assistance Program, 213 marginal tax rates in, 375–77 market fundamentalism in, 35–36 Medicaid, 166, 180–81, 213, 221 Medicare, 166, 213 “military-industrial complex” in, 178 National Aeronautics and Space Administration (NASA), 179, 194–95 National Ambient Air Quality Standards (NAAQS), 277, 281 National Institutes of Health, 194–95 National Strategic Computing Initiative, 196–97 New Deal, 4, 22, 32, 67–68, 207 normative approach to role of government in, 110 occupational licensing in, 125–26 Outdoor Recreation Review Commission, 3 Patent and Trademark Office, 347 Pension Protection Act of 2006, 128 pensions in, 222–23 populism in, 74 Progressive Era, 18, 223 progressive taxes in, 52–53, 343–44 protection of property in, 202 public ownership in, 135, 136 public spending in, 23–24, 40–41, 77–78, 190 regulations in, 173, 276, 277, 279 research in, 194–97 “revolving door policies” in, 335–36 Safe Drinking Water Act, 276 “safety nets” in, 207–8 safety-related regulations in, 146–47 “Second Bill of Rights,” 43–45 Securities Act of 1933, 57 Securities and Exchange Commission, 84–85, 276 Securities Exchange Act of 1934, 57 Sixteenth Amendment, 24 slavery in, 249–50, 265–66 stabilization policies in, 55–59 statutes in, 274–75, 276 stimulus in, 239–40 Supplemental Nutrition Assistance Program, 126, 316 supply-side economics in, 76–78, 395 Supreme Court, 251, 253, 267–69 taxation in, 52–53, 190, 367, 368, 371, 380 tax expenditures in, 232–33, 380–81 tax reduction in, 77, 87 Treasury Department, 127, 334 unions in, 342 upward mobility in, 391 “War on Poverty,” 43, 48, 56, 58, 229, 388 welfare policies in, 43–45, 212–14 Women, Infants and Children (WIC), 213 Universal welfare programs, 214 Upward mobility, 391 Urban Institute, 368 Urbanization externalities and, 91, 163–64 income inequality and, 206 legal rules and, 254 limited role of government, effect on, 97 regulations, effect on, 130 U.S.

Money and Government: The Past and Future of Economics
by Robert Skidelsky
Published 13 Nov 2018

Despite the flaws in Keynes’s own theory, and the even greater ones in those of Keynesian economists of the Samuelson generation, one cannot avoid the strong impression that the whole unravelling was driven by ideological hostility to government per se, which, as we have seen, has its roots in the original mindset of economics: a return to the roots after a long deviation. The period of the Great Moderation, which supposedly ran from the early 1990s, when the transition to the new regime was accomplished, to the onset of the crisis in 2008, was believed to vindicate the new system of macro-management. Disconfirming events like the East Asian financial crisis of 1997–8, and the collapse of the dotcom bubble in 2001, were regarded as ‘teething problems’, which would be overcome by a continually updated learning process, making financial markets ever more efficient. True, the average OECD rate of unemployment in the new ‘normal’ was more than double what it had been in the ‘old’ normal (7 per cent between 1992 and 2007, as opposed to 3 per cent between 1959 and 1975), but this was seen as a legacy of bad labour-market practices which would soon yield to further labour-market reforms.

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The poverty of domestic consumption led to a business model based on export-led growth through currency under-valuation. The purchase of US Treasury bonds was part of a deliberate policy of keeping the dollar over-valued in order to help Chinese exporters. (Alternatively, one might see China’s reserve accumulation as a form of precautionary saving following the East Asian financial crisis of 1997.) On this interpretation, it was the excess of Chinese saving over its domestic investment which caused the US deficit. It was the willingness of China to finance the US deficit for its own purposes which enabled the American consumer to go on a spending spree. The Chinese purchase of US government securities created the conditions for a credit expansion in America, with the People’s Bank of China acting as an additional source of reserves for the American banking system.

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R., 179 Erie Canal, 90 Eshag, Eprime, 71 European Central Bank, 139, 188, 198, 217, 242–3, 253, 254, 361 institutional constraints on, 50, 234, 242, 249, 274–5 misreading of Eurozone crisis, 275 quantitative easing (QE) by, 273–4 on ‘stress testing’, 364 taxing of ‘excess’ reserves, 266 use of LTROs, 257 European Commission, 139, 3612, 365 European Exchange Rate Mechanism, 188 European Investment Bank, 354 European Union (EU, formerly EEC), 153, 318, 379, 383 Financial Stability Board (FSB), 363 ‘Four Freedoms’, 375 lack of state, 376 Single Resolution Board, 365 Eurozone current account imbalances, 333, 334, 335, 336–7, 341–2 Juncker investment programme, 274 proposed European Monetary Fund, 376, 382 structural flaw in, 341, 375–7 two original sins of, 274, 376–5 Eurozone debt crisis (2010–12), 50, 223, 377, 382 and double-dip recession, 241, 242–3, 274 ECB’s misreading of, 275 and financial crowding-out theory, 234 and Greece, 32, 224, 224–5, 226, 233, 235, 242–3, 243, 365 and ‘troika’, 32, 139, 243 469 i n de x exchange-rate policy, 127–8, 139 and Congdon’s ‘real balance effect’, 285 and domestic interest rates, 251 fixed rates under Bretton Woods, 16, 159, 161, 162, 168 floating rates from 1970s, 16–17, 184 and Friedman, 182 IMF ‘scarce currency’ clause, 380–81 Nixon’s dollar devaluation (1971), 153, 154, 165 and quantitative easing, 267, 267 sterling crisis (1951), 145 sterling devaluation (November 1967), 152 sterling-dollar peg (from 1949), 148, 150, 152 sterling/franc/deutschmark devaluations (1949), 152 ‘Triffin paradox’, 161, 165 ‘expansionary fiscal consolidation’, 192, 225, 231 Fabian socialism, 96 Fama, Eugene, 208, 311–12, 313 Fanny Mae, 217, 256, 309, 320 fascism, 13, 98, 131, 175 Federal Reserve, US and 2008 crash, 50, 217, 254, 256 AIG bail-out (2008), 325 Federal Open Market Committee (FOMC), 185–6 and Great Depression, 104–6 inflation targeting, 188 and monetarism, 185–6, 188 monetary policy in 1950s, 146 ‘Operation Twist’, 268 quantitative easing (QE) by, 256–7, 273–4 ‘Reserve Position Doctrine’ (1920s), 103–4 and under-consumption theory, 298 Ferguson, Niall, 73, 79, 80, 91 financial collapse (2007–8) acute phase, 218–20, 223 ‘Austrian’ explanation, 104, 303 banks as proximate cause, 343, 361, 365 Bear Stearns rescue, 217 British analogies with Greece, 235 British debate after, 225–8 causes of, 3–4, 343–4, 365, 366, 368 central bank responses, 3, 217, 219, 234–5, 253–4, 254, 256–8, 359 comparative recovery patterns, 241–4, 242, 273, 273–4 compared to 1929 crash, 218 Conservative narrative, 226–8, 229–31, 233, 234–5, 237–9 and crisis of conservative economics, 17 and embedded leverage, 318, 322, 325 five distinct stages of crisis, 216–19 ‘global imbalances’ explanation, 11, 331, 333, 336–43, 337 government responses, 3, 217–18, 219–20, 221–36, 237–47 Hayekian view of cause, 303 hysteresis after, 239–41, 240, 241, 370 inequality as deeper cause of, 299–306, 368 Lehman Brothers bankruptcy, 3, 50, 217, 365 leverage (debt to equity) ratios on eve of, 317–18 liquidity-solvency confusion, 317 outbreaks of populism following, 13, 371–3, 376, 383 post-crash deficit, 226–33, 229, 237–8 private debt as proximate cause, 3–4 470 i n de x stagnation of real earnings as deep cause, 4, 303, 367 standard account of origins of, 3–4 as test of two theories, 2–3, 76 theoretical and policy responses, 10, 129, 219–20, 223–36, 237–47 see also austerity policy and under-consumption theory, 303–6 US sub-prime mortgage market, 3, 216, 304–5, 309, 323, 328, 341 see also Great Recession (2008–9) Financial Services Authority, U K, 321–2, 330 financial system and causes of 2008 collapse, 3, 4–5, 253, 307–9, 361 and crisis of conservative economics, 17 deregulation, 307–9, 310–16, 318–22, 328, 332–3, 384 East Asian financial crisis (1997–8), 202, 339, 371, 382 ‘Efficient Market Hypothesis’ (EMH), 311–13, 321–2, 328, 388 ‘financialization’ of the economy, 5, 305, 307–9, 366–7 fraud and criminality, 3, 4, 5, 7, 328, 350, 365–6, 367 and free-market orthodoxy, 5, 308–16 loosening of moral restraints, 319 mark-to-market (M2M) framework, 314 offshore euro-dollar market, 308, 332 privatised gain and socialised loss, 319–20 released from national regulation (1980s/90s), 131, 318–22 structural power of finance, 6–7, 14, 309 systemic under-estimation of risk, 314–16, 316*, 320–22, 323, 329–30 Thatcher’s Big Bang (1980s), 319 tradable public debt instruments, 43, 80–81 Turner’s ‘financial intensity’ concept, 366 unrealism of assumptions, 310–16 value at risk (VaR) framework, 314–15, 315, 330 ‘Washington consensus’ deregulation, 198, 200 see also banks FinTech, 356 First World War, 86, 95, 106–7, 374, 375 ‘fiscal consolidation’, 10–11, 129, 225 Darling’s plan (2009), 225–6 ‘expansionary’, 192, 225, 231 and Osborne, 227–8, 229–30, 231, 233, 237–9, 243–4, 244, 245 fiscal policy and 2008 collapse, 10, 217–18, 219–20, 223–36, 265–6, 273–4, 286 ‘Barber boom’, 167, 168 during Blair-Brown years, 221–4, 223, 225–6, 227 British experience (1692–2012), 77 Congdon’s total rejection of, 280, 285–6 ‘crowding out’ argument, 83–4, 109–11, 226, 233–5 current and capital spending, 107–8, 114, 142, 155–6, 193, 221–3, 237–8, 355–7 directing flow of new spending, 286–7 fiscal multiplier, 110–11, 125–6, 133–6, 138, 230–31, 233, 235, 244–5 471 i n de x fiscal policy – (cont.) in inter-war Britain, 106–17 and Keynesian economics, 2–3, 109, 111, 114–17, 125–7, 129–31, 133–4, 137–8, 173, 278 Keynesian full employment phase (1945–60), 141–8 Krugman’s ‘confidence fairy’, 117 Lawson counterrevolution, 185, 192–3, 222, 358 legacy of monetarism, 190–93 May Committee (1931), 112 national income accounts, 138 New Classical view of, 200 in new macroeconomic constitution, 351–2, 355–7, 360–61 nineteenth-century theory of, 9, 29 post-Keynesian disablement of, 193, 221, 258, 304, 328 pre-crash orthodoxy, 221–2, 223–4, 230–31 Public Sector Borrowing Requirement (PSBR), 155–6 see also balanced budget theory; public investment; taxation Fisher, Irving, 9, 52, 61, 99, 280 ‘compensated dollar’ scheme, 66 equation of exchange, 62–4, 71–2, 258, 278–9, 283, 284, 287 QTM formulation, 62–7, 71–2 and quantitative easing, 258, 278–9 Santa Claus money, 62–4, 258, 278–9 Fitch (CR A), 329 France assignats in 1790s, 64–5 and gold standard, 50, 102, 104, 127 ‘indicative planning’ system, 150 ‘physiocrats’in, 81 protectionism in late nineteenthcentury, 59 state holding companies, 356 statism in, 140, 144 university campus revolts (1968), 164 Freddie Mac, 217, 256, 309, 320 free trade, xviii, 9, 58–9, 76, 79, 81–2 abandoned in Britain (1932), 113 general presumption in favour of, 377 and Hume’s ‘price-specie-flow’ mechanism, 37–8, 53, 54, 104, 332 and Irish potato famine, 15 List’s ‘infant industry’ argument, 88–9, 90, 378–7 and nationalist–globalist split, 371–3 and post-war liberalization, 16, 374 and presumption of peace, 379 repeal of Corn Laws (1846), 15, 85 Ricardo’s doctrine of comparative advantage, 88, 378, 379, 379 US conversion to (1940s), 90 Freiburg School, 140 Friedman, Milton adaptive expectations theory, 180–81, 183, 194, 206–11 and Cartesian distinction, 22 as Fisher’s heir, 278 The Great Contraction (with Schwartz; 1865), 105 idea of ‘helicopter money’, 63 and monetary base, 185, 280 and Mont Pelerin Society, 176–7 and ‘natural’ rate of unemployment, 163, 177, 181, 195, 206, 208 onslaught on Keynesianism, 170, 174, 177–83, 261 ‘permanent income hypothesis’ (1957), 178, 183 and Phillips Curve, 38, 180–81, 194, 206–8, 207 472 i n de x policy implications of work of, 182–3 political motives of, 177, 183–4 and quantity theory, 61, 70, 177–9, 182, 183, 194 ‘stable demand function for money’, 179 view of Great Depression, 104–6, 179, 183, 256, 276, 278 weaknesses in arguments of, 183 Frydman, Roman, 389 Fullarton, John, 49 Funding for Lending programme, 265–6 G20 Financial Stability Board, 363 summits (2009/10), 219–20, 223, 225 G7 finance ministers meeting (February 2010), 224–5 Galbraith, James, 303, 361 game theorists, 389 Gasperin, Simone, 357* Geddes, Sir Eric, 108 German Historical School, 88–9 Germany and 2008 crash, 217, 218, 243 current account surplus, 333, 334, 341, 342, 380, 381 employer–union bargains, 147, 167 and Eurozone crisis, 341, 365, 376, 377 and Great Depression, 97, 111, 129–30 growth Keynesianism (1960–70), 153–4 high growth rates in 1950/60s, 149, 156 Hitler’s reduction in unemployment, 111, 112, 129–30 hyperinflation of early 1920s, 275 as Keynesian in 1960s, 140 nineteenth-century expansion and unification, 89, 91 ‘ordo-liberalism’ in, 140 post-war modernization/catch-up, 156–7 protectionism in late nineteenthcentury, 59 return to gold standard (1924), 102 ‘Rhenish capitalism’ model, 154 Giffen, Robert, 51 Giles, Chris, 219, 302 Gini coefficient, 299, 300 Gladstone, William, 42–3, 86 Glass–Steagall Act (1933), 319, 361, 362 global imbalances basic theory of, 335–6 and capital account liberalization, 318–19 capital flight, 59, 334, 337, 341, 343 Eurozone see Eurozone: current account imbalances as explanation for 2007–8 crash, 11, 331, 333, 336–43, 337 and financial deregulation, 318–19, 332–3 and First World War, 95 increases in pre-crash years, 333, 333–4, 334, 335 problematic nature of, 333–4 reserve accumulation, 336, 337–41 ‘saving glut’ vs ‘money’ glut, 338–41, 342 structural causes still in place, 344 US dollar as main reserve currency, 338 global warming, 383 globalization, 17, 300, 334–5 absence of the state, 350, 373, 375–6 anti-globalist movements, 371–2, 373 first age of, 51, 55, 57, 59, 374, 375 473 i n de x globalization – (cont.) future of, 382–4 Geneva and Seattle protests (1998/99), 371 and inflation rate, 252–3 and lower wages in developed world, 252–3, 300, 379 nationalist-globalist split, 371–3 ‘neo-liberal’ agenda of IMF, 139, 181, 318–19 popular protest against, 351, 371–2 resurgence of after Cold War, 374 Rodrik’s ‘impossible trinity’, 375 gold, 23, 24, 25, 28, 35, 37 new gold production, 51, 52, 55, 62 gold standard, xviii, 1, 9, 27, 29, 338 and Britain, 9, 42, 43, 44, 45–50, 53, 57–9, 80, 101, 102, 113 collapse of US exchange standard (1971), 160, 165 commitment to convertibility, 55–6 and Cunliffe model, 54–5, 102 depressions in later nineteenthcentury, 51–2 dysfunctional after First World War, 95, 97 final suspension in Britain (1931), 113, 125 Fisher’s ‘compensated dollar’ scheme, 66 Hume’s ‘price-specie-flow’ mechanism, 37–8, 53, 54, 104, 285, 332 and international bond markets, 92 as international by 1880s, 50–52 Keynes on, 58, 101, 127 Kindleberger thesis, 58–9 move to ‘managed’ system, 71, 99–100 replaces silver standard (1690s), 42, 43 restored (1821), 48 return to in 1920s, 102, 104, 107 suspension during Napoleonic wars, 43, 45–7 suspension of convertibility (1919), 101–2 triumph of by mid-nineteenthcentury, 44, 50 working and design of, 52–9 as working in tandem with empire, 57, 58 Goldberg, Michael D., 389 Goldman Sachs, 315 Goodhart, Charles, 168, 187 Graeber, David, 28 Great Depression (1929–32), 9, 13, 96, 97–8, 110–13, 127 compared to 2008 crash, 218 Friedman-Schwartz view, 104–6, 179, 183, 256, 276, 278 impact on US policy-makers in 2008 period, 256, 275, 278 left-wing explanations of, 298 rise in inequality in lead-up to, 289 and second wave of collectivism, 15–16 Great Moderation (early 1990s–2007), 4, 53, 202, 278 economic problems during, 348 financial deregulation during, 318–22, 328 financial innovation during, 322–8 and independent central banks, 215 inflation during, 106, 215, 216, 252–3, 253, 348, 359, 360 international financial network, 309, 318–28 output growth during, 215, 253, 348 Great Recession (2008–9), xviii Congdon’s view of, 281–2, 287 co-ordinated global response, 219–20, 383 decline in productivity after, 305–6 474 i n de x initial signs of recovery (2009), 218–19, 225, 226 monetary interpretation of, 105, 106 ‘premature withdrawal’ of fiscal stimulus, 219–20, 223–36, 245, 352 reform agenda after, 361–8 rise in inequality in lead-up to, 289–90, 299–300 see also financial collapse (2007–8) Greece and Eurozone debt crisis, 32, 224, 224–5, 226, 233, 235, 242–3, 243, 337, 341, 365 in gold standard era, 59 Greenspan, Alan, 188, 313 Hamilton, Alexander, 88, 90, 92 Hammond, Philip, 236, 352 Hannover Re scandal, 329 Harrison, George, 105 Harrod, Roy, 123 Harvey, John, 333, 387 Hawtrey, Ralph, 109–10, 280 Hayek, Friedrich, 33, 46, 177, 195, 350, 367 founds Mont Pelerin Society, 176 ‘over-consumption’ theory, 296 The Road to Serfdom (1944), 16, 175–6 on Wall Street Crash, 104 Heath, Edward, 167–8 Heckscher, Eli, 37 Help to Buy programme, 265, 266 Henderson, Hubert, 109 Henderson, W.

Planet Ponzi
by Mitch Feierstein
Published 2 Feb 2012

Since the departure of Paul Volcker in 1987, the Federal Reserve has the unwelcome record of having gotten every single major decision wrong. Every time there has been a hint of a crisis, the Fed has acted like some senior court advisor to the Emperor of Planet Ponzi. The 1987 stock market crash, my liege? I’ll pump in liquidity. Asian financial crisis, sire? I’ll flood the place with dollars. A major hedge fund, LTCM, has gone bust, your majesty? I’ll organize a bailout. Dotcom bubble? Let’s watch it inflate. Even the September 11 terrorist attacks‌—‌surely a matter for the US security apparatus rather than its monetary authority‌—‌were taken as an excuse for monetary loosening.

…

The poster-child for irresponsible risk-taking was Long-Term Capital Management, which failed in 1998 under a senior management too impressed by its own academic excellence. Unfortunately, the real world is no respecter of academic reputations. The firm took on too much debt and bet the proceeds with too little thought for what might happen if things didn’t turn out as expected. When the Asian financial crisis was followed by a Russian one, LTCM found that its ‘safe’ bets had turned sour on a colossal scale. Given the scale of leverage at the firm‌—‌its capital represented just 3% of assets‌—‌there was no return from that misjudgment. A bailout, organized by the New York Fed, saw the firm’s creditors take control.

Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist
by Kate Raworth
Published 22 Mar 2017

But it can also result in domestic job losses that decimate whole communities – as experienced in America’s ‘rust belt’, the nation’s former industrial heartland. Likewise, financial inflows may boost an emerging economy’s fledgling stock market but when international finance exits even faster than it entered, it can induce a near collapse of the currency, as Thailand, Indonesia and South Korea discovered the hard way during the Asian financial crisis of the late 1990s. Cross-border flows are always double-edged and so need to be managed. Ricardo was right in thinking that very different nations may be able to trade to mutual gain, but comparative advantage is not only what you are blessed with: it is something you can build. As Ha-Joon Chang puts it, however, today’s high-income countries are ‘kicking away the ladder’ that they once climbed, recommending that low- and middle-income countries open their borders to follow a trade strategy that they strategically avoided themselves.

…

Page numbers in italics denote illustrations A Aalborg, Denmark, 290 Abbott, Anthony ‘Tony’, 31 ABCD group, 148 Abramovitz, Moses, 262 absolute decoupling, 260–61 Acemoglu, Daron, 86 advertising, 58, 106–7, 112, 281 Agbodjinou, Sénamé, 231 agriculture, 5, 46, 72–3, 148, 155, 178, 181, 183 Alaska, 9 Alaska Permanent Fund, 194 Alperovitz, Gar, 177 alternative enterprise designs, 190–91 altruism, 100, 104 Amazon, 192, 196, 276 Amazon rainforest, 105–6, 253 American Economic Association, 3 American Enterprise Institute, 67 American Tobacco Corporation, 107 Andes, 54 animal spirits, 110 Anthropocene epoch, 48, 253 anthropocentrism, 115 Apertuso, 230 Apple, 85, 192 Archer Daniels Midland (ADM), 148 Arendt, Hannah, 115–16 Argentina, 55, 274 Aristotle, 32, 272 Arrow, Kenneth, 134 Articles of Association and Memoranda, 233 Arusha, Tanzania, 202 Asia Wage Floor Alliance, 177 Asian financial crisis (1997), 90 Asknature.org, 232 Athens, 57 austerity, 163 Australia, 31, 103, 177, 180, 211, 224–6, 255, 260 Austria, 263, 274 availability bias, 112 AXIOM, 230 Axtell, Robert, 150 Ayres, Robert, 263 B B Corp, 241 Babylon, 13 Baker, Josephine, 157 balancing feedback loops, 138–41, 155, 271 Ballmer, Steve, 231 Bangla Pesa, 185–6, 293 Bangladesh, 10, 226 Bank for International Settlements, 256 Bank of America, 149 Bank of England, 145, 147, 256 banking, see under finance Barnes, Peter, 201 Barroso, José Manuel, 41 Bartlett, Albert Allen ‘Al’, 247 basic income, 177, 194, 199–201 basic personal values, 107–9 Basle, Switzerland, 80 Bauwens, Michel, 197 Beckerman, Wilfred, 258 Beckham, David, 171 Beech-Nut Packing Company, 107 behavioural economics, 11, 111–14 behavioural psychology, 103, 128 Beinhocker, Eric, 158 Belgium, 236, 252 Bentham, Jeremy, 98 Benyus, Janine, 116, 218, 223–4, 227, 232, 237, 241 Berger, John, 12, 281 Berlin Wall, 141 Bermuda, 277 Bernanke, Ben, 146 Bernays, Edward, 107, 112, 281–3 Bhopal gas disaster (1984), 9 Bible, 19, 114, 151 Big Bang (1986), 87 billionaires, 171, 200, 289 biodiversity, 10, 46, 48–9, 52, 85, 115, 155, 208, 210, 242, 299 as common pool resource, 201 and land conversion, 49 and inequality, 172 and reforesting, 50 biomass, 73, 118, 210, 212, 221 biomimicry, 116, 218, 227, 229 bioplastic, 224, 293 Birmingham, West Midlands, 10 Black, Fischer, 100–101 Blair, Anthony ‘Tony’, 171 Blockchain, 187, 192 blood donation, 104, 118 Body Shop, The, 232–4 Bogotá, Colombia, 119 Bolivia, 54 Boston, Massachusetts, 3 Bowen, Alex, 261 Bowles, Sam, 104 Box, George, 22 Boyce, James, 209 Brasselberg, Jacob, 187 Brazil, 124, 226, 281, 290 bread riots, 89 Brisbane, Australia, 31 Brown, Gordon, 146 Brynjolfsson, Erik, 193, 194, 258 Buddhism, 54 buen vivir, 54 Bullitt Center, Seattle, 217 Bunge, 148 Burkina Faso, 89 Burmark, Lynell, 13 business, 36, 43, 68, 88–9 automation, 191–5, 237, 258, 278 boom and bust, 246 and circular economy, 212, 215–19, 220, 224, 227–30, 232–4, 292 and complementary currencies, 184–5, 292 and core economy, 80 and creative destruction, 142 and feedback loops, 148 and finance, 183, 184 and green growth, 261, 265, 269 and households, 63, 68 living metrics, 241 and market, 68, 88 micro-businesses, 9 and neoliberalism, 67, 87 ownership, 190–91 and political funding, 91–2, 171–2 and taxation, 23, 276–7 workers’ rights, 88, 91, 269 butterfly economy, 220–42 C C–ROADS (Climate Rapid Overview and Decision Support), 153 C40 network, 280 calculating man, 98 California, United States, 213, 224, 293 Cambodia, 254 Cameron, David, 41 Canada, 196, 255, 260, 281, 282 cancer, 124, 159, 196 Capital Institute, 236 carbon emissions, 49–50, 59, 75 and decoupling, 260, 266 and forests, 50, 52 and inequality, 58 reduction of, 184, 201, 213, 216–18, 223–7, 239–41, 260, 266 stock–flow dynamics, 152–4 taxation, 201, 213 Cargill, 148 Carney, Mark, 256 Caterpillar, 228 Catholic Church, 15, 19 Cato Institute, 67 Celts, 54 central banks, 6, 87, 145, 146, 147, 183, 184, 256 Chang, Ha-Joon, 82, 86, 90 Chaplin, Charlie, 157 Chiapas, Mexico, 121–2 Chicago Board Options Exchange (CBOE), 100–101 Chicago School, 34, 99 Chile, 7, 42 China, 1, 7, 48, 154, 289–90 automation, 193 billionaires, 200, 289 greenhouse gas emissions, 153 inequality, 164 Lake Erhai doughnut analysis, 56 open-source design, 196 poverty reduction, 151, 198 renewable energy, 239 tiered pricing, 213 Chinese Development Bank, 239 chrematistics, 32, 273 Christianity, 15, 19, 114, 151 cigarettes, 107, 124 circular economy, 220–42, 257 Circular Flow diagram, 19–20, 28, 62–7, 64, 70, 78, 87, 91, 92, 93, 262 Citigroup, 149 Citizen Reaction Study, 102 civil rights movement, 77 Cleveland, Ohio, 190 climate change, 1, 3, 5, 29, 41, 45–53, 63, 74, 75–6, 91, 141, 144, 201 circular economy, 239, 241–2 dynamics of, 152–5 and G20, 31 and GDP growth, 255, 256, 260, 280 and heuristics, 114 and human rights, 10 and values, 126 climate positive cities, 239 closed systems, 74 coffee, 221 cognitive bias, 112–14 Colander, David, 137 Colombia, 119 common-pool resources, 82–3, 181, 201–2 commons, 69, 82–4, 287 collaborative, 78, 83, 191, 195, 196, 264, 292 cultural, 83 digital, 82, 83, 192, 197, 281 and distribution, 164, 180, 181–2, 205, 267 Embedded Economy, 71, 73, 77–8, 82–4, 85, 92 knowledge, 197, 201–2, 204, 229, 231, 292 commons and money creation, see complementary currencies natural, 82, 83, 180, 181–2, 201, 265 and regeneration, 229, 242, 267, 292 and state, 85, 93, 197, 237 and systems, 160 tragedy of, 28, 62, 69, 82, 181 triumph of, 83 and values, 106, 108 Commons Trusts, 201 complementary currencies, 158, 182–8, 236, 292 complex systems, 28, 129–62 complexity science, 136–7 Consumer Reaction Study, 102 consumerism, 58, 102, 121, 280–84 cooking, 45, 80, 186 Coote, Anna, 278 Copenhagen, Denmark, 124 Copernicus, Nicolaus, 14–15 copyright, 195, 197, 204 core economy, 79–80 Corporate To Do List, 215–19 Costa Rica, 172 Council of Economic Advisers, US, 6, 37 Cox, Jo, 117 cradle to cradle, 224 creative destruction, 142 Cree, 282 Crompton, Tom, 125–6 cross-border flows, 89–90 crowdsourcing, 204 cuckoos, 32, 35, 36, 38, 40, 54, 60, 159, 244, 256, 271 currencies, 182–8, 236, 274, 292 D da Vinci, Leonardo, 13, 94–5 Dallas, Texas, 120 Daly, Herman, 74, 143, 271 Danish Nudging Network, 124 Darwin, Charles, 14 Debreu, Gerard, 134 debt, 37, 146–7, 172–3, 182–5, 247, 255, 269 decoupling, 193, 210, 258–62, 273 defeat device software, 216 deforestation, 49–50, 74, 208, 210 degenerative linear economy, 211–19, 222–3, 237 degrowth, 244 DeMartino, George, 161 democracy, 77, 171–2, 258 demurrage, 274 Denmark, 180, 275, 290 deregulation, 82, 87, 269 derivatives, 100–101, 149 Devas, Charles Stanton, 97 Dey, Suchitra, 178 Diamond, Jared, 154 diarrhoea, 5 differential calculus, 131, 132 digital revolution, 191–2, 264 diversify–select–amplify, 158 double spiral, 54 Doughnut model, 10–11, 11, 23–5, 44, 51 and aspiration, 58–9, 280–84 big picture, 28, 42, 61–93 distribution, 29, 52, 57, 58, 76, 93, 158, 163–205 ecological ceiling, 10, 11, 44, 45, 46, 49, 51, 218, 254, 295, 298 goal, 25–8, 31–60 and governance, 57, 59 growth agnosticism, 29–30, 243–85 human nature, 28–9, 94–128 and population, 57–8 regeneration, 29, 158, 206–42 social foundation, 10, 11, 44, 45, 49, 51, 58, 77, 174, 200, 254, 295–6 systems, 28, 129–62 and technology, 57, 59 Douglas, Margaret, 78–9 Dreyfus, Louis, 148 ‘Dumb and Dumber in Macroeconomics’ (Solow), 135 Durban, South Africa, 214 E Earning by Learning, 120 Earth-system science, 44–53, 115, 216, 288, 298 Easter Island, 154 Easterlin, Richard, 265–6 eBay, 105, 192 eco-literacy, 115 ecological ceiling, 10, 11, 44, 45, 46, 49, 51, 218, 254, 295, 298 Ecological Performance Standards, 241 Econ 101 course, 8, 77 Economics (Lewis), 114 Economics (Samuelson), 19–20, 63–7, 70, 74, 78, 86, 91, 92, 93, 262 Economy for the Common Good, 241 ecosystem services, 7, 116, 269 Ecuador, 54 education, 9, 43, 45, 50–52, 85, 169–70, 176, 200, 249, 279 economic, 8, 11, 18, 22, 24, 36, 287–93 environmental, 115, 239–40 girls’, 57, 124, 178, 198 online, 83, 197, 264, 290 pricing, 118–19 efficient market hypothesis, 28, 62, 68, 87 Egypt, 48, 89 Eisenstein, Charles, 116 electricity, 9, 45, 236, 240 and Bangla Pesa, 186 cars, 231 Ethereum, 187–8 and MONIAC, 75, 262 pricing, 118, 213 see also renewable energy Elizabeth II, Queen of the United Kingdom, 145 Ellen MacArthur Foundation, 220 Embedded Economy, 71–93, 263 business, 88–9 commons, 82–4 Earth, 72–6 economy, 77–8 finance, 86–8 household, 78–81 market, 81–2 power, 91–92 society, 76–7 state, 84–6 trade, 89–90 employment, 36, 37, 51, 142, 176 automation, 191–5, 237, 258, 278 labour ownership, 188–91 workers’ rights, 88, 90, 269 Empty World, 74 Engels, Friedrich, 88 environment and circular economy, 220–42, 257 conservation, 121–2 and degenerative linear economy, 211–19, 222–3 degradation, 5, 9, 10, 29, 44–53, 74, 154, 172, 196, 206–42 education on, 115, 239–40 externalities, 152 fair share, 216–17 and finance, 234–7 generosity, 218–19, 223–7 green growth, 41, 210, 243–85 nudging, 123–5 taxation and quotas, 213–14, 215 zero impact, 217–18, 238, 241 Environmental Dashboard, 240–41 environmental economics, 7, 11, 114–16 Environmental Kuznets Curve, 207–11, 241 environmental space, 54 Epstein, Joshua, 150 equilibrium theory, 134–62 Ethereum, 187–8 ethics, 160–62 Ethiopia, 9, 226, 254 Etsy, 105 Euclid, 13, 15 European Central Bank, 145, 275 European Commission, 41 European Union (EU), 92, 153, 210, 222, 255, 258 Evergreen Cooperatives, 190 Evergreen Direct Investing (EDI), 273 exogenous shocks, 141 exponential growth, 39, 246–85 externalities, 143, 152, 213 Exxon Valdez oil spill (1989), 9 F Facebook, 192 fair share, 216–17 Fama, Eugene, 68, 87 fascism, 234, 277 Federal Reserve, US, 87, 145, 146, 271, 282 feedback loops, 138–41, 143, 148, 155, 250, 271 feminist economics, 11, 78–81, 160 Ferguson, Thomas, 91–2 finance animal spirits, 110 bank runs, 139 Black–Scholes model, 100–101 boom and bust, 28–9, 110, 144–7 and Circular Flow, 63–4, 87 and complex systems, 134, 138, 139, 140, 141, 145–7 cross-border flows, 89 deregulation, 87 derivatives, 100–101, 149 and distribution, 169, 170, 173, 182–4, 198–9, 201 and efficient market hypothesis, 63, 68 and Embedded Economy, 71, 86–8 and financial-instability hypothesis, 87, 146 and GDP growth, 38 and media, 7–8 mobile banking, 199–200 and money creation, 87, 182–5 and regeneration, 227, 229, 234–7 in service to life, 159, 234–7 stakeholder finance, 190 and sustainability, 216, 235–6, 239 financial crisis (2008), 1–4, 5, 40, 63, 86, 141, 144, 278, 290 and efficient market hypothesis, 87 and equilibrium theory, 134, 145 and financial-instability hypothesis, 87 and inequality, 90, 170, 172, 175 and money creation, 182 and worker’s rights, 278 financial flows, 89 Financial Times, 183, 266, 289 financial-instability hypothesis, 87, 146 First Green Bank, 236 First World War (1914–18), 166, 170 Fisher, Irving, 183 fluid values, 102, 106–9 food, 3, 43, 45, 50, 54, 58, 59, 89, 198 food banks, 165 food price crisis (2007–8), 89, 90, 180 Ford, 277–8 foreign direct investment, 89 forest conservation, 121–2 fossil fuels, 59, 73, 75, 92, 212, 260, 263 Foundations of Economic Analysis (Samuelson), 17–18 Foxconn, 193 framing, 22–3 France, 43, 165, 196, 238, 254, 256, 281, 290 Frank, Robert, 100 free market, 33, 37, 67, 68, 70, 81–2, 86, 90 free open-source hardware (FOSH), 196–7 free open-source software (FOSS), 196 free trade, 70, 90 Freeman, Ralph, 18–19 freshwater cycle, 48–9 Freud, Sigmund, 107, 281 Friedman, Benjamin, 258 Friedman, Milton, 34, 62, 66–9, 84–5, 88, 99, 183, 232 Friends of the Earth, 54 Full World, 75 Fuller, Buckminster, 4 Fullerton, John, 234–6, 273 G G20, 31, 56, 276, 279–80 G77, 55 Gal, Orit, 141 Gandhi, Mohandas, 42, 293 Gangnam Style, 145 Gardens of Democracy, The (Liu & Hanauer), 158 gender equality, 45, 51–2, 57, 78–9, 85, 88, 118–19, 124, 171, 198 generosity, 218–19, 223–9 geometry, 13, 15 George, Henry, 149, 179 Georgescu-Roegen, Nicholas, 252 geothermal energy, 221 Gerhardt, Sue, 283 Germany, 2, 41, 100, 118, 165, 189, 211, 213, 254, 256, 260, 274 Gessel, Silvio, 274 Ghent, Belgium, 236 Gift Relationship, The (Titmuss), 118–19 Gigerenzer, Gerd, 112–14 Gintis, Herb, 104 GiveDirectly, 200 Glass–Steagall Act (1933), 87 Glennon, Roger, 214 Global Alliance for Tax Justice, 277 global material footprints, 210–11 Global Village Construction Set, 196 globalisation, 89 Goerner, Sally, 175–6 Goffmann, Erving, 22 Going for Growth, 255 golden rule, 91 Goldman Sachs, 149, 170 Gómez-Baggethun, Erik, 122 Goodall, Chris, 211 Goodwin, Neva, 79 Goody, Jade, 124 Google, 192 Gore, Albert ‘Al’, 172 Gorgons, 244, 256, 257, 266 graffiti, 15, 25, 287 Great Acceleration, 46, 253–4 Great Depression (1929–39), 37, 70, 170, 173, 183, 275, 277, 278 Great Moderation, 146 Greece, Ancient, 4, 13, 32, 48, 54, 56–7, 160, 244 green growth, 41, 210, 243–85 Greenham, Tony, 185 greenhouse gas emissions, 31, 46, 50, 75–6, 141, 152–4 and decoupling, 260, 266 and Environmental Kuznets Curve, 208, 210 and forests, 50, 52 and G20, 31 and inequality, 58 reduction of, 184, 201–2, 213, 216–18, 223–7, 239–41, 256, 259–60, 266, 298 stock–flow dynamics, 152–4 and taxation, 201, 213 Greenland, 141, 154 Greenpeace, 9 Greenspan, Alan, 87 Greenwich, London, 290 Grenoble, France, 281 Griffiths, Brian, 170 gross domestic product (GDP), 25, 31–2, 35–43, 57, 60, 84, 164 as cuckoo, 32, 35, 36, 38, 40, 54, 60, 159, 244, 256, 271 and Environmental Kuznets Curve, 207–11 and exponential growth, 39, 53, 246–85 and growth agnosticism, 29–30, 240, 243–85 and inequality, 173 and Kuznets Curve, 167, 173, 188–9 gross national product (GNP), 36–40 Gross World Product, 248 Grossman, Gene, 207–8, 210 ‘grow now, clean up later’, 207 Guatemala, 196 H Haifa, Israel, 120 Haldane, Andrew, 146 Han Dynasty, 154 Hanauer, Nick, 158 Hansen, Pelle, 124 Happy Planet Index, 280 Hardin, Garrett, 69, 83, 181 Harvard University, 2, 271, 290 von Hayek, Friedrich, 7–8, 62, 66, 67, 143, 156, 158 healthcare, 43, 50, 57, 85, 123, 125, 170, 176, 200, 269, 279 Heilbroner, Robert, 53 Henry VIII, King of England and Ireland, 180 Hepburn, Cameron, 261 Herbert Simon, 111 heuristics, 113–14, 118, 123 high-income countries growth, 30, 244–5, 254–72, 282 inequality, 165, 168, 169, 171 labour, 177, 188–9, 278 overseas development assistance (ODA), 198–9 resource intensive lifestyles, 46, 210–11 trade, 90 Hippocrates, 160 History of Economic Analysis (Schumpeter), 21 HIV/AIDS, 123 Holocene epoch, 46–8, 75, 115, 253 Homo economicus, 94–103, 109, 127–8 Homo sapiens, 38, 104, 130 Hong Kong, 180 household, 78 housing, 45, 59, 176, 182–3, 269 Howe, Geoffrey, 67 Hudson, Michael, 183 Human Development Index, 9, 279 human nature, 28 human rights, 10, 25, 45, 49, 50, 95, 214, 233 humanistic economics, 42 hydropower, 118, 260, 263 I Illinois, United States, 179–80 Imago Mundi, 13 immigration, 82, 199, 236, 266 In Defense of Economic Growth (Beckerman), 258 Inclusive Wealth Index, 280 income, 51, 79–80, 82, 88, 176–8, 188–91, 194, 199–201 India, 2, 9, 10, 42, 124, 164, 178, 196, 206–7, 242, 290 Indonesia, 90, 105–6, 164, 168, 200 Indus Valley civilisation, 48 inequality, 1, 5, 25, 41, 63, 81, 88, 91, 148–52, 209 and consumerism, 111 and democracy, 171 and digital revolution, 191–5 and distribution, 163–205 and environmental degradation, 172 and GDP growth, 173 and greenhouse gas emissions, 58 and intellectual property, 195–8 and Kuznets Curve, 29, 166–70, 173–4 and labour ownership, 188–91 and land ownership, 178–82 and money creation, 182–8 and social welfare, 171 Success to the Successful, 148, 149, 151, 166 inflation, 36, 248, 256, 275 insect pollination services, 7 Institute of Economic Affairs, 67 institutional economics, 11 intellectual property rights, 195–8, 204 interest, 36, 177, 182, 184, 275–6 Intergovernmental Panel on Climate Change, 25 International Monetary Fund (IMF), 170, 172, 173, 183, 255, 258, 271 Internet, 83–4, 89, 105, 192, 202, 264 Ireland, 277 Iroquois Onondaga Nation, 116 Israel, 100, 103, 120 Italy, 165, 196, 254 J Jackson, Tim, 58 Jakubowski, Marcin, 196 Jalisco, Mexico, 217 Japan, 168, 180, 211, 222, 254, 256, 263, 275 Jevons, William Stanley, 16, 97–8, 131, 132, 137, 142 John Lewis Partnership, 190 Johnson, Lyndon Baines, 37 Johnson, Mark, 38 Johnson, Todd, 191 JPMorgan Chase, 149, 234 K Kahneman, Daniel, 111 Kamkwamba, William, 202, 204 Kasser, Tim, 125–6 Keen, Steve, 146, 147 Kelly, Marjorie, 190–91, 233 Kennedy, John Fitzgerald, 37, 250 Kennedy, Paul, 279 Kenya, 118, 123, 180, 185–6, 199–200, 226, 292 Keynes, John Maynard, 7–8, 22, 66, 69, 134, 184, 251, 277–8, 284, 288 Kick It Over movement, 3, 289 Kingston, London, 290 Knight, Frank, 66, 99 knowledge commons, 202–4, 229, 292 Kokstad, South Africa, 56 Kondratieff waves, 246 Korzybski, Alfred, 22 Krueger, Alan, 207–8, 210 Kuhn, Thomas, 22 Kumhof, Michael, 172 Kuwait, 255 Kuznets, Simon, 29, 36, 39–40, 166–70, 173, 174, 175, 204, 207 KwaZulu Natal, South Africa, 56 L labour ownership, 188–91 Lake Erhai, Yunnan, 56 Lakoff, George, 23, 38, 276 Lamelara, Indonesia, 105–6 land conversion, 49, 52, 299 land ownership, 178–82 land-value tax, 73, 149, 180 Landesa, 178 Landlord’s Game, The, 149 law of demand, 16 laws of motion, 13, 16–17, 34, 129, 131 Lehman Brothers, 141 Leopold, Aldo, 115 Lesotho, 118, 199 leverage points, 159 Lewis, Fay, 178 Lewis, Justin, 102 Lewis, William Arthur, 114, 167 Lietaer, Bernard, 175, 236 Limits to Growth, 40, 154, 258 Linux, 231 Liu, Eric, 158 living metrics, 240–42 living purpose, 233–4 Lomé, Togo, 231 London School of Economics (LSE), 2, 34, 65, 290 London Underground, 12 loss aversion, 112 low-income countries, 90, 164–5, 168, 173, 180, 199, 201, 209, 226, 254, 259 Lucas, Robert, 171 Lula da Silva, Luiz Inácio, 124 Luxembourg, 277 Lyle, John Tillman, 214 Lyons, Oren, 116 M M–PESA, 199–200 MacDonald, Tim, 273 Machiguenga, 105–6 MacKenzie, Donald, 101 macroeconomics, 36, 62–6, 76, 80, 134–5, 145, 147, 150, 244, 280 Magie, Elizabeth, 149, 153 Malala effect, 124 malaria, 5 Malawi, 118, 202, 204 Malaysia, 168 Mali, Taylor, 243 Malthus, Thomas, 252 Mamsera Rural Cooperative, 190 Manhattan, New York, 9, 41 Mani, Muthukumara, 206 Manitoba, 282 Mankiw, Gregory, 2, 34 Mannheim, Karl, 22 Maoris, 54 market, 81–2 and business, 88 circular flow, 64 and commons, 83, 93, 181, 200–201 efficiency of, 28, 62, 68, 87, 148, 181 and equilibrium theory, 131–5, 137, 143–7, 155, 156 free market, 33, 37, 67–70, 90, 208 and households, 63, 69, 78, 79 and maxi-max rule, 161 and pricing, 117–23, 131, 160 and rational economic man, 96, 100–101, 103, 104 and reciprocity, 105, 106 reflexivity of, 144–7 and society, 69–70 and state, 84–6, 200, 281 Marshall, Alfred, 17, 98, 133, 165, 253, 282 Marx, Karl, 88, 142, 165, 272 Massachusetts Institute of Technology (MIT), 17–20, 152–5 massive open online courses (MOOCs), 290 Matthew Effect, 151 Max-Neef, Manfred, 42 maxi-max rule, 161 maximum wage, 177 Maya civilisation, 48, 154 Mazzucato, Mariana, 85, 195, 238 McAfee, Andrew, 194, 258 McDonough, William, 217 Meadows, Donella, 40, 141, 159, 271, 292 Medusa, 244, 257, 266 Merkel, Angela, 41 Messerli, Elspeth, 187 Metaphors We Live By (Lakoff & Johnson), 38 Mexico, 121–2, 217 Michaels, Flora S., 6 micro-businesses, 9, 173, 178 microeconomics, 132–4 microgrids, 187–8 Micronesia, 153 Microsoft, 231 middle class, 6, 46, 58 middle-income countries, 90, 164, 168, 173, 180, 226, 254 migration, 82, 89–90, 166, 195, 199, 236, 266, 286 Milanovic, Branko, 171 Mill, John Stuart, 33–4, 73, 97, 250, 251, 283, 284, 288 Millo, Yuval, 101 minimum wage, 82, 88, 176 Minsky, Hyman, 87, 146 Mises, Ludwig von, 66 mission zero, 217 mobile banking, 199–200 mobile phones, 222 Model T revolution, 277–8 Moldova, 199 Mombasa, Kenya, 185–6 Mona Lisa (da Vinci), 94 money creation, 87, 164, 177, 182–8, 205 MONIAC (Monetary National Income Analogue Computer), 64–5, 75, 142, 262 Monoculture (Michaels), 6 Monopoly, 149 Mont Pelerin Society, 67, 93 Moral Consequences of Economic Growth, The (Friedman), 258 moral vacancy, 41 Morgan, Mary, 99 Morogoro, Tanzania, 121 Moyo, Dambisa, 258 Muirhead, Sam, 230, 231 MultiCapital Scorecard, 241 Murphy, David, 264 Murphy, Richard, 185 musical tastes, 110 Myriad Genetics, 196 N national basic income, 177 Native Americans, 115, 116, 282 natural capital, 7, 116, 269 Natural Economic Order, The (Gessel), 274 Nedbank, 216 negative externalities, 213 negative interest rates, 275–6 neoclassical economics, 134, 135 neoliberalism, 7, 62–3, 67–70, 81, 83, 84, 88, 93, 143, 170, 176 Nepal, 181, 199 Nestlé, 217 Netherlands, 211, 235, 224, 226, 238, 277 networks, 110–11, 117, 118, 123, 124–6, 174–6 neuroscience, 12–13 New Deal, 37 New Economics Foundation, 278, 283 New Year’s Day, 124 New York, United States, 9, 41, 55 Newlight Technologies, 224, 226, 293 Newton, Isaac, 13, 15–17, 32–3, 95, 97, 129, 131, 135–7, 142, 145, 162 Nicaragua, 196 Nigeria, 164 nitrogen, 49, 52, 212–13, 216, 218, 221, 226, 298 ‘no pain, no gain’, 163, 167, 173, 204, 209 Nobel Prize, 6–7, 43, 83, 101, 167 Norway, 281 nudging, 112, 113, 114, 123–6 O Obama, Barack, 41, 92 Oberlin, Ohio, 239, 240–41 Occupy movement, 40, 91 ocean acidification, 45, 46, 52, 155, 242, 298 Ohio, United States, 190, 239 Okun, Arthur, 37 onwards and upwards, 53 Open Building Institute, 196 Open Source Circular Economy (OSCE), 229–32 open systems, 74 open-source design, 158, 196–8, 265 open-source licensing, 204 Organisation for Economic Co-operation and Development (OECD), 38, 210, 255–6, 258 Origin of Species, The (Darwin), 14 Ormerod, Paul, 110, 111 Orr, David, 239 Ostrom, Elinor, 83, 84, 158, 160, 181–2 Ostry, Jonathan, 173 OSVehicle, 231 overseas development assistance (ODA), 198–200 ownership of wealth, 177–82 Oxfam, 9, 44 Oxford University, 1, 36 ozone layer, 9, 50, 115 P Pachamama, 54, 55 Pakistan, 124 Pareto, Vilfredo, 165–6, 175 Paris, France, 290 Park 20|20, Netherlands, 224, 226 Parker Brothers, 149 Patagonia, 56 patents, 195–6, 197, 204 patient capital, 235 Paypal, 192 Pearce, Joshua, 197, 203–4 peer-to-peer networks, 187, 192, 198, 203, 292 People’s QE, 184–5 Perseus, 244 Persia, 13 Peru, 2, 105–6 Phillips, Adam, 283 Phillips, William ‘Bill’, 64–6, 75, 142, 262 phosphorus, 49, 52, 212–13, 218, 298 Physiocrats, 73 Pickett, Kate, 171 pictures, 12–25 Piketty, Thomas, 169 Playfair, William, 16 Poincaré, Henri, 109, 127–8 Polanyi, Karl, 82, 272 political economy, 33–4, 42 political funding, 91–2, 171–2 political voice, 43, 45, 51–2, 77, 117 pollution, 29, 45, 52, 85, 143, 155, 206–17, 226, 238, 242, 254, 298 population, 5, 46, 57, 155, 199, 250, 252, 254 Portugal, 211 post-growth society, 250 poverty, 5, 9, 37, 41, 50, 88, 118, 148, 151 emotional, 283 and inequality, 164–5, 168–9, 178 and overseas development assistance (ODA), 198–200 and taxation, 277 power, 91–92 pre-analytic vision, 21–2 prescription medicines, 123 price-takers, 132 prices, 81, 118–23, 131, 160 Principles of Economics (Mankiw), 34 Principles of Economics (Marshall), 17, 98 Principles of Political Economy (Mill), 288 ProComposto, 226 Propaganda (Bernays), 107 public relations, 107, 281 public spending v. investment, 276 public–private patents, 195 Putnam, Robert, 76–7 Q quantitative easing (QE), 184–5 Quebec, 281 Quesnay, François, 16, 73 R Rabot, Ghent, 236 Rancière, Romain, 172 rating and review systems, 105 rational economic man, 94–103, 109, 111, 112, 126, 282 Reagan, Ronald, 67 reciprocity, 103–6, 117, 118, 123 reflexivity of markets, 144 reinforcing feedback loops, 138–41, 148, 250, 271 relative decoupling, 259 renewable energy biomass energy, 118, 221 and circular economy, 221, 224, 226, 235, 238–9, 274 and commons, 83, 85, 185, 187–8, 192, 203, 264 geothermal energy, 221 and green growth, 257, 260, 263, 264, 267 hydropower, 118, 260, 263 pricing, 118 solar energy, see solar energy wave energy, 221 wind energy, 75, 118, 196, 202–3, 221, 233, 239, 260, 263 rentier sector, 180, 183, 184 reregulation, 82, 87, 269 resource flows, 175 resource-intensive lifestyles, 46 Rethinking Economics, 289 Reynebeau, Guy, 237 Ricardo, David, 67, 68, 73, 89, 250 Richardson, Katherine, 53 Rifkin, Jeremy, 83, 264–5 Rise and Fall of the Great Powers, The (Kennedy), 279 risk, 112, 113–14 Robbins, Lionel, 34 Robinson, James, 86 Robinson, Joan, 142 robots, 191–5, 237, 258, 278 Rockefeller Foundation, 135 Rockford, Illinois, 179–80 Rockström, Johan, 48, 55 Roddick, Anita, 232–4 Rogoff, Kenneth, 271, 280 Roman Catholic Church, 15, 19 Rombo, Tanzania, 190 Rome, Ancient, 13, 48, 154 Romney, Mitt, 92 Roosevelt, Franklin Delano, 37 rooted membership, 190 Rostow, Walt, 248–50, 254, 257, 267–70, 284 Ruddick, Will, 185 rule of thumb, 113–14 Ruskin, John, 42, 223 Russia, 200 rust belt, 90, 239 S S curve, 251–6 Sainsbury’s, 56 Samuelson, Paul, 17–21, 24–5, 38, 62–7, 70, 74, 84, 91, 92, 93, 262, 290–91 Sandel, Michael, 41, 120–21 Sanergy, 226 sanitation, 5, 51, 59 Santa Fe, California, 213 Santinagar, West Bengal, 178 São Paolo, Brazil, 281 Sarkozy, Nicolas, 43 Saumweder, Philipp, 226 Scharmer, Otto, 115 Scholes, Myron, 100–101 Schumacher, Ernst Friedrich, 42, 142 Schumpeter, Joseph, 21 Schwartz, Shalom, 107–9 Schwarzenegger, Arnold, 163, 167, 204 ‘Science and Complexity’ (Weaver), 136 Scotland, 57 Seaman, David, 187 Seattle, Washington, 217 second machine age, 258 Second World War (1939–45), 18, 37, 70, 170 secular stagnation, 256 self-interest, 28, 68, 96–7, 99–100, 102–3 Selfish Society, The (Gerhardt), 283 Sen, Amartya, 43 Shakespeare, William, 61–3, 67, 93 shale gas, 264, 269 Shang Dynasty, 48 shareholders, 82, 88, 189, 191, 227, 234, 273, 292 sharing economy, 264 Sheraton Hotel, Boston, 3 Siegen, Germany, 290 Silicon Valley, 231 Simon, Julian, 70 Sinclair, Upton, 255 Sismondi, Jean, 42 slavery, 33, 77, 161 Slovenia, 177 Small Is Beautiful (Schumacher), 42 smart phones, 85 Smith, Adam, 33, 57, 67, 68, 73, 78–9, 81, 96–7, 103–4, 128, 133, 160, 181, 250 social capital, 76–7, 122, 125, 172 social contract, 120, 125 social foundation, 10, 11, 44, 45, 49, 51, 58, 77, 174, 200, 254, 295–6 social media, 83, 281 Social Progress Index, 280 social pyramid, 166 society, 76–7 solar energy, 59, 75, 111, 118, 187–8, 190 circular economy, 221, 222, 223, 224, 226–7, 239 commons, 203 zero-energy buildings, 217 zero-marginal-cost revolution, 84 Solow, Robert, 135, 150, 262–3 Soros, George, 144 South Africa, 56, 177, 214, 216 South Korea, 90, 168 South Sea Bubble (1720), 145 Soviet Union (1922–91), 37, 67, 161, 279 Spain, 211, 238, 256 Spirit Level, The (Wilkinson & Pickett), 171 Sraffa, Piero, 148 St Gallen, Switzerland, 186 Stages of Economic Growth, The (Rostow), 248–50, 254 stakeholder finance, 190 Standish, Russell, 147 state, 28, 33, 69–70, 78, 82, 160, 176, 180, 182–4, 188 and commons, 85, 93, 197, 237 and market, 84–6, 200, 281 partner state, 197, 237–9 and robots, 195 stationary state, 250 Steffen, Will, 46, 48 Sterman, John, 66, 143, 152–4 Steuart, James, 33 Stiglitz, Joseph, 43, 111, 196 stocks and flows, 138–41, 143, 144, 152 sub-prime mortgages, 141 Success to the Successful, 148, 149, 151, 166 Sugarscape, 150–51 Summers, Larry, 256 Sumner, Andy, 165 Sundrop Farms, 224–6 Sunstein, Cass, 112 supply and demand, 28, 132–6, 143, 253 supply chains, 10 Sweden, 6, 255, 275, 281 swishing, 264 Switzerland, 42, 66, 80, 131, 186–7, 275 T Tableau économique (Quesnay), 16 tabula rasa, 20, 25, 63, 291 takarangi, 54 Tanzania, 121, 190, 202 tar sands, 264, 269 taxation, 78, 111, 165, 170, 176, 177, 237–8, 276–9 annual wealth tax, 200 environment, 213–14, 215 global carbon tax, 201 global financial transactions tax, 201, 235 land-value tax, 73, 149, 180 non-renewable resources, 193, 237–8, 278–9 People’s QE, 185 tax relief v. tax justice, 23, 276–7 TED (Technology, Entertainment, Design), 202, 258 Tempest, The (Shakespeare), 61, 63, 93 Texas, United States, 120 Thailand, 90, 200 Thaler, Richard, 112 Thatcher, Margaret, 67, 69, 76 Theory of Moral Sentiments (Smith), 96 Thompson, Edward Palmer, 180 3D printing, 83–4, 192, 198, 231, 264 thriving-in-balance, 54–7, 62 tiered pricing, 213–14 Tigray, Ethiopia, 226 time banking, 186 Titmuss, Richard, 118–19 Toffler, Alvin, 12, 80 Togo, 231, 292 Torekes, 236–7 Torras, Mariano, 209 Torvalds, Linus, 231 trade, 62, 68–9, 70, 89–90 trade unions, 82, 176, 189 trademarks, 195, 204 Transatlantic Trade and Investment Partnership (TTIP), 92 transport, 59 trickle-down economics, 111, 170 Triodos, 235 Turkey, 200 Tversky, Amos, 111 Twain, Mark, 178–9 U Uganda, 118, 125 Ulanowicz, Robert, 175 Ultimatum Game, 105, 117 unemployment, 36, 37, 276, 277–9 United Kingdom Big Bang (1986), 87 blood donation, 118 carbon dioxide emissions, 260 free trade, 90 global material footprints, 211 money creation, 182 MONIAC (Monetary National Income Analogue Computer), 64–5, 75, 142, 262 New Economics Foundation, 278, 283 poverty, 165, 166 prescription medicines, 123 wages, 188 United Nations, 55, 198, 204, 255, 258, 279 G77 bloc, 55 Human Development Index, 9, 279 Sustainable Development Goals, 24, 45 United States American Economic Association meeting (2015), 3 blood donation, 118 carbon dioxide emissions, 260 Congress, 36 Council of Economic Advisers, 6, 37 Earning by Learning, 120 Econ 101 course, 8, 77 Exxon Valdez oil spill (1989), 9 Federal Reserve, 87, 145, 146, 271, 282 free trade, 90 Glass–Steagall Act (1933), 87 greenhouse gas emissions, 153 global material footprint, 211 gross national product (GNP), 36–40 inequality, 170, 171 land-value tax, 73, 149, 180 political funding, 91–2, 171 poverty, 165, 166 productivity and employment, 193 rust belt, 90, 239 Transatlantic Trade and Investment Partnership (TTIP), 92 wages, 188 universal basic income, 200 University of Berkeley, 116 University of Denver, 160 urbanisation, 58–9 utility, 35, 98, 133 V values, 6, 23, 34, 35, 42, 117, 118, 121, 123–6 altruism, 100, 104 anthropocentric, 115 extrinsic, 115 fluid, 28, 102, 106–9 and networks, 110–11, 117, 118, 123, 124–6 and nudging, 112, 113, 114, 123–6 and pricing, 81, 120–23 Veblen, Thorstein, 82, 109, 111, 142 Venice, 195 verbal framing, 23 Verhulst, Pierre, 252 Victor, Peter, 270 Viner, Jacob, 34 virtuous cycles, 138, 148 visual framing, 23 Vitruvian Man, 13–14 Volkswagen, 215–16 W Wacharia, John, 186 Wall Street, 149, 234, 273 Wallich, Henry, 282 Walras, Léon, 131, 132, 133–4, 137 Ward, Barbara, 53 Warr, Benjamin, 263 water, 5, 9, 45, 46, 51, 54, 59, 79, 213–14 wave energy, 221 Ways of Seeing (Berger), 12, 281 Wealth of Nations, The (Smith), 74, 78, 96, 104 wealth ownership, 177–82 Weaver, Warren, 135–6 weightless economy, 261–2 WEIRD (Western, educated, industrialised, rich, democratic), 103–5, 110, 112, 115, 117, 282 West Bengal, India, 124, 178 West, Darrell, 171–2 wetlands, 7 whale hunting, 106 Wiedmann, Tommy, 210 Wikipedia, 82, 223 Wilkinson, Richard, 171 win–win trade, 62, 68, 89 wind energy, 75, 118, 196, 202–3, 221, 233, 239, 260, 263 Wizard of Oz, The, 241 Woelab, 231, 293 Wolf, Martin, 183, 266 women’s rights, 33, 57, 107, 160, 201 and core economy, 69, 79–81 education, 57, 124, 178, 198 and land ownership, 178 see also gender equality workers’ rights, 88, 91, 269 World 3 model, 154–5 World Bank, 6, 41, 119, 164, 168, 171, 206, 255, 258 World No Tobacco Day, 124 World Trade Organization, 6, 89 worldview, 22, 54, 115 X xenophobia, 266, 277, 286 Xenophon, 4, 32, 56–7, 160 Y Yandle, Bruce, 208 Yang, Yuan, 1–3, 289–90 yin yang, 54 Yousafzai, Malala, 124 YouTube, 192 Yunnan, China, 56 Z Zambia, 10 Zanzibar, 9 Zara, 276 Zeitvorsoge, 186–7 zero environmental impact, 217–18, 238, 241 zero-hour contracts, 88 zero-humans-required production, 192 zero-interest loans, 183 zero-marginal-cost revolution, 84, 191, 264 zero-waste manufacturing, 227 Zinn, Howard, 77 PICTURE ACKNOWLEDGEMENTS Illustrations are reproduced by kind permission of: archive.org

The Code of Capital: How the Law Creates Wealth and Inequality
by Katharina Pistor
Published 27 May 2019

At first, everything went according to plan; in its first three years of operation, LTCM returned between 19 percent and 42 percent to its investors; and by late 1997 it had generated $7 billion in equity. After the peak came the fall; by early 1998, investors had taken out $2.7 billion and, in the fall of 1998, LTCM faced imminent collapse. Something had happened that was not supposed to: The East Asian Financial Crisis erupted in the summer of 1997 and cast a spell over emerging market debt; and in August 1998, Russia defaulted on its sovereign debt.68 In response, the price for debt of all emerging markets tumbled almost simultaneously as if orchestrated and the yields between US treasuries and emerging market debt widened rather than narrowed, as the model had predicted.

…

INDEX AAA rating, 86, 99–100, 251n19 ad hoc privileges, 119, 218, 223, 228 Advisory Committee for Trade Negotiations (ACTN), 121–24 Amazon, 130 American Civil War, 41, 50, 138, 174 American College of Medical Genetics, 113 American Express, 50 American International Group (AIG), 191 American Society for Clinical Pathology, 113 anti-usury rules, 90, 236n26 Apple, 72 arbitrage: optimizing legal, 67, 161; RASCAL and, 73–75; regulatory, 48, 56, 73–76, 90–91, 226; tax, 48, 56, 73 arbitration: as alternative to slow courts, 181–82; capital rule and, 215, 217, 223, 226; code masters and, 161–62, 178, 180–82; corporations and, 48, 56, 67, 73–76; digital code and, 190, 204; empire of law and, 15, 18; global code and, 136, 139–43, 146, 152, 154–57, 261n27; lawyers and, 161–62, 178, 180–82; minting debt and, 90–91; private, 143, 146, 152, 154, 157, 162, 180–81, 217, 223, 226 Arendt, Hannah, 243n40 Arruñada, Benito, 239n56 artisans, 118–19, 128 asset-backed securities (ABS), 85, 87 assets: bearer, 198; Bitcoin and, 197–202; capital rule and, 205–34; cloning legal persons and, 47–75, 247n24; code masters and, 158–61, 164–69, 174–75, 177, 180–82, 267n26; coding land and, 23–26, 30, 35–46; Debt Recovery Act and, 39–40; digital code and, 187–94, 197–204, 271n17; empire of law and, 2–22, 235n9, 238n51; eviction and, 41, 233; exclusive use rights and, 35, 209; foreclosure and, 39, 95–98, 253n44; genetic knowledge and, 109; global code and, 132, 135–38, 142–50, 154, 260n8, 262n45; homeowners and, 59, 80–84, 86, 88, 94–98, 100, 106; intangible capital and, 13, 24, 115–21, 143, 212, 216; landowners and, 24, 34–39, 42, 45, 56, 78, 128, 158–59, 166; legal coding and, 2–8, 11–12, 15, 19–24, 40, 52, 87, 92, 107–8, 116, 118, 132, 143, 168, 177, 180, 205, 208, 211–12, 215–18, 222–27, 233; legal personality and, 55; lock-in and, 15, 47, 65–67, 77, 81, 117, 196; MBS, 82–83, 86–87, 94–95, 97, 99, 101; Medici empire and, 57–58, 247n21; minting debt and, 77, 251n19, 253n41 (see also minting debt); monopolies and, 17, 41, 66, 91, 109, 111, 114–26, 257n29; partitioning and, 48, 52, 54, 56–57, 59, 107, 238n51; pooling of, 13–14, 16, 19, 45, 47, 52, 55–56, 66, 83–84, 86, 93, 96, 164–65, 211, 251n19; property and, 1–5 (see also property); rating agencies and, 80, 86–87, 98–100, 251n6, 251n19; scalability of, 145; securitization and, 43, 45, 78–86, 91–101, 165, 251n11, 251n13, 253n41; self-interest and, 6, 8–9, 18, 232, 236n18; shielding of, 3, 14, 20, 22, 44, 47–48, 51–63, 65, 67, 71, 78, 84, 86, 99, 107, 129, 161, 165, 205, 215, 238n51, 246n16, 247n20; stage-contingent, 41; titles and, 13, 25–27, 30–35, 37, 43, 46, 75, 96–97, 110, 125, 194, 206; toxic, 86, 100, 167; trade secrets and, 126–31; tranched, 83–87, 94, 98, 101, 251n19 Association for Molecular Pathology, 113 attorneys, 21, 32, 143, 160–62, 171–74, 181–82, 217, 269n54 Australia, 29, 33 Austro-Hungarian Empire, 120 autonomy: capital rule and, 209, 212–13, 215, 218–20, 232, 272n29; coding land and, 33; corporations and, 50; digital autonomous organizations (DAO) and, 194–97, 272n29, 272n30, 272n33; digital code and, 194–97; global code and, 134–35; lawyers and, 171–73 bailouts, 55, 62, 64, 84, 104–5, 151, 226, 247n17 Baldwin, Simeon E., 169 Bank for International Settlement (BIS), 149–50 bankruptcy, ix–x; capital rule and, 207, 209, 211, 227; cloning legal persons and, 48–49, 51, 55, 62–63, 73, 75; code masters and, 160, 168, 269n58; coding land and, 27; derivatives and, 144–52; empire of law and, 3, 13–14, 16, 21; global code and, 137, 144–53, 262n42; ISDA and, 147–51; law and, 3, 13, 16, 21, 73, 78, 87, 107, 137, 144–52, 160, 168, 209, 239n55, 262n42, 269n58; Lehman Brothers and, 48–58, 61–65, 70–75, 80, 85, 96, 101, 103–4, 106, 135, 149, 175, 190, 245n4, 246n6, 248n33; minting debt and, 78–80, 83–84, 87, 107, 255n71; safe harbors and, 63, 145, 148–50, 152, 207, 211, 227, 262n44, 263n49; United States and, 55, 148, 239n55, 255n71, 262n44 Banque de France, 104 Barclays, 203 barristers, 169–70 Bayerische Landesbank, 85 bearer assets, 198 Bear Stearns, 64, 83 Belize: British colonialism and, 26–27; coding land and, 23–29, 230, 241n7, 261n21; Constitution of, 25, 28, 241n7; courts and, 23–24, 27–29, 126, 230, 261n21; global code and, 261n21; independence of, 26–27; Maya people and, 23–29, 230, 261n21; mining and, 25–27, 29, 37; Privy Council and, 27–29, 126 beneficiaries, 43–45, 53, 81, 115, 164, 181–82 big data, 126–31 bilateral investment treaties (BITs), 140, 155, 264n67 bilateral trade, 122, 132, 136, 140, 154–56, 256n23 bills of exchange, 57, 78, 88–92, 108, 198–99, 252n31 Bitcoin, 197–202 Black Act, 243n42 blacklisting, 73, 225 Blackstone, William, 46 blockchain, 184, 187–90, 192, 195, 197–98, 203–4, 270n2 blue-chip corporations, 83, 175–76, 269n55 BNP Paribas, 85 Bonaparte, Louis, 104 Bonaparte, Napoleon, 133, 242n27 bourgeoisie, 10, 208 Brandeis, Louis, 109 Braudel, Fernand, 9 Breast Cancer Susceptibility Gene (BRCA), 111–14, 116, 127, 130, 214 Brexit, 179 bright-line rule, 224–25 Bristol-Myers, 124 Bruges, 57–58 bubbles, 59, 247n26 bugs, 185, 188, 196 Campbell, Lord, 158, 170 Canada: coding land and, 29; Comprehensive Economic and Trade Agreement (CETA) and, 156–57, 264n69; Eli Lilly and, 138–43, 152–55, 261n17, 261n19; Federal Court of, 139; global code and, 138–43, 156–57, 261n17, 261n18, 263n57, 264n69; intellectual property and, 138–43, 152–55, 261n17, 261n19; NAFTA and, 124, 138, 138–42, 155, 261n20; USMCA and, 139, 261n20 Canadian Patent Act, 140, 261n23 Cancer Genetics Network Project, 113 capital: attributes of, 3–4, 11–15, 21, 39, 78, 161, 183, 205, 211–12, 233; coding land and, 24, 26, 29, 34–45; Commons on, 12; convertibility and, 3–4, 11, 13, 15, 19, 77–78, 183, 193, 199, 211, 229, 233; corporations and, 47–48, 52–53, 56–57, 64–67, 70, 73–76; digital code and, 183–86, 189, 195–200, 203; durability and, 3, 211, 229, 233 (see also durability); economic growth and, 2; empire of law and, 2–22; enigma of, 9–13; global code and, 132–38, 143, 149, 152–57; intangible, 8, 115–18; intellectual property and, 108, 112–20, 126, 130; labor and, 2, 9–11, 116, 160, 169, 217, 237n37; legal attributes and, 13–15; legal codes and, 2 (see also legal code); Levy on, 12; Marxism and, 9–11; minting debt and, 77–79, 83, 92, 100–102, 107; Piketty on, 4–5; priority rights and, 206–7, 215 (see also priority rights); in service of, 152–57; Smith on, 6, 46, 134, 220, 240n68; state power and, 15–19 (see also state power); universality and, 3–4, 11, 13–14, 19, 21, 54, 211, 229, 233; venture, 112; wealth and, 12–13 (see also wealth) capital gains, 235n9 Capital in the Twenty-First Century (Piketty), 4–5 capitalism: capital rule and, 205–9, 212, 217, 222, 224, 228–29, 234; cloning legal persons and, 47; code masters and, 168, 179, 182, 266n24; coding land and, 26; digital code and, 199–200; empire of law and, 2, 4, 8, 10–14, 17–21, 238n44; free markets and, 4, 19, 106–7, 128–29; global code and, 132–33; historiography of, 10; nature’s code and, 112; substance of, 238n44 Capitalism without Capital (Haskel and Westlake), 115–16 capital rule: arbitration and, 215, 217, 223, 226; autonomy and, 209, 212–13, 215, 218–20, 232, 272n29; bankruptcy and, 207, 209, 211, 227; bright-line rule and, 224–25; capitalism and, 205–9, 212, 217, 222, 224, 228–29, 234; coercive power and, 220, 232–33; collateral and, 224; contracts and, 209–18, 222–27, 231, 276n37; convertibility and, 211, 226–27, 229, 233; corporate law and, 209–11, 224; costly externalities and, 226; courts and, 206–7, 211–18, 221–24, 227, 230; creditors and, 206–7, 211, 216; debt and, 206–7, 209, 219, 228; derivatives and, 211, 227; durability and, 211, 229, 233; elitism and, 218; enclosure and, 229; enforcement and, 210, 220, 223; enigma of capital and, 9–13; feudalism and, 5–6, 205, 211, 223, 276n24; first-mover advantage and, 214–15; global code and, 152–57; globalization and, 219–23, 277n51; governing the code and, 222–29; growth and, 220; harmonization and, 227; inequality and, 223; intangible capital and, 212, 216; International Center for Settlement of Investment Disputes (ICSID) and, 154–55; investment and, 225–26; knowledge and, 229; law’s inherent incompleteness and, 210–13; lawyers and, 206–16, 221, 224, 227–29, 234; legal attributes and, 13–15; legal code and, 205, 211–13, 216, 218–20, 225, 227, 230; legal structures and, 225; Marxism and, 207–8, 216, 234; mortgages and, 206–7, 211; New York Arbitration Convention and, 154; partnerships and, 228; patents and, 211–15, 230; priority rights and, 206–7, 215; private code and, 20, 209–19; private law and, 209–15; property and, 206, 209, 212–20, 222, 224, 230, 276n24; public power and, 216–19; reform and, 218, 231; regulation and, 211, 213, 216–17, 221, 224–27, 274n1; resurrecting limitations and, 227; risk and, 207, 226, 229; roll-back strategies for, 224–29; roving, 219–21; safe harbors and, 63, 145, 148–50, 152, 207, 211, 227, 262n44, 263n49; shareholders and, 213, 229; slavery and, 205; sovereignty and, 234, 277n51; state power and, 15–18, 205, 208–9, 212, 216, 221–23; treaty law and, 225; United Kingdom and, 228, 234; United States and, 219, 227–28, 234; universality and, 211, 229, 233; veils and, 8, 13, 48, 207, 246n16; wealth and, 205–9, 215, 217, 221–22, 224, 230; Weber and, 206; without law, 229–34 Cayman Islands, 50, 71, 99, 135, 249n53 central banks: code masters and, 167; empire of law and, 6; global code and, 151; minting debt and, 77–78, 89, 102–6, 255n72 Chase, 64, 83–85, 248n32, 255n70 Chicago Mercantile Exchange, 200 China, 178 China Investment Corporation (CIC), 85 Chrysler, 247n17 Citigroup, 60, 248n32; foreign help for, 84; Kleros clones and, 100; NC2 and, 79–87, 94, 98–100, 106–7, 135, 251n4, 251n19 Citigroup Mortgage Realty Corporation (CMRC), 80–85 City Group Global Markets (CGGM), 85 civil law, 42–43, 133, 168–73, 178, 249n48 civil rights, 232 claims to future pay, 78, 84, 88 cloning legal persons: bankruptcy and, 48–49, 51, 55, 62–63, 73, 75; capitalism and, 47; collateral and, 51; contracts and, 47–48, 52–55, 58–60, 64–65, 68–69, 247n24; corporate law and, 47–56, 60–62, 65, 67–72, 74, 76, 246n14, 246n16, 248n30; courts and, 58, 68–70, 73–76, 247n24; creditors and, 47–48, 51, 54–67, 71, 73, 75, 246n16, 247n24; debt and, 47–53, 56, 59–60, 67, 73–74; durability and, 47, 54–55; elitism and, 66, 75; immortality and, 50, 55, 65–67; incorporation theory and, 69–70, 74, 136, 246n10; investment and, 48–53, 60–65, 67, 72, 75, 248n39; Kleros and, 99; labor and, 49; lawyers and, 48, 52, 70; legal entities and, 51–53, 55, 57, 65, 69–71; Lehman Brothers and, 48–58, 61–65, 70–75, 80, 85, 96, 101, 103–4, 106, 135, 149, 175, 190, 245n4, 246n6, 248n33, 250n59; limited liability and, 60–61; loss shifting and, 55, 59–64, 67; monopolies and, 66; NC2 and, 79–87, 94, 98–100, 106–7, 135, 251n4, 251n19; priority rights and, 55–56, 63; private law and, 68; property and, 47, 68; regulation and, 249n46; risk and, 48, 54–56, 59, 63–66, 70, 74–75; Roman law and, 51; slavery and, 49, 54, 57, 60; universality and, 54; wealth and, 48, 56, 59, 64, 66–67 Coase, Ronald, 45, 192 code masters: arbitration and, 161–62, 178, 180–82; assets and, 158–61, 164–69, 174–75, 177, 180–82; bankruptcy and, 160, 168, 269n58; capitalism and, 168, 179, 182, 266n24; central banks and, 167; coercive power and, 177, 180; collateral and, 160, 177; common law and, 168–73, 176–78; contracts and, 159–60, 172, 178, 181–82; corporate law and, 159–60, 163–64, 168, 174–79, 269n60; courts and, 159–64, 168–73, 177, 180–82; creditors and, 158–59, 168; debt and, 158, 167, 174; durability and, 159, 161, 182; elitism and, 158, 162, 164, 175–77; enforcement and, 168, 180; globalization and, 176–79, 270n71; growth and, 166, 175, 267n26, 270n71; inequality and, 167; investment and, 160–61, 165, 167–68; labor and, 160, 169; legal code and, 158–59, 167, 177, 180; legal origin of, 167–76; Lehman Brothers and, 175; partnerships and, 162–63, 166, 175–78; poison pills and, 163–64, 266n15, 266n17; priority rights and, 158, 161; private law and, 169–73, 182; private money and, 175; property and, 158–60, 164, 172, 177; reform and, 158–59, 171; regulation and, 160–63, 168, 171–77, 182, 267n37, 268n42; risk and, 161–62, 165; securitization and, 165; shareholders and, 164, 168; sovereignty and, 160; United Kingdom and, 168, 178–79; United States and, 162, 168, 171, 174–79; wealth and, 159, 162, 164–67, 174, 176 coding land: acquired rights and, 45–46; autonomy and, 33; bankruptcy and, 27; Belize and, 23–29, 230, 241n7, 261n21; British colonies and, 39–42; capitalism and, 26; collateral and, 30, 35–36; common law and, 31–32, 40, 243n43; common use and, 29–30; contracts and, 41–42; Conveyance Act and, 38–39; corporate law and, 24, 35, 37, 44; courts and, 23–34, 38–45, 244n63; creditors and, 24, 30, 35–45; debt and, 30, 35–42; decoding the trust and, 42–45; digital code and, 183–90, 194, 197, 203–4; discovery doctrine and, 34–35; durability and, 24, 39, 42–43, 46; elitism and, 8, 40–41, 75, 158, 164, 254n55; emerging land market and, 32; enclosure and, 29–35, 39, 229, 256n14; eviction and, 41, 233; important role of land and, 23–24; inequality and, 46; investment and, 25, 37, 45, 241n13; landowners and, 24, 34–39, 42, 45, 56, 78, 128, 158–59, 166, 254n55; lawyers and, 24, 31–32, 35, 37–38, 40, 43–45, 164, 240n6, 242n29; legal code and, 24, 39–40, 43; legal title and, 24–29, 33–34, 45–46; Maya people and, 23–29, 230, 261n21; monopolies and, 41; mortgages and, 35–38, 43; ownership and, 30, 34–35, 136; priority rights and, 24–25, 29, 37, 39, 46; property and, 23–39, 42–46, 240n2, 241n10, 241n13, 242n27, 242n36, 243n41, 245n75; protecting spoils and, 35–39; reform and, 38–41, 244n58, 244n64; regulation and, 44; risk and, 35, 41; securitization and, 43, 45; Settled Land Acts and, 38–39; settlers and, 33–35, 42, 125, 192–93; shielding and, 44; slavery and, 39; sovereignty and, 26–27, 33–34; state power and, 23, 46; Statute of Enrollments and, 44; Statute of Uses and, 44; titles and, 25–27, 30–35, 37, 43, 46, 125, 194; trust law and, 42–45; turning land into private, 29–35; usage and, 24–29; wealth and, 24, 27, 35–46 coercive power: capital rule and, 220, 232–33; code masters and, 177, 180; digital code and, 187, 193; empire of law and, 4, 7, 15–21, 239n60; global code and, 132, 154; minting debt and, 90; trade secrets and, 126, 129; World Trade Organization (WTO) and, 125 Cohen, Morris, 137–38 Coindesk, 203 collateral, ix–x; capital rule and, 224; cloning legal persons and, 51; code masters and, 160, 177; coding land and, 30, 35–36; digital code and, 187, 190–91, 271n19; empire of law and, 3, 7, 11–13, 16, 21, 238n49; global code and, 144, 148, 263n48; minting debt and, 78, 81, 86–87, 92, 97, 99, 103, 107; mortgages and, 13–14; slavery and, 11–12 collateralized debt obligations (CDOs), 87, 99–101, 108, 165, 211, 254n53 Columbia Law School, 270n4 Commerce Clause, 70, 177 commercial codes, 13, 238n48, 260n8 common law: code masters and, 168–73, 176–78; coding land and, 31–32, 40, 243n43; digital code and, 271n13; empire of law and, 5, 8; English law and, 27, 38–40, 43, 146, 178, 262n41; frustration of contracts and, 271n13; global code and, 133, 264n65; law schools and, 243n43; nature’s code and, 119; New York State laws and, 8, 76, 80, 132–33, 135, 143, 146, 150, 168, 178; Roman law and, 30, 42, 132–33, 135, 170, 177, 242n27, 243n43; United Kingdom and, 176–77 Common Pleas, 32 Commons, John, 12, 238n44 Companies Act, 61 competition: free trade and, 38; guild barriers and, 128–29; intangible capital and, 118; investment banking and, 50, 91–92; lawyers and, 174, 176; private rights and, 122; property and, 121; regulatory, 68, 135, 221, 227; Schumpeter on, 118, 276n30; state power and, 221; tax shelters and, 72; trade secrets and, 128–29 Comprehensive Economic and Trade Agreement (CETA), 156–57, 264n69 conflict-of-law rules, 9, 68–69, 134–35, 212, 225, 249n48, 276n37 contingent convertibles (CoCos), 202 contracts, ix–x; blockchain and, 184, 187–90, 192, 195, 197–98, 203–4, 270n2; capital rule and, 209–18, 222–27, 231, 276n37; cloning legal persons and, 47–48, 52–55, 58–60, 64–65, 68–69, 247n24; code masters and, 159–60, 172, 178, 181–82; coding land and, 41–42; credible enforcement and, 1–2; digital code and, 183–92, 195, 198, 203, 271n13, 271n17, 271n18, 272n32; empire of law and, 2–8, 13, 15–16, 21, 238n48; enforcement of, 2, 16, 203; frustration of in common law, 271n13; global code and, 135–37, 139, 145–53; insurance, 190, 271n17; minting debt and, 78–81, 86, 88–89, 107; nature’s code and, 129; nexus of, 48; rise of West and, 4; Roman law and, 187; smart, 187–91; theory of firms and, 272n32 convertibility: capital rule and, 211, 226–27, 229, 233; debt and, 3, 15, 77–78, 87–91; digital code and, 183, 193, 199; empire of law and, 3–4, 11, 13, 15, 19; state money and, 3 Conveyance Act, 38–39 copyright, 11, 115, 256n23 corporate law, ix–x; asset partitioning and, 53; capital rule and, 209–11, 224; choosing, 69–71; cloning legal persons and, 47–56, 60–62, 65, 67–72, 74, 76, 246n14, 246n16, 248n30; code masters and, 159–60, 163–64, 168, 174–79, 269n60; coding land and, 24, 35, 37, 44; digital code and, 185, 189, 196, 202; empire of law and, 3, 5, 8, 11, 13, 21, 238n54; enabling, 55; global code and, 135–36, 155; incorporation theory and, 69–70, 74, 136, 246n10; international private, 68–69; international treaty, 9, 120, 136–39, 225; legal personality and, 55; minting debt and, 78, 80, 86, 91, 98–102, 107, 252n22, 253n41; nature’s code and, 108, 115, 122, 125; seat theory and, 53, 69–70; shopping for, 67–69; sunset provisions and, 76; treaty law and, 70; veils and, 8, 13, 48, 246n16 corporations: arbitration and, 48, 56, 67, 73–76; autonomy and, 50; blue-chip, 83, 175–76, 269n55; bonds and, 5, 16, 44, 48–49, 83, 86, 102–5, 108, 128, 195, 198, 202, 211, 252n22, 262n32; choosing tax rate and, 71–73; coding modern, 54–56; conflict of law and, 9, 68–69, 134–35, 212, 225, 249n48, 276n37; contracts and, 47–48, 52–55, 58–60, 64–65, 68–69; durability and, 47, 54–55; essence of, 52; immortality and, 50, 55, 65–67; incorporation theory and, 69–70, 74, 136, 246n10; legal entities and, 14, 51–59, 65, 69–71, 249n46, 253n41; legal structures and, 48–51, 54, 58, 70–71, 76, 80; Lehman Brothers’ bankruptcy and, 48–58, 61–65, 70–75, 80, 85, 96, 101, 103–4, 106, 135, 149, 175, 190, 245n4, 246n6, 248n33; limited liability and, 51, 53–54, 60–61, 63, 99, 254n49; loss shifting and, 55, 59–64, 67; mobility and, 68, 70; ownership and, 59, 67, 92, 118, 136; partnerships and, 65 (see also partnerships); poison pills and, 163–64, 266n15, 266n17; PRIMA and, 136; put option and, 55, 64, 226; RASCAL and, 73–75, 250n60, 250n62; rating agencies and, 80, 86–87, 98–100, 251n6, 251n19; regulation and, 47–48, 50, 56, 68, 73–76, 226, 249n46; risk and, 48, 54–56, 59, 63–66, 70, 74–75; Roman law and, 51, 54; shareholders and, 48–56 (see also shareholders); shielding and, 3, 14, 20, 22, 44, 47–48, 51–63, 65, 67, 71, 78, 84, 86, 99, 107, 129, 161, 165, 205, 215, 238n51, 246n16, 247n20; sovereignty and, 53, 66–70; subsidiaries and, 50–53, 58–59, 61–64, 70–74, 84, 131, 135, 149, 151, 191, 196, 247n17, 250n59, 259n80; United States and, 139, 142, 148, 151, 156; US Supreme Court and, 68 cotton, 41, 49, 246n5 courts: appeals and, 26–27, 72, 113, 139, 143, 155–56, 261n18; arbitration and, 180–82 (see also arbitration); Belize and, 23–24, 27–29, 126, 230, 261n21; Canada and, 138–43, 152–57, 261n17, 261n19; capital rule and, 206–7, 211–18, 221–24, 227, 230; cease and desist orders and, 113; certiorari writ and, 261n18; cloning legal persons and, 58, 68–70, 73–76, 247n24; code masters and, 159–64, 168–73, 177, 180–82; coding land and, 23–34, 38–45, 244n63; Common Pleas and, 32; Comprehensive Economic and Trade Agreement (CETA) and, 156–57; digital code and, 187, 204; discovery doctrine and, 34–35; empire of law and, 7–8, 12, 15–20; equity rule and, 31–32; European Court of Justice and, 70, 156; first-mover advantage and, 214–15; genetics and, 109–16, 127, 211, 214; global code and, 133, 136, 138–46, 150, 152–56, 261n18, 261n21, 262n45; Ibanez case and, 95–97; Indian Removal Act and, 34; indigenous rights and, 126; Inns of Court and, 242n29; International Court of Justice and, 125, 146; ISDA and, 146; jingle rule, 247n24; King’s Council and, 27, 31; landowners and, 38–39; minting debt and, 87, 90–91, 96–98, 104, 252n31; nature’s code and, 110–16; patents and, 120; plaintiffs and, 32, 58, 69, 113, 142, 214, 265n5, 275n17; Privy Council and, 27–29, 126; property and, 17, 23–28, 30, 38–39, 43–44, 96–97, 126, 136, 140, 143, 159–60, 172, 214–15, 218, 262; Star Chamber and, 31; sunset provisions and, 76; trade secrets and, 127–31; tribunals and, 18, 136–43, 146, 152, 155–57, 261n21, 264n70; US Supreme Court and, 34, 68, 110–13, 116, 127, 211, 214 credit cooperatives, 93–95 credit default swaps (CDS), 190–91, 271nn17–19 credit derivatives, 78, 145, 165, 227 Crédit Mobilier, 102–6 creditors: bailouts and, 55, 62, 64, 104–5, 151, 226, 247n17; capital rule and, 206–7, 211, 216; cloning legal persons and, 47–48, 51, 54–67, 71, 73, 75, 246n16, 247n24; code masters and, 158–59, 168; coding land and, 24, 30, 35–45; Debt Recovery Act and, 39–40; digital code and, 187–88, 202; empire of law and, 3, 13–16, 20; eviction and, 41, 233; global code and, 144, 147–50, 262n41, 262n45; landlords and, 206–7; Lehman Brothers and, 61, 63–64, 71, 73, 103; limited liability and, 51, 53–54, 60–61, 63, 99, 254n49; lobbying by, 207; minting debt and, 77–79, 88–89, 92–93, 95, 103–5, 107; reciprocal claims and, 262n41; Roman law and, 54; shareholders and, 14, 48, 55–56, 60–67, 71, 104, 168, 202, 246n16; shielding assets from, 14, 20, 47–48, 54–61, 63, 65, 67, 71, 107, 247n20; Statute of Enrollments and, 44; Statute of Uses and, 44; tort, 55, 59; trade secrets and, 128 Crick, Francis, 108–10 Critique of Rights (Menke), 209, 231 cryptocurrencies, 15, 192, 196–203, 238n53, 270n4, 273n43, 274n57 debt, ix; bills of exchange and, 57, 78, 88–92, 108, 198–99, 252n31; capital rule and, 206–7, 209, 219, 228; cloning legal persons and, 47–53, 56, 59–60, 67, 73–74; code masters and, 158, 167, 174; coding land and, 30, 35–42; convertibility and, 3, 15, 77–78, 87–91; credit cooperatives and, 93–95; Crédit Mobilier and, 102–6; creditors and, 3, 13 (see also creditors); default and, 14, 35–36, 38, 42, 56, 62, 81–83, 88–89, 92, 96–97, 100, 102, 105, 137, 146–48, 151, 153, 170, 174, 180, 187, 190, 223, 233, 262n45; derivatives and, 78, 81, 86, 91; digital code and, 187, 190, 198–203; empire of law and, 3, 13–16, 20–21; foreclosure and, 39, 95–98, 253n44; global code and, 144, 147, 149–50, 262n41; Kleros clones and, 79, 86, 98–100, 107, 135, 165; minting, 77–107 (see also minting debt); NC2 and, 79–87, 94, 98–100, 106–7, 135, 251n4, 251n19; notes and, 78, 88–92, 98, 108, 198–200, 202; private money and, 86, 89, 92, 101–7, 147, 202; regulation and, 85, 90–91, 99–100, 103–7, 251n6, 255n73; risk and, 78–87, 90–95, 98–100, 104–5, 251n6, 251n19; securitization and, 78–86, 91–95, 98–101, 251n11, 251n13, 253n41; state money and, 77–78, 88–93, 106; unsecured, 79 Debt Recovery Act, 39–40 Deposit Trust Corporation, 254n49 derivatives: Bank for International Settlement (BIS) and, 149–50; bankruptcy and, 144–52; capital rule and, 211, 227; collateralized debt obligations (CDOs) and, 87, 99–101, 108, 165, 211, 254n53; comeback of, 262n36; complex credit, 165; digital code and, 189, 202; empire of law and, 5, 8; Financial Stability Board (FSB) and, 150–51; global code and, 143–53, 262n36, 263n49; International Swaps and Derivatives Association (ISDA) and, 145–53, 261n31, 271n18; Lehman Brothers and, 63; Loan Market Association (LMA) and, 262n32; Master Agreement (MA) and, 146–47, 150–51, 153; minting debt and, 78, 81, 86, 91; paving way for, 143–52; PRIME and, 146; safe harbors for, 263n49; transnational, 150–51 De Soto, Hernando, 14 digital autonomous organizations (DAO), 194–97, 272n29, 272n30, 272n33 digital code: arbitration and, 190, 204; assets and, 187–94, 197–204; autonomy and, 194–97; Bitcoin and, 197–202; blockchains and, 184, 187–90, 192, 195, 197–98, 203–4, 270n2; bugs and, 185, 188, 196; capitalism and, 199–200; capital rule and, 205, 208–9, 212, 216, 221–23; “code is law” and, 183, 196; coercive power and, 187, 193; collateral and, 187, 190–91, 271n19; common law and, 271n13; contracts and, 183–92, 195, 198, 203, 271n13, 271n17, 271n18, 272n32; convertibility and, 183, 193, 199; corporate law and, 185, 189, 196, 202; courts and, 187, 204; creditors and, 187–88, 202; debt and, 187, 190, 198–203; derivatives and, 189, 202; durability and, 183, 193; elitism and, 186; enclosure and, 183, 203; enforcement and, 187, 190, 203; exogenous shocks and, 188; hierarchy and, 185–86, 201–2; immutable ledgers and, 188–90; investment and, 195–97, 200–202, 272n33; knowledge and, 183; lawyers and, 183–86, 188, 204; legal code and, 183–90, 194, 197, 203–4; legal entities and, 195; Lehman Brothers and, 190; LIBOR and, 190; Marxism and, 185; as meritocracy, 186; mining and, 200–201; patents and, 203–4; priority rights and, 193; private code and, 198; private money and, 198–99, 202; property and, 184–86, 191–94, 198, 203–4, 272n28; realists and, 184–86; reform and, 273n46; regulation and, 185–86, 190, 271n17, 272n30; replacing law by, 183–84; residual rights and, 191–92; scalability and, 184; shareholders and, 195–96, 202; state money and, 198–203; state power and, 184, 193, 197; Szabo on, 192–93, 198; United States and, 202; utopists and, 184; wealth and, 198, 200 discovery doctrine, 34–35 dividends, 11, 53, 61–62, 103 DNA (deoxyribonucleic acid), 108–11, 114 Drahos, Peter, 124 dry exchange, 90 Du Pont, 124 durability: capital rule and, 211, 229, 233; cloning legal persons and, 47, 54–55; code masters and, 159, 161, 182; coding land and, 24, 39, 42–43, 46; digital code and, 183, 193; empire of law and, 3–5, 11, 13–15, 19, 21; intangible capital and, 117; minting debt and, 78 Dutch East India Company (VOC), 65–67, 196 East Asian Financial Crisis, 105 Economist, The (magazine), 37 Edward III, King of England, 118 Egypt, 133 Eichengreen, Barry, 240n64 elephant curve, 1, 8 Eli Lilly, 138–43, 152–55, 261n17, 261n19 elitism: capital rule and, 218; cloning legal persons and, 66, 75; code masters and, 158, 162, 164, 175–77; coding land and, 8, 40–41, 75, 158, 164, 254n55; digital code and, 186; empire of law and, 2, 8; global code and, 133; gold coins and, 254n55; Goldman Sachs and, 175; Lehman Brothers and, 175; minting debt and, 85, 254n55; Roman law and, 132–33; WASPs and, 176 Elizabeth I, Queen of England, 32, 119 empire of law: arbitration and, 15, 18; bankruptcy and, 3, 13–14, 16, 21; capitalism and, 2, 4, 8, 10–14, 17–21, 238n44; coercive power and, 4, 7, 15–21, 239n60; collateral and, 3, 7, 11–13, 16, 21, 238n49; common law and, 5, 8; contracts and, 2–4, 7–8, 13, 15–16, 21, 238n48; convertibility and, 3–4, 11, 13, 15, 19; corporate law and, 3, 5, 8, 11, 13, 21, 238n54; courts and, 7–8, 12, 15–20; creditors and, 3, 13–16, 20; debt and, 3, 13–16, 20–21; derivatives and, 5, 8; durability and, 3–5, 11, 13–15, 19, 21; elephant curve and, 1, 8; elitism and, 2, 8; enforcement and, 2, 9, 12, 16–19, 239n60; enigma of capital and, 9–13; globalization and, 2; growth and, 1, 4, 8, 20, 235n10; inequality and, 1–3, 6, 21–22, 235n9, 240n69, 240n70; inheritance and, 238n48; intangible capital and, 13; investment and, 12, 14, 16; labor and, 2, 9–11, 237n37; law’s guiding hand and, 6–9; lawyers and, 3–4, 6, 8, 15, 19–20, 22, 165, 236n26; legal attributes and, 13–15; legal code and, 2–15, 19–22; legal entities and, 14; legal norms and, 16–17; legal structures and, 4, 6, 9, 18, 21; Marxism and, 2, 9–11, 22; monopolies and, 17; mortgages and, 13–15; patents and, 11; priority rights and, 13–14, 16, 18; private law and, 20–21; property and, 1–5, 11–14, 17, 19, 21, 238n44, 238n48, 238n50, 239n56, 240n68; reform and, 1; regulation and, 7; risk and, 14, 17; self-interest and, 6, 8–9, 18, 232, 236n18; shielding and, 3, 14, 20, 22; slavery and, 11–12, 237n38, 237n40; state power and, 4, 14–19; universality and, 3–4, 11, 13–14, 15, 19, 21; wealth and, 1–8, 12–14, 17–22 enclosure: capital rule and, 229; coding land and, 229; digital code and, 183, 203; intangible capital and, 117, 256n14; knowledge and, 35, 108–9, 115, 117, 131, 183; nature’s code and, 109–12, 115; property and, 29–35, 39, 229; trade secrets and, 131 Enclosure Acts, 29–30, 242n22 enforcement: capital rule and, 210, 220, 223; code masters and, 168, 180; contract, 2, 16, 203; digital code and, 187, 190, 203; empire of law and, 2, 9, 12, 16–19, 239n60; global code and, 134, 139–40, 147, 152, 154; International Court of Justice and, 125; law, 16–19, 125, 152, 154, 168, 180, 187, 220, 259n80; minting debt and, 88; priority rights and, 16; trade secrets and, 130; World Trade Organization (WTO) and, 125 Engels, Friedrich, 185 English law.

Panderer to Power
by Frederick Sheehan
Published 21 Oct 2009

Posen. 34 Kevin Warsh, “Hedge Funds and Systemic Risk: Perspectives on the President’s Working Group on Financial Markets,” Hearing of the House Financial Services Committee, July 11, 2007. 35 Ibid. 36 Randall S. Kroszner, “Analyzing and Assessing Banking Crises,” speech at the Federal Reserve Bank of San Francisco Conference on the Asian Financial Crisis Revisited, San Francisco (via videoconference), September 6, 2007. 37The Fed followed with a surprising announcement. It would “continue to accept a broad range of collateral for discount window loans, including home mortgages and related assets.” This was an extraordinary change on the part of the Fed.

…

Shaw & Company, 323 DeConcini, Dennis, 85 Deflation, 287–288, 359 de la Renta, Françoise, 75 de la Renta, Oscar, 75 Dell Computer Corporation, 130, 207, 216 Depression, deflation and, 285–286 Deregulation of banking, 99–100, 102 Derivatives, 111, 190 in 2007, 303 Congressional hearings on, 131 credit default swaps, 314 and fed funds rate, 130 Greenspan’s understanding of, 189–190, 343 held by commercial banks, 312 in late 1990s, 164–165 and LTCM failure, 183 mortgage securities, 273 and recession of early 1990s, 124–125 risk of, 131 synthetic CDOs, 313 Deutsche Bank, 300, 345 Dillon, Douglas, 26, 77 Dingell, John, 115 Discount rate, 1987 stock market crash and, 112–113 DJIA (see Dow Jones Industrial Average) Dollar(s): in 1980s, 72 and Asian financial crisis, 172–173 and gold standard, 22, 38, 41 and positive inflation, 288 recycled into Treasury securities, 309 shorting, 316–317 value of, 1–2, 5 as world’s reserve currency, 49 Dow 36,000 (James K. Glassman and Kevin A. Hassett), 198 Dow Jones Industrial Average (DJIA), 19, 29, 72 and 1987 stock market crash, 110–112 in 1999, 198 in 2000, 219 in 2009, 257 in mid–1970s, 43 Drexel Burnham, 80, 116, 117 Drexel Burnham Lambert, 117 Dunbar, Nicholas, 186 E Earnings growth: analysts’ predictions of, 199–200 stock prices vs., 175, 177–178, 194, 216 Eccles, Marriner, 20 Eckstein, Otto, 42, 60 Econometrics, 17, 40 Economic forecasts (in general), 10, 43 in 1995, 133 by Greenspan, 3, 6, 13, 16–17, 25, 43, 54–55, 97–98, 119 (See also Stock market analysts) Economic growth: and recovery from 1990s recession, 127 and types of inflation, 166 Economic power, struggle for, 364 Economic stimulation, through monetary policy, 121 Economics, 11–12, 96 “New Economics,” 26–27, 39, 121, 350 supply-side, 68–69 Economist, 195, 286, 299 Education, verbal inflation in, 63–64 Efficient market hypothesis, 26, 81, 81n.37, 112, 187, 318 Ely, Bert, 138 Employment Act (1946), 23 Enron Corporation, 183, 247–248, 284 Ertergun, Mica, 75 Ertegun, Ahmet, 75 E*TRADE, 212 Eveillard, Jean-Marie, 140 Excite@Home, 232 Exxon, 112 F Faber, Marc, 38–39 Fannie Mae Corporation, 266–272, 275, 279, 309, 310 Fatbrain.com, 174 FDIC (Federal Deposit and Insurance Commission), 78–79, 294 Fed funds rate, 368 and 1987 stock market crash, 113 in 1993, 162 in 1994, 128–130 in 1995, 136–137, 139–141, 160, 162 in 1996, 160 in 1997, 161, 162 in 1998, 187–189, 192 in 1999, 208 in 2000, 225 in 2001, 238, 239, 245, 246, 249, 258, 259 in 2002, 258–260 in 2003, 287 in 2004, 293 in 2007 and 2008, 338 and global crisis, 338 over the past two decades, 359 and recession of early 1990s, 122, 123, 125 Federal budget deficit, 77, 84, 113, 126 Federal Deposit and Insurance Commission (FDIC), 78–79, 294 Federal Home Loan Bank (FHLB), 86–87, 91 Federal Housing Authority (FHA), 272–273 Federal (Reserve) Open Market Committee (FOMC), 40, 344 and 1990s stock market bubble, 161–162, 170–172, 174–178, 192–194, 196, 200, 205–206, 212, 225, 285 1995 decisions of, 136–143 and 1998 rate cuts, 187–189 and 2000–2001 economic slowdown, 231–234, 238–245, 249 composition of, 367 and consumer debt‘, 251–257 Greenspan’s control of, 137 and LTCM failure, 184–186 and margin requirements, 220 and productivity claims, 157–160 rate changes by, 368 and recession of early 1990s, 122, 123, 128–130 and subprime market of 1990s, 166 Y2K discussions in, 210–211 Federal Reserve Act (1913), 367 Federal Reserve Board: and 1987 stock market crash, 112 Burns as chairman of, 13, 40, 66n.25 chairmen of, 362 and changes in CPI, 50 diminished influence of, 104 dissolution of, 359 Eccles, as chairman of, 20 economic growth mandate for, 23–24 and “the Great Impoverishment,” 358–359 Greenspan as chairman of, 104–107 Greenspan’s control of, 137–139 Greenspan’s early views of, 14, 28, 66n.25 Greenspan’s nomination hearing for, 95–102 and inflation of 1970s, 48–49 and inflation of late 1960s, 39–40 interest rates set by, 66 (See also Fed funds rate) and margin requirements (stock market), 104, 105, 161, 175, 219–220, 223, 286 Martin, as chairman of, 20, 40 McCabe, as chairman of, 20n.5 Miller, as chairman of, 66n.25 at mid-century, 20–22 and monetary base, 134, 216, 248 and money supply, 4, 351, 352, 362 Patman’s threats against, 65 power and prestige of, 115–116 and recession of early 1990s, 122–126, 128–132 Volcker as chairman of, 66, 82, 95 and Wall street collapse of 2008, 345 Federal Reserve System, 224, 367–368 Feldstein, Martin, 239 FHA (Federal Housing Authority), 272–273 FHA mortgages, 273, 277 FHLB (see Federal Home Loan Bank) Fidelity Investments, 130 15 Central Park West, 356–357 Financial activities: in the 1980s, 71–72 and commercial bank bailouts, 78–79 during conglomerate years, 33–36 innovation in, 124 junk bonds, 80–81 leveraged buyouts, 80 profits from, 3 Financial concentration, in banking industry, 100–101 Financial derivatives, description of, 109–112, 130–131, 276, 313–314 Financial institutions, Fed bailouts of, 115 The Financial Services Modernization Act (see GrammLeach-Bliley Act (1999)) Financial system: in the 1980s, 7 1994 deleveraging of, 128–129 1995 inflation of, 136–137 Proxmire’s fears for, 6 Financial Times, 192, 217, 242, 244, 313, 322, 328, 332, 345, 347 First Alliance Corporation, 274 Fixed-rate mortgages, 292 Fleet Financial, 130 FLEX-ARM mortgages, 289 FOMC (see Federal (Reserve) Open Market Committee) Forbes, Malcolm, 74 Ford, Gerald, 5, 47, 52–54, 69, 70 Ford Motor Company, 51, 246 Foreign buying: dollar supported by, 308–310 of mortgagebacked securities, 272 Fortune magazine, 3, 4, 13, 23, 24, 29, 34, 37, 51, 144, 191, 334, 349, 351 Frank, Barney, 268 Freddie Mac Corporation, 266–269, 272, 279, 309, 310, 347n.48 Freemarket economics, 15 Friedman, Milton, 21, 37, 42, 68, 288–289, 299, 354 Fritts, Steve, 294 FTSE (Financial Times Stock Exchange), 246 Fuld, Richard “Dick,” 274, 354 Futures Industry Association, 189–190 G Galbraith, James K., 327 Galbraith, John Kenneth, 66n.25, 361 Garment, Leonard, 31–32 Gates Commission, 36, 37 GDP (see Gross domestic product) Geithner, Timothy, 79, 277, 361 General Electric Corporation, 183, 364–365, 306 General Motors Corporation, 51, 112, 123, 127, 246 General Motors Acceptance Corporation, 306 GeoCities, 174 George Washington High School, 10 German central bank (Bundesbank), 49, 308–309, 351 Getz, Stan, 10 Glassman, James K., 198, 207, 243, 284–285 Glass-Steagall Act (1933), 101, 102, 275–276 Glenn, John, 85 Global Crossing, 248 “Global savings glut,” 310 TheGlobe.com, 191–192 Goebbels, Joseph, 218n.11 “Gold and Economic Freedom” (Alan Greenspan), 28–29, 45–46, 47, 115, 205, 286, 352, 362 Gold prices, 41, 66 Gold standard, 1, 5, 21–22, 27, 28–29, 38, 41, 47, 62, 115, 124, 305–306, 362–363, “gold exchange standard” (see also Bretton Woods), 22, 38, 41, 47, 49, 305–306, 362n.5 Goldberger, Paul, 357 Goldman Sachs, ix, 96, 174, 232, 272, 276, 283, 310, 321, 322, 347n.48, 354, 356 Gone with the Wind (Margaret Mitchell), 315 González, Henry, 115 Gordon, Robert J., 230 Gore, Al, 323 Government agency securities, 309–310 Gramlich, Edward “‘Ned,” 178, 188, 259–260 Gramm, Phil, 163, 217, 245, 322 GrammLeach-Bliley Act (1999), 275–277 Grant, Cary, 47, 57 Grant, James, 118, 125, 195, 314 Gray, Edwin, 91–93 Great Depression: Greenspan’s analysis of, 28–29, 205 and money supply, 352 “The Great Impoverishment,” 358–359 Greenspan, Alan: and 1987 stock market crash, 103–104, 112–114 and 1990s stock market bubble, 160–164, 170–178, 191–210, 219–225, 285–287 and 1990s subprime market, 164–166 and 1995 funds rate cuts, 139–141 and 1998 rate cuts, 187–189 and 2000–2001 economic slowdown, 224–225, 237–249 2007–2008 speaking tour of, 341–344 and analysts, consistent-bias theorem, 197, 199, 201 and analysts, upward bias of forecasts, 202, 203, 209, 232, 284 and (Wall Street) analysts, 29, 175, 177–178, 193, 194, 195, 196, 198, 199, 200, 201 n.35, 203, 204, 209, 218, 231n.16, 232, 233, 235, 239, 243, 244, 284 and asset inflation (vis-à-vis price inflation), 4, 16, 25, 28, 65, 106, 170, 171, 175, 176–177 awarded, American Hero of 2007, 329 awarded, Department of Defense Medal for Distinguished Public Service, 297 awarded, Enron Prize for Distinguished Service, 248, 284, 297 awarded, Knight Commander of the British Empire, 297 awarded, Order national de la Legion d’honneur, 297 awarded, Presidential Medal of Freedom 297 after retirement, 301–304 Americans’ feelings about, 104, 144, 164, 195, 203, 245, 243, 337–338 on asset inflation, 359 autobiography of, 154, 187, 303, 337–341, and bubbles, states he (and Federal Reserve) has and can pop bubbles, 128–129, 139–140, 161 and bubbles, states Federal Reserve cannot pop bubbles, 192–195, 203–205, 225, 228, 261, 285–286 on bubbles, 192, 203–204, 285, 349–350 campaign for Fed chairmanship, 82–83 debt, refers to as “wealth,” 2, 99, 107, 258, 260, 290 during Carter presidency, 60–67 character and personality of, 3, 14, 15, 27, 193, 211–213 and consumer debt, 254, 258, 261 and corporate management earnings bias, 235 control of FOMC/Federal Reserve by, 137–139 on Council of Economic Advisers, 5, 47, 50, 52–57 on credit default swaps, 315–316 and derivatives, 102–105, 110, 113, 128, 130–131, 182, 189–190, 206, 276, 312, 314, 343, 346 dissolution of Townsend Greenspan, 102 early life of, 2, 9–10 economic forecasts by, 3, 6, 13, 16–17, 25, 43, 54–55, 97–98, 119 education of, 3, 10–13, 59–60 and presidential election of 1980, 67–70 as Fed chairman, 6–7, 104–107 Fed nomination hearing for, 95–102 and financial institution bailouts, 115 “Gold and Economic Freedom,” 28–29, 205, 286, 352, (see additional pages under “Gold and Economic Freedom”) on gold standard, 362–363 and housing market, 254, 259–263 image presented by, 2, 52–53, 60, 61 infamous speeches of, 284–286, 289–299 on inflation, 4, 5, 45–46, 48 on investment, 350–352 legacy of, 365 and Lincoln Savings and Loan, 6–7, 85–93 on liquidity boom, 331 and LTCM failure, 181–187, 189 marriages of, 13, 57 and Mexico bailout, 135–136 Greenspan, Alan: (Cont.)

Samsung Rising: The Inside Story of the South Korean Giant That Set Out to Beat Apple and Conquer Tech
by Geoffrey Cain
Published 15 Mar 2020

One by one, currencies were falling off a cliff, from Thailand to Indonesia, wiping out the savings of farmers and workers and later prompting Indonesian students to rise up and topple their longtime dictator, Suharto. Harried American officials suspended trading on the New York Stock Exchange, reacting to its worst decline ever in a single day until then, as the contagion spread to Japan, Brazil, and Russia. Despite the “Asian financial crisis,” as it was called, Chairman Lee stubbornly insisted that Samsung become an automaker. “I’ve studied the automobile industry more than anyone else….There are concerns that we made a mistake in starting the automobile business, but I am confident that Samsung Motors, which will be launched in March 1998, will put these misunderstandings and fears to bed.”

…

Having slashed Samsung’s bureaucracy, the chairman’s empire was emerging nimbler, ready to focus on the businesses that mattered: mobile phones, televisions, LCD displays, lithium ion batteries for cellphones, and NAND flash memories—Samsung’s last investment, which later made advances in the iPod possible. “Think about it this way,” the chairman’s aide Hwang Young-key told me. “The Frankfurt Declaration, in 1993, was when the chairman laid down his vision. But the Asian financial crisis was his chance to execute it.” My Boss the Shit Kicker THREE FRANTIC SOUTH KOREAN executives showed up at Pete Skarzynski’s office in Richardson, Texas, in January 1998. “What do you need to double your plan for the year?” one asked. “We want you to grow six times.” A gregarious and talkative veteran of AT&T and Lucent Technologies who once did a stint in London debriefing teams of CIA officers on the telecommunications industry, Pete had joined Samsung a year earlier as senior vice president for sales and marketing at Samsung Telecommunications America.

The Powerful and the Damned: Private Diaries in Turbulent Times
by Lionel Barber
Published 5 Nov 2020

Davos Man (and they are largely men) has long been the FT’s natural audience. This is my second trip as editor and I’ve lined up meetings with the world’s top bankers, starting with Dick Fuld, chairman and CEO of Lehman Brothers. Fuld took over at Lehman in 1994 and is the longest-serving CEO on Wall Street. He’s survived mergers, spin-offs and the 1998 Asian financial crisis. A big man with jet-black hair and a beak, Fuld cuts an intimidating figure – maybe that’s why he is known as the Gorilla of Wall Street. My experience of seeing him in New York was almost always favourable. He was courteous and pleasant, once agreeing to chair the annual fund-raising dinner for the Knight-Bagehot fellowship programme at Columbia Journalism School for mid-career journalists.

…

(BBC Radio 4) 340–41 apartheid, South Africa 51, 52–3, 109, 229–30, 261 Apple (technology company) xi, 42, 137–8, 178, 204, 215 Arab Spring 55, 177, 210, 377 ArcelorMittal 262 Arlidge, John 42–3 Arm (semiconductor maker) 325, 325n artificial intelligence (AI) 214–15, 394, 439 Arup 305 Asian financial crisis (1998) 46, 71 Assange, Julian xv, 174–5 AstraZeneca 244, 263 Atkins, Ralph 61 Aung San Suu Kyi 231 austerity policies 154, 155, 203, 209, 210, 259, 273, 289, 319, 438 Aven, Petr 275 Axel Springer xv, 283, 288, 291–3, 295 Aznar, José María 154, 225 BaFin 405, 407 Baker III, James A. ix, 54, 86, 188, 233, 314–16 Baker, Steve 373 Balls, Ed 71, 136 bank/corporate sector bail outs 19, 22n, 37, 71, 72, 86n, 106, 109, 167, 172, 212, 435–6 Bank of England 19, 22n, 30, 70, 71, 76, 77, 106, 115, 128, 138, 167, 210, 212, 323, 327, 333, 365–6, 371 Bank of Italy 178 Bank of Scotland 19 Bannon, Steve 342, 348, 349n, 350, 366, 367, 379–80, 380n, 381, 381n Barber, Francesca (daughter) 51, 173 Barber, Frank (father) 4, 7, 441 Barber, Lionel: cycling, enthusiasm for 35, 216, 218–19, 235, 243–4, 272, 382, 402; Dulwich College, scholarship boy at 138, 262; European University Institute, Fiesole, sabbatical at 178; family and see individual family member name; Financial Times career see Financial Times; future/post-Covid-19 world, on five potential developments worth considering in 436–41; Institute of Governmental Studies, Berkeley, sabbatical at 157, 207; interviews see individual interviewee name; journalism as a vocation, belief in 4, 340, 441; journalism career, origins of 4, 7, 340; Laurence Stern fellow, Washington Post 10; lectures 134, 172–3, 200, 219, 264; Légion d’Honneur 326–7, 341; life after editorship of FT 10, 432, 433–4; Oxford Union debate 41, 41n; Oxford University 7, 9, 217, 340, 418; overseas trips see individual nation name; rugby and 9, 17, 203, 424, 428; Wimbledon Championships, attends 33–4, 118, 211–12, 242n Barber, Tony (brother) 353, 417, 419 Barber, Victoria (wife) 7, 8, 33–4, 37, 39, 48–9, 56, 57, 82, 88, 98, 107, 110, 135, 136–7, 140, 143, 151, 155–6, 168–9, 171, 178, 204, 206, 208, 211, 222, 225, 243, 248, 250, 264, 284, 292, 296, 300, 304, 322, 360, 409, 411, 422, 431 Barclay, Aidan 358, 358n Barclays Bank 74–5, 101, 121, 121n, 122, 167–8, 211–12, 285–6 Barker, Alex 323, 326, 406, 426 Barroso, José Manuel 83–4, 84n BBC 28, 43, 56, 65, 70, 121n, 149, 162, 216–17, 216n, 217n, 289, 317, 318, 332, 340; BBC Trust 217, 217n Bear Stearns 24, 25, 85, 87–8, 93–4, 98, 104 Becker, Boris 242–3, 242n Bell, David ix, 3–5, 6, 12, 28, 189, 220–21, 239, 277, 294, 430 Bell, Tim 316, 430 Benoit, Bertrand 95, 96 Berkley, Bill 186 Berlusconi, Silvio 196, 204–5 Bermann, Sylvie x, 341 Bernanke, Ben 94–5 Bezos, Jeff 60n, 189, 215, 276, 282, 398 Bharatiya Janata Party (BJP) 244, 246 Bhutto, Benazir 41, 41n, 170, 171 Big Bang deregulation, City of London 429 Big Shorts 134, 134n Bild 283, 292 Black, Conrad 197, 227 Blackhurst, Chris 192 Blackstone xiv, 46–7, 103–4, 118–20, 333, 377 Blair, Tony ix, 10–12, 11n, 13, 41, 47, 64, 64n, 65, 67, 68, 68n, 71, 89n, 98, 125, 138, 142, 154, 157, 158, 164, 204, 207–9, 286, 316, 317, 333, 339, 356, 376, 414, 426, 438; ‘Inside Blair Inc’, FT feature 142 Blankfein, Lloyd ix, xiv–xv, 24, 24n, 87, 112, 166–7 Blas, Javier 286 Blavatnik, Len 319, 377, 377n Bloomberg 25, 35, 212, 217, 218, 258, 283, 286, 298 Bloomberg, Michael 217–18 Blue, Carol 57 Blumenthal, Sidney 206 BNP Paribas 69 Bogler, Dan 26, 26n, 147–8 Bokhari, Farhan 170–71 Bono, Caspar de 118 Bono, Gillian de 104 Botín, Ana 210, 210n, 320 Botswana 51, 52 Bo Xilai 206, 207 Bozorgmehr, Najmeh 248 BP 5n, 34–5, 43, 58, 59, 239, 409; Browne resigns from 58–9, 59n; Deepwater Horizon explosion (2010) 5n, 155, 160, 197, 409; Dudley as CEO 163, 239; Prudhoe Bay oil field 34–5; safety record in the US 5n, 34–5, 43, 59, 155, 160, 197, 409; Texas City terminal explosion (2005) 34–5 Bracken, Brendan 24–5n Bracken House 115, 373, 391, 404, 411 Bracken Room 24, 24n, 25, 101, 398 Bradlee, Ben 10, 32, 35–6, 276, 432 Brailsford, David 216, 216n Branson, Richard 204, 376 Brauchli, Marcus 60, 60n, 92–3, 289 Brazil 140, 142–3 Brexit xv, xvi, 58, 97, 153, 267, 273–4, 290, 332, 339, 388, 395, 419, 432, 435; Article 50 of the Treaty on European Union 323, 323–4n, 331, 331n, 381; China and 374, 375; General Election (2017) and 354; globalisation and 335; inequality and xiii; Japan and 391–2; leaving negotiations 324, 327–8, 334, 339, 343, 344, 345–6, 347, 349–50, 354, 362, 363–4, 365–6, 373, 381, 399–400, 402, 406, 410, 411, 412, 413, 414–15, 420–21, 420n, 422, 423–5, 426, 427, 429; national renewal, as opportunity for 437–8; ‘People’s Vote’/second referendum 322, 323, 341, 354, 389, 399, 406, 413, 424, 426; populism in Europe and 353; Project Fear 318–19; prorogation of Parliament 423–5; referendum 228, 308–10, 312–23, 325, 340–41, 382, 383, 394n; Trump and 346, 347; Vote Leave campaign 310, 312–13, 318, 320–21, 322, 323, 394n British Press Awards 92, 379 Brittan, Leon 151, 326 Brooks, Rebekah 162, 223, 324n Browne, John 58–9, 59n, 163, 319 Brown, Gordon ix, 11–12, 11n, 13, 47–50, 64–5, 64n, 69, 70, 71, 92, 97, 98, 101, 106, 109, 117, 122, 123, 128, 136, 143–4, 148, 150, 157, 162, 164, 173–4, 244, 273, 286, 414, 435, 438 Brown, Tina 6–7, 99 Bruni, Carla 91–2 Brunswick 42, 153n BskyB 63, 162, 267–8 Buckley, Neil 89–90 Buck, Tobias 107, 226 Buffett, Warren 228, 352, 402 Bundesbank 179, 368, 415–16 Burberry 42, 75 Burma 169 Burns, Bill 417 Burns, Jimmy 20–21 Burns, Nick 172, 173 Buscombe, Baroness 139, 165–6 Bush, George H.

The Invisible Hands: Top Hedge Fund Traders on Bubbles, Crashes, and Real Money
by Steven Drobny
Published 18 Mar 2010

And if the underlying hypotheses do not materialize, we get out, even if the trade is making money. Making money for the wrong reasons means you are rolling the dice, not trading. We are not here to gamble. Trades have to be making money for the reasons that we have identified and have the proper risk versus reward. The Asian financial crisis theme in 1998-1999 is a good example. The underlying premise was that a lack of transparency would stop the flow of funds into Asia, and we shorted the Hang Seng. The trade started working in our favor, but funds did not stop flowing into Asia, even though transparency did not increase, so we got out of the trade.

…

We are very good at looking out at the periphery for trade ideas, not getting stuck at the center of a view or theme. You mentioned you have a one-year time horizon for trades. How far ahead do you look in developing your themes? Time horizons on themes vary considerably, from maybe six months to five years. We look at trends. For example, the Asian financial crisis theme lasted about six months, whereas the theme around commodity inelasticity of demand and supply has been on since inception. But the trades within a theme are all structured around a one-year investment horizon, both economically and technically. We look at valuations and targets based on one-year economic values, and our technical price model is also based on a one-year horizon.

The White Man's Burden: Why the West's Efforts to Aid the Rest Have Done So Much Ill and So Little Good
by William Easterly
Published 1 Mar 2006

It helped South Korea and Thailand with financial squeezes in the 1980s, after which they had rapid growth. The IMF bailout of Mexico in 1994–1995, although much criticized at the time, worked well. The Mexican government repaid the loans in advance, and economic growth resumed. Most recently, the IMF handled the 1997–1998 East Asian financial crisis with some success, especially, again, in South Korea. The IMF recruits talented Ph.D.’s in economics, who observe strong norms of professional analysis. It has an outstanding research department, as well as other specialized departments that provide valuable technical advice to poor countries on their fiscal and financial systems.

…

Post-program inflation under the IMF was higher than the program targets on average in the 1990s for a worldwide sample of countries.13 Conversely, what if people holding domestic currency suddenly panicked and wanted to turn it in for the central bank’s dollars? It’s not always clear why they panic, but it happens. International reserves would drop precipitously for reasons unrelated to government budget deficits. Many economists think that this is a good description of the East Asian financial crisis of 1997–1998. East Asian countries were not running large government deficits, yet they suffered currency panics and disappearing foreign exchange reserves all the same. Another loophole in the relationship between budget deficits and foreign exchange reserves is that the government finances its deficit not only with central bank credit but also with foreign debt.

Making Globalization Work
by Joseph E. Stiglitz
Published 16 Sep 2006

That book chronicled much of what I had seen during the time I was at the Bank and in the White House, where I served from 1993 to 1997 as a member and then chairman of the Council of Economic Advisers under President William Jefferson Clinton. Those were tumultuous years; the 1997–98 East Asian financial crisis pushed some of the most successful of the developing countries into unprecedented recessions and depressions. In the former Soviet Union, the transition from communism to the market, which was supposed to bring new prosperity, instead brought a drop in income and living standards by as much as 70 percent.

…

Discontent with the World Bank and the IMF has manifested itself also in the creation of alternative institutions. In chapter 9, I described the attempt by Japan in 1997 to establish an Asian Monetary Fund, with $100 billion—partly motivated by dissatisfaction with the way that the IMF was dealing with the Asian financial crisis. The United States and the IMF managed to stop this initiative—as much as they believe in competition in the market place, they were appalled at the idea of competition in providing assistance for countries in need, or in providing advice on how to manage one’s economy. In February 2007, Venezuela, enriched by the high oil prices that had followed the Iraq War, joined several other countries, including Argentina, Bolivia, Ecuador, and Brazil, to found a new bank, the Bank of the South.

Shutdown: How COVID Shook the World's Economy
by Adam Tooze
Published 15 Nov 2021

Abe, Shinzo, 73 Abrams, Stacy, 276 Africa, 69, 163, 251–52, 257–58, 261–65 airline industry, 72, 97–98, 152–53 Algeria, 161 American Chamber of Commerce in China, 57 American Families Plan, 289, 299–300 American Jobs Plan, 296 American Rescue Plan, 289, 299–300, 302 Angola, 156, 161, 256, 258–59 Anthropocene, 22–23, 47, 189, 292 Argentina, 156, 158, 163, 171, 260, 265 Armenia, 267 artificial intelligence (AI), 235 Asian financial crisis (1990s), 3 Asian flu pandemic (1957–1958), 45 Asian Infrastructure Investment Bank (AIIB), 206 Association of Southeast Asian Nations (ASEAN), 206–8 AstraZeneca, 238–39, 242, 245–48, 251, 286 Australia, 33, 133, 138, 194–95, 206, 212, 238, 264, 286 Austria, 72, 104, 186 automotive industry, 54, 85–86, 204, 212 AXA Investment Managers, 187 Aylward, Bruce, 244 Azar, Alex, 75 Azerbaijan, 267 Bailey, Andrew, 123–24, 130 Bangladesh, 86, 88, 102–3, 208–9 Bank for International Settlements (BIS), 123, 160 Bank of England, 76, 123–25, 128, 130, 144, 144, 147, 278 Bank of Indonesia, 164 Bank of Japan, 122, 125–26, 128, 144, 144, 160, 165 Barr, William, 218–19 Barrett, Amy Coney, 223 Barrett, David, 228 Basic Law, 198 Bavaria, 67 Beck, Ulrich, 10–11, 35, 292–93 Belgium, 233, 260 Berlusconi, Silvio, 285 Bernanke, Ben, 120, 122, 146, 149, 272, 291 Better Utilization of Investments Leading to Development Act (or BUILD Act), 263 Biden, Joe: Build Back Better program, 12; and climate agenda, 194; election and inauguration of, 1, 21, 229, 267, 269–70, 271, 287–89; initial actions as president, 288–89; and lessons of 2020, 295–97, 299–301; and political polarization in U.S., 224–27, 254, 271, 275 Bill & Melinda Gates Foundation, 32, 33, 236, 237, 245 biological warfare and terrorism, 17, 46, 68 BioNTech, 234, 238–40, 244, 246, 248–49 biotechnology revolution, 235–36 Birx, Deborah, 90–91 Bismarckian Germany, 139, 293 Black Lives Matter, 7, 36, 216–17, 219, 240–41 BlackRock, 117, 120, 124, 146, 202, 228 Blair, Tony, 3, 17–18 Blanchard, Oliver, 143, 290 Blue Dot Network, 264 Bollywood, 100 Bolsanaro, Jair, 11, 77, 80, 89–90, 171, 173, 197, 248–49, 265–66 Bourla, Albert, 67, 240–41 Brainard, Lael, 121 Brazil: and Chinese pandemic aid, 197; and debt relief programs, 265–66, 268; and emerging market debt crises, 159, 164, 165, 171–73; and financial market turmoil, 125; and fiscal responses to pandemic, 133; and global market stabilization efforts, 122; and global vaccine rollout, 248–49; and pandemic denialism, 77; and second wave of pandemic, 292; size of economy, 155–56; and virus variants, 266; and WHO funding, 33 Bretton Woods system, 15 Brexit, 2, 3, 6, 69, 276–79, 288, 296 Bridgewater Associates, 201–2, 218 Britain, 39, 101, 233.

…

See also green agenda Clinton, Bill, 46, 287, 295, 300 Clinton, Hillary, 206, 288 Coalition for Epidemic Preparedness Innovations (CEPI), 237, 243 Cold War, 1, 15, 18–19, 203 Colombia, 164, 169, 170 Comando Vermelho (Red Command), 87 Commercial Paper Funding Facility (CPFF), 129 Common Framework for Debt Treatments Beyond the DSSI, 260 Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), 206–7, 209–10 Confindustria, 86, 284–85 Conservative Party (UK), 141 Conte, Giuseppe, 71, 135, 284 contract labor, 104, 154 COP26 meeting, 2, 190–91 Corbyn, Jeremy, 11, 146 Coronavirus Aid, Relief, and Economic Security Act (CARES Act), 131, 135, 136–41, 151–53, 221–22, 270–75, 289, 299 Correa, Rafael, 168 Costa, António, 134 Côte d’Ivoire, 268 COVAX, 243, 246, 249, 251 COVID-19 Tools Accelerator, 243 Crashed (Tooze), 23 Crédit Agricole, 187 credit default swaps, 165 Croce, Benedetto, 24 cruise industry, 106–7, 153 Cruz, Ted, 162, 219, 253 Cuba, 30, 88 Cuomo, Andrew, 35, 83, 98 currency values, 70, 155–56, 170 Czech Republic, 196, 233 Dalio, Ray, 201, 202–3 De Blasio, Bill, 80, 83 Debt Service Suspension Initiative (DSSI), 162–63, 252, 254, 256–60, 261, 264, 268, 303 “debt trap,” 256 Defense Production Act, 87, 245, 289 deflation, 145, 148 democracy and democratic institutions, 21, 45, 283–84, 287 Democratic Party, 16, 90, 139, 216–17, 221–22, 270–71, 275–76, 290, 299–300 Democratic Republic of the Congo, 33 Denmark, 137 Department of Health and Human Services (HHS), 75 Deutsche Bank, 115 Deutsche Telekom, 212 developing countries, 72, 156–61, 254, 255, 261, 263–64 Development Finance Institute Canada (DFIC), 263 Dimon, Jamie, 217, 228 disease eradication programs, 32–34 Dominican Republic, 9 Dornbusch, Rudiger, 15, 147 Draghi, Mario, 130, 178, 182, 285, 286, 288 Dutch State Treasury Agency, 283 Duterte, Rodrigo, 11, 83 East Africa, 102, 189 East Asia, 5, 233 East Asian financial crisis (1997), 156 Eastern Europe, 190, 280 East-West conflict narrative, 68 Ebola, 30–31, 35, 46, 52, 236, 247 Ecuador, 8, 71, 161, 163–64, 166–67, 168, 265, 268 Egypt, 83–84, 165 electronics manufacturing industry, 54, 60–61 emerging markets, 13, 116–17, 155–72, 265–67, 294, 302 energy sector, 79.

The Bank That Lived a Little: Barclays in the Age of the Very Free Market
by Philip Augar
Published 4 Jul 2018

Countries were graded on a scale according to economic and political risk, which in this case led them to take a more cautious line on Russia than Barclays Capital wanted. Taylor opened the meeting up. There was one strong dissenter to Barclays Capital’s request: Christopher Haviland, a senior executive in Barclays’ international banking business and an independent-minded banker who had just witnessed the Asian financial crisis of 1997 at first hand. He was convinced that it would spread to Russia and was firmly set against any increase in the limit. Forster’s boss, Alan Brown, another Barclays’ veteran, had just also become a vice-chairman of Barclays Capital. He suggested a compromise, capping the Russia country limit at £500 million, more than double the existing limit but far short of the £1 billion that the Barclays Capital team were requesting.

…

Why had they been hired if they were not going to be allowed to take advantage of the wonderful prospects for fixed income investors in Russia and the other emerging markets? RUSSIAN DOLLS As it turned out, the traders were wrong. Barclays’ conservatism proved well judged and the investment bankers’ enthusiasm reckless. The Asian financial crisis of 1997 spilled over into Russia in exactly the way Haviland had feared. On 17 August 1998, the Russian government devalued the rouble, defaulted on its debt obligations and abandoned support for its currency altogether on 2 September. In Barclays’ group risk, Brown, Forster and colleagues were watching developments calmly.

The Future Is Asian
by Parag Khanna
Published 5 Feb 2019

Pakistan also faced instability on its western border as the chaos of Afghanistan’s civil war resulted in the radical Taliban movement’s rise from the refugee camps of Peshawar to the takeover of Afghanistan in 1994, after which it began to set its sights on spreading Islamist revolution by harboring terrorist groups such as Al Qaeda. In the aftermath of the Asian financial crisis, the region’s economic conditions recovered in the late 1990s and 2000s thanks to increased outsourcing of manufacturing by Western companies and accelerated trade integration. By 2004, Asia’s intraregional trade surpassed its trade with developed countries, insulating the region’s economies from the demand shock of the 2007 Western financial crisis.

…

While these are either within the Gulf Cooperation Council (GCC) or within East Asia, the number of daily long-distance connections between Asian subregions is growing rapidly each year. Fitting the Pieces Together Today the Asian megasystem is coming together like an enormous jigsaw puzzle of dozens of large and small pieces, with economic complementarities creating a whole much greater than the sum of its parts. Since the 1997–98 Asian financial crisis, Asian countries’ trade growth with one another advanced at a faster pace than the world economy as a whole. By the time of the 2007–08 Western financial crisis, intra-Asian trade was so robust that it cushioned the shock of falling exports to the United States and European Union. The “global financial crisis” was not actually global.

The Billionaire Raj: A Journey Through India's New Gilded Age
by James Crabtree
Published 2 Jul 2018

In 2017, ten years after the financial crisis began, India’s banks were left holding at least $150 billion worth of bad assets.23 This cycle of boom and bust followed a pattern familiar from other emerging economies, as when tycoons in Malaysia and Thailand gorged on cheap credit and splurged on speculative investments in the run-in to the 1997 Asian financial crisis. But India’s wider story was still global. In America and Britain, two decades of hyper-globalization ultimately overwhelmed the financial system, taking down once-mighty banks and insurers in New York and London. In India, the same surging global forces swamped the industrial system instead, battering the conglomerates that had long formed the backbone of the industrial economy.

…

His PhD thesis at MIT, entitled “Essays on Banking,”12 featured a trio of papers casting doubt on the idea of perfectly efficient financial markets, the last of which looked directly at the ties between corporations, lenders, and debt. In his early academic career he went on to explore a range of other unfashionable corners of the financial sector, from bond pricing and bank credit to capital structures. Rajan had an interest in corruption, too. After the late 1990s’ Asian financial crisis, he published a paper explaining why countries with “relationship-based systems” of investment, like Malaysia and Thailand—meaning those that suffered from rampant crony capitalism—were especially prone to financial collapse.13 Then, at the International Monetary Fund, where he was made the youngest-ever head of the research department, there was his 2005 speech highlighting the dangers posed by risk-taking financiers and predicting much of the coming global financial crisis.14 Yet for all this, Rajan told me he still had no real sense of the scale of India’s debt crisis when he arrived at the Reserve Bank of India.

The End of Loser Liberalism: Making Markets Progressive
by Dean Baker
Published 1 Jan 2011

In the first half of the Clinton administration, to some extent, this process played out as the textbook would dictate, but the tables turned when Robert Rubin became Treasury Secretary in January 1995. Rubin was openly committed to a strong dollar. When he first took office this may have just been words, but in 1997, during the East Asian financial crisis, he had the opportunity to put some serious muscle behind them. The United States used its de-facto control of the International Monetary Fund (IMF) to impose harsh conditions on the crisis countries. The IMF effectively acted as an enforcement agent for the banks that had made loans to the companies and countries in the region.

Angrynomics
by Eric Lonergan and Mark Blyth
Published 15 Jun 2020

AfD (Alternative für Deutschland) 114 Afghanistan 6 aging population 10, 13, 14, 95, 106–11 and consumption 109–10 and government bonds 138–9, 152 and inequality 56–7, 58, 107–10 and inter-generational transfer 106–107 and poverty 57, 107 as stressor 57, 91, 106, 110, 111, 116, 118 and technological change 90, 106, 122 AIG 85, 124 Amazon 96, 98, 104, 142, 143–4 Anderson, Elizabeth 176 anger 2–3, 7–9, 10, 11–12, 159, 161 misplaced 13 as opportunity 16 and play 153 private see private anger public see public anger reducing see calming strategies anxiety/stress 9, 13–14, 50, 53, 55–6, 88, 118, 161 and cognitive effort 89–90, 91 and job insecurity 95–6 three causes of 91 and uncertainty see uncertainty Apple 96, 142, 143 Aristotle 59, 153 artificial intelligence (AI) 14, 102–106, 142 Asian financial crisis (1998) 77, 140 asset ownership 130–31, 133, 136, 140–41 Atkinson, Tony 80, 173 austerity policies 2–3, 6, 15, 34–5, 41, 48, 84 and euro crisis 44–5 and low interest rates 135 Australia 125 Austria 3 baby boomers 107–108, 110, 111, 175 Bank of England 84, 103, 120, 145, 148 TFS scheme 149–50, 166 banks 1, 6, 15, 33–5, 42, 44, 48, 145–50 and capital/liquidity ratios 126 and direct support for consumption 145–8 and dual interest rates 149–50 and economic models 3, 4 failure of 119–21, 122 and helicopter money 131, 146 independence of 78, 79 and leverage see financial leverage and problem of low interest rates 120–21, 122, 131, 135 regulations on 125–6, 127, 129, 132 restrictions on 72, 77 see also financial crisis (2008) Beck, Aaron 171–2 Bernanke, Ben 6, 148 Biden, Joe 106 billionaires 4 Bitcoin 102, 103 Blackrock 165 blockchain technology 14, 103 Blyth, Mark 172, 175 bonuses 81, 85, 124 Brazil 11, 127 Brexit 4, 7, 11, 22, 24, 37, 38, 55, 117, 154 and austerity policies 41, 45 and immigration 111, 112, 114, 116 and job insecurity 100–101 Brill, Stephen 175 Britain (UK) 3, 38, 119, 155, 162, 164 aging population in 107, 110 austerity policies in 41 dual interest rates in 149–50 and EU see Brexit fear of immigration in 27 gig economy in 100 and government bonds 135, 140 government spending in 71 immigration in 111, 112, 114, 115–16 inequality in 6 interest rates in 145 nationalism in 23 Thatcherism in 75, 76 Brittan, Samuel 151 Brynjolfsson, Erik 173 budget deficits 71, 75 Buffett, Warren 130 calming strategies 12, 15, 118, 122, 123–57 and data dividend see data dividend and direct support for consumption 145–8 and dual interest rates 149–50 and economic diversity 153–6 and inequality see inequality, strategies to reduce and national wealth fund see NWF and regulations on banks 125–6, 127, 129, 132 and sustainable investment see sustainable investment Canada 125 cancer 53, 87, 88, 106 capital 4 cost of 137, 139, 153 and dispersion 97–98 as “fictitious” commodity 65 formation, rate of 108 global 40, 42, 43, 49, 50, 58 and labour 50, 60, 69, 72 and neoliberalism 75, 76, 77, 79 protection of, following financial crisis 85 versus capital 97, 98 Capital in the Twenty-First Century (Piketty) 49, 108–10 capital/liquidity ratios 126 capitalism 64–5 and commodities 65–6 capitalism as computer 11, 61–72 fixing 124–25 hardware of 62–3, 117 software of 63–4, 68–71 and unemployment/inequality 66–7 version 1.0 68–9 version 1.0 crash 64, 66, 67, 71, 73, 83, 118 version 2.0 69–73, 74, 75, 76, 116 version 2.0 crash 70–71, 73, 83–4, 118 version 3.0 74–80, 98–9, 117, 125, 140–41 version 3.0 crash 116 car industry 100–101 caring industry 104 Case, Anne 54, 176 centrism, political 38, 48, 118–19, 121, 160–61, 162 CEOs (chief executive officers) 4 Chamberlain, Joseph 66 Chile 3 China 42, 63, 64, 78, 93, 137, 151, 156 Citibank 81, 82 cities 55, 56 climate change 104, 111, 121, 129, 131, 153, 159–60 and investment see sustainable investment Clinton, Hillary 160 Coggan, Philip 172 cognitive effort 89–90, 91 Cold War 28, 48 ending/legacy of 5, 23, 26, 29, 30, 37, 116 communism 68, 71 competition/competitiveness 47, 65, 94, 95, 111, 116, 125 and technology 105 see also product market competition computer analogy see capitalism as computer constrained volatility 85 consumption, direct support for 145–8, 150–51, 160 consumption, distribution of 52–3, 58 Corbyn, Jeremy 119 corporations 6, 20, 57 and competition 95, 96 and data dividend see data dividend corruption 8, 29, 61, 130 Covid-19 163 culture 160 Czech Republic 146, 147, 155 data dividend 141–4, 160, 162 and monopolies 142, 143, 144 and privacy 141–2 and property rights 142–3 de-unionization 50, 95, 99 Deaton, Angus 54, 176 debt 75, 84, 120, 132, 145, 150 and demography 109, 111, 131 government 136–7, 151, 152 net 136 deflation 65, 69, 120, 128, 144, 148 demand management 44–5, 47, 126–7 democracy 16, 25, 29, 39, 40, 104, 117, 130 and markets 68 demography see aging population Denmark 64, 164 depression see recession deregulation 28, 40, 48, 50, 58, 75 and inflation 127 as micro-stressor 94, 96, 99, 101, 118 DGSE (dynamic stochastic general equilibrium) models 3–4 Doughnut Economics (Raworth) 131–2, 165 dual interest rates 131–2, 149–50, 174 Dublin (Ireland) 17–18 economic change 9–10, 29, 43, 153 see also fiscal reform; recession economic growth 2, 6, 41, 69, 71, 86 and demography 108–10 and immigration 116 and inequality 76, 79–80 and quality of jobs/wages 46, 47, 85 economic ideology 28 economics 12, 54–5 shortcomings of models 3–5, 6, 7 education 24, 53, 58, 135, 141 tuition fees/student loans 107, 111 electoral politics 5–6, 104 and demographics 107, 110 and tribalism 13, 22, 24–7, 29, 30, 31 electric vehicles 153 elites 2–3, 5, 6, 7, 9, 37 in cities 55, 56 and corruption 8, 29 and ethical norms 20 and financial crisis 43–4 manipulation of tribal identity by 22, 24, 61, 116, 161 policy failures of 48–9 Engbom, Niklas 175–6 environmental degradation 29, 161 see also climate change environmental and social governance 168 ethical norms 20 euro crisis 7, 37, 44, 77, 144 Europe 34, 42, 137, 140 inequality in 41, 53, 56, 58 migrant crisis in 7 tribalism in 30 European Central Bank (ECB) 34, 84, 146, 155, 164–5 TLTRO programme 147–8, 166 European Union (EU) 22, 33, 34–5, 37, 43, 119 austerity policies in 2, 36, 48 and financial crisis (2008) 82 micro-stressors in 47–8 and nationalism 154–6 and neoliberalism 76, 77 unemployment in 44–5 see also Brexit eurozone 45, 65, 83, 148, 151, 155 exchange rates 72, 134 Extinction Rebellion 8, 131–2 Facebook 27, 96, 98, 142, 143 fake news 26 Farage, Nigel 17, 161 Farmer, Roger 174 fascism 45–6, 66, 67–8, 71 fear 16, 17, 94, 113, 117, 150, 161 and media 26, 27 and politics 7, 45 financial crisis (2008) 1–2, 6, 26, 29, 30, 39, 48, 127, 163 and automation 102–103 and bail-out of banks 84 fragility of recovery from 46, 85, 89, 121 further reading on 172–3 and globalized financial system 84 and growth of populism 85 and inequality 79–80 and low interest rates 135 and regulation of banks 129 financial leverage 72, 81–3, 85, 99, 126, 157 and credit crunch 83 and interest rates 81–2 financial market deregulation 77 fiscal councils 150–51 fiscal reform 15, 150–53, 162 Fischer, Stan 148, 165 Florence (Italy) 87–8 foodbanks 6, 53 football fans 8, 19, 56 France 2, 3, 20, 55, 56, 71, 101, 154, 156 and NWF 135 Franklin, Benjamin 87 free markets 30, 69, 118 Friedman, Milton 118 full employment 40, 47, 60, 66, 71–2, 79, 85, 175 and inflation 73–4, 76 without inflation 121, 125, 126 future 101–102, 111 Garcia family, parable of 33–5, 43 Gates, Bill 130 GDP (gross domestic product) 5, 44, 76, 79, 100–101, 106, 151, 152 and NWF 135, 141 Germany 3, 11, 34, 38, 42, 62–3, 66, 151, 154, 156, 167 and migrant crisis 111, 113–14 and NWF 135 Gibley, Bruce Cannon 175 gig economy 94, 98, 99–100 global economy 12, 39–40, 50, 53, 58, 133 and nationalism 154 and neoliberalism 77 globalization 5, 39, 41, 42–3, 48, 77, 117 hyper- 40 and inequality 80 and inflation 127 and insecurity 101 and labour market 42, 43 and nationalism 154 Gold Standard 65, 67 Google 96, 98, 104, 142 government bonds 72, 131, 133, 135, 137, 138–9, 152 as insurance policies 139, 140 government borrowing 134–5, 137, 152–3 and cost of capital 137, 139, 153 and low inflation 128, 138–40, 150 and NWF 136–137, 138–40 Great Depression 40, 44, 66, 69, 120 Great Moderation 6, 120 Greece 35, 38, 44, 45, 106–07, 110, 144 green revolution see sustainable investment gross domestic product see GDP Guilluy, Christophe 55 Gulf States 133, 134 Hayek, Friedrich 118 healthcare 47, 53–4, 58, 123–4, 135, 139 and access to data 141–2 and NWF 141 and uncertainty/probability 92 hedge fund managers 4 helicopter money 131, 146, 166 Hildebrand, Philipp 165 Hong Kong 2–3, 140, 164 Hopkin, Jonathan 172 Hopkins, Ellen 123 housing 71, 113, 114, 135 Hungary 11, 23, 30 Iceland 1–2, 8, 20 immigration 5, 7, 26, 27, 111–17, 164 economic effects of 115–16 and housing/training 113, 114 and income distribution 112, 113, 114–15 and manipulation by media/politicians 111, 115 as stressor 113, 115 and technological change 106 and tribalism 95, 111, 112, 113 income see wages income distribution 43, 50, 51 and Keynesian economics 71 and neoliberalism 80, 81 independent fiscal councils 150–51 India 23, 127 individualism 29, 154 Indonesia 3 inequality 3, 4, 6, 15, 29, 30, 40–41, 43, 49–57, 58, 61, 79, 118 difficulties in measuring 50–53 and distribution of income/consumption 53–4 and financial crisis (2008) 79–80, 83, 85 further reading on 173, 176 intergenerational 56–7, 107–10 and populism 54–5 and uncertainty 49–50 inequality, strategies to reduce 121–2, 129–31, 132, 162 asset ownership 130–31, 133, 136, 140–41 and data dividend 141–4 National Wealth Fund see NWF optimal/effective 132–3 and universal basic income (UBI) 141, 144 wealth tax 130, 132 inflation 5, 40, 51–2, 53, 69 death of 126, 128 and full employment 73–4, 76, 121, 122, 125 and global financial markets 78 and interest rates 75, 81–2, 120 low see low inflation and oil prices 96–7 and printing money 78, 128, 145 and raising taxes 129 and recession 144–5 and regulation of banks 125–6, 127, 132 and stagflation 40, 74, 120, 128 inheritance 132, 133, 160 national 136 innovation see technological change insurance industry 93 interest rates 15, 33–4, 75, 81–2, 165–6 dual, and sustainable investment 131–2, 149–50 low, problem of 120–21, 122, 131, 132, 135, 146–8, 152 negative, problem of 15, 148, 149, 150 and spending 147 internet 25 investment spending 40, 60, 69 and future expectations 103 and global capital flows 77–8 and inflation 74 public sector 67, 70–71 sustainable see sustainable investment IRA (Irish Republican Army) 17 Iraq 6 Ireland 17–18, 23, 24 Islam 27 Italy 35, 37, 38, 39, 44, 66, 71, 87–8, 144, 156, 167 aging population in 110 poverty in 47 tribalism in 45–6 Japan 26, 84, 110, 137, 140, 148 job security/insecurity 34, 50, 56, 61, 94, 95–6, 100–101 and technology 102 Kalecki, Michał 60–61, 73–5, 120, 121, 127 Keynes, John Maynard/Keynesian economics 60, 66–7, 68–70, 92, 103, 118, 127, 151 General Theory of Employment, Interest and Money 66, 175 and inflation 67, 69, 128 labour market 35, 40–41, 42, 43, 44 and automation 102–106 deregulation 50, 95, 99, 122, 127 dispersion in 98–9 and full employment see full employment and immigration 115–16 in Keynesian system 71–2 and labour as commodity 59, 60, 65–6, 73, 85 and protectionism 59–61, 66 and secular stability 125, 126 and training 62–3 see also wages Lagarde, Christine 167 Lerner, Abba 118 libertarianism 63 Lonergan, Eric 174 Los Indignatios 85 low inflation 79, 134, 157 and full employment/secular stability 126 and government spending/borrowing 128, 138–40, 150, 152 and recession 144–5, 150, 162 Luce, Edward 164 Ludd, Ned/Luddites 102 machine learning (MI) 102–104 see also artificial intelligence macroeconomics 9, 13, 47, 89 failure of 119–20 and uncertainty 94 Macron, Emmanuel 162 Mair, Peter 172 markets 30, 59–61, 62, 66–7 and democracy 68 and quantity theory of money 68–9 see also labour market Mauss, Marcel 21–2 Mazzucato, Mariana 156 media 11, 43, 47 and technological change 98, 102–103, 105 and tribalism 24–5, 26–7, 29, 31, 61, 116, 161 Merkel, Angela 114 Mexico 63 micro-stressors 47–8, 53, 84, 91 and aging populations see aging populations and change 94 and fourth industrial revolution 94 and immigration see immigration microeconomics 9, 13–14, 160 migrant crisis 7, 111 Milanovic, Branko 52, 80 minimal group paradigm 21 Minsky, Hyman 128 mobile phones 53, 96, 97, 142 modern monetary theory (MMT) 118, 128–9 money, printing 78, 128, 145 monopolies 142, 143, 144 moral outrage 8, 13, 15, 35–6, 57–8, 117, 130, 161 and inequality see inequality as rational 36 and tribalism, compared 19, 20, 22, 29, 30–31, 36 triggers for 36 mortgages 34, 35, 38, 82, 111, 137, 145 nation state 39–40, 48, 50, 117, 119 national wealth fund see NWF nationalism 5, 11, 23, 29, 31, 39, 41, 116, 119 as positive 153–6 neoliberalism 4, 28–9, 37, 75–8, 122 and global capital flows 77–8 and inequality 51, 52, 53 NHS (National Health Service) 107 Nissan 100–101 Nixon, Richard 26 Northern Ireland 17–18, 23, 24 Norway 133, 134 Nussbaum, Martha 16, 35, 36 NWF (national wealth fund) 15, 132, 133–41, 143, 152, 168 and aging population 138–9 and asset ownership 133, 136, 140–41 and government borrowing/debt 136–7, 138–40 and growth of global stock market 137–8 and individual trust funds 135 and negative interest rates 134–5, 136 and risk 136, 137–8 sovereign 133–4 and trade surplus 134 Obama, Barack 29, 46 oil prices 96–7 Orban, Viktor 23, 30, 161 “Panama Papers” 2, 20 pensions 57, 63, 106–107, 138 perpetual loans 147–8 Philadelphia Eagles 20 Pickett, Kate 168 Piketty, Thomas 49, 52, 80, 108–10 play 153 Poland 11, 30 Polanyi, Karl 59–61, 64–5, 67, 175 political centrism 38, 48, 118–19, 121, 160–61, 162 political disengagement 29 political economy 12, 13 political identity 22–3, 29–30, 37, 48, 116, 117 further reading on 172 political parties 5–6, 7, 28 politics, new 15–16, 58, 160 populism 11, 27, 39 and financial crisis 86 three genres of 54–5 Portugal 35, 38, 44, 144 poverty 47, 67, 72, 80, 115 and demographics 57, 107 power 4, 48 powerlessness 9, 41 price stability 76, 79, 128, 147 private anger 7, 8, 9, 10, 13–14, 36, 117 and cognitive effort 89–90, 91 see also anxiety/stress private sector debt 131, 145 and government borrowing 134–5, 137, 138–40 investment 67, 70, 149–50, 151 liability in financial crisis 85, 127 privatization 28, 40, 96, 107 probability 91–3 product market competition 94, 95–8, 116, 125 and deregulation/privatization 96–7 and dispersion 97, 98–9 intensification of 96, 101 and technological change 96, 97–8, 99 productivity 40 and technological innovation 9, 10, 15, 102, 104–105 and wages 71, 72, 74, 76 profit margins 98, 101, 105, 143 property prices 34, 38 property rights 142, 143, 154 protectionism 59–60, 61, 66 public anger 7, 8–9, 10, 89, 98, 117–18 economic causes of 13 see also moral outrage; tribalism/tribal anger public housing 71, 113, 114 public sector investment 67, 70–71 public services 24, 115, 116 quantitative easing (QE) 146–7, 167 quantity theory of money 68–9, 78 racism 26, 54, 55, 115 Raworth, Kate 131–2, 173 Reagan, Ronald 26, 75, 118 recession 15, 29, 30, 34–5, 44, 49, 55, 58, 84, 152, 153 and dual interest rates 150 and interest rates 75, 120–21 and investment spending 60, 70, 71 and low inflation 144–5, 150, 162 and MMT 128–9 and stock markets 139, 140 see also euro crisis referenda 37 regeneration, economic 132 regional development 15, 115, 116, 149, 153, 156 Renzi, Matteo 37 risk 91–2, 127, 136, 137, 153 Roberts, Carys 174 robotics see artificial intelligence Rodrik, Dani 4, 39, 40 Russia 11, 41 Sahm, Claudia 150–51 Salvo, Francesca 87–8 Sandbu, Martin 174 Sanders, Bernie 128, 164 savings 93 scale economies 98, 99, 142 Scottish nationalism 7, 119 secular stability 125, 126, 127 service-based economy 52 Singapore 133, 134, 162 SMEs (small- and medium-sized enterprises) 164–5, 166 social democracy 63–4 social media 26, 27, 90, 98 Solow growth model 109 sovereign wealth funds 133–4 sovereignty 39 Spain 33–5, 38, 44, 45, 144 protests against austerity in 85 spending increasing 145, 147, 151 investment 40, 60 power 145 public sector 67, 70–71, 128, 151 restrictions on 41, 44, 149 sports fans 8, 19–20, 21, 25 sports industry 99 stagflation 40, 74, 120, 128 status-injury 36, 54 stock markets 63, 137–8, 139–40 stress see anxiety/stress strikes 73, 74 student loans 111 supply–demand 60, 96, 104 sustainable investment 131–2, 149–50, 152, 153 Sweden 63–4, 72–3 Syria 111, 113 Tavris, Carol 36, 171 taxes 40, 50, 57, 108, 116, 124 cuts in 34, 44, 111, 151 dodging 2, 6, 20, 132–3, 143 political opposition to 129, 130, 132, 133 raising 152 on wealth 129, 130, 132, 140 Tea Party movement 85 technocracy 37, 42–3, 48, 160–61 technological change 29, 58, 96, 109 and aging population 90, 106, 122 and competition 96, 97–8 and dispersion of returns 97 and fourth industrial revolution 94 further reading on 173–4 and inequality 50, 53 and labour market 102–104 and media 24–5, 27 as micro-stressor 88, 91, 94, 96, 97–8, 99, 101–102, 105, 116, 118 and productivity 9, 10, 15, 105, 122 and rate of diffusion 14 and uncertainty 101–102 telecommunications 96, 97, 142 terrorism 17, 18, 27 Thatcher, Margaret 75, 76, 118, 131 Thunberg, Greta 150 TLTRO programme (European Central Bank) 147–8 trade 21–2, 26, 42, 78, 154 and neoliberalism 78 trade surplus 134 trade unions 28, 42, 63, 66, 72, 73, 76, 79 trade wars 21–2, 26 training 62–3, 93, 113, 114, 141 tribalism/tribal anger 8–9, 11, 18–31, 41, 45–6, 117 and central/eastern Europe 23, 30 destructiveness of 24 and ethical norms 20 and fascism 68 and financial crisis 86, 89 and global politics 21–2, 26, 28–9 and immigration 95, 111, 112, 113 manipulation by politicians/media of 13, 22, 24–7, 29, 30, 31, 35, 61, 95, 116, 161 and minimal group paradigm 21 and moral outrage, compared 19, 20, 22, 29, 30–31, 36 and political identity 22–23, 29–30 social function of 20–21 and sport fans 19–20, 25 see also nationalism trickling down/up 79–80 trilemma, political 39 trucking industry 103 Trump, Donald 11, 22, 23, 25–6, 27, 33, 38, 119, 126, 161 and deregulation 129 election of 41–2, 54 tax cuts of 11 Turkey 11 universal basic income (UBI) 141, 144 Ukraine 11 uncertainty 9–10, 43, 49–50, 65, 91–4, 99, 118, 161 and aging populations see aging populations and emerging technologies 102–103, 106 and healthcare 92 and immigration see immigration reducing 93–4 and risk/probability 91–3 and skills development 93 unemployment 2, 30, 34, 44–5, 48, 58, 66, 72, 84, 167 and inflation/interest rates 74, 75, 125 unfairness 25, 36, 105 United States (US) 3, 38, 93, 118, 129, 164 aging population in 107–108, 110, 111 automation in 103, 104–105 financial crisis in (2008) 82–3, 84, 85 gig economy in 100 healthcare in 47–8, 53–4, 58, 106, 123–4 independent fiscal councils in 150–51 inequality in 50, 51, 53–4, 58, 80–81 Keynesian system in 71, 72–3 labour market in 42, 44, 46, 62 micro-stressors in 47–8 neoliberalism in 76 and NWF 135 stock market in 63 tribalism in 23, 25, 29 wealth tax in 130 US Federal Reserve 6, 46, 84, 108, 110, 120, 148, 151 voice, loss of 37–9, 43, 48, 58 Volcker, Paul 75, 81–2 voting 37–8 see also electoral politics wages 2, 60 and automation 105 and competition 96–7, 98 and consumption 53–4, 58, 72 distribution of see income distribution growth in, without inflation 125 and immigration 115–16 and inequality 4, 50–53, 58 and neoliberalism 76, 77 and oil prices 96–7 and productivity 72, 76 stagnation in 34, 47, 58, 80–81, 83, 84, 85 and supply/demand 65–6 Wall Street Crash 67 Warren, Elizabeth 130, 132 Watson’s Analytics 19 wealth, distribution of 4, 15, 29, 30 welfare state 71 WhatsApp 2 Wilkinson, Richard 176 wind power, investment in 150 Wolf, Martin 80, 173 World Trade Organization (WTO) 42 Wren-Lewis, Simon 151 Yates, Tony 151 “Yellow Jackets” protests 2, 20, 55, 56

The Default Line: The Inside Story of People, Banks and Entire Nations on the Edge
by Faisal Islam
Published 28 Aug 2013

The size of China’s foreign currency reserves, at one point half of China’s GDP, far outweighs its needs. For China, the reserves are a consequence of the efforts of its people, a sensible insurance policy against the speculative attacks made against the currencies of neighbouring countries during the East Asian financial crisis of 1997. China vowed that the agony, indignity and loss of sovereignty inflicted on its near neighbours then would not occur to it. China does not have a happy historic memory of how its large trade surpluses have been dealt with by more powerful nations. For centuries, China was not really interested in the goods the West was trying to sell it, as attested by a letter written in the late eighteenth century to George III by the Emperor Qianlong: ‘We possess all things and of the highest quality… I set no value on the strange and useless objects and have no use of your country’s manufactures.’

…

In the 1980s and 1990s, South Korea had its own export-led manufacturing boom. A key feature of this was the thriftiness of Korean households. For thirteen consecutive years, Korean households were the number one savers in the rich man’s club of world nations, the OECD. Koreans saved around 25 per cent of their income. After the Asian financial crisis of the late 1990s, however, household saving collapsed, dropping as low as 0.4 per cent in 2002, and staying below 3 per cent in recent years. It was a spectacular fall to the bottom of that OECD savers’ league table. South Korea’s reputation for household thrift evaporated in an orgy of housing speculation, child tuition fees and credit-fuelled purchases of expensive Western brands.

The Pandemic Century: One Hundred Years of Panic, Hysteria, and Hubris
by Mark Honigsbaum
Published 8 Apr 2019

Hong Kong, which usually mustered the second biggest delegation after the Swiss, threatened to sue, but the Swiss refused to budge, prompting one Hong Kong company to erect a sign over an empty booth that read: “Due to our fear of Swiss Aggravated Respiratory Syndrome we are going home.” From an economic perspective, SARS could not have come at a worse time for Hong Kong as the territory was only just beginning to recover from the 1998 Asian financial crisis. The previous year Hong Kong had seen its real GDP grow by 2 percent, and in 2003 the government had been forecasting 3 percent real GDP growth. Within weeks of the WHO’s travel advisory, those forecasts were revised downward as shops reported a halving of retail sales and hotels saw their occupancy rates plunge by 60 percent.

…

See also specific antibiotics discovery of new, 149 drug-resistant microbes and, 365–66 era before, 47 antibody-dependent enhancement (ADE), 60, 347–48 antibody reactions, 259 “antigentic drift,” 55 antiretroviral drugs, 200, 226, 403n antiwar movement, 169–70 arboviruses, 319–24, 326, 330–31, 335, 359 Argentina, 106–8 Argentine National Health Board (Asistencia Publica), 107, 114 Armed Forces Institute of Pathology, 55, 109, 405–6n Armstrong, Charlie, 105–6, 115–17, 118, 120–24, 126, 132, 138–39 Asheville, North Carolina, 31–33 Asia Asian financial crisis of 1998, 266 mega-cities in, 362 Zika in, 326–27 “Asian flu,” 56, 245 Associated Press, 82 AIDS panic and, 213 Ebola and, 296 “parrot fever” pandemic 1929–1930 and, 138 Athenians, 14 Athens, Greece, plague of, 14, 362 Atlanta, Georgia, 300, 302, 303 the Atlanticos, 95 Attaran, Amir, 340 Aureomycin, 142 Avery, Oswald, 22, 35–36, 37, 149 avian influenza, 4, 10, 55–56, 243–48, 250, 257, 274, 284, 367, 381–82n of 1997, 4, 254 H5N1 virus, 59, 405n “multiple reassortants” of, 247 unusual pathology in young adults, 245–46 avian viruses, mutations of, 245–46 avirulence, survival strategy of, 30 Ayer, Massachusetts, 17–18, 19, 28, 33, 47 Aylward, Bruce, 308 Ayres, Constância, 350–51, 352 AZT, 212, 226, 403n Bachmann, Leonard, 155 Bacillus influenzae, 26–27, 34, 35–38, 36–39, 40, 42, 43, 48–49, 58, 113 Bacillus psittacosis, 112–13, 126 bacteria.

Globalists: The End of Empire and the Birth of Neoliberalism
by Quinn Slobodian
Published 16 Mar 2018

“­There is for all practical purposes, no such ­thing” as neoliberal theory, one scholar claimed recently.6 In 2016, however, the International Monetary Fund (IMF), making international headlines, not only identified neoliberalism as a coherent doctrine but asked if the policy package of privatization, deregulation, and liberalization had been “oversold.”7 Fortune reported at the time that “even the IMF now admits neoliberalism has failed.”8 The magazine’s suggestion that this was a new development was somewhat inaccurate. The policies associated with neoliberalism had been challenged—at least rhetorically—­for two I n t r o d u ctio n 3 de­cades. An early expression of doubt came from Joseph Stiglitz ­after the Asian financial crisis of 1997.9 World Bank chief economist from 1997 to 2000 and winner of the Nobel Memorial Prize in Economics, Stiglitz became a vocal critic of neoliberal globalization. In the late 1990s other critics declared that the un­regu­la­ted global ­free market was “the last utopia”—­and the international financial institutions partly agreed.10 They dropped their doctrinaire opposition to capital controls, the very subject of the 2016 Fortune article.

…

See also Invisibility Anti-­Semitism, 153 Antitrust measures, 209 Apartheid, 149; end of, 9, 16; neoliberals and, 22, 149–154, 172–179, 266, 332n194; opposition to, 172, 219, 323n23; U.S. conservatives and, 168–169 Arabs: Arab Spring, 279; as oil-­producing nations, 217; as a social group, 153 Area studies, 69 366 Index Argentina, 139, 236 Aristocracy, 45 Aron, Raymond, 78 Art, of GATT and WTO buildings, 240, 281, 282, 283, 284 Ashbrook, John M., 169 Asia, 42, 64, 126, 147, 152, 197; Asian Financial Crisis, 3 Atavism, 202, 286; social justice as, 281 Atlantic City, New Jersey, 35 Atlantic Community, 156, 184 Attlee, Clement, 139 Augustine, Saint, 268 Austerity, 25 Austria, 26, 42, 51, 106; and Eu­ro­pean integration, 189; First Republic, 31 Austrian Business Cycle Research Institute, 31, 59, 66, 82–83 Austrian economics, 6, 91 Austro-­Hungarian Empire.

The Volatility Smile
by Emanuel Derman,Michael B.Miller
Published 6 Sep 2016

Hence, for equally powerful currencies, smiles tend resemble a symmetric smile, as illustrated in the USD/JPY smile in Figure 8.12. 150 THE VOLATILITY SMILE USD/MXN Implied Volatility 20% 19% 18% 17% 16% 15% 14% 13% 12% 11% 10% −10% −15% −25% −35% ATM 35% Call Put Put Put Put Delta 25% Call 15% Call 10% Call −10% −15% −25% −35% ATM 35% Call Put Put Put Put Delta 25% Call 15% Call 10% Call USD/JPY Implied Volatility 15% 14% 13% 12% 11% 10% 9% 8% FIGURE 8.12 Volatility Smiles for Foreign Exchanges Rates as of 12/31/2015 Source: Bloomberg. Emerging market economies, on the other hand, tend to be less stable, and their currencies are much more likely, periodically, to fall dramatically, rather than rise, relative to major currencies. The Asian financial crisis in 1997 is a good example. During that crisis, exchange rates versus the U.S. dollar for several emerging Asian currencies fell by more than 30%, and in some cases by more than 80%. Smiles for exchange rates between emerging market currencies and major currencies therefore tend to resemble an index smile.

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Index Page numbers followed by f refer to figures Absolute valuation, 11–12 Analytical approximation: of jump-diffusion, 410–416 of smile for geometric Brownian motion stochastic volatility with zero correlation, 363–368 of transaction costs, 123–124 Anderson, Leif, 409 Andreasen, Jesper, 409 Apple Inc., 20 Approximate static hedge, 42–44 Arbitrage opportunity, 14 Arbitrage pricing theory, 33–34 Arithmetic Brownian motion, method of images for, 208–209 Arrow-Debreu securities, 176, 332–334. See also State-contingent securities Asian financial crisis of 1997, 150 Asian options, 297 Assumptions, of Black-Scholes-Merton model, 85 At-the-money (ATM) options: deltas of, 141–142 hedging error in, 111–114 Monte Carlo simulations of, 106–110 Avoidable investment risks, 25–26 Axiomatic approach, to financial engineering, 6, 8 Barrier options: approximate static hedge for, 42–44 in local volatility models, 292–296 replicating portfolio for, 220–221 weak static replication of, 206–219 Barrier option parity, 223–224 Best stock-only hedge, 379–381 Binomial derivation, of Dupire’s equation, 270–275 Binomial diffusion-only model, 388f Binomial jump model, 389f, 390 Binomial local volatility models, 250–257 Binomial model, 227–246 of barrier options, 295n.1 of call option value, 46 convexity in, 49–50 Dupire’s equation derived from, 270–275 extending Black-Scholes-Merton model with, 237–246 for option valuation, 232–237 stochastic stock price and volatility in, 333–334 for stock evolution, 227–232 Binomial Poisson process, 391 Binomial trees: with Cox-Ross-Rubinstein convention, 242–243 difficulties with, 262–263 for future returns of stocks, 21–22 for lookback options, 299–300 of riskless security, 23–24 Bjerg, Ole, 21n.2 Black, Fischer, 16 Black-Scholes-Merton (BSM) equation, 85–89 Black-Scholes-Merton (BSM) formula, and implied distributions, 175 Black-Scholes-Merton (BSM) model, 2–3 derivatives of, 419–420 in dynamic replication, 46, 47, 203 extending, with binomial model, 237–246 extension of, with stochastic volatility models, 320, 325, 344–350 and hedged options, 94 hedge ratios under, 379 implied volatility in, 80 impracticality of, 204 501 502 Black-Scholes-Merton (BSM) model (Continued) as inconsistent with volatility smiles, 163 local volatility as extension of, 303–304 stochastic volatility models in, 321–325 transaction costs in, 117, 125, 127 Black-Scholes-Merton (BSM) partial differential equation, 304 and binomial model, 235–237 in stochastic volatility models, 349 Black-Scholes-Merton (BSM) risk-neutral probability density, 197–200 Black-Scholes partial differential equation (PDE), 208 Bonds: long zero coupon, 39f riskless, see Riskless bonds short-term government, 154n.1 Bounds: no-arbitrage, See No-arbitrage bounds on profit and loss when hedging at realized volatility, 99–100 Boundary payoffs, in weak static replication, 205 Breeden-Litzenberger formula: and Dupire’s equation, 265 in implied distribution, 180–183, 184f, 185–186 BSM, see Black-Scholes-Merton Butterfly spread: in Breeden-Litzenberger formula, 181–182 in derivation of Dupire’s equation, 273–275 payoff and value of, 156–157 Calendar spread: in derivation of Dupire’s equation, 271–273 and Dupire’s equation, 267–268 Calibration: for jumps, 387–391 of local volatility models, 165 of quadrinomial tree, 350 and trinomial jump-diffusion, 398–401 Call option payoff functions, 35 Call option value, 46 Call price, 45–46 Call spread, 155–156 Capital asset pricing model (CAPM), 32 INDEX CBOE (Chicago Board Options Exchange), 82 CEV (constant elasticity of variance) model, 166–167 Chain rule: hedge ratio from, 169 in stochastic volatility models, 342 Chicago Board Options Exchange (CBOE), 82 Collars, 38–40 Compensated process, 400–401 Compensation, for jumps, 387–391 Constant elasticity of variance (CEV) model, 166–167 Convexity: and dynamic replication, 49–50 as function of volatility, 322 gains from, 52 payout with positive, 48f as quality of options, 45–46 Correlated stocks, 31–34 Costs, types of, 117.

Willful: How We Choose What We Do
by Richard Robb
Published 12 Nov 2019

Index Abraham (biblical figure), 117–118 abstraction, 12, 140–143, 196–197, 206–207 acting in character, 49–66, 94–95, 203 acting out of character, 19, 26, 68–69, 72–74, 97, 114, 122 activist investors, 66 actuarial tables, 163 Akerlof, George A., 210–211n2 Alexander the Great, 140, 180–181 alienation, 205, 207 alpha, 75 altruism, 4 apparently irrational, 28–29, 206 care altruism, 38, 104, 108–114, 115, 120, 135, 201 effective, 110–112, 126, 130, 135–136 in for-itself model, 19, 104, 123, 129 love altruism, 104, 116, 123–125, 203 manners and ethics in, 104, 106–108, 135 observed care altruism, 108–112 purposeful choice compatible with, 104, 113–114, 115–116 selfish, 104, 105–106, 109, 123, 125, 135 types of, 104, 123, 130 utility maximized by, 5–6 vaccination as, 59. See also mercy ambiguity effect, 24 American Work-Sports (Zarnowski), 191 Anaximander, 190 anchoring, 168 angel investors, 212–213n1 “animal spirits,” 169 Antipater of Tarsus, 134–135, 137 “anxious vigilance,” 73, 82 arbitrage, 70, 78 Aristotle, 200, 220n24 Asian financial crisis (1997–1998), 13 asset-backed securities, 93–95 asset classes, 75 astrology, 67 asymmetric information, 96, 210n2 authenticity, 32–37, 114 of challenges, 176–179 autism, 58, 59 auto safety, 139 Bank of New York Mellon, 61 Battle of Waterloo, 71, 205 Bear Stearns, 85 Becker, Gary, 33, 108–109 behavioral economics, 4, 10, 198–199 assumptions underlying, 24 insights of, 24–25 rational choice complemented by, 6 Belgium, 191 beliefs: attachment to, 51 defined, 50 evidence inconsistent with, 54, 57–58 formation of, 53, 92 persistence of, 26–28, 54 transmissibility of, 92–93, 95–96 Bentham, Jeremy, 127, 197–198 “black swans,” 62–64 blame aversion, 57, 72 brain hemispheres, 161 Brexit, 181–185 “bull markets,” 78 capital asset pricing model, 64 care altruism, 38, 104, 108–114, 115, 120, 135, 201 Casablanca (film), 120, 125 The Cask of Amontillado (Poe), 126–127 challenges, 202–203 authenticity of, 176–179 staying in the game linked to, 179–181 changes of mind, 147–164 charity, 40, 45–46, 119, 128 choice: abundance of, 172–174 intertemporal, 149–158, 166 purposeful vs. rational, 22–23 Christofferson, Johan, 83, 86, 87, 88 Cicero, 133–134 Clark, John Bates, 167 cognitive bias, 6, 23, 51, 147–148, 167, 198–199 confirmation bias, 200 experimental evidence of, 10–11, 24 for-itself behavior disguised as, 200–201 gain-loss asymmetry, 10–11 hostile attribution bias, 59 hyperbolic discounting as, 158 lawn-mowing paradox and, 33–34 obstinacy linked to, 57 omission bias, 200 rational choice disguised as, 10–11, 33–34, 199–200 salience and, 29, 147 survivor bias, 180 zero risk bias, 24 Colbert, Claudette, 7 Columbia University, 17 commitment devices, 149–151 commodities, 80, 86, 89 commuting, 26, 38–39 competitiveness, 11, 31, 41, 149, 189 complementary skills, 71–72 compound interest, 79 confirmation bias, 57, 200 conspicuous consumption, 31 consumption planning, 151–159 contrarian strategy, 78 cooperation, 104, 105 coordination, 216n15 corner solutions, 214n8 cost-benefit analysis: disregard of, in military campaigns, 117 of human life, 138–143 credit risk, 11 crime, 208 Dai-Ichi Kangyo Bank (DKB), 12–14, 15, 17, 87, 192–193 Darwin, Charles, 62–63 depression, psychological, 62 de Waal, Frans, 118 Diogenes of Seleucia, 134–135, 137 discounting of the future, 10, 162–164 hyperbolic, 158, 201 disjunction effect, 174–176 diversification, 64–65 divestment, 65–66 Dostoevsky, Fyodor, 18 drowning husband problem, 6–7, 110, 116, 123–125 effective altruism, 110–112, 126, 130, 135–136 efficient market hypothesis, 69–74, 81–82, 96 Empire State Building, 211–212n12 endowment effect, 4 endowments, of universities, 74 entrepreneurism, 27, 90, 91–92 Eratosthenes, 190 ethics, 6, 104, 106–108, 116, 125 European Union, 181–182 experiential knowledge, 59–61 expert opinion, 27–28, 53, 54, 56–57 extreme unexpected events, 61–64 fairness, 108, 179 family offices, 94 Fear and Trembling (Kierkegaard), 53–54 “felicific calculus,” 197–198 financial crisis of 2007–2009, 61, 76, 85, 93–94, 95 firemen’s muster, 191 flow, and well-being, 201–202 Foot, Philippa, 133–134, 135 for-itself behavior, 6–7, 19, 21, 27, 36, 116, 133–134, 204–205, 207–208 acting in character as, 51–53, 55–56, 94–95, 203 acting out of character as, 69, 72 analyzing, 20 authenticity and, 33–35 charity as, 39–40, 45–46 comparison and ranking lacking from, 19, 24, 181 consequences of, 55–64 constituents of, 26–31 defined, 23–24 difficulty of modeling, 204 expert opinion and, 57 extreme unexpected events and, 63–64 flow of time and, 30 free choice linked to, 169–172 in groups, 91–100 incommensurability of, 140–143 in individual investing, 77–78 in institutional investing, 76 intertemporal choice and, 168, 175, 176 job satisfaction as, 189 mercy as, 114 misclassification of, 42, 44, 200–201 out-of-character trading as, 68–69 purposeful choice commingled with, 40–43, 129, 171 rationalizations for, 194–195 in trolley problem, 137 unemployment and, 186 France, 191 Fuji Bank, 14 futures, 80–81 gain-loss asymmetry, 10–11 Galperti, Simone, 217n1 gambler’s fallacy, 199 gamifying, 177 Garber, Peter, 212n1 Germany, 191 global equity, 75 Good Samaritan (biblical figure), 103, 129–130, 206 governance, of institutional investors, 74 Great Britain, 191 Great Depression, 94 Greek antiquity, 190 guilt, 127 habituation, 201 happiness research (positive psychology), 25–26, 201–202 Hayek, Friedrich, 61, 70 hedge funds, 15–17, 65, 75, 78–79, 93, 95 herd mentality, 96 heroism, 6–7, 19–20 hindsight effect, 199 holding, of investments, 79–80 home country bias, 64–65 Homer, 149 Homo ludens, 167–168 hostile attribution bias, 59 housing market, 94 Huizinga, Johan, 167–168 human life, valuation of, 138–143 Hume, David, 62, 209n5 hyperbolic discounting, 158, 201 illiquid markets, 74, 94 index funds, 75 individual investing, 76–82 Industrial Bank of Japan, 14 information asymmetry, 96, 210n2 innovation, 190 institutional investing, 74–76, 82, 93–95, 205 intergenerational transfers, 217n1, 218n4 interlocking utility, 108 intertemporal choice, 149–159, 166 investing: personal beliefs and, 52–53 in start-ups, 27 Joseph (biblical figure), 97–99 Kahneman, Daniel, 168 Kantianism, 135–136 Keynes, John Maynard, 12, 58, 167, 169, 188–189 Kierkegaard, Søren, 30, 53, 65, 88 Knight, Frank, 145, 187 Kranton, Rachel E., 210–211n2 labor supply, 185–189 Lake Wobegon effect, 4 lawn-mowing paradox, 33–34, 206 Lehman Brothers, 61, 86, 89, 184 leisure, 14, 17, 41, 154, 187 Libet, Benjamin, 161 life, valuation of, 138–143 Life of Alexander (Plutarch), 180–181 Locher, Roger, 117, 124 long-term vs. short-term planning, 148–149 loss aversion, 70, 199 lottery: as rational choice, 199–200 Winner’s Curse, 34–36 love altruism, 104, 116, 123–125, 126, 203 lying, vs. omitting, 134 Macbeth (Shakespeare), 63 MacFarquhar, Larissa, 214n6 Madoff, Bernard, 170 malevolence, 125–127 Malthus, Thomas, 212n2 manners, in social interactions, 104, 106, 107, 116, 125 market equilibrium, 33 Markowitz, Harry, 65 Marshall, Alfred, 41, 167 Mass Flourishing (Phelps), 189–191 materialism, 5 merchant’s choice, 133–134, 137–138 mercy, 104, 114–116, 203 examples of, 116–120 inexplicable, 45–46, 120–122 uniqueness of, 119, 129 mergers and acquisitions, 192 “money pump,” 159 monks’ parable, 114, 124 Montaigne, Michel de, 114, 118 mortgage-backed securities, 93 Nagel, Thomas, 161 Napoleon I, emperor of the French, 71 neoclassical economics, 8, 10, 11, 22, 33 Nietzsche, Friedrich, 21, 43, 209n5 norms, 104, 106–108, 123 Norway, 66 Nozick, Robert, 162 observed care altruism, 108–112 Odyssey (Homer), 149–150 omission bias, 200 On the Fourfold Root of the Principle of Sufficient Reason (Schopenhauer), 209n5 “on the spot” knowledge, 61, 70, 80, 94, 205 Orico, 13 overconfidence, 57, 200 “overearning,” 44–45 The Palm Beach Story (film), 7 The Paradox of Choice (Schwartz), 172 parenting, 108, 141, 170–171 Pareto efficiency, 132–133, 136, 139–140 Peirce, Charles Sanders, 53–54, 67, 94 pension funds, 66, 74–75, 93, 95 permanent income hypothesis, 179 Pharaoh (biblical figure), 97–99 Phelps, Edmund, 17, 189–191 Philip II, king of Macedonia, 181 planning, 149–151 for consumption, 154–157 long-term vs. short-term, 148–149 rational choice applied to, 152–158, 162 play, 44–45, 167, 202 pleasure-pain principle, 18 Plutarch, 180–181 Poe, Edgar Allan, 126 pollution, 132–133 Popeye the Sailor Man, 19 portfolio theory, 64–65 positive psychology (happiness research), 25–26, 201–202 preferences, 18–19, 198 aggregating, 38–39, 132, 164 altruism and, 28, 38, 45, 104, 110, 111, 116 in behavioral economics, 24, 168 beliefs’ feedback into, 51, 55 defined, 23 intransitive, 158–159 in purposeful behavior, 25, 36 risk aversion and, 51 stability of, 33, 115, 147, 207, 208 “time-inconsistent,” 158, 159, 166, 203 present value, 7, 139 principal-agent problem, 72 Principles of Economics (Marshall), 41 prisoner’s dilemma, 105 private equity, 75 procrastination, 3, 4, 19, 177–178 prospect theory, 168 protectionism, 185–187 Prussia, 191 public equities, 75 punishment, 109 purposeful choice, 22–26, 27, 34, 36, 56, 133–134, 204–205 altruism compatible with, 104, 113–114, 115–116 commensurability and, 153–154 as default rule, 43–46 expert opinion and, 57 extreme unexpected events and, 62–63 flow of time and, 30 for-itself behavior commingled with, 40–43, 129, 171 mechanistic quality of, 68 in merchant’s choice, 135, 137–138 Pareto efficiency linked to, 132 rational choice distinguished from, 22–23 regret linked to, 128 social relations linked to, 28 stable preferences linked to, 33 in trolley problem, 135–136 vaccination and, 58–59 wage increases and, 187.

Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa
by Dambisa Moyo
Published 17 Mar 2009

Finally, to my parents, Steven and Orlean Moyo, for their unwavering belief in me (and our continent Africa) every step of the way, even when there have been many reasons not to believe. Index Acleda (Cambodia) 132 Afghanistan 132 Africa: Geography and Growth (Collier) 30 African Growth and Opportunity Act 2000 (US) 118, 149 Alesina, Alberto 52 Amin, Idi 23, 108 Angola 105, 108, 120, 133 Annan, Kofi 101 Argentina 77, 82, 84, 86, 95–6 Asian financial crisis 1997 84, 87 Association of Southeast Asian Nations 124 Bachelet, Michelle 43 Banco do Brasil 134 Banco do Nordeste (Brazil) 132 Bangladesh 126 Bauer, Peter Thomas 58, 67 Benguela railway 106 Benin 71–2, 94, 116 Beyond Aid (World Bank) 134 Biafra 26, 32 Black and Minority Ethnic Remittance Survey, The 133 Black Economic Empowerment regulations (SA) 111 Blue Orchard Finance 131 Blumenthal, Irwin 53 Bokassa, Jean-Bédel 23, 108 Bongo, President Omar 6 Bono 27 Boone, Peter 46, 66 Botswana abandoning foreign aid 144 and bond issues 89 and HIV–AIDS 71 IDA graduate success story 38, 40 market-oriented incentives 34 tribal groupings 32 wise use of aid 76, 78, 150 Bottom Billion, The (Collier) 67–8 BRAC (Bangladesh) 132 Brazil 77, 82, 84, 86, 93, 117, 132, 151 Bretton Woods conference 10–11, 13, 19 British Colonial Development and Welfare Act 1940 (UK) 10 Broadman, Harry G. 123 Burkina Faso 106, 116, 120, 145 Burnside, C. 40 Burundi 145 Bush, President George W. 27, 55, 75 Calvinism 31 Cambodia 132 Cameroon 100, 125 Central African Republic/Empire 23, 108 Cerqueira, José 108–9 Chad 116 Chicago School of Economics 20 Chile 42–3 Chiluba, President Frederick 53 China 24, 34, 56, 98–9, 103–12, 117–23, 145–7, 152 China–Africa Cooperation Forum 103, 106, 120 Citizens Economic Empowerment Commission (Zambia) 111 Clay, Sir Edward 48 Clemens, Michael A. 46 CNOOC (Chinese energy company) 105 Cold War 14, 23–4 Collier, Paul 30, 32–3, 60, 67–8 Colonial Development Act 1929 (US) 10 Commission for Africa 101 Common Agricultural Policy (CAP) 115 ‘conditional cash transfers’ 150–51 conditionalities of aid 38–9, 52 conflicts 59–60 Congo, Democratic Republic of 16, 48, 53, 71–2, 106, 108 Congo-Brazzaville 87, 106 Congo-Kinshasa see Congo, Democratic Republic of corruption 22–3, 35, 39, 48–50, 50–59 Corruption Perceptions Index (CPI) 51, 56 cotton production 116 CRISIL (ratings, risk, and research firm) 91 Darfur 108 Davies, Omar 136 de Soto, Hernando 137 Dead Aid proposals 75–6, 143–8, 150 debt capital markets 153 democracy 23–4, 39, 41–3 Denmark 73, 125 developing countries 18, 25, 29, 40, 52, 63, 72–4, 77, 85–6 Dexia Micro-Credit Fund 131 Diamond, Jared 29 Diamond, Larry 53–4 diaspora bonds 134, 153 Djankov, Simeon 101 ‘Do Corrupt Governments Receive Less Foreign Aid?’

All the Devils Are Here
by Bethany McLean
Published 19 Oct 2010

The bank’s initial 1994 swap deal—the one that insured against an Exxon default—had gone off without a hitch. Since then, J.P. Morgan had done a handful of similar deals, while at the same time using credit default swaps internally to better evaluate its loan portfolio. In 1997, after the bank lost millions in bad loans during the Asian financial crisis, the credit derivatives team was put in charge of the bank’s commercial lending department, much to the horror of the old-time commercial lenders. They began using swaps to perform risk analysis on the loan portfolio. Credit default swaps were truly becoming central to the way the bank did business.

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Born, for her part, said that CFTC was a long way from trying to regulate derivatives; all it was trying to do was ask some useful questions and glean some useful answers. “Greenspan thought even asking the questions was dangerous,” recalls Born. And where was Rubin? Given his history of concerns about derivatives, you might have expected him to be Born’s one ally in the room. During the Asian financial crisis, Rubin had asked one of his aides to find out how much derivatives exposure U.S. financial institutions had to South Korea. “We couldn’t find out,” this aide recalled. Rubin was stunned. But in this meeting, Rubin sided, without hesitation, with his fellow regulators. His reaction to Born’s arguments was almost visceral—a far cry from the man who was so admired for his ability to listen and ask questions.

Smart Cities, Digital Nations
by Caspar Herzberg
Published 13 Apr 2017

The question remained how many businesses would accept the overture, especially since the economic heart of the zone had been, until recently, a tidal basin where commerce extended barely beyond fishing. Incheon was a large, growing city, but it was not a budding international presence. When the 1997 Asian financial crisis hit, influential analysis described South Korea’s situation as akin to a nut in the nutcracker, competing as it did with a savvier technological power in Japan and far greater resources in China.3 Increasing the national profile as a knowledge economy was a direct response to this evaluation; additionally, the Incheon authorities embraced the primacy of airports as a central concept in their strategy.

The Captured Economy: How the Powerful Enrich Themselves, Slow Down Growth, and Increase Inequality
by Brink Lindsey
Published 12 Oct 2017

It is no surprise, then, that the creation of a formal safety net for banks led to higher levels of indebtedness.22 In addition to these explicit subsidies, an implicit subsidy created by a string of ad hoc bailouts has further incentivized financial institutions to ramp up their leverage. Continental Illinois in 1984, the Latin American debt crisis of the 1980s, the peso crisis of 1994, the Asian financial crisis of 1997–98, Long Term Capital Management in 1998, and of course the financial crisis of 2007–09—again and again the US government has intervened with emergency assistance to prop up American financial institutions deemed too big or too important to fail. This implicit safety net has extended far beyond the traditional banks covered by deposit insurance to include investment banks, the GSEs Fannie Mae and Freddie Mac, hedge funds, money market mutual funds, and insurance companies.

Adaptive Markets: Financial Evolution at the Speed of Thought
by Andrew W. Lo
Published 3 Apr 2017

This early success didn’t depend as much on the firm’s mathematical trading models, the general principles of which were well known by that time, but in two areas of superiority: expertise in reading those models, and the ability to acquire lower-cost financing to take advantage of the opportunities detected by those models.28 These key adaptations kept LTCM extremely profitable well into 1997, the year of the Asian financial crisis. It seemed that not even a financial crisis that wracked a continent could give this juggernaut a bad year. You probably remember what happened next. Like the Chicxulub meteor strike on Mexico’s Yucatan Peninsula whose destructive effects killed the dinosaurs 66 million years ago, a single extinction event larger than the one that decimated the early hedge funds in 1969 caused the collapse of LTCM.

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Abbe, Emmanuel A., 386 Abel, Andy, 127 ablation, 76–77, 78 abstraction, 132, 208; human capacity for, 155, 164, 183, 187, 188; narrative as, 312 Acharya, Viral, 377 acquired sociopathy, 103 Acton, John Emerich Edward Dalberg Acton, Baron, 363 adaptation, 2, 137, 139, 143, 197, 203; in academia, 211, 213; elimination vs., 141, 202; emotion as, 157; evolutionary psychology theories of, 173–174; by hedge funds, 228, 230–235, 243, 277, 284, 293; by Homo sapiens, 151, 153, 182–183; by learning, 106; limitations of, 149; liquidity resistant to, 324, 327; by markets and participants, 3, 220, 225, 228, 230, 239–240, 246, 293, 295, 344; morality as, 340; mutations necessary for, 146, 148; by nonhuman species, 9, 134, 147–148, 220, 226–227; rational behavior as, 134; timescale of, 9, 134, 187–188 adaptive expectations, 34 Adaptive Markets Hypothesis, 175, 322, 335, 354, 364; bounded rationality likened to, 188; Efficient Markets Hypothesis vs., 2, 198, 207–208, 214, 225; financial crisis of 2008 and, 296–297, 318–319; in hedge fund industry, 222–248; high-frequency trading and, 246; maladaptation explained by, 188–189; moral reasoning and, 340–349; need for, 11; in portfolio management, 249, 254, 261–269, 277–282, 292, 293; predecessors of, 215–221; as prescriptive tool, 365, 388, 390, 393, 396, 415, 417, 420; probability matching explained by, 189–198; resistance to, 209–214; risk aversion and, 203–205; systematic risk and, 198–203 adaptive radiation, 227, 233, 240, 298 adaptive regulation, 368–371, 384, 387, 393 Addiction by Design (Schüll), 91 ADHD, 125 adjustable-rate mortgages, 298, 299, 323 Administrative Behavior (Simon), 177 Adoboli, Kweku, 61 adrenaline, 81, 85, 122 affect heuristic, 84 affinity fraud, 334 Africa, 411, 412, 413 African grey parrot, 162 Agnelli, Gianni, 223 Ahmadi, Sheila, 338 AIDS, 403 AIG (American International Group), 300, 370–371, 376 Alchian, Armen, 216–217 Alex (parrot), 162 Alexa, 396 algorithmic trading, 41, 270, 276, 278, 356, 361 Allen, Woody, 141 Allied Irish Banks, 61 alpha (measure), 232, 249, 252, 269, 282 altruism, 168–169, 170, 196, 336 Alzheimer’s disease, 409 Ambac, 300 Amemori, Ken-ichi, 121–122 American Society of Safety Engineers, 379 American Stock Exchange (AMEX), 286, 289 amphetamines, 90 amygdala, 79, 81, 90, 91, 187, 319, 378; malfunctions of, 83, 107; in nonhuman species, 118; short-circuiting by, 96, 104, 122, 158; sublenticular extended, 89 amyotrophic lateral sclerosis (Lou Gehrig’s disease), 409 anterior cingulate cortex, 86, 105 anterior insula, 90, 91, 337 Antiques Roadshow, 341 Antoncic, Madelyn, 317–318 ants, 169, 170, 197 arbitrage, 112, 268, 281; fixed-income, 243, 293; merger, 267; statistical, 284, 286, 288–291, 292–293, 362 Aristotle, 16–17 Armstrong, Neil, 12–13 Arthur, W. Brian, 218 artificial intelligence, 4, 101, 131–133, 181, 182 artificial selection, 142–143 Asian financial crisis (1997), 241 asset allocation, 249, 253, 255, 282 asset-backed securities (ABSs), 298 Asteroidea, 192 auditory pathway, 80–81 auditory thalamus, 81 Austin, J. L., 46–47 Australopithecus, 153 autism, 110–111 Automated Proprietary Trading (APT), 236, 237, 240 automated teller machines (ATMs), 400 automobile safety, 205 aviation safety, 85, 321, 379–383 Avnaim-Pesso, Liora, 166, 167 Awakenings (Sacks), 88 Azar, Pablo, 372 Bachelier, Louis Jean-Baptiste Alphonse, 18–20, 21, 234 back testing, 285 Ball, Lucille, 395 Bamberger, Gerry, 235–236 Bankers Trust, 320, 344 Bank of America, 386–387 Bank of England, 366–367 bank runs, 176 Barings Bank, 61 Barnea, Amir, 161 Baron-Cohen, Simon 111 Barrett, Majel, 396 Bartra, Oscar, 100 BATS Global Markets, 360 Bear Stearns, 304, 305, 307, 308, 309, 316, 317 Bechara, Antoine, 106 behavioral economics, 3, 6–7, 51, 71, 92, 220 Behavioral Investment Allocation Strategy (BIAS), 90 behavioral risk, 388–394 Beinhocker, Eric, 218 bell curve (Gaussian distribution), 22, 273 Benner, Samuel, 29 Benner’s Prophecies of Future Ups and Downs in Prices, 29 Benyamine, David, 60 Bernanke, Ben, 300 Bernoulli, Daniel, 57 Berns, Gregory, 97, 98 Berra, Yogi, 415 beta (measure), 232, 249, 251, 252, 268–269, 282 Between a Rock and a Hard Place (Ralston), 118 Beutler, Ernest, 419 Bezear Homes, 325 Biham, Eli, 238 Billio, Monica, 376 binary choice model, 190–199, 201–202, 220, 362 biodiversity, 148–149 biofeedback, 93 biological determinism, 170–172 Biological Economics (Lo and Zhang), 218 biotechnology, 401–410 birthday problem, 67–68 Bismarck, Otto von, 417 Biston betularia (peppered moth), 138–140, 141 Bitcoin, 356 Black, Fischer, 27, 97, 260, 274, 276, 356–357 Black-Scholes/Merton option pricing formula, 10, 27, 97, 211, 260, 356–357 Blinder, Alan, 7, 310 block trading, 235 Bloomberg terminals, 360 Bocskocsky, Andrew, 69 Bogle, John C., 6, 263–264, 265, 397, 398 bonds, 259, 409; for biotechnology, 407; government, 242, 249–250, 292; index funds for, 265 Bonfire of the Vanities, The (Wolfe), 322 Bonner, John, 371 bonobo, 162 bonuses, 303–305 Bossaerts, Peter, 101 bounded rationality, 36, 208, 215; Adaptive Markets Hypothesis likened to, 188; applications of, 185, 217; criticisms of, 181–182, 209, 213–214; informational limits acknowledged by, 34; optimization contrasted with, 180, 183 Boyle, Danny, 118 bracketology, 64–65 brain size, 152–53 brainstem, 81 Breiter, Hans, 88–89 Brennan, Tom, 182, 190, 196–197, 198, 203, 220, 362, 369 Brexit referendum, 377 Brodmann, Korbinian, 76 broker-dealers, 304–308, 311, 376 Bronze Age, 163 Brosnan, Sarah F., 337 Brownian motion, 19, 211 Buck v.

The Bottom Billion: Why the Poorest Countries Are Failing and What Can Be Done About It
by Paul Collier
Published 26 Apr 2007

However, a large improvement is not enough; it must be sustained. We decided to define “sustained” as being at least five years. Had we chosen a very long period of sustained improvement, we would have excluded situations such as in Indonesia. The improvement in Indonesia began in 1967 and was broadly sustained until the collapse associated with the Asian financial crisis of 1998. It seemed to us unreasonable to attribute that collapse to failures in the original reforms. Having established what we meant by a turnaround in a failing state, we were at last ready to investigate what generated them. We first investigated the preconditions for a turnaround and then tried to find out what determined whether a turnaround, once it had started, progressed to a decisive escape from being a failing state.

Kicking Awaythe Ladder
by Ha-Joon Chang
Published 4 Sep 2000

Cameron, R, 1993, A Concise Economic History of the World, 2nd ed., Oxford, Oxford University Press. Carr, R, 1980, Modern Spain, 1875-1980, Oxford, Oxford University Press. Carruthers, B, 2000, 'Institutionalising Creative Destruction: Predictable and Transparent Bankruptcy Law in the Wake of the East Asian Financial Crisis', a paper presented at the UNRISD (United Nations Research Institute for Social Development) conference, 'Neoliberalism and Institutional Reform in East Asia', 12-13 May 2000, Bangkok, Thailand. Carruthers, B and Halliday, T , 1998, Rescuing Business - The Making of Corporate Bankruptcy Law in England and the United States, Oxford, Oxford University Press.

Plenitude: The New Economics of True Wealth
by Juliet B. Schor
Published 12 May 2010

Global surpluses of labor, including vast numbers of former rural peasants in China, combined with the market power of chains such as Wal-Mart, have led to relentless downward pressure on apparel workers’ wages. Other contributors to low prices include artificially inexpensive global shipping, technological innovation in inventory control, and fierce competition among suppliers. In the late 1990s, the Asian financial crisis accelerated the downward price trend as exporting economies endured a severe contraction that further eroded wages. The cost of a dress, a pair of pants, or a coat declined sharply. The consumer price index for apparel, which stood at 127 in 1991, fell to a low of 117.9 in 2006. For twenty years, consumers have ratcheted up their purchases of apparel.

In Defense of Global Capitalism
by Johan Norberg
Published 1 Jan 2001

Reconsidering a Financial Quick Fix,’’ Foreign Affairs 78 (May/June 1999): 18–22. 6. John Micklethwait and Adrian Wooldridge, A Future Perfect (New York: Random House, 2000), p. 55. 7. Eichengreen and Mussa, p. 18. 8. Steven Radelet and Jeffrey Sachs, ‘‘What Have We Learned, So Far, From the Asian Financial Crisis,’’ CAER II Discussion Paper no. 37 (Cambridge, Mass.: Harvard Institute for International Development, 1999), http://www.hiid.harvard.edu/caer2/htm/content/papers/paper37/paper37.htm; Tomas Larsson, ‘‘Asia’s Crisis of Corporatism,’’ in Va´squez. 9. Yago and Goldman. 10. Klein, chap. 9; Elmbrant, p. 85f; World Bank World Development Report 2000/2001, p. 163. 11.

How to Run the World: Charting a Course to the Next Renaissance
by Parag Khanna
Published 11 Jan 2011

Business and government can’t forever point to each other’s leaks. If the boat sinks, everyone is a victim. *With the inclusion of the European Union and eventually Russia, G-7 has actually been more a G-9; it is also referred to as the G-8. *The G-20 actually first convened in 1999 after the Asian financial crisis, but it did not gain momentum until 2008. The G-20 members are Argentina, Australia, Brazil, Canada, China, the European Union, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom, and the United States. Part Two SAVING US FROM OURSELVES Chapter Four Peace Without War Diplomacy without power is like an orchestra without a score.

The Behavioral Investor
by Daniel Crosby
Published 15 Feb 2018

List of some notable manias, panics and crashes Tulip mania (Netherlands) – 1637 South Sea Bubble (UK) – 1720 Bengal Bubble (UK) – 1769 Credit Crisis of 1772 (UK) Financial Crisis of 1791 (US) Panic of 1796–7 (US) Panic of 1819 (US) Panic of 1825 (UK) Panic of 1837 (US) Panic of 1847 (UK) Panic of 1857 (US) Panic of 1866 (UK) Black Friday (US) – 1869 Paris Bourse crash of 1882 (France) “Encilhamento” (Brazil) – 1890 Panic of 1893 (US) Panic of 1896 (US) Panic of 1901 (US) Panic of 1907 (US) Great Depression (US) – 1929 Recession of 1937–8 (US) Brazilian Market Crash of 1971 British Market Crash of 1973–4 Souk Al-Manakh Crash (Kuwait) – 1982 Black Monday (US) – 1987 Rio de Janeiro Stock Exchange Crash – 1989 Japanese Asset Price Bubble – 1991 Black Wednesday (UK) – 1992 Asian Financial Crisis – 1997 Russian Financial Crisis – 1998 dot.com Bubble (US) – 2000 Chinese Stock Bubble – 2007 Great Recession of 2007–9 (US) European Sovereign Debt Crisis (2010) Flash Crash of 2010 (US) Notes 114 L. Swedroe, ‘Why alpha’s getting more elusive,’ ETF.com (November 21, 2014). 115 T.

Blue Ocean Strategy, Expanded Edition: How to Create Uncontested Market Space and Make the Competition Irrelevant
by W. Chan Kim and Renée A. Mauborgne
Published 20 Jan 2014

Not only did the unit have a distinctive value curve, but it also faced the most intense competition. Samsung Electronics institutionalized the use of the strategy canvas in its key business creation decisions by establishing the Value Innovation Program (VIP) Center all the way back in 1998. Samsung was at a crossroads at the time. With the aftermath of the 1997 Asian financial crisis still being felt, the company, under the direction of its leader, Jong Yong Yun, saw the dire need to break out of commodity-type competition and create products and businesses that were both differentiated and lower cost. Only that, CEO Yun felt, would propel the company to become a leading consumer electronics company of the future.

When Free Markets Fail: Saving the Market When It Can't Save Itself (Wiley Corporate F&A)
by Scott McCleskey
Published 10 Mar 2011

See asset backed securities (ABSs) AIG CDS exposure and insufficient collateral, 39 credit default swaps, 5 Federal Reserve, 29, 39 government bailout of, 25 liquidity crisis was tipping point for, 39 performance pay, government bailout money for, 48 taxpayers’ funds collateralized, 39 American Association of Retired Persons (AARP), 105 American Bankers Association, 58, 61–62 Anti-Trust Division of Justice, 17–18 Asian financial crisis, 16 asset backed securities (ABSs), 32–33, 36, 181 Associated Press, 87, 171 Australia, 97, 136 B Bank for International Settlements, 38, 43, 185 Bank of America, 16–17, 77 Basel Committee for Banking Supervision (BCBS), 140 BCBS. See Basel Committee for Banking Supervision (BCBS) Bear Stearns collapse of, 21, 38 government bailout of, 25, 134 investment banks and bad asset classes, 14 J.P.

Everybody Lies: Big Data, New Data, and What the Internet Can Tell Us About Who We Really Are
by Seth Stephens-Davidowitz
Published 8 May 2017

Why might light at night be a good measure of GDP? Well, in very poor parts of the world, people struggle to pay for electricity. And as a result, when economic conditions are bad, households and villages will dramatically reduce the amount of light they allow themselves at night. Night light dropped sharply in Indonesia during the 1998 Asian financial crisis. In South Korea, night light increased 72 percent from 1992 to 2008, corresponding to a remarkably strong economic performance over this period. In North Korea, over the same time, night light actually fell, corresponding to a dismal economic performance during this time. In 1998, in southern Madagascar, a large accumulation of rubies and sapphires was discovered.

The Alpha Masters: Unlocking the Genius of the World's Top Hedge Funds
by Maneet Ahuja , Myron Scholes and Mohamed El-Erian
Published 29 May 2012

And that’s even before you get to the various types of credit derivatives.” And so this promising young man found himself at a moment of tremendous opportunity in an area that he loved, where there were essentially no veterans let alone experts. Interesting things began to happen. Just before Weinstein joined Deutsche, there was the 1997 Asian financial crisis, where Korean banks verged on collapse. Then Thailand couldn’t pay its debts. Then a few months later, Russia defaulted on its debt, indirectly leading to the collapse of the colossal hedge fund Long Term Capital Management, threatening American, European, and Japanese banks with catastrophe.

The New Economics: A Bigger Picture
by David Boyle and Andrew Simms
Published 14 Jun 2009

Regulation of finance, and the restoration of policy autonomy to democratic government, implies the reintroduction of capital controls. Governments need the freedom to use capital control as an active component of economic policy, to encourage certain types of capital flow and to discourage others. The Asian financial crisis of the late 1990s made it very clear that countries with capital controls were both insulated from the crisis and retained policy autonomy to pursue their national economic priorities. The current crisis drives the final nail in the coffin of the idea that countries should simply abandon all interference with international financial markets.

Propaganda and the Public Mind
by Noam Chomsky and David Barsamian
Published 31 Mar 2015

India’s macroeconomic statistics are not bad, so there’s been growth and great praise for India, despite objections that it is moving too slowly. It didn’t liberalize finance, as South Korea did under U.S. pressure. This is part of the reason, it is widely assumed, that South Korea was hit so hard by the Asian financial crisis while India, like China, stayed more or less immune. There’s a fair amount of U.S. and other foreign investment coming in, a lot of buying up of the country. But there’s more to it, as usual. India, unlike the United States and like practically every other industrial country outside the U.S., keeps regular social statistics.

Rethinking Money: How New Currencies Turn Scarcity Into Prosperity
by Bernard Lietaer and Jacqui Dunne
Published 4 Feb 2013

Rui Izumi, associate professor at the School of Economics, Senshu University, in Tokyo, personal correspondence with Jacqui Dunne: “Major factors that have contributed to the growth of local currencies: First, and perhaps surprisingly, was a program on national television in the late 1990s called Michael Ende’s Last Message. This broadcast profiled complementary systems from the 1930s in Europe up [to] today’s WIR, LETS, and other popular systems. It touched a collective nerve. At that time, Japan was in deflationary depression after the East-Asian financial crisis happened in 1997 and a bubble economic collapse in 1991, and these caused many Japanese people to wonder about speculation and money. Second, Toshiharu Kato, a bureaucrat at Department of Trade and Industry, created the term ‘Eco-money.’ Many people felt an affinity with the term rather than the phrase ‘community or complementary currency,’ and many books with the title containing the term ‘Eco-money’ were published.” 13.

23 Things They Don't Tell You About Capitalism
by Ha-Joon Chang
Published 1 Jan 2010

By 2007, net foreign debt (foreign debts minus foreign lending) reached nearly 250 per cent of GDP, up from 50 per cent of GDP in 1997. Countries have gone to pieces with far less exposure – foreign debts were equivalent to 25 per cent of GDP in Korea and 35 per cent of GDP in Indonesia on the eve of the Asian financial crisis in 1997. On top of that, the shady nature of the financial deals behind the Icelandic economic miracle was revealed – very often the main borrowers from the banks were key shareholders of those same banks. New engine of growth? Why am I spending so much time talking about a small island with just over 300,000 people that does not even have a train station or a McDonald’s, however dramatic its rise and fall may have been?

Ten Lessons for a Post-Pandemic World
by Fareed Zakaria
Published 5 Oct 2020

Now the pendulum has swung back, and there is a pervasive sense that markets alone cannot solve the widening inequality and rampant job insecurity that have been sparked by relentless technological change and foreign competition. These problems require government solutions. Has the pandemic changed society’s mood in ways that were not possible before? Previous shocks to the system occasioned a sense of foreboding and predictions of wholesale change—only to be met with cosmetic changes in policy. During the Asian financial crisis of the late 1990s, the economist Paul Krugman warned in a Fortune essay that unless Asian countries took drastic measures (like putting controls on their currency), “we could be looking at a true Depression scenario—the kind of slump that 60 years ago, devastated economies, destabilized governments, and eventually led to war.”

The Enablers: How the West Supports Kleptocrats and Corruption - Endangering Our Democracy
by Frank Vogl
Published 14 Jul 2021

Rhodes, the former senior vice chairman of Citigroup and chairman of Citibank, has been involved in more sovereign debt restructurings than any other banker, and he has long been worried. He played leading roles in restructuring the debts of Latin American countries as they defaulted one after another in the 1980s, he predicted the Asian financial crisis in the late 1990s, and he issued warnings of financial crisis ahead in early 2007 and again in early 2008. We have worked together over many years and he has long argued in articles, TV interviews, and speeches that the ever-increasing determination of investors to pile into high-yielding bonds issued by high-risk governments is bound to end in disaster.

Heads I Win, Tails I Win
by Spencer Jakab
Published 21 Jun 2016

The street-smart kid turned academic turned hedge fund star learned at the feet of the great George Soros and was one of the top-performing investors of the 1990s. In 1996 he was named the number one hedge fund manager in the world by an industry newsletter after making returns of 35 percent compounded over many years. Then he blew up in the 1997 Asian financial crisis following a disastrous bet on Thai banks. “Blew up” is an imprecise term, but Niederhoffer’s first downfall was a thermonuclear blast, wiping out the fund and rendering past performance meaningless. Ironically, Niederhoffer had just published a book I really liked (well, I still like it) called The Education of a Speculator that dealt, among other things, with the similarities and differences between gambling and investing.

The Origins of Political Order: From Prehuman Times to the French Revolution
by Francis Fukuyama
Published 11 Apr 2011

Over the following fifty years, Nigeria took in more than $300 billion in oil revenues, and yet its per capita income declined in the years between 1975 and 1995. In contrast, South Korea grew at rates ranging from 7 to 9 percent per year over this same period, to the point that it became the world’s twelfth-largest economy by the time of the Asian financial crisis in 1997. The reason for this difference in performance is almost entirely attributable to the far superior government that presided over South Korea compared to Nigeria. Between rule of law and growth In the academic literature, the rule of law is sometimes considered a component of governance and sometimes considered a separate dimension of development (as I am doing here).

…

With some gentle nudging from its ally the United States, this happened in 1987, when the first democratic elections for president were announced (arrow 3). Both the country’s rapid economic growth and its transition to democracy helped strengthen the regime’s legitimacy, which in turn helped, among other things, to strengthen its ability to weather the severe Asian financial crisis of 1997–1998 (arrows 4 and 5). Finally, both economic growth and the advent of democracy helped to strengthen South Korea’s rule of law (arrows 6 and 7). In South Korea’s case, all of the different dimensions of development tended to fortify one another, as modernization theory suggested, though there was a definite sequencing of stages that delayed the onset of electoral democracy and rule of law until industrialization had occurred.

Grave New World: The End of Globalization, the Return of History
by Stephen D. King
Published 22 May 2017

The European Union was blamed by many voters – not just in the UK, but also in increasing numbers elsewhere in Europe – for all manner of problems, ranging from austerity and unemployment to excessive immigration and an inability to deal with terrorism. Many countries in Asia looked upon the IMF with considerable scepticism given its controversial handling of the Asian financial crisis. All of this raises a critical question. Can globalization be healed or, instead, are we facing a world in which our international relationships – political, economic, financial – are beating a disorderly retreat? POPULISTS AND RENEGADES Some argue that the problem represents no more than a growing divide between the traditional right and left.

The Enigma of Capital: And the Crises of Capitalism
by David Harvey
Published 1 Jan 2010

The rise of Japan in the 1960s, followed by South Korea, Taiwan, Singapore and Hong Kong in the 1970s, and then the rapid growth of China after 1980, later accompanied by industrialisation spurts in Indonesia, India, Vietnam, Thailand and Malaysia during the 1990s, has altered the centre of gravity of capitalist development, although it has not done so smoothly. The east and south-east Asian financial crisis of 1997–8 saw wealth flow briefly but strongly back towards Wall Street and the European and Japanese banks. If crises are moments of radical reconfigurations in capitalist development, then the fact that the United States is having to deficit-finance its way out of its financial difficulties on such a huge scale and that the deficits are largely being covered by those countries with saved surpluses – Japan, China, South Korea, Taiwan and the Gulf States – suggests this may be the occasion for such a shift.

The Post-American World: Release 2.0
by Fareed Zakaria
Published 1 Jan 2008

For an even better example of just how profound the changes associated with the rise of the rest will be, reread the coverage of the November 2008 G-20 summit in Washington, D.C., which took place during the tensest days of the global financial crisis. Every prior crisis had been handled by the IMF, the World Bank, or the G-7 (and, later, the G-8). In past crises, the West played the part of the stern schoolteacher rebuking a wayward classroom. The lessons the teachers imparted now seem discredited. Recall that during the Asian financial crisis the United States and other Western countries demanded that the Asians take three steps—let bad banks fail, keep spending under control, and keep interest rates high. In its own crisis, the West did exactly the opposite on all three fronts. Economics is not a zero-sum game—the rise of other players expands the pie, which is good for all—but geopolitics is a struggle for influence and control.

When the Money Runs Out: The End of Western Affluence
by Stephen D. King
Published 17 Jun 2013

Ultimately, though, the Indonesian people knew whom to blame. Suharto may have been re-elected in March 1998 but everyone knew the outcome was rigged. Two months later he was gone, a victim of popular student-led uprisings, economic meltdown and, ultimately, a nation's refusal to accept ongoing political corruption. Suharto didn't cause the Asian financial crisis but he was one of its most visible casualties. Malaysia: Mahathir Deflects Blame Mahathir Mohamad, Malaysia's leader, adopted a rather different approach. He, too, had been in power for many years, first becoming Prime Minister in 1982. Yet he survived the Asian crisis. As with Indonesia, Malaysia had seen a fourfold increase in per capita incomes between the mid-1960s and the mid-1990s.

Leading From the Emerging Future: From Ego-System to Eco-System Economies
by Otto Scharmer and Katrin Kaufer
Published 14 Apr 2013

Says Lawrence Lau, professor of economic development, emeritus, Stanford University, and chairman, CIC International (Hong Kong): “The overwhelming majority of foreign exchange transactions are thus purely speculative, in effect, pure gambles, and serve no useful social purposes.”3 This disconnect between the financial and the real economy produces the financial bubbles that keep plaguing the global economy: the Latin American debt crisis (1980s); the Asian financial crisis (1997); the dot-com bubble (2000); and the US housing crisis (2006–07), which was followed by the world financial crisis (2007–09) and the euro crisis (2010–). Such financial bubbles destabilize the real economy instead of serving it. 2. A disconnect between the infinite growth imperative and the finite resources of Planet Earth.

The Age of Stagnation: Why Perpetual Growth Is Unattainable and the Global Economy Is in Peril
by Satyajit Das
Published 9 Feb 2016

Political scientist Francis Fukuyama, in his 1992 book The End of History and the Last Man, made the case for the triumph of Western liberal democracy and market systems as the end point of ideological evolution. In reality, though, the period was punctuated by a series of rolling bubbles and crises: the 1987 stock market crash, the 1990 collapse of the junk bond market, the 1994 great bond market massacre, the 1994 Tequila economic crisis in Mexico, the 1997 Asian financial crisis, the 1998 collapse of the hedge fund Long-Term Capital Management, the 1998 default of Russia, and the 2000 dot-com crash. These one-in-ten-thousand-years events seemed to occur every year or so. In 1989, Japan, considered an economic poster child, fell into a prolonged recession following the collapse of a credit-fueled real estate and stock boom.

Winning Now, Winning Later
by David M. Cote
Published 17 Apr 2020

Bankers maintained the subprime problem was limited, and initially it didn’t seem to be a big deal because Honeywell’s sales, margins, earnings-per-share, cash flow, and orders were all strong. Our M&A machine was working, and we had many new products and services, process initiatives, and geographic expansions in the pipeline. In the back of my mind, I did harbor some doubts. The Asian financial crisis of the late 1990s had begun with the collapse in value of the Thai currency. Observers had proclaimed then as well that it was no big deal. But the crisis spread to Brazil, and then to Russia. Before you knew it, we had a global crisis on our hands. Would a similar situation come to pass here?

Straight Talk on Trade: Ideas for a Sane World Economy
by Dani Rodrik
Published 8 Oct 2017

Argentine economy minister Domingo Cavallo had envisioned the convertibility law as both a harness and an engine for the economy. The strategy worked well initially by bringing much-needed price stability. But, by the end of the decade, the Argentine nightmare had returned with a vengeance. The Asian financial crisis and the Brazilian devaluation in early 1999 left the Argentinean peso looking decidedly overvalued. Doubts about Argentina’s ability to service its external debt multiplied, confidence collapsed, and before too long, Argentina’s creditworthiness slid below that of some African countries. Ultimately, what sealed Argentina’s fate was not its leaders’ lack of political will but rather their inability to impose ever-more costly policies on their domestic constituents.

Global Inequality: A New Approach for the Age of Globalization
by Branko Milanovic
Published 10 Apr 2016

We have to go back to the period before the 1970s to find a gap that was mostly in the other direction, when Europe, North America, and Japan were growing faster than what were then called “developing countries.” During the past thirty-five years, there is only one year (1998) when the key emerging economies (excluding China) grew at a perceptibly lower rate than the rich world. This was the year of the Asian financial crisis, when Indonesia’s economy shrank by 15 percent and the contagion affected Brazil and South Africa too, leading to modest negative growth rates (minus 1 percent) in those countries. FIGURE 4.2. Difference in the combined (population-weighted) growth rates between the principal emerging economies (excluding China) and the advanced economies, 1951–2013 This graph shows the difference in population-weighted GDP per capita growth rates between emerging economies other than China (India, Brazil, Indonesia, South Africa, and Vietnam) and advanced economies (United States, European Union, and Japan).

The Curse of Cash
by Kenneth S Rogoff
Published 29 Aug 2016

In financially liberalized advanced economies, the latter operation is normally the province of fiscal authorities, not a central bank acting in its narrow monetary policy capacity. Either by charter or by tradition, most advanced-country central banks are highly reluctant to get involved in operations that seem to favor particular markets. A dramatic and successful exception occurred during the Asian financial crisis of the late 1990s, when the Hong Kong Monetary Authority stunned the world by buying into its country’s stock market to fend off a currency attack. Back then, it was considered an unorthodox and highly successful maneuver. For advanced economies, this kind of intervention has been the exception, not the rule, at least before the 2008 crisis.

Rogue States
by Noam Chomsky
Published 9 Jul 2015

The cheers now resound once again, while wages have fallen more than 25 percent since 1994 (the first year of NAFTA), after a very severe decline from the early 1980s, when the liberal reforms were initiated; real minimum wages dropped more than 80 percent from 1981 to 1998.12 Just as the Asian financial crisis erupted, the World Bank and IMF published studies praising the “sound macroeconomic policies” and “enviable fiscal record” of Thailand and South Korea, singling out the “particularly intense” progress of “the most dynamic emerging [capital] markets,” namely “Korea, Malaysia, and Thailand, with Indonesia and the Philippines not far behind.”

Reinventing the Bazaar: A Natural History of Markets
by John McMillan
Published 1 Jan 2002

Given that corruption exists, it does less harm to markets if it is monopolized than if it is free for all. Indonesia’s system relied on the power of one man, and fell with him. Suharto resigned in 1998 after riots in which over a thousand people died. The end came partly because of the external shock of the 1997 Asian financial crisis, which was beyond the ability of Indonesia’s stunted political, legal, and regulatory institutions to cushion, and partly because of the people’s disgust at the Suharto government’s cronyism. Demonstrating students chanted “KKN,” for korupsi, kolusi, nepotisme. In the students’ opinion, corruption, collusion, and nepotism were the causes of the crisis.

The Corruption of Capitalism: Why Rentiers Thrive and Work Does Not Pay
by Guy Standing
Published 13 Jul 2016

The titans of finance became ‘masters of the universe’, in Tom Wolfe’s famous phrase in The Bonfire of the Vanities, his 1987 novel satirising Wall Street, as they mingled with heads of state and spent time in senior government posts before returning to make yet more money from speculation. The rise of finance was accompanied by more frequent and widespread financial crises, from the Latin American debt crisis in the 1980s to the worldwide banking collapse of 2007–08 and subsequent global recession. Little was done to prevent them, even after the Asian financial crisis of 1997–98 and the related collapse of Long-Term Capital Management, a US hedge fund that boasted two Nobel Prize-winning neo-liberal economists on its board. There was no political will to challenge the might of financial capital. At the heart of neo-liberalism is a contradiction. While its proponents profess a belief in free ‘unregulated’ markets, they favour regulations to prevent collective bodies from operating in favour of social solidarity.

The Uninhabitable Earth: Life After Warming
by David Wallace-Wells
Published 19 Feb 2019

This did not prompt a dramatic expansion of social spending or the extension of a Marshall Plan across the Caribbean; instead, Donald Trump tossed a few rolls of paper towels to the citizens of San Juan, then left them to plead with the outsiders who now controlled the public coffers for mercy, which did not come. The echo of financial crisis is unmistakable, as Hsiang and Houser note, suggesting such crises may offer the best conceptual model for the punishments of climate change. “For Puerto Rico,” they write, “Maria could be as economically costly as the 1997 Asian financial crisis was to Indonesia and Thailand and more than twice as damaging as the 1994 Peso Crisis was to Mexico.” * * * — How well will the shock doctrine be sustained through a new climatic regime, one that assaults the economies of the world with extreme weather and natural disaster at an entirely unprecedented rate and—just in the diminishing downtime between hurricanes and floods and heat waves and droughts—also threatens to devastate agricultural yields and cripple worker productivity?

The Infinite Machine: How an Army of Crypto-Hackers Is Building the Next Internet With Ethereum
by Camila Russo
Published 13 Jul 2020

It wasn’t loaded with fancy games. He just loved to experiment with different shapes and colors on Microsoft Paint and would spend entire afternoons punching in numbers and testing formulas on Excel. By 1998, the limping Russian economy suffered a new blow as demand for oil, its main export, plummeted following the Asian financial crisis. The government defaulted on its debt and the central bank stopped defending a fixed trading band for the ruble, which caused the currency to plunge. Many companies, including Renaissance Capital, slashed expenses to stay afloat amid a contracting economy, and that meant cutting Natalia’s job.

The Physics of Wall Street: A Brief History of Predicting the Unpredictable
by James Owen Weatherall
Published 2 Jan 2013

Hanover, NH: Brandeis University Press. Prigogine, I., and G. Nicolis. 1977. Self-Organization in Nonequilibrium Systems. New York: John Wiley and Sons. Pynchon, Thomas. 1973. Gravity’s Rainbow. New York: Viking Press. Radelet, Steven, and Jeffrey D. Sachs. 2000. “The Onset of the East Asian Financial Crisis.” In Currency Crises, ed. Paul Krugman, 105–62. Chicago: University of Chicago Press. Rajan, Raghuram G. 2010. Faultlines. Princeton, NJ: Princeton University Press. Reinhart, Carmen M., and Kenneth Rogoff. 2009. This Time Is Different: Eight Centuries of Financial Folly. Princeton, NJ: Princeton University Press.

The Deficit Myth: Modern Monetary Theory and the Birth of the People's Economy
by Stephanie Kelton
Published 8 Jun 2020

,” American Affairs 3, no. 1 (Spring 2019), americanaffairsjournal.org/2019/02/does-america-need-global-savings-to-finance-its-fiscal-and-trade-deficits/. 21. L. Randall Wray, “Twin Deficits and Sustainability,” Policy Note, Levy Economics Institute of Bard College, March 2006, www.levyinstitute.org/pubs/pn_3_06.pdf. 22. The 1997 Asian financial crisis, in particular, taught the world that pegging exchange rates is unwise if countries cannot maintain a stockpile of reserves, especially without capital controls. See Wray, “Twin Deficits and Sustainability.” 23. Scott Ferguson, Maxximilian Seijo, and William Saas, “The New Postcolonial Economics with Fadhel Kaboub,” MR Online, July 7, 2018, mronline.org/2018/07/07/the-new-postcolonial-economics-with-fadhel-kaboub/. 24.

Age of Anger: A History of the Present
by Pankaj Mishra
Published 26 Jan 2017

Is this America’s frustrations venting themselves? Is it a valid frustration? Who is to blame for the mess? At a point when the world has seen communism falter as an imperfect system to manage people, democracy seems to be headed down the same road. No one is seeing the ‘big’ picture. The Asian financial crisis of 1997, which plunged several countries into chaos and mass suffering, showed, more than a decade before the Euro-American financial crisis of 2008, how mobile and speculative finance could be as devastatingly unpredictable and hostile to socio-political order as weapons of war. The irruption of fundamentalist hatred on 9/11 briefly disrupted celebrations of a world benignly globalized by capital and consumption, exposing paradise to the hell of global insecurity.

The Divide: A Brief Guide to Global Inequality and Its Solutions
by Jason Hickel
Published 3 May 2017

Indeed, it is the approach that high-profile philanthropists like George Soros and the Rockefellers have taken: make mountains of money during the day, and in the evening give a bit away to improve the lives of the poor. But we have to ask the difficult question: where do their riches come from in the first place? Much of Soros’ wealth comes from currency speculation, which played a direct role in the 1997 Asian financial crisis that pushed millions of people into poverty. The Rockefeller Foundation won its riches from monopolies in the fossil fuel industry. In almost every case we can find that the accumulation that sustains charity comes from processes that cause the very problems they purport to solve. Starbucks has given charity to help improve the health outcomes of poor people in Ethiopia’s coffee-growing communities, but at the same time the company stands accused of dramatically underpaying Ethiopian coffee growers.2 Coca-Cola gives a bit of charity to help impoverished communities in Guatemala, but the firm has been accused of engaging in violent campaigns against trade union organisers in order to prevent wages on its Guatemalan sugar plantations from rising.3 Fairness is better than charity.

Capitalism, Alone: The Future of the System That Rules the World
by Branko Milanovic
Published 23 Sep 2019

China’s growth rate is on average about 8 percent, Vietnam’s around 6 percent, and the United States’ only 2 percent. Not only is the gap between the growth rates high, but it is constant across all years: over a twenty-six-year period, there was only one year when Vietnam and the United States displayed the same growth rate (in 1997, the year of the Asian financial crisis), and in no year was Chinese growth equal to or lower than American growth. As we shall see below, this remarkable performance of political capitalist countries is something that puts them, at least if prosperity is a key criterion, in competition with liberal capitalism as to the best way to organize society.

Nomad Capitalist: How to Reclaim Your Freedom With Offshore Bank Accounts, Dual Citizenship, Foreign Companies, and Overseas Investments
by Andrew Henderson
Published 8 Apr 2018

Because of this, they are generally immune to global recession and depression. Cambodia has not had a recession in more than 20 years. In fact, there has not been a single year in the last decade when growth in Cambodia has been less than 7-8%. It has even enjoyed double digit growth. It has been one big growth chart. Skipping the Asian Financial Crisis of the 1990s, the tech bubble of the early 2000s and the Global Financial Crisis of 2008, Cambodia’s economy has shrugged off the rest of the world’s problems. So, while frontier markets may be risky by one account, they can also be an important part of a diversified portfolio. An entrepreneur who spreads their risk by placing some capital in overlooked markets that are in their infancy will be better off than those who place all their capital in ‘developed’ markets that are all susceptible to global financial crises.

Confidence Game: How a Hedge Fund Manager Called Wall Street's Bluff
by Christine S. Richard
Published 26 Apr 2010

Long Term Capital Management, a hedge fund run by a team of Nobel Prize-winning mathematicians, was unraveling and threatening to take the financial system with it. Almost immediately after the AHERF bankruptcy filing, MBIA sought to reassure investors by stating that it had $75 million of reserves that would be adequate to absorb the loss. Yet confidence in the bond insurer continued to falter that summer on a combination of AHERF concerns and the Asian financial crisis. For the first time, investors were asking whether MBIA’s triple-A rating was at risk. MBIA’s shares had been sinking all summer, dropping from a high of around $53 in April to $43 by late summer and then tumbling precipitously in early September. On September 11, 1998, the company held a conference call to set the record straight.

Poisoned Wells: The Dirty Politics of African Oil
by Nicholas Shaxson
Published 20 Mar 2007

“We need to deal with the cancer of corruption.”5 He had placed the issue squarely on the development agenda for the first time at a multilateral institution. Peter Eigen, chairman of Transparency International, calls the World Bank “the most powerful force against corruption in the world nowadays.”6 The 1997 Asian financial crisis had rammed home the idea that economic liberalization is not enough if it is not accompanied by good governance. Government does not need sweeping away, it needs fixing. The worst disasters in postindependence Angola—civil war, hyperinflation, and corruption—came not from overly strong government, but from government weakness—above all, weak military control and a fragmented economic system with out-of-control spending.

Age of Discovery: Navigating the Risks and Rewards of Our New Renaissance
by Ian Goldin and Chris Kutarna
Published 23 May 2016

The hindsight-informed analysis has been repeated many times: American and European bankers played round after round of a highly lucrative game—lending cash to consumers and homebuyers, moving the debts and risk off their books through securitization and credit derivatives, then lending again—until households were drowning in borrowing costs and the balance sheets of big financial institutions were awash with hundreds of billions in bad debts that would never be paid off. The integration of emerging economies into global capital markets amplified the risk: China was generating lots of cash, saw few investment opportunities in Asia after the 1997 Asian financial crisis, and so plowed it into the US economy by buying US government debt. The foreign cash infusion helped dampen domestic interest rates and kept the game going longer. We did not clearly understand how fragile these activities made the global financial system, and we broke it. Households that took out big mortgages in the belief that housing prices would never go down turned out to be wrong.

The Land Grabbers: The New Fight Over Who Owns the Earth
by Fred Pearce
Published 28 May 2012

He told environmentalists he would create a “sustainable” forest industry in Indonesia, based around acacia plantations. I still have the publicity literature from the time. But the plantations only emerged when the forests were all gone. He continued to oversee unprecedented forest destruction. The wheels nearly came off the deforestation juggernaut after the 1998 Asian financial crisis. This followed huge forest fires in Sumatra and Borneo during the 1997 El Niño drought, which had alerted the world to the parlous state of the Indonesian forests. Both APP and APRIL effectively went bust as global pulp prices collapsed and their activities came under international scrutiny for the first time.

Dark Towers: Deutsche Bank, Donald Trump, and an Epic Trail of Destruction
by David Enrich
Published 18 Feb 2020

Abs, Hermann, 19–22, 320 Achleitner, Paul, 234–36, 266, 345–48 Ackermann, Joe background of, 97 at Bank of Cyprus, 338–39 at Credit Suisse, 97 death of, 124–25 at World Economic Forum, 209–10 at Zurich Insurance, 203–204, 210, 227, 338 Ackermann, Joe, at Deutsche Bank, 97–102, 119–21, 166, 169 appointment as CEO, 140–41 Bankers Trust acquisition, 65–66, 169 Bänziger and, 105–109 bombing attempt, 162–63 compensation systems, 101, 152 de facto CEO, 85, 98–102 Dresdner Bank deal, 82–83 financial crisis and, 141–42 Frankfurt Festhalle speech, 178–81 leadership style, 100–102 Mitchell’s death, 89, 91–92 Postbank acquisition, 148, 234 profits-at-any-price approach, 98–102, 103, 105–106, 109, 119–20, 130–32, 147–48, 157 retirement, 178–81, 192 return-on-equity target, 99–100, 108, 109 Russian business, 108–11, 200, 317–18, 340 sanctions-busting transactions, 103–105, 104n, 236 September 11 attacks (2001), 95–96 Trump loans, 166, 174 Albright College, 50, 217–18 Alfa Bank, 327 Allianz, 23 Alta Mira Treatment Center, 242–43, 244–45, 248 Alt-A mortgages, 131–32, 136–37, 138, 139, 195, 340, 360 American Civil War, 14 Apprentice, The (TV show), 118–19, 173 Army Rangers, U.S., 105, 105n Arsenal Football Club, 170 Arthur, Chester A., 13 Arthur Andersen, 30 Art of the Deal, The (Trump), 123 Aryanization, 19–20 Asian financial crisis of 1997, 65 Auden, W. H., 230 Audi Q5, 282, 283–84 Auschwitz concentration camp, 20, 67 Avila, Jonathan, 217, 245 Bacon, Francis, 83 BaFin (Federal Financial Supervisory Authority), 263–65, 332 Banca Monte dei Paschi scheme, 208, 296 BaFin (Federal Financial Supervisory Authority) (cont.)

Arguing With Zombies: Economics, Politics, and the Fight for a Better Future
by Paul Krugman
Published 28 Jan 2020

The point is that while the new House majority won’t be able to do much beyond defending Obamacare, at least for now, its allies in the states can do much more, and in the process deliver on the agenda the whole party ran on this year. As they say in New Jersey, you got a problem with that? 4 Bubble and Bust THE SUM OF ALL FEARS DOES ANYONE STILL REMEMBER THE ASIAN FINANCIAL CRISIS OF THE late 1990s? With everything that has happened since, it can seem like ancient history. Yet for those who followed it, it was a deeply frightening event, not just for its immediate consequences—trillions of dollars were lost, tens of millions of people saw their lives disrupted—but as an omen.

Treasure Islands: Uncovering the Damage of Offshore Banking and Tax Havens
by Nicholas Shaxson
Published 11 Apr 2011

These matter, of course, but such analyses obscure what all the disasters have in common: offshore. And when offshore erosion has been considered, it has been taken as an inconvenience, to be addressed with Band-Aids. As one IMF report put it: “Offshore banking has most certainly been a factor in the Asian financial crisis. A special effort is therefore needed to help emerging economies . . . to avert financial crises through dissemination of internationally accepted prudential and supervisory standards.”34 The IMF is arguing here in an illogical circle. By helping local elites effectively place themselves above the law and creating new temptations to mischief, the offshore system entirely neuters the chance of prudent regulation and supervision that is needed to protect those countries against that very same offshore system.

After the Fall: Being American in the World We've Made
by Ben Rhodes
Published 1 Jun 2021

The oppressive veil of Soviet totalitarianism was lifted. But the transition to what would come next was turbulent. The privatization of the state’s assets—the nation’s industry and natural resources—resembled a rigged fire sale. Oil prices, a main source of revenue, collapsed to $12 a barrel. The 1998 Asian financial crisis led to a devaluation of currency that further wiped out people’s savings. Meanwhile, all these oligarchs had become billionaires while Russia fell further behind the West—evident in everything from the loss of influence over former Soviet satellites to those women in Kaliningrad making for the border carrying shopping bags full of vodka and cigarettes.

American Foundations: An Investigative History
by Mark Dowie
Published 3 Oct 2009

"Paradoxically," reports a 1999 study released by the Institute for Food and Development Policy, "food and ecological insecurity worsened in parts of the country, even as more rice was produced." The report continues: "Thirty years of `Green Revolution' has left many farmers dependent on expensive external inputs of seeds, fertilizers and pesticides, the tragic result of which became stark with the onset of the Asian financial crisis of 1997."63 When these inputs were limited for lack of foreign exchange and fertilizer subsidies were withdrawn, agricultural productivity was seriously impaired. Indonesia's farmers were further imperiled by an influx of cheap or free emergency food aid, which did nothing to encourage them to revive its own agriculture without again succumbing to chemical-intensive monoculture farming.

The End of Wall Street
by Roger Lowenstein
Published 15 Jan 2010

Just as important, Geithner was a career public servant who did not instinctively recoil from the idea of government intervention. His mentor at the Treasury, Robert Rubin, had championed the American bailout of Mexico, and as undersecretary for international affairs in the late 1990s, Geithner himself was a key player in the government’s response to the pan-Asian financial crisis. Now he argued that the government had to save Bear Stearns or risk a systemic collapse—exactly what Paulson and Bernanke had been fearing. Since the Treasury couldn’t act without Congress’s authority, it had to be the Fed.14 Early Friday morning, the bankers and the bureaucrats reached a consensus.

The Ascent of Money: A Financial History of the World
by Niall Ferguson
Published 13 Nov 2007

Indeed, there was arguably a Paris Consensus before there was a Washington Consensus (though in many ways it was building on a much earlier Bonn Consensus in favour of free capital markets).64 In London, too, Margaret Thatcher’s government pressed ahead with unilateral capital account liberalization without any prompting from the United States. Rather, it was the Reagan administration that followed Thatcher’s lead. Jaime Roldós Aguilera of Ecuador . . . . . . and Omar Torrijos of Panama: Allegedly victims of the ‘economic hit men’ Stiglitz’s biggest complaint against the IMF is that it responded the wrong way to the Asian financial crisis of 1997, lending a total of $95 billion to countries in difficulty, but attaching Washington Consensus-style conditions (higher interest rates, smaller government deficits) that actually served to worsen the crisis. It is a view that has been partially echoed by, among others, the economist and columnist Paul Krugman.65 There is no doubting the severity of the 1997-8 crisis.

The Long Boom: A Vision for the Coming Age of Prosperity
by Peter Schwartz , Peter Leyden and Joel Hyatt
Published 18 Oct 2000

If that decree had not forced equality, the Chinese would have gobbled the vast majority of that economy, too. The Chinese ran outright and were the majority population of three of the four vaunted Asian tigers that stunned the world with their torrid growth in the 1980s and 1990s: Hong Kong, Taiwan, and Singapore. The fourth, South Korea, was the only one to collapse in the Asian financial crisis. Taiwan, the one that most closely compares with Korea in size and output, actually thrived during the crisis due to the much more decentralized, entrepreneurial nature of its economy, which also is decidedly high-tech, and due to its robust democracy. And Singapore has been a model for all Asian countries in making the transition to a higher value service economy and, ultimately, a knowledge economy.

Brazillionaires: The Godfathers of Modern Brazil
by Alex Cuadros
Published 1 Jun 2016

In a sign of its clout, the bank managed to bring Margaret Thatcher to Brazil for a meeting with local businessmen in 1994. And that year Garantia cleared a billion dollars in profit. Pioneers of risky American-style financial bets, its traders got cocky. They sold tons of insurance on Brazilian government bonds without properly hedging their bets, and when the Asian financial crisis exploded in 1997, sending interest rates soaring in emerging markets, Garantia lost hundreds of millions of dollars. Telles would later explain the disaster by blaming Lemann’s absence and the fact that he himself, along with Sicupira, were busy with their outside takeovers. Whatever the truth, Lemann and his partners decided to sell the bank to Credit Suisse.

The Investment Checklist: The Art of In-Depth Research
by Michael Shearn
Published 8 Nov 2011

In short, you need to mentally prepare yourself in advance with the idea that you will not have many outstanding investments in your lifetime. Most investments you make will produce mediocre results, but a few can provide outstanding results. The best investment opportunities usually come in big waves, such as when entire markets decline. There have been several recent examples: the Asian financial crisis of 1997 to 1998, the Internet bubble ending in 2000, and the recession starting in 2007. There were many buying opportunities in 2008 when the S&P 500 dropped 36 percent. This was caused by forced selling. The market sell-off was exacerbated by the indiscriminate selling of stocks by money managers who were forced to sell stocks to fund client redemptions.

The Firm
by Duff McDonald
Published 1 Jun 2014

That officer: Idi Amin, the future tyrant.2 While the family did return to Canada—Barton spent the first eleven years of his McKinsey career in the Toronto office—the Ugandan experience had given him wanderlust, and Barton jumped at the chance to move first to Sydney, Australia, and then Seoul, South Korea, when the firm was having trouble finding partners to staff that office. Almost as soon as he arrived, the Asian financial crisis hit, dealing a severe blow to the Korean banking system. For Barton, though, the crisis was a bit of a godsend: With thirty-four of the country’s banks insolvent, his first big project was to help Korea restructure its entire banking system. “The public sector work was exciting,” he recalled.

Stock Market Wizards: Interviews With America's Top Stock Traders
by Jack D. Schwager
Published 1 Jan 2001

INDEX accounting, 84, 89, 91, 94, 324 Blake, Gil, 189, 197-98 Bloomberg financial services, 57, 59 acquisition finance, 250-52, 253 Advanced Research Projects Agency (ARPA), 262 AIDS drugs, 1 74 Amazon.com, 150-52, 272-73, 323 America Online (AOL), 43-44, 235, 259 Amerigon, 62 arbitrage, 132-33, 255-56, 267, 284 ARPAnet, 262 Asian financial crisis, 18 assets: growth of, 23-24, 207, 312-13 liquidation of, ]65 return of, ], 31 transfer of, 189 value of, 41, 63, 248-49, 253 audits, 84,91 Balance Bars, 66 balance sheets, 42, 51, 85, 268 Bankers Trust, 57, 58 banking, 141, 243-44, 249 Bombay (clothing store), 67-68 bonds: convertible, 257 government, 8, 247-48 illiquid, 7, 8, 25 interest rates and, 9, 24, 67, 105, 133-34, 135, 269, 277 junk, 82 market for, 9-10, 1 10-1 1, 144-45, 285, 309 price of, 7-8, 110-11, 144-45, 285 book value, 44, 149, 150, 165, 167 Brandywine Fund, 58-59 brokerage firms, 55-56, 61-62 Buffett, Warren, 40, 42, 157 business plans, 68-69, 91, 94, 1 18, 122, 316, 324 Business Week, \27n Canada, 1-6, 9-10, 36 capital: bankruptcy, 12-14, 24, 105-6, 122, 139, 145-46, appreciation of, 23 loss of, 68 163 Bannister, Roger, 291 Bear Stearns, 127, 131, 135-36, 138, 142 Beat the Dealer (Thorpe), 266 Beat the Market (Thorpe), 266 Bender, John, 221-38 background of, 221-25 fund managed by, 221, 222 losses of, 225 as novice trader, 225-27 profits of, 221-22, 234 strategy of, 221, 226-38, 303, 304, 306, 312 Bezos, Jeff, 272-73 preservation of, 44, 141, 217 venture, 10, 205, 207, 222, 303 capitalization: large, 34, 43-44, 150, 198-99, 320 medium, 58 revenue vs., 36-37, 45, 52 small, 24, 47, 57, 58, 59, 68, 69, 78, 198-99, 281 for trading, 10, 114-19, 120, 142, 146, 147,205, 207, 222, 303 cash flow, 43, 44, 45, 51, 149, 248 catalysts, 44-46, 52, 60, 61, 62-63, 89, 94, 114, bid/ask differentials, 134-35 215-17,220, 279-81, 307, 325 Black & Decker, 62-63 central processing unit (CPU), 261 blackjack, 266-67 Black-Scholes model, 221, 227-34 certificates, stock, 69-70 chart patterns, 181-84 331 INDEX chief executive officers (CEOs), 49, 91, 241, 244-45, 250 Cook, Marvin, 95, 96, 123-24, 126 Cook, Terri, 97, 99, 106 funds managed by, 128-29, 138, 142-47 Ingram's, 272 as novice trader, 127-38 initial public offerings (IPOs), 24, 25, 250-52, chief financial officers (CFOs), 57, 58, 59, 60, 62, 64, Cramer's commentary, 218 67, 71, 72,94, 142, 324 Church, George J., 320 Cisco, 22 Cray, Seymour, 261-62 profits of, 128-29, 132, 141-42, 147 strategy of, 138-47, 252, 300, 301, 304, 305, 306 279-81 innovation, 147 currency trading, 5, 9, 202-3 Cyrus J.

Disaster Capitalism: Making a Killing Out of Catastrophe
by Antony Loewenstein
Published 1 Sep 2015

“Sometimes we feel as though we are the forgotten island,” says Linda Cash, Christmas Island Tourism Association’s marketing manager.7 Christmas Island and the Cocos Islands were essentially colonies controlled by Australia. In the 1990s a casino brought riches to Christmas Island, but closed due to the Asian financial crisis. Some locals wanted it reopened. Boat arrivals had made at least ten people millionaires on Christmas Island—savvy beneficiaries of the detention business.8 Building commenced in 2006, and the facility was initiated with roughly 800 beds at a cost of $400 million. But the cost increased, and private contractors still had not completed all the work when John Howard was voted out of office in 2007.

The Establishment: And How They Get Away With It
by Owen Jones
Published 3 Sep 2014

When Iceland was plunged into economic ruin by the financial collapse, capital controls were fundamental to its recovery. Brazil, for example, imposed a financial transactions tax that went up to 6 per cent, and was hailed by its government as a success because it prevented its exchange rate jumping too quickly. Malaysia survived the 1997 Asian financial crisis better than competitor economies precisely because it had capital controls. Capital controls monitor the flow of money in and out of a given economy, guarding against asset bubbles and investors’ short-term interests that may be on a collision course with the interests of society as a whole.

The Economics Anti-Textbook: A Critical Thinker's Guide to Microeconomics
by Rod Hill and Anthony Myatt
Published 15 Mar 2010

Public regulation of financial institutions can require individual financial institutions ‘to expend the resources necessary to manage risk, to maintain adequate capital, and pay for risk insurance’ to internalize these external costs, as John Eatwell and Lance Taylor explain in a study of the Asian financial crisis of 1997. They note that while effective management of these externalities is good for society as a whole, the financial institutions ‘tend to resent the costs involved, and argue that, in their case at least, these costs are unnecessary’ (1998: 22–3). The result is an ongoing tension between the regulators and the regulated.

The Great Divide: Unequal Societies and What We Can Do About Them
by Joseph E. Stiglitz
Published 15 Mar 2015

Summers encouraged countries to quickly liberalize their capital markets, to allow capital to flow in and out without restrictions—indeed insisted that they do so—against the advice of the White House Council of Economic Advisers (which I led from 1995 to 1997), and this more than anything else led to the Asian financial crisis. Few policies or actions have greater culpability for that Asian crisis and the global financial crisis of 2008 than the deregulatory policies that Mr. Summers advocated. Supporters of Mr. Summers argue that he is exceptionally qualified to manage crises—and that, while we hope that there won’t be a crisis in the next four years, prudence requires someone who excels at those critical moments.

Targeted: The Cambridge Analytica Whistleblower's Inside Story of How Big Data, Trump, and Facebook Broke Democracy and How It Can Happen Again
by Brittany Kaiser
Published 21 Oct 2019

From SCL’s high-tech op center in Jakarta, the company, he claimed, had spent eighteen months orchestrating massive student rallies that otherwise wouldn’t have occurred and had incited demonstrations that spilled out into the streets and had led to the resignation of the long-ruling dictator, Suharto. It had been a crafty and complex operation, Alexander boasted. Indonesia was a massive country, the seventh-largest in the world, an archipelago spread out among more than three hundred islands. Given the challenge of messaging across those islands, and the backdrop of the 1999 Asian financial crisis, SCL had had to work to calm an entire population of Indonesians who were terribly anxious when the only leader they had known for years stepped down. People feared the instability that Suharto’s resignation would bring to the country, and SCL had anticipated this as it carried out the second phase of its operation: a propaganda campaign that reassured the nation that life without Suharto was “a positive development.”

Red-Blooded Risk: The Secret History of Wall Street
by Aaron Brown and Eric Kim
Published 10 Oct 2011

Not just the one big disaster in 2007, but the many others: the Drexel Burnham bankruptcy, the Bankers Trust scandal, the Kidder Peabody crash, and Long-Term Capital Management’s failure, to name only four. These were among the most advanced firms in these techniques. I haven’t included the collateral damage from Wall Street abuses such as the Orange County bankruptcy, nor the non–Wall Street financial firms like Enron, nor the damage overseas as with the Asian financial crisis, nor the ones that entered more people’s homes like the Internet stock collapse and the mutual fund timing scandal. First, let me reiterate that the good from financial innovations far exceeds the damage. There were scandals and bankruptcies and disasters before quants came to Wall Street.

Culture and Prosperity: The Truth About Markets - Why Some Nations Are Rich but Most Remain Poor
by John Kay
Published 24 May 2004

It is fashionable to adopt one or other of these rich countries as the current exemplar of success-Japan took that role in the 1980s. As the Japanese sun set after 1989, the performance of the German economy was applauded, and then as that country struggled with the burden of reunification, attention turned to the Asian tigers. After the 1997 Asian financial crisis, the United States assumed the role of the most admired economy for economic commentary and business gurus. But, as I shall describe in chapter 4, differences in performance among these twenty countries are small relative to the differences between these twenty and the rest of the world. The division between rich and poor states is sharp and has been enduring.

Makers and Takers: The Rise of Finance and the Fall of American Business
by Rana Foroohar
Published 16 May 2016

“Easy money monetary policy is the best reward in the world for Wall Street. After all, it’s mainly the rich who benefit from a rising stock market.”58 Although markets boomed under Greenspan, they also went bust more than ever before. The crash of 1987, the S&L crisis of 1989, the Mexican peso collapse of 1994, the Asian financial crisis of 1997, the larger emerging-market crisis of 1998, and the dot-com boom and bust all happened on his watch. Each time the economy faltered as a result, Greenspan would lower rates to boost lending. (He used this tactic so reliably, in fact, that Wall Street bankers began calling it the “Greenspan put”—a caustic term that encapsulated their belief that the Fed would bail them out no matter what.)

Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives
by Satyajit Das
Published 15 Nov 2006

However, the text is different. 6 ‘What Worries Warren’ (3 March 2003) Fortune. 13_INDEX.QXD 17/2/06 4:44 pm Page 325 Index accounting rules 139, 221, 228, 257 Accounting Standards Board 33 accrual accounting 139 active fund management 111 actuaries 107–10, 205, 289 Advance Corporation Tax 242 agency business 123–4, 129 agency theory 117 airline profits 140–1 Alaska 319 Allen, Woody 20 Allied Irish Bank 143 Allied Lyons 98 alternative investment strategies 112, 308 American Express 291 analysts, role of 62–4 anchor effect 136 Anderson, Rolf 92–4 annuities 204–5 ANZ Bank 277 Aquinas, Thomas 137 arbitrage 33, 38–40, 99, 114, 137–8, 171–2, 245–8, 253–5, 290, 293–6 arbitration 307 Argentina 45 arithmophobia 177 ‘armpit theory’ 303 Armstrong World Industries 274 arrears assets 225 Ashanti Goldfields 97–8, 114 Asian financial crisis (1997) 4, 9, 44–5, 115, 144, 166, 172, 207, 235, 245, 252, 310, 319 asset consultants 115–17, 281 ‘asset growth’ strategy 255 asset swaps 230–2 assets under management (AUM) 113–4, 117 assignment of loans 267–8 AT&T 275 attribution of earnings 148 auditors 144 Australia 222–4, 254–5, 261–2 back office functions 65–6 back-to-back loans 35, 40 backwardation 96 Banca Popolare di Intra 298 Bank of America 298, 303 Bank of International Settlements 50–1, 281 Bank of Japan 220 Bankers’ Trust (BT) 59, 72, 101–2, 149, 217–18, 232, 268–71, 298, 301, 319 banking regulations 155, 159, 162, 164, 281, 286, 288 banking services 34; see also commercial banks; investment banks bankruptcy 276–7 Banque Paribas 37–8, 232 Barclays Bank 121–2, 297–8 13_INDEX.QXD 17/2/06 326 4:44 pm Page 326 Index Baring, Peter 151 Baring Brothers 51, 143, 151–2, 155 ‘Basel 2’ proposal 159 basis risk 28, 42, 274 Bear Stearns 173 bearer eurodollar collateralized securities (BECS) 231–3 ‘behavioural finance’ 136 Berkshire Hathaway 19 Bermudan options 205, 227 Bernstein, Peter 167 binomial option pricing model 196 Bismarck, Otto von 108 Black, Fischer 22, 42, 160, 185, 189–90, 193, 195, 197, 209, 215 Black–Scholes formula for option pricing 22, 185, 194–5 Black–Scholes–Merton model 160, 189–93, 196–7 ‘black swan’ hypothesis 130 Blair, Tony 223 Bogle, John 116 Bohr, Niels 122 Bond, Sir John 148 ‘bond floor’ concept 251–4 bonding 75–6, 168, 181 bonuses 146–51, 244, 262, 284–5 Brady Commission 203 brand awareness and brand equity 124, 236 Brazil 302 Bretton Woods system 33 bribery 80, 303 British Sky Broadcasting (BSB) 247–8 Brittain, Alfred 72 broad index secured trust offerings (BISTROs) 284–5 brokers 69, 309 Brown, Robert 161 bubbles 210, 310, 319 Buconero 299 Buffet, Warren 12, 19–20, 50, 110–11, 136, 173, 246, 316 business process reorganization 72 business risk 159 Business Week 130 buy-backs 249 ‘call’ options 25, 90, 99, 101, 131, 190, 196 callable bonds 227–9, 256 capital asset pricing model (CAPM) 111 capital flow 30 capital guarantees 257–8 capital structure arbitrage 296 Capote, Truman 87 carbon trading 320 ‘carry cost’ model 188 ‘carry’ trades 131–3, 171 cash accounting 139 catastrophe bonds 212, 320 caveat emptor principle 27, 272 Cayman Islands 233–4 Cazenove (company) 152 CDO2 292 Cemex 249–50 chaos theory 209, 312 Chase Manhattan Bank 143, 299 Chicago Board Options Exchange 195 Chicago Board of Trade (CBOT) 25–6, 34 chief risk officers 177 China 23–5, 276, 302–4 China Club, Hong Kong 318 Chinese walls 249, 261, 280 chrematophobia 177 Citibank and Citigroup 37–8, 43, 71, 79, 94, 134–5, 149, 174, 238–9 Citron, Robert 124–5, 212–17 client relationships 58–9 Clinton, Bill 223 Coats, Craig 168–9 collateral requirements 215–16 collateralized bond obligations (CBOs) 282 collateralized debt obligations (CDOs) 45, 282–99 13_INDEX.QXD 17/2/06 4:44 pm Page 327 Index collateralized fund obligations (CFOs) 292 collateralized loan obligations (CLOs) 283–5, 288 commercial banks 265–7 commoditization 236 commodity collateralized obligations (CCOs) 292 commodity prices 304 Commonwealth Bank of Australia 255 compliance officers 65 computer systems 54, 155, 197–8 concentration risk 271, 287 conferences with clients 59 confidence levels 164 confidentiality 226 Conseco 279–80 contagion crises 291 contango 96 contingent conversion convertibles (co-cos) 257 contingent payment convertibles (co-pays) 257 Continental Illinois 34 ‘convergence’ trading 170 convertible bonds 250–60 correlations 163–6, 294–5; see also default correlations corruption 303 CORVUS 297 Cox, John 196–7 credit cycle 291 credit default swaps (CDSs) 271–84, 293, 299 credit derivatives 129, 150, 265–72, 282, 295, 299–300 Credit Derivatives Market Practices Committee 273, 275, 280–1 credit models 294, 296 credit ratings 256–7, 270, 287–8, 297–8, 304 credit reserves 140 credit risk 158, 265–74, 281–95, 299 327 credit spreads 114, 172–5, 296 Credit Suisse 70, 106, 167 credit trading 293–5 CRH Capital 309 critical events 164–6 Croesus 137 cross-ruffing 142 cubic splines 189 currency options 98, 218, 319 custom repackaged asset vehicles (CRAVEs) 233 daily earning at risk (DEAR) concept 160 Daiwa Bank 142 Daiwa Europe 277 Danish Oil and Natural Gas 296 data scrubbing 142 dealers, work of 87–8, 124–8, 133, 167, 206, 229–37, 262, 295–6; see also traders ‘death swap’ strategy 110 decentralization 72 decision-making, scientific 182 default correlations 270–1 defaults 277–9, 287, 291, 293, 296, 299 DEFCON scale 156–7 ‘Delta 1’ options 243 delta hedging 42, 200 Deming, W.E. 98, 101 Denmark 38 deregulation, financial 34 derivatives trading 5–6, 12–14, 18–72, 79, 88–9, 99–115, 123–31, 139–41, 150, 153, 155, 175, 184–9, 206–8, 211–14, 217–19, 230, 233, 257, 262–3, 307, 316, 319–20; see also equity derivatives Derman, Emmanuel 185, 198–9 Deutsche Bank 70, 104, 150, 247–8, 274, 277 devaluations 80–1, 89, 203–4, 319 13_INDEX.QXD 17/2/06 4:44 pm Page 328 328 Index dilution of share capital 241 DINKs 313 Disney Corporation 91–8 diversification 72, 110–11, 166, 299 dividend yield 243 ‘Dr Evil’ trade 135 dollar premium 35 downsizing 73 Drexel Burnham Lambert (DBL) 282 dual currency bonds 220–3; see also reverse dual currency bonds earthquakes, bonds linked to 212 efficient markets hypothesis 22, 31, 111, 203 electronic trading 126–30, 134 ‘embeddos’ 218 emerging markets 3–4, 44, 115, 132–3, 142, 212, 226, 297 Enron 54, 142, 250, 298 enterprise risk management (ERM) 176 equity capital management 249 equity collateralized obligations (ECOs) 292 equity derivatives 241–2, 246–9, 257–62 equity index 137–8 equity investment, retail market in 258–9 equity investors’ risk 286–8 equity options 253–4 equity swaps 247–8 euro currency 171, 206, 237 European Bank for Reconstruction and Development 297 European currency units 93 European Union 247–8 Exchange Rate Mechanism, European 204 exchangeable bonds 260 expatriate postings 81–2 expert witnesses 310–12 extrapolation 189, 205 extreme value theory 166 fads of management science 72–4 ‘fairway bonds’ 225 Fama, Eugene 22, 111, 194 ‘fat tail’ events 163–4 Federal Accounting Standards Board 266 Federal Home Loans Bank 213 Federal National Mortgage Association 213 Federal Reserve Bank 20, 173 Federal Reserve Board 132 ‘Ferraris’ 232 financial engineering 228, 230, 233, 249–50, 262, 269 Financial Services Authority (FSA), Japan 106, 238 Financial Services Authority (FSA), UK 15, 135 firewalls 235–6 firing of staff 84–5 First Interstate Ltd 34–5 ‘flat’ organizations 72 ‘flat’ positions 159 floaters 231–2; see also inverse floaters ‘flow’ trading 60–1, 129 Ford Motors 282, 296 forecasting 135–6, 190 forward contracts 24–33, 90, 97, 124, 131, 188 fugu fish 239 fund management 109–17, 286, 300 futures see forward contracts Galbraith, John Kenneth 121 gamma risk 200–2, 294 Gauss, Carl Friedrich 160–2 General Motors 279, 296 General Reinsurance 20 geometric Brownian motion (GBM) 161 Ghana 98 Gibson Greeting Cards 44 Glass-Steagall Act 34 gold borrowings 132 13_INDEX.QXD 17/2/06 4:44 pm Page 329 Index gold sales 97, 137 Goldman Sachs 34, 71, 93, 150, 173, 185 ‘golfing holiday bonds’ 224 Greenspan, Alan 6, 9, 19–21, 29, 43, 47, 50, 53, 62, 132, 159, 170, 215, 223, 308 Greenwich NatWest 298 Gross, Bill 19 Guangdong International Trust and Investment Corporation (GITIC) 276–7 guaranteed annuity option (GAO) contracts 204–5 Gutenfreund, John 168–9 gyosei shido 106 Haghani, Victor 168 Hamanaka, Yasuo 142 Hamburgische Landesbank 297 Hammersmith and Fulham, London Borough of 66–7 ‘hara-kiri’ swaps 39 Hartley, L.P. 163 Hawkins, Greg 168 ‘heaven and hell’ bonds 218 hedge funds 44, 88–9, 113–14, 167, 170–5, 200–2, 206, 253–4, 262–3, 282, 292, 296, 300, 308–9 hedge ratio 264 hedging 24–8, 31, 38–42, 60, 87–100, 184, 195–200, 205–7, 214, 221, 229, 252, 269, 281, 293–4, 310 Heisenberg, Werner 122 ‘hell bonds’ 218 Herman, Clement (‘Crem’) 45–9, 77, 84, 309 Herodotus 137, 178 high net worth individuals (HNWIs) 237–8, 286 Hilibrand, Lawrence 168 Hill Samuel 231–2 329 The Hitchhiker’s Guide to the Galaxy 189 Homer, Sidney 184 Hong Kong 9, 303–4 ‘hot tubbing’ 311–12 HSBC Bank 148 HSH Nordbank 297–8 Hudson, Kevin 102 Hufschmid, Hans 77–8 IBM 36, 218, 260 ICI 34 Iguchi, Toshihude 142 incubators 309 independent valuation 142 indexed currency option notes (ICONs) 218 India 302 Indonesia 5, 9, 19, 26, 55, 80–2, 105, 146, 219–20, 252, 305 initial public offerings 33, 64, 261 inside information and insider trading 133, 241, 248–9 insurance companies 107–10, 117, 119, 150, 192–3, 204–5, 221, 223, 282, 286, 300; see also reinsurance companies insurance law 272 Intel 260 intellectual property in financial products 226 Intercontinental Hotels Group (IHG) 285–6 International Accounting Standards 33 International Securities Market Association 106 International Swap Dealers Association (ISDA) 273, 275, 279, 281 Internet stock and the Internet boom 64, 112, 259, 261, 310, 319 interpolation of interest rates 141–2, 189 inverse floaters 46–51, 213–16, 225, 232–3 13_INDEX.QXD 17/2/06 4:44 pm Page 330 330 Index investment banks 34–8, 62, 64, 67, 71, 127–8, 172, 198, 206, 216–17, 234, 265–7, 298, 309 investment managers 43–4 investment styles 111–14 irrational decisions 136 Italy 106–7 Ito’s Lemma 194 Japan 39, 43, 82–3, 92, 94, 98–9, 101, 106, 132, 142, 145–6, 157, 212, 217–25, 228, 269–70 Jensen, Michael 117 Jett, Joseph 143 JP Morgan (company) 72, 150, 152, 160, 162, 249–50, 268–9, 284–5, 299; see also Morgan Guaranty junk bonds 231, 279, 282, 291, 296–7 JWM Associates 175 Kahneman, Daniel 136 Kaplanis, Costas 174 Kassouf, Sheen 253 Kaufman, Henry 62 Kerkorian, Kirk 296 Keynes, J.M. 167, 175, 198 Keynesianism 5 Kidder Peabody 143 Kleinwort Benson 40 Korea 9, 226, 278 Kozeny, Viktor 121 Krasker, William 168 Kreiger, Andy 319 Kyoto Protocol 320 Lavin, Jack 102 law of large numbers 192 Leeson, Nick 51, 131, 143, 151 legal opinions 47, 219–20, 235, 273–4 Leibowitz, Martin 184 Leland, Hayne 42, 202 Lend Lease Corporation 261–2 leptokurtic conditions 163 leverage 31–2, 48–50, 54, 99, 102–3, 114, 131–2, 171–5, 213–14, 247, 270–3, 291, 295, 305, 308 Lewis, Kenneth 303 Lewis, Michael 77–8 life insurance 204–5 Lintner, John 111 liquidity options 175 liquidity risk 158, 173 litigation 297–8 Ljunggren, Bernt 38–40 London Inter-Bank Offered Rate (LIBOR) 6, 37 ‘long first coupon’ strategy 39 Long Term Capital Management (LTCM) 44, 51, 62, 77–8, 84, 114, 166–75, 187, 206, 210, 215–18, 263–4, 309–10 Long Term Credit Bank of Japan 94 LOR (company) 202 Louisiana Purchase 319 low exercise price options (LEPOs) 261 Maastricht Treaty and criteria 106–7 McLuhan, Marshall 134 McNamara, Robert 182 macro-economic indicators, derivatives linked to 319 Mahathir Mohammed 31 Malaysia 9 management consultants 72–3 Manchester United 152 mandatory convertibles 255 Marakanond, Rerngchai 302 margin calls 97–8, 175 ‘market neutral’ investment strategy 114 market risk 158, 173, 265 marketable eurodollar collateralized securities (MECS) 232 Markowitz, Harry 110 mark-to-market accounting 10, 100, 139–41, 145, 150, 174, 215–16, 228, 244, 266, 292, 295, 298 Marx, Groucho 24, 57, 67, 117, 308 13_INDEX.QXD 17/2/06 4:44 pm Page 331 Index mathematics applied to financial instruments 209–10; see also ‘quants’ matrix structures 72 Meckling, Herbert 117 Melamed, Leo 34, 211 merchant banks 38 Meriwether, John 167–9, 172–5 Merrill Lynch 124, 150, 217, 232 Merton, Robert 22, 42, 168–70, 175, 185, 189–90, 193–7, 210 Messier, Marie 247 Metallgesellschaft 95–7 Mexico 44 mezzanine finance 285–8, 291–7 MG Refining and Marketing 95–8, 114 Microsoft 53 Mill, Stuart 130 Miller, Merton 22, 101, 194 Milliken, Michael 282 Ministry of Finance, Japan 222 misogyny 75–7 mis-selling 238, 297–8 Mitchell, Edison 70 Mitchell & Butler 275–6 models financial 42–3, 141–2, 163–4, 173–5, 181–4, 189, 198–9, 205–10 of business processes 73–5 see also credit models Modest, David 168 momentum investment 111 monetization 260–1 monopolies in financial trading 124 moral hazard 151, 280, 291 Morgan Guaranty 37–8, 221, 232 Morgan Stanley 76, 150 mortgage-backed securities (MBSs) 282–3 Moscow, City of 277 moves of staff between firms 150, 244 Mozer, Paul 169 Mullins, David 168–70 multi-skilling 73 331 Mumbai 3 Murdoch, Rupert 247 Nabisco 220 Napoleon 113 NASDAQ index 64, 112 Nash, Ogden 306 National Australia Bank 144, 178 National Rifle Association 29 NatWest Bank 144–5, 198 Niederhoffer, Victor 130 ‘Nero’ 7, 31, 45–9, 60, 77, 82–3, 88–9, 110, 118–19, 125, 128, 292 NERVA 297 New Zealand 319 Newman, Frank 104 news, financial 133–4 News Corporation 247 Newton, Isaac 162, 210 Nippon Credit Bank 106, 271 Nixon, Richard 33 Nomura Securities 218 normal distribution 160–3, 193, 199 Northern Electric 248 O’Brien, John 202 Occam, William 188 off-balance sheet transactions 32–3, 99, 234, 273, 282 ‘offsites’ 74–5 oil prices 30, 33, 89–90, 95–7 ‘omitted variable’ bias 209–10 operational risk 158, 176 opinion shopping 47 options 9, 21–2, 25–6, 32, 42, 90, 98, 124, 197, 229 pricing 185, 189–98, 202 Orange County 16, 44, 50, 124–57, 212–17, 232–3 orphan subsidiaries 234 over-the-counter (OTC) market 26, 34, 53, 95, 124, 126 overvaluation 64 13_INDEX.QXD 17/2/06 4:44 pm Page 332 332 Index ‘overwhelming force’ strategy 134–5 Owen, Martin 145 ownership, ‘legal’ and ‘economic’ 247 parallel loans 35 pari-mutuel auction system 319 Parkinson’s Law 136 Parmalat 250, 298–9 Partnoy, Frank 87 pension funds 43, 108–10, 115, 204–5, 255 People’s Bank of China (PBOC) 276–7 Peters’ Principle 71 petrodollars 71 Pétrus (restaurant) 121 Philippines, the 9 phobophobia 177 Piga, Gustavo 106 PIMCO 19 Plaza Accord 38, 94, 99, 220 plutophobia 177 pollution quotas 320 ‘portable alpha’ strategy 115 portfolio insurance 112, 202–3, 294 power reverse dual currency (PRDC) bonds 226–30 PowerPoint 75 preferred exchangeable resettable listed shares (PERLS) 255 presentations of business models 75 to clients 57, 185 prime brokerage 309 Prince, Charles 238 privatization 205 privity of contract 273 Proctor & Gamble (P&G) 44, 101–4, 155, 298, 301 product disclosure statements (PDSs) 48–9 profit smoothing 140 ‘programme’ issuers 234–5 proprietary (‘prop’) trading 60, 62, 64, 130, 174, 254 publicly available information (PAI) 277 ‘puff’ effect 148 purchasing power parity theory 92 ‘put’ options 90, 131, 256 ‘quants’ 183–9, 198, 208, 294 Raabe, Matthew 217 Ramsay, Gordon 121 range notes 225 real estate 91, 219 regulatory arbitrage 33 reinsurance companies 288–9 ‘relative value’ trading 131, 170–1, 310 Reliance Insurance 91–2 repackaging (‘repack’) business 230–6, 282, 290 replication in option pricing 195–9, 202 dynamic 200 research provided to clients 58, 62–4, 184 reserves, use of 140 reset preference shares 254–7 restructuring of loans 279–81 retail equity products 258–9 reverse convertibles 258–9 reverse dual currency bonds 223–30 ‘revolver’ loans 284–5 risk, financial, types of 158 risk adjusted return on capital (RAROC) 268, 290 risk conservation principle 229–30 risk management 65, 153–79, 184, 187, 201, 267 risk models 163–4, 173–5 riskless portfolios 196–7 RJ Reynolds (company) 220–1 rogue traders 176, 313–16 Rosenfield, Eric 168 Ross, Stephen 196–7, 202 Roth, Don 38 Rothschild, Mayer Amshel 267 Royal Bank of Scotland 298 Rubinstein, Mark 42, 196–7 13_INDEX.QXD 17/2/06 4:44 pm Page 333 Index Rumsfeld, Donald 12, 134, 306 Rusnak, John 143 Russia 45, 80, 166, 172–3, 274, 302 sales staff 55–60, 64–5, 125, 129, 217 Salomon Brothers 20, 36, 54, 62, 167–9, 174, 184 Sandor, Richard 34 Sanford, Charles 72, 269 Sanford, Eugene 269 Schieffelin, Allison 76 Scholes, Myron 22, 42, 168–71, 175, 185, 189–90, 193–7, 263–4 Seagram Group 247 Securities and Exchange Commission, US 64, 304 Securities and Futures Authority, UK 249 securitization 282–90 ‘security design’ 254–7 self-regulation 155 sex discrimination 76 share options 250–1 Sharpe, William 111 short selling 30–1, 114 Singapore 9 single-tranche CDOs 293–4, 299 ‘Sisters of Perpetual Ecstasy’ 234 SITCOMs 313 Six Continents (6C) 275–6 ‘smile’ effect 145 ‘snake’ currency system 203 ‘softing’ arrangements 117 Solon 137 Soros, George 44, 130, 253, 318–19 South Sea Bubble 210 special purpose asset repackaging companies (SPARCs) 233 special purpose vehicles (SPVs) 231–4, 282–6, 290, 293 speculation 29–31, 42, 67, 87, 108, 130 ‘spinning’ 64 333 Spitzer, Eliot 64 spread 41, 103; see also credit spreads stack hedges 96 Stamenson, Michael 124–5 standard deviation 161, 193, 195, 199 Steinberg, Sol 91 stock market booms 258, 260 stock market crashes 42–3, 168, 203, 257, 259, 319 straddles or strangles 131 strategy in banking 70 stress testing 164–6 stripping of convertible bonds 253–4 structured investment products 44, 112, 115, 118, 128, 211–39, 298 structured note asset packages (SNAPs) 233 Stuart SC 18, 307, 316–18 Styblo Bleder, Tanya 153 Suharto, Thojib 81–2 Sumitomo Corporation 100, 142 Sun Tzu 61 Svensk Exportkredit (SEK) 38–9 swaps 5–10, 26, 35–40, 107, 188, 211; see also equity swaps ‘swaptions’ 205–6 Swiss Bank Corporation (SBC) 248–9 Swiss banks 108, 305 ‘Swiss cheese theory’ 176 synthetic securitization 284–5, 288–90 systemic risk 151 Takeover Panel 248–9 Taleb, Nassim 130, 136, 167 target redemption notes 225–6 tax and tax credits 171, 242–7, 260–3 Taylor, Frederick 98, 101 team-building exercises 76 team moves 149 technical analysis 60–1, 135 television programmes about money 53, 62–3 Thailand 9, 80, 302–5 13_INDEX.QXD 17/2/06 4:44 pm Page 334 334 Index Thatcher, Margaret 205 Thorp, Edward 253 tobashi trades 105–7 Tokyo Disneyland 92, 212 top managers 72–3 total return swaps 246–8, 269 tracking error 138 traders in financial products 59–65, 129–31, 135–6, 140, 148, 151, 168, 185–6, 198; see also dealers trading limits 42, 157, 201 trading rooms 53–4, 64, 68, 75–7, 184–7, 208 Trafalgar House 248 tranching 286–9, 292, 296 transparency 26, 117, 126, 129–30, 310 Treynor, Jack 111 trust investment enhanced return securities (TIERS) 216, 233 trust obligation participating securities (TOPS) 232 TXU Europe 279 UBS Global Asset Management 110, 150, 263–4, 274 uncertainty principle 122–3 unique selling propositions 118 unit trusts 109 university education 187 unspecified fund obligations (UFOs) 292 ‘upfronting’ of income 139, 151 Valéry, Paul 163 valuation 64, 142–6 value at risk (VAR) concept 160–7, 173 value investing 111 Vanguard 116 vanity bonds 230 variance 161 Vietnam War 182, 195 Virgin Islands 233–4 Vivendi 247–8 volatility of bond prices 197 of interest rates 144–5 of share prices 161–8, 172–5, 192–3, 199 Volcker, Paul 20, 33 ‘warehouses’ 40–2, 139 warrants arbitrage 99–101 weather, bonds linked to 212, 320 Weatherstone, Dennis 72, 268 Weil, Gotscal & Manges 298 Weill, Sandy 174 Westdeutsche Genosenschafts Zentralbank 143 Westminster Group 34–5 Westpac 261–2 Wheat, Allen 70, 72, 106, 167 Wojniflower, Albert 62 World Bank 4, 36, 38 World Food Programme 320 Worldcom 250, 298 Wriston, Walter 71 WTI (West Texas Intermediate) contracts 28–30 yield curves 103, 188–9, 213, 215 yield enhancement 112, 213, 269 ‘yield hogs’ 43 zaiteku 98–101, 104–5 zero coupon bonds 221–2, 257–8 

Commodity Trading Advisors: Risk, Performance Analysis, and Selection
by Greg N. Gregoriou , Vassilios Karavas , François-Serge Lhabitant and Fabrice Douglas Rouah
Published 23 Sep 2004

INTRODUCTION In recent years, hedge funds and commodity trading advisors (CTAs) have drawn considerable attention from regulators, investors, academics, and the general public.1 Much of the attention has focused on the concern that hedge funds and CTAs exert a disproportionate and destabilizing influence on financial markets, which can lead to increased price volatility and, in some cases, financial crises (e.g., Eichengreen and Mathieson 1998). Hedge fund trading has been blamed for many financial distresses, including the 1992 European Exchange Rate Mechanism crisis, the 1994 Mexican peso crisis, the 1997 Asian financial crisis, and the 2000 bust in U.S. technology stock prices. A spectacular example of concerns about hedge funds can be found in the collapse and subsequent financial bailout of Long-Term Capital Management (e.g., Edwards 1999). The concerns about hedge fund and CTA trading extend beyond financial markets to other speculative markets, such as commodity futures markets.

The Frackers: The Outrageous Inside Story of the New Billionaire Wildcatters
by Gregory Zuckerman
Published 5 Nov 2013

Within six months, Chesapeake had spent $800 million to buy a series of companies with about eight hundred billion cubic feet of gas equivalent reserves, as it reinvented itself as a traditional gas exploration company. The purchases didn’t help much, though. Anemic oil and gas prices kept pressure on Chesapeake shares, as the Asian financial crisis and OPEC’s inability to keep a lid on its members’ production flooded the market with surplus energy. By February 1999, Chesapeake shares traded at a measly seventy cents each, giving the company a market value of only about $75 million. When McClendon and Ward met with veteran landman Larry Coshow to try to recruit him, Coshow was skeptical: “Man, I’ve been reading y’all’s balance sheet and y’all are broke.”

Stocks for the Long Run 5/E: the Definitive Guide to Financial Market Returns & Long-Term Investment Strategies
by Jeremy Siegel
Published 7 Jan 2014

The emerging market stocks fell 64 percent in dollar terms, although they fell less in the local currency as the currencies of almost all emerging markets, except for the Chinese yuan, depreciated against the dollar.11 The decline in the emerging stock markets was nearly identical to the decline suffered during the Asian financial crisis in 1997-1998. But the emerging market indexes at their 2009 lows remained well above the levels reached at the bottom of the 2002 bear market. This contrasted with the United States and most other developed markets that fell below their 2002 bear market lows. Certain equity sectors that held up well in the early stages of the market decline fell sharply as credit markets froze.

The Cleaner: The True Story of One of the World's Most Successful Money Launderers
by Bruce Aitken
Published 2 Mar 2017

Glass Radcliffe & Co Ltd., my auditor, was run by a pleasant chap named Robin Radcliffe; Robin needed to prepare all kinds of special opinions and certify copies of everything—client accounts, confirmations, certificates, everything except the rolls of toilet paper. For Marcus’ eyes only, all the cash transactions were listed in detail. Rakesh Saxena, of all people, had not yet caused the Asian financial crisis, and was high on my list as an expert witness as to how cash money was routinely moved in and out of Hong Kong. The list of tasks seemed endless. The fight was on! She remembered… As I had requested, Maria had called our storage company, Crown Pacific, to have all previous years’ FFS records destroyed.

Water: A Biography
by Giulio Boccaletti
Published 13 Sep 2021

And just as the United States had exported its approach to water security to the world with President Truman’s Point Four strategy, so was China now ready to bring its expertise, technology, and finance all across the world. Three Gorges Dam had given the Chinese government enormous confidence in its ability to deliver on the most arduous project, and it was now time to deploy that confidence. Having survived the Asian financial crisis of the 1990s, China had accumulated savings. For a while, those savings were mostly invested in United States Treasury bonds, but as the performance of Western economies lagged early in the new millennium, China began looking elsewhere to deploy its money. It was ready to engage on the rivers of the world.

The Lonely Century: How Isolation Imperils Our Future
by Noreena Hertz
Published 13 May 2020

For many, a few hours of dancing a week has done wonders to relieve anxieties about failed businesses, marriages or their day-to-day loneliness. ‘If you have music and a partner, you can put all other thoughts out of your mind,’ says Kim In-gil, also 85, who lost most of his savings in the Asian financial crisis of the late 1990s. And for those who are too shy to find a partner, full-time matchmakers facilitate introductions. ‘Those helpers sometimes take me to a new woman and put our hands together to dance. I buy them a bottle of Will [a locally made probiotic yoghurt] during our tea-breaks,’ says Kim In-gil.21 At a time when churchgoing had plummeted, work was increasingly solitary, youth clubs were shutting their doors, community centres closing down and more and more urbanites lived alone, commercialised communities were starting to become the new cathedrals of the twenty-first century, where ‘congregants’ came together to spin, paint or jive rather than kneel or pray.

The World for Sale: Money, Power and the Traders Who Barter the Earth’s Resources
by Javier Blas and Jack Farchy
Published 25 Feb 2021

ABCD, 241 , 253 Abidjan, Ivory Coast, 233 , 237 ABN, 165 Abramovich, Roman, 145 , 147 , 148 Abu Dhabi, United Arab Emirates, 262 , 319 acid rain, 232 Aeroflot, 149 Afghanistan, 311 Africa Progress Panel, 225 Agnelli, Roger, 264 –5 agriculture, 9 , 25 –6 , 57 , 239 –56 cocoa, 251 food price crises (2007–10), 239 –42 , 248 , 250 , 252 , 255 –6 futures market, 102 , 104 , 243 Great Grain Robbery (1972), 38 –42 , 57 , 69 , 135 , 310 potato futures default (1976), 104 rice, 102 , 177 , 232 soybeans, 114 , 181 , 240 , 318 wheat, 30 , 31 , 39 –41 , 56 , 232 , 239 –41 , 245 –7 , 252 AIOC, 143 , 145 Akins, James, 52 Akouédo, Abidjan, 233 , 237 Alcan, 75 , 76 , 81 , 83 , 143 Alcoa, 75 , 80 , 81 , 143 , 144 Alison-Madueke, Diezani, 221 Almaty, Kazakhstan, 146 alumina, 73 , 75 –81 , 83 , 140 –44 , 148 , 187 , 205 aluminium Glencore, 205 , 245 global financial crisis (2007–9), 249 Jamaica, 73 , 75 –84 , 142 Marc Rich + Co, 77 –84 , 122 , 125 , 144 , 165 Soviet collapse, 133 –5 , 140 –50 , 165 Trans-World, 133 –5 , 137 –49 Alvarez, Luis, 198 , 202 –3 Amanecer Holding, 160 Amsterdam, Netherlands, 236 , 237 André & Cie, 39 , 149 , 162 , 170 Andreas, Dwayne, 253 –4 Anglo-Persian Oil Company, 67 , 105 Angola, 85 , 98 , 130 , 153 , 161 , 206 , 229 –30 , 282 , 300 , 325 animal feed trade, 261 Annan, Kofi, 225 Anro, 64 Antwerp, Belgium, 46 , 47 Arab Spring (2011), 1 , 247 –8 , 255 Archer Daniels Midland (ADM), 11 , 241 , 253 –6 , 262 , 310 –11 Argentina, 86 , 190 , 239 Arkan (Željko Ražnatovic´), 167 Aron Hirsch & Sohn, 26 artisanal miners, 226 Ashland Oil, 53 , 55 , 309 Asian financial crisis (1997), 169 Asturiana de Zinc, 123 , 191 Atlantic Richfield Company, 68 , 104 Australia, 75 , 131 , 143 , 181 , 183 , 186 –7 , 190 , 193 –4 , 273 Azerbaijan, 33 , 206 , 319 Baar, Switzerland, 170 , 185 , 190 , 197 , 257 , 321 Baba Gurgur, Kurdistan, 284 , 289 backwardation, 193 Bahamas, 163 , 201 Bahrain, 309 Bake, Chris, 3 , 4 , 6 , 287 , 291 Bakken oilfields, North Dakota, 323 Baku, Azerbaijan, 33 ballistic missiles, 43 Bankers Trust, 60 banking sector, 13 , 15 , 17 credit, 60 –61 financialisation, 18 , 101 –5 , 110 , 113 –14 , 252 Banque National de Paris, 95 Banque de Paris et des Pays-Bas, see Paribas Banque Nationale de Paris, 95 Barbados, 154 bauxite, 73 , 75 –7 , 79 , 80 , 85 , 86 Bayoil, 64 , 203 Beard, Alex, 259 Beer, Sondheimer & Co., 26 Belgian Congo (1908–60), 33 , 218 , 222 Belgium, 46 , 47 , 91 Belousov, Nikolai, 38 –41 Bénard, André, 54 Benavides, Roque, 48 –9 Benghazi, Libya, 1 –8 Berezovsky, Boris, 149 Bermann, Josef, 183 Bermuda, 65 , 159 , 160 , 325 Bernberg, Mendel, 37 Berruien, Nuri, 4 –5 , 6 Better Together campaign (2014), 291 BHP, 175 –6 BHP Billiton, 176 , 264 , 273 big data, 244 Billiton, 171 , 175 –6 Blair, Anthony ‘Tony’, 272 Bloomberg News, 10 Bloomberg, Michael, 316 BNP Paribas, 61 , 215 , 304 –8 , 312 , 315 , 325 Bolivia, 129 Bosnia, 167 Botha, Pieter Willem, 90 Botswana, 66 Bouazizi, Mohamed, 247 BP, 13 , 32 , 64 , 67 , 89 , 104 , 105 , 106 , 115 , 171 –2 , 267 –8 Bratsk, Russia, 142 Brazil, 20 , 81 , 85 , 86 , 169 , 180 , 181 , 206 , 264 , 313 , 318 Brent oilfield, 114 –16 , 122 , 123 , 204 , 316 bribery, 20 , 69 , 229 , 260 , 309 , 310 –11 , 313 –15 , 326 BRIC group, 180 , 221 , 299 British Virgin Islands, 201 Browne, John, 267 –9 Brunei, 88 Bryce, Colin, 102 , 155 Bulk Oil, 63 Bunge, 39 , 241 Burundi, 91 –4 , 98 Busch, Gary, 144 Bush, George Walker, 224 , 255 C.

The Man Who Knew: The Life and Times of Alan Greenspan
by Sebastian Mallaby
Published 10 Oct 2016

Greenspan began dating Andrea Mitchell of NBC in 1984. Pictured here in 1996, after Mitchell completed the New York Marathon. Greenspan married Mitchell at a picturesque inn in Virginia. General Colin Powell, hero of the Gulf War, accused him of “sensual exuberance.” After the successful management of the Asian financial crisis of 1997, and despite Russia’s default in 1998, Time lauded Greenspan, Treasury Secretary Bob Rubin, and Deputy Secretary Lawrence Summers as “The Committee to Save the World.” Even though Greenspan had actually questioned the bailouts, he dominated Time’s cover. In January 2000, when Greenspan was nominated to his fourth term as Fed chairman by President Clinton, his star was higher than ever.

…

See also “Negro problem”; civil rights movement; racial tension; riots Agnew, Bob, 584 Agnew, Spiro T., 122–24 Albright, Madeleine, 517 Alcoa, 44–45, 73, 103, 292, 571–72 Alexander, Lewis, 643 Alexandria, Virginia, 277 Allen, Richard, 245–48 aluminum industry, 55, 73, 104, 332 American Bankers Association, 345–48, 558–59 American Creators’ Millennium Dinner, 564 American Enterprise Institute, 369, 503–5 American Finance Association, 151 American frontier, 31–32, 76–77 American International Group (AIG), 469, 661, 663, 665–66 American Statistical Association, 49, 71, 80, 331, 413, 548 American Stock Exchange, 346 Ameriquest, 616, 618–20, 627 Anderson, Martin, 102–4, 110, 113, 126, 131, 224–26, 237, 252–54, 256, 267–68, 368, 426 Ando, Albert, 220 Andrews Air Force Base, 357 Angell, Wayne, 332, 342, 360, 369, 440 antitrust laws, 72–75, 78, 88, 116, 123, 157–58, 160, 305, 323, 655–56 Apple, 3, 292 Arizona Biltmore, 557–59 Armey, Richard, 582 Arnold & Porter, 531 Ash, Roy, 169 Asia, 297, 530, 564. See also specific countries Asian financial crisis, 514–22, 536–37, 539–40, 547 assets bubbles, 51, 91, 227, 432, 435, 553–55, 578, 634, 681–82 changing value of, 209–10, 213, 496–97 and financial collapses, 539 markets, 53, 597, 682 prices, 49–51, 88, 212–13, 219, 331, 362, 413, 435–36, 438–39, 444, 448, 496–497, 500, 504, 506, 513, 553–54, 581, 593, 632, 635, 637–39, 644, 674, 681–84 Atlanta Federal Reserve, 606 Atlas Shrugged (Rand), 68–71, 81, 85, 90–94, 112, 203, 269, 490, 674 Augusta National, 415 austerity, 145, 156, 174, 257, 375, 420, 423 Australia, 504, 583 automobiles, 58–60, 63, 74, 79, 102, 297 bailouts, 6–7, 195–200, 205 of banks, 297–302, 404, 408–10, 467–68, 470, 476, 620, 660–64, 676 of Continental Illinois, 297–302, 312, 361, 472–73 of corporations, 140–44, 240, 6f601 cost of, 389–90 and the Fed, 238–39, 347, 389–90, 474–77, 479, 484 Greenspan in favor of, 301–4, 361–62, 379–80, 473, 659, 663 Greenspan opposed to, 239, 283, 659, 663, 676 of hedge funds, 546 of mortgage lenders, 659–60 of S&Ls, 379–82, 389–90, 429 of South Korea, 517–22, 537 See also Mexico: 1982 default of, 1994 default of; New York City: bailout of Baker, Howard, 310–11, 315, 352–53, 355–59 Baker, James, 252, 316–17, 377, 384, 397 and 1987 crash, 353, 358–59 on deregulating banks, 313 endorses Greenspan, 309–11, 314–15 and the Fed, 373–75 Greenspan meets with, 273, 279, 341, 345, 358, 369, 373–74 as Reagan chief of staff, 273, 285 runs Bush campaign, 372–73 as secretary of state, 375 on social security, 273, 275, 278–80 as Treasury secretary, 307, 309, 372–74 Washington residence of, 279, 310 Baker, Richard, 626–27 Ball, Robert M., 288 Banc One, 525–26 Bank of America, 526, 627–28, 661 Bank of England, 382–83, 615–16, 631, 649 Bank of Japan, 594 Bank of New England, 397 bank regulation, 294–95, 468, 681 and 2008 crisis, 670 and the Fed, 283–85, 543–44, 558–61, 620, 624–25, 627–28, 630–33, 670 Fed and Treasury battle over, 403–11 Geithner’s plans for, 630–33 Greenspan’s speech on, 345–46 Greenspan’s views of, 287, 302–4, 558–60, 627–29, 656–58, 663, 665, 678, 684 lack of, 663–64 and securities, 311, 313, 315, 403 and U.S.

European Spring: Why Our Economies and Politics Are in a Mess - and How to Put Them Right
by Philippe Legrain
Published 22 Apr 2014

Governments that have a deficit of more than 3 per cent of GDP or public debt exceeding 60 per cent of GDP that is not falling towards that level by at least one-twentieth averaged over three years are subject to further interventions under the Excessive Deficit Procedure. http://www.eurozone.europa.eu/media/304649/st00tscg26_en12.pdf 366 http://europa.eu/rapid/press-release_MEMO-13-457_en.htm 367 http://europa.eu/rapid/press-release_MEMO-13-318_en.htm 368 See, for example, the notes to governments explaining what they must do to comply: http://ec.europa.eu/economy_finance/economic_governance/sgp/pdf/coc/code_of_conduct_en.pdf 369 Monitoring worrying imbalances seems like a good idea, but in practice such surveillance tends to be ineffective. It often raises false alarms – hence the joke that economists have predicted ten of the last three recessions. It often fails to warn (or warns too late) about big crises: the IMF missed the 1997–8 Asian financial crisis; the IMF, ECB and the European Commission were all blindsided by the current financial crisis and its eurozone offshoot. Even when risks are correctly identified, political interference and special-interest lobbying often ensure that concerns are watered down or ignored. Last but not least, the resulting policy recommendations may be flawed or not implemented. 370 The European Commission previously monitored imbalances through the EU’s Broad Economic Policy Guidelines. 371 To have any hope of identifying problems in good time, an early-warning system ought to be based on current information and in particular on leading indicators – economic data that tends to provide early indications of future trends.

Overbooked: The Exploding Business of Travel and Tourism
by Elizabeth Becker
Published 16 Apr 2013

It is a gamble to convince the government there is room in Shanghai for the historic Bund as well as Disneyland. All of this maneuvering has been done against the backdrop of the rapid buildup of tourism that exploded in 2000 when domestic tourism was unleashed and foreigners discovered China’s strength, especially after the Asian financial crisis. The Golden Weeks announcement of guaranteed vacation “put it all together,” said Cranley. “Now we have to deal with our success. We’re all experimenting to find the sweet spot where tourism is working for China and where Chinese tourists feel they are free as tourists.” Bill and I met many of those Chinese tourists at the site of the First National Congress of the Chinese Communist Party, when the party was officially founded, a critical milestone on the road to revolution.

Connectography: Mapping the Future of Global Civilization
by Parag Khanna
Published 18 Apr 2016

When countries are willing to sell, trade, or open their territory to foreign governance at such large scale, it is a sign of the shift toward a supply chain world where optimizing economic geography supersedes preserving territorial sovereignty. All of Southeast Asia is now aggregating according to the same logic. The regional diplomatic grouping called ASEAN was founded four decades ago on the mantra “Prosper thy neighbor,” but Cold War politics prevented any such camaraderie. Since the region’s hammering in the 1997–98 Asian financial crisis, however, the ASEAN Economic Community has risen to become the world’s fifth-largest economic area with a GDP of over $2 trillion (behind the EU, the United States, China, and Japan) and attracts more FDI than China due to its youthful 650 million people. Even as it competes with China, ASEAN helps Asia strengthen its grip on global supply chains.1 From 1990 to 2013, Asia’s share of global manufacturing rose from 25 percent to 50 percent and will rise even further in the coming decade.

Capitalism in America: A History
by Adrian Wooldridge and Alan Greenspan
Published 15 Oct 2018

Children’s Hospital, 194 advertising, 208, 208 affluent society, 205–6 Afghanistan, 267, 300, 369, 438 agrarian vs. industrial visions of America, 61–68 Agricultural Adjustment Act, 244–45, 248, 257–58 agriculture, 433, 434–35 collapse of southern, 83–86 Granger movement, 171–72 New Deal farm and rural programs, 241, 244–45, 248, 249, 257–58, 259 new nation, 33, 35–36, 46–48, 58, 65–66, 72–73 post–World War II, 275, 276 railroad age, 114–22 World War I and, 233–34 Ahamed, Liaquat, 227 Aid to Families with Dependent Children (AFDC), 303–4, 305 AIG (American International Group), 374–75, 385–86 Airbnb, 402 air-conditioning, 213–14 air flight, and Wright brothers, 107–9 air travel, 199–200, 262–63, 286–87 Alaska Purchase, 95 Alger, Horatio, 165 Alibaba, 391 alternating current (AC), 106 Aluminum Company of America (Alcoa), 132 Amazon, 349, 355, 390, 396, 402 America-first nationalism, 217–18 American attitudes to government, 176–79 American Barbed Wire Company, 116 American Civil War, 9, 81–85, 161, 266, 267, 455 American colonies, 5–6, 29–34 American Economic Association (AEA), 178 American Enterprise Institute, 277, 324 American Express, 374 American Federation of Labor (AFL), 193–94, 261, 290 American Fur Company, 123 American Individualism (Hoover), 218 American Revolution, 5–6, 31, 34–35, 38–40, 62, 69, 135, 266, 266 “Americans” identity, 58–59 American Tobacco Company, 214 “American way of life,” 296–97 Amos ‘n’ Andy (radio show), 204 Anderson, Edward, 224–25 Anderson, Sherwood, 218 Andrews, Dan, 397 antibiotics, 284 antitrust, 182–83, 184, 257, 337–38 Sherman Antitrust Act of 1890, 143, 154, 159–60, 162, 184 Apple, 323–24, 334, 347, 349, 353, 360, 390, 396, 402 Argonne National Laboratory, 285 arms race, 279–80 Army Air Corps, 212 Articles of Confederation, 39 Asian financial crisis of 1997, 366 assembly line, 146–47, 194–95 Astor, John Jacob, 35, 123, 135 AT&T, 91–92, 140, 144, 148, 149, 206, 288, 319, 341 Atlas Shrugged (Rand), 277–78 Atomic Energy Act, of 1954, 285 Atomic Energy Commission, 284–85 atomic power, 284–85 Auden, W. H., 264–65 Autor, David, 371 Babbitt (Lewis), 205–6 baby-boom retirement, 26, 403–4 Bader, William, 179 Bagehot, Walter, 374 Baltimore and Ohio Railroad, 53, 138 banking (banking system), 10, 25.

Upheaval: Turning Points for Nations in Crisis
by Jared Diamond
Published 6 May 2019

Indonesia’s parliament reelected Suharto as president for one five-year term after another. After nearly 33 years, just after parliament had acclaimed him as president for a seventh five-year term, his regime collapsed quickly and unexpectedly in May 1998. It had been undermined by a combination of many factors. One was an Asian financial crisis that reduced the value of Indonesia’s currency by 80% and provoked rioting. Another was that Suharto himself, at age 77, had grown out of touch with reality, lost his political skills, and was shaken by the death in 1996 of his wife, who had been his closest partner and anchor. There was widespread public anger at corruption and at the wealth accumulated by his family.

Analysis of Financial Time Series
by Ruey S. Tsay
Published 14 Oct 2001

Example 9.1. As an illustration, consider the daily log returns of the stock market indexes for Hong Kong and Japan from January 1, 1996 to October 16, 1997 for 469 observations. The indexes are dollar denominated and the returns are in percentages. We select the sample period to avoid the effect of Asian financial crisis, -8 -4 log-rtn 0 2 4 6 (a) Hong Kong 0 100 200 300 400 300 400 days -4 -2 log-rtn 0 2 4 (b) Japan 0 100 200 days Figure 9.1. Time plots of daily log returns in percentages of stock market indexes for Hong Kong and Japan from January 1, 1996 to October 16, 1997: (a) the Hong Kong market, and (b) the Japanese market. 366 MULTIVARIATE VOLATILITY MODELS which hit the Hong Kong Market on October 17, 1997.

Why Stock Markets Crash: Critical Events in Complex Financial Systems
by Didier Sornette
Published 18 Nov 2002

G., Sutton, P., and van den Belt, M. (1997). The value of the world’s ecosystem services and natural capital, Nature 387, 253–260. 95. Cox, J. C., Ingersoll, J. E., and Ross, S. A. (1985). A theory of the term structure of interest rates, Econometrica 53, 385–407. 96. Cronin, R. P. (1998). Asian Financial Crisis: An Analysis of U.S. Foreign Policy Interests and Options, Foreign Affairs and National Defense Division, http:// www.fas.org/man/crs/crs-asia.htm. 97. Crutchfield, J. P. and Mitchell, M. (1995). The evolution of emergent computation, Proceedings of the National Academy of Science, U.S.A. 92, 10742–10746. 402 references 98.

The Battle of Bretton Woods: John Maynard Keynes, Harry Dexter White, and the Making of a New World Order
by Benn Steil
Published 14 May 2013

China, the world’s new rising economic power, began pegging its currency to the dollar in 1994. Voluntarily importing U.S. monetary policy had a compelling logic for a country rapidly integrating with the global economy, and conducting the vast bulk of its trade in dollars. It stuck with this policy even through the tumult of the Asian financial crisis of 1997 and 1998, in spite of widespread speculation that it would follow its neighbors and devalue. This earned it great praise from the United States government. “China, by maintaining its exchange rate policy,” pronounced President Clinton’s Treasury Secretary, Robert Rubin, in May of 1998, “has been an important island of stability in a turbulent region.”32 The rising global trade imbalances of the past decade have been predominantly imbalances created by these two economic giants, today accounting for one-third of world GDP.

The Billionaire's Apprentice: The Rise of the Indian-American Elite and the Fall of the Galleon Hedge Fund
by Anita Raghavan
Published 4 Jun 2013

“Ask around the street about the market’s hottest tech investor, and the name you keep hearing is Raj Rajaratnam,” gushed Barron’s in November 1997. The glowing review masked a rocky patch that Galleon hit in the fall of 1997. Galleon was long—or had bullish bets—on technology stocks. After the Asian financial crisis triggered uncertainty, investors ran to less risky assets and shed their tech positions. In October alone, Galleon lost between 10 and 12 percent of its value. Rajaratnam needed to right his Galleon or the $800 million fund would sail away from him. Rajaratnam picked up the phone and lobbed a call to his old friend from Intel, Khan.

The History of the Future: Oculus, Facebook, and the Revolution That Swept Virtual Reality
by Blake J. Harris
Published 19 Feb 2019

By the time Scaleform was acquired by Autodesk in 2011, Seo’s region was responsible for about 25 percent of the company’s global revenue. That staggering percentage was not only a tribute to Seo’s salesmanship but also to the size and import of PC gaming in South Korea—a county where, of its fifty million residents, half are estimated to play online games regularly. In 1997, on the heels of the Asian financial crisis, the South Korean government made a concerted effort to improve the country’s internet infrastructure. Specifically, this involved heavy investment into ADSL (asymmetric digital subscriber line), which, unlike conventional voice modems, used copper telephone lines to enable faster data transmission.

The Asylum: The Renegades Who Hijacked the World's Oil Market
by Leah McGrath Goodman
Published 15 Feb 2011

With Hurricanes Katrina and Rita ripping through the Gulf Coast in the summer and autumn of 2005, it was not the best time for the leadership of the global oil market to be in flux. The storms sent oil prices hurtling past $70 a barrel. Refco, the brokerage that once catered to Hillary Clinton, went under without warning in October, due to bad debts that traced back to the Asian financial crisis. Nymex, despite its growing realization that the trading pits were an anachronism, opened its trading floor in London anyway, burning through millions of dollars until its inglorious closing just months later. The executives had moved too late in trying to win over the British traders. The traders had already adapted to the screen or become cabbies.

Alpha Trader
by Brent Donnelly
Published 11 May 2021

See reassessment triggers activity bias, 241 adaptability, trader attribute of, 35, 75, 104, 106-107 See also adaptation, trader adaptation, trader, 439—451 to fast/crisis markets, 440—445 growth mindset and, 451 to major structural market changes, 450—451 to new trading methods, 449 to rangebound markets, 447—448 to trending markets, 448, 449 to volatile markets, 445—447 algorithms, 163, 164, 173 All-Weather portfolio, 87 alpha, definitions of, 21 alpha trader feeling uncomfortable and, 112 formula for success, 72, 75 grit and, 92 having plan, 126 as healthy skeptic, 104 intellectual humility, 184 numeracy, 248 as rational thinker, 34, 76 as risk-seeker, 32 See also trader attributes, positive cognitive; trader attributes, positive miscellaneous; trader attributes, positive non-cognitive “AM/FX” newsletter, 84, 96, 202, 220 Amazon (AMZN) stock, 231, 347, 412 analogs, idea generation and, 402—405 analytical skill, 69 anchoring bias, 67, 225—229, 480, 484 See also disposition effect; loss aversion Anderson, Irina, 69 apophenia, 64, 216—225 See also pattern recognition; Turnaround Tuesday Apple (AAPL) stock, 219, 241, 276, 277, 278, 289, 290, 291, 291, 442 Arcsine Law, 251—254 Art of Currency Trading, The (B. Donnelly), 172 Asch, Solomon, 82 Asch Conformity Experiment, 82, 82, 83 Asian Financial Crisis (1998), 441 “Aspen Trading” (newsletter), 492 asymmetrical information, 156, 160 Axelrod, Bobby, 102 backtesting, 81, 221 curiosity and, 89—90 Bank of America, 42 Global Fund Manager Survey, 345 Bank of Canada, 308 bank traders annual performance and pay, 354 free capital, 356 information asymmetry and, 156 simple indicators and, 166 success rate, 40 bankrupt company, common stock of idea generation and, 406 rallies, 406 typical path followed by, 238 Batnick, Michael, 67—68 Baumeister, Roy, 56—57, 95, 106, 491 Bayes Theorem, 80, 81 Bayesian thinking, 201 Bayesian updating, 80, 81, 84 Beane, Billy, 451, 460—461 beauty contest analogy (Keynes), 311, 325 behavioral bias, 66, 179—180, 198 See also specific types of bias', biased thinking Bernanke, Ben, 208 Bernstein, Jake, 234, 345 bet size, varying, 107, 379 bet sizing, 256 better-than-average effect, 182—183 bias idea generation and, 396 post-trade, 416 See also specific types of bias', apophenia; biased thinking; gambler’s fallacy; herding; hot hand biased thinking, 155 See also specific types of bias; behavioral bias; bias bid/offer spread, 276 finding data on, 278 Big Five Personality Traits, 46—49 agreeableness, 47, 49, 50 conscientiousness, 47—48, 49, 50, 51, 52, 56-58, 71 effect of IQ and on male earnings, 49, 50 extraversion, 47, 49, 50 financial success and, 49—50, 52 lifetime stability of, 48 neuroticism, 47, 49, 50, 51, 52, 58, 71 openness to experience, 47, 49 versus Myers-Briggs (MBTI), 47 See also grit; personality; self-control birthday paradox, 254—255, 255 bitcoin bubble (2017-2018), 185, 239, 370, 405 bleed, slow, 167—168 blogs, 77 “Cheap Convexity,” 492 “Exante,” 492 “Liberty Street Economics,” 280 “No Mercy, No Malice,” 492 Bloomberg, 65, 97, 162, 194, 218, 259, 290, 321, 371, 393, 399, 482 blowups, 117—118 bonds as safe haven, 262 stocks and, 260—261, 261 Borish, Peter, 87, 163 breakout traders, 106 breakout trading, 173 breakouts, 161, 289 Breath (J.

More Money Than God: Hedge Funds and the Making of a New Elite
by Sebastian Mallaby
Published 9 Jun 2010

Julian Robertson allowed me to read all his monthly letters to investors, spanning the twenty-year life of his Tiger fund; spiced with observations about fur-wearing men in Aspen and the difficulty of lowering one’s body temperature after a tennis match in Hong Kong, the two fat binders of Roberston’s letters were a book in themselves. Rodney Jones kept almost daily notes of the Asian financial crisis, allowing me to reconstruct the Soros funds’ role in Thailand, Indonesia, and South Korea in more detail than would have been possible based on interviews alone. Paul Tudor Jones wrote nocturnal e-mails that illustrated his thought process brilliantly. John Paulson’s memo to his investors laid out the logic of betting against the credit bubble so clearly that it makes you wonder how anyone could have been on the other side.

The Long Twentieth Century: Money, Power, and the Origins of Our Times
by Giovanni Arrighi
Published 15 Mar 2010

The bifurcation of military and financial power globally as well as the economic rise of East Asia both continue apace. In a co-authored book published in 1999 entitled C/mos and Governance in t/7e Modem W/orld System, Beverly Silver and I argued that the inability of the Japanese economy to recover from the crash of l990—92 and the East Asian financial crisis of 199798 in themselves did not support the conclusion that the rise of East Asia had been a mirage. We noted that in previous hegemonic transitions it was the newly emerging centers of capital accumulation on a world scale that experienced the deepest financial crises, as their financial prowess outstripped their institutional capacity to regulate the massive flows of mobile capital entering and exiting their jurisdictions.

Under the Loving Care of the Fatherly Leader: North Korea and the Kim Dynasty
by Bradley K. Martin
Published 14 Oct 2004

“How long have they been using this method of payments?” he asked his visitors from Japan. “Even shoddy products are being sold on the installment plan. It appears that the installment plan is due to slow sales.” His characterizations of South Korea, which at the time was suffering from a severe Asian financial crisis that had begun in 1997, were full of exaggeration and misrepresentation—perhaps simply his wishful thinking: “The real ruler of South Korea is the United States. Today South Korea is in turmoil politically and economically. Seoul officials are trying to restore economic stability but I doubt they will make it.”

…

News of the summit announcement suggested that Kim Jong-il had looked over the possibilities for fixing his busted economy and realized that it could hardly be done without the participation of the estranged but filthy-rich Koreans living south of the Demilitarized Zone—-who by that time had shown their staying power by weathering the Asian financial crisis. Hyundai, with its tour cruises to Mount Kumgang, had given Pyongyang a tantalizing sample of just how much help the South could provide if relations improved. And the basic strategy embodied in both Kim Dae-jung’s sunshine policy and the South Korean–American-Japanese “Perry process,” named after the former defense secretary, was to combine aid with credible assurances of domestic non-interference and hook Pyongyang on peaceful coexistence.

The Rough Guide to Korea
by Rough Guides
Published 24 Sep 2018

A few of these organizations have achieved fame around the world, though perhaps bar Samsung, most foreigners probably wouldn’t know that the company is Korean even if the name is familiar to them. Some of the largest and most renowned jaebeol include LG, Hyundai, SK, Lotte, Daewoo and Kumho Asiana. Most are still family-controlled, leading to enormous riches for those at the helm; their power was a driving force behind Korea’s “Economic Miracle”. Times have changed; after the Asian Financial Crisis and the resultant reforms, many chose (or were forced) to break up into smaller units. K: K-pop For all its success in international business and mobile telephony, it’s Korea’s pop music – usually referred to as K-pop – which has best marketed the country as a brand. While the term is broad, it usually refers to saccharine boy- and girl-band pap, which since the turn of the century has seen accompanying music videos become ever more raunchy.

The Rise of the Network Society
by Manuel Castells
Published 31 Aug 1996

Khoury, Sarkis and Ghosh, Alo (1987) Recent Developments in International Banking and Finance, Lexington, MA: D.C. Heath. Kiesler, Sara (ed.) (1997) The Culture of the Internet, Hillsdale, NJ: Erlbaum. Kim, E.M. (1989) “From domination to symbiosis: state and chaebol in Korea”, Pacific Focus, 2: 105–21. Kim, Jong-Cheol (1998) “Asian financial crisis and the state”, unpublished MA thesis, Berkeley, CA: University of California, Department of Sociology. Kim, Kyong-Dong (ed.) (1987) Dependency Issues in Korean Development, Seoul: Seoul National University Press. Kimsey, Stephen (1994) “The virtual flight of the cyber-trader”, Euromoney, June: 45–6.

Liberalism at Large: The World According to the Economist
by Alex Zevin
Published 12 Nov 2019

Acting together, Micklethwait and Wooldridge wrote even more, with five books on discoveries made in America – examining its business consultants in The Witch Doctors in 1996; leadership of globalization in A Future Perfect in 2000; spirited innovations in The Company in 2003; politics in The Right Nation in 2004 (accurately predicting Bush’s victory and helping to secure Micklethwait the editorship); and its peculiar religiosity in God Is Back in 2009. This body of work, closely overlapping with their articles for the Economist, displayed levels of giddiness about American-style capitalism that surpassed Emmott’s.78 Nowhere was the breathless tone more apparent than in The Future Perfect, written after the East Asian financial crisis and WTO protests in 1998–99, ‘to make the intellectual case for globalization’. That case rested in large part on a group they dubbed the ‘cosmocrats’ – a perplexing neologism, evoking a Soviet-era space program, instead of the global race of yuppies they had in mind – ordering ‘loups de mer’ for dinner, while ‘forever eliminating barriers, overcoming limits, removing rigidities’.

Too big to fail: the inside story of how Wall Street and Washington fought to save the financial system from crisis--and themselves
by Andrew Ross Sorkin
Published 15 Oct 2009

It was during that search that he met with some bankers from JP Morgan who were pitching a new kind of credit derivative product called the broad index secured trust offering—an unwieldy name—that was known by its more felicitous acronym, BISTRO. With banks and the rest of the world economy taking hits in the Asian financial crisis, JP Morgan was looking for a way to reduce its risk from bad loans. With BISTROs, a bank took a basket of hundreds of corporate loans on its books, calculated the risk of the loans defaulting, and then tried to minimize its exposure by creating a special-purpose vehicle and selling slices of it to investors.

Political Order and Political Decay: From the Industrial Revolution to the Globalization of Democracy
by Francis Fukuyama
Published 29 Sep 2014

Notwithstanding the clear limits to the radius of the national identity that the Indonesian state has been able to impose, the government has achieved a remarkable degree of national integration for a region that was not remotely a single nation one hundred years earlier. Indeed, Indonesian identity by the 1990s had become sufficiently secure that when the country as a whole transitioned to democracy after the Asian financial crisis in the late 1990s, it was able to permit a substantial devolution of power to its provinces and localities without fear of further fragmentation. Indonesia remains a highly fractured country, as communal violence against the Chinese and Christian communities and other minorities continues.

The Story of Work: A New History of Humankind
by Jan Lucassen
Published 26 Jul 2021

In South Korea, four decades of authoritarian rule came to an end with a civic movement in which the general strike of 1996–97 played a decisive role. In their simultaneous demand for democracy and redistribution, social welfare workers and their trade unions and reformist elites worked together.158 In the backlash of neoliberal market reforms that quickly followed, in particular with the Asian Financial Crisis of 1997 and the global banking crisis of 2008, many of these achievements survived. Everything was nibbled away from the universal social insurance scheme that was introduced in South Korea from 1997, especially in the sphere of old-age pensions, but its national health care programme proudly remained in place.

Immigration worldwide: policies, practices, and trends
by Uma Anand Segal , Doreen Elliott and Nazneen S. Mayadas
Published 19 Jan 2010

Consequently, Thailand adopted an export-led economic policy in the mid–1980s, and reached 10% a year economic growth, resulting in the employment of many female rural-urban and foreign migrants in manufacturing industries, especially in clothing and textiles businesses (Archavanitkul, 1998, p. 12). In addition, male migrants were hired in fisheries, construction, and agricultural work (Asian Research Center for migration 2000, p. 16). The Asian financial crisis of 1997 was expected to increase unemployment among Thais, as 303 304 Nations with Increasing Immigrant Populations well as encourage unemployed Thais to replace migrant workers. As a result, some immigrant workers left Thailand during 1997 to 1998 (the Ministry of Labour and Social Welfare [MOLSW], currently called the Ministry of Labour [MOL]).

Capital in the Twenty-First Century
by Thomas Piketty
Published 10 Mar 2014

International organizations such as the OECD, the World Bank, and the IMF promoted the same set of measures in the name of the latest in economic science.41 But the movement was propelled essentially by democratically elected governments, reflecting the dominant ideas of a particular historical moment marked by the fall of the Soviet Union and unlimited faith in capitalism and self-regulating markets. Since the financial crisis of 2008, serious doubts about the wisdom of this approach have arisen, and it is quite likely that the rich countries will have increasing recourse to capital controls in the decades ahead. The emerging world has shown the way, starting in the aftermath of the Asian financial crisis of 1998, which convinced many countries, including Indonesia, Brazil, and Russia, that the policies and “shock therapies” dictated by the international community were not always well advised and the time had come to set their own courses. The crisis also encouraged some countries to amass excessive reserves of foreign exchange.

Conspiracy of Fools: A True Story
by Kurt Eichenwald
Published 14 Mar 2005

To his agitated mind, their faces were frozen in fear, dark circles defining their eyes. The elite of the financial world worked here, and Skilling thought they had good reason to be terrified. A global economic depression was on the way; Skilling was sure of it. Russia had defaulted. The Asian financial crisis was still digging into world economies. The Fed had been forced to engineer a bailout of Long-Term Capital Management LP, a hedge fund, on concern its collapse would trigger a market meltdown. Skilling feared the gathering financial storm would swamp Enron itself. Banks were ruthlessly tightening credit.

Principles of Corporate Finance
by Richard A. Brealey , Stewart C. Myers and Franklin Allen
Published 15 Feb 2014

Its mandate is only to assure that investors are given adequate information. 23M. Bertrand, P. Mehta, and S. Mullainathan, “Ferreting out Tunneling: An Application to Indian Business Groups,” Quarterly Journal of Economics 117 (February 2002), pp. 121–148. 24S. Johnson, P. Boone, A. Breach, and E. Friedman, “Corporate Governance in the Asian Financial Crisis,” Journal of Financial Economics 58 (October/November 2000), pp. 141–186. 25R. Levine, “Financial Development and Economic Growth: Views and Agenda,” Journal of Economic Literature 35 (1997), pp. 688–726; and R. Rajan and L. Zingales, “Financial Dependence and Growth,” American Economic Review 88 (1998), pp. 559–586. 26R.