light touch regulation

Bean Counters: The Triumph of the Accountants and How They Broke Capitalism
by Richard Brooks
Published 23 Apr 2018

By the time the world needed to respond to the early-twentieth-century crisis of accounting epitomized by Enron and WorldCom, Britain’s New Labour government was in thrall to the bean counters-turned-consultants now strolling the corridors of power reforming public services. When the accountants lobbied, the government listened. A 1997 New Labour manifesto commitment to more independent regulation of the accountancy profession was soon dropped. ‘Light touch’ regulation became a selling point for ‘UK plc’. Set up your companies here or list on our stock exchanges, was the message, and we won’t probe your accounts or those who audit them too closely. Britain’s public accountancy regulator, the Financial Reporting Council, was set up in 1990 in the wake of the 1980s scandals like Barlow Clowes, but had soon become the vehicle for this indulgence.

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McKinsey & Co., 75 Japan, 2, 82, 230–31, 234–5, 240–41 Jennings, Andrew, 220, 224 Jerome, Saint, 35 Jersey, 89, 94–5, 158 job costing, 43 Johnson Matthey Bank, 91, 128 Johnson, Lyndon Baines, 63 joint stock companies, 41 Joint Stock Companies Act 1844: 47 1856: 50 Jones, Lewis Davies, 54, 55, 56 Jowell, Tessa, 196 junk bonds, 85 Kanebo, 240 Kapital, Das (Marx), 3 Kattner, Markus, 225 Keating, Charles, 85–6, 91 Kellaway, Lucy, 275 Kershaw, Sue, 199 Kgosana, Moses, 250 Khodorkovsky, Mikhail, 237 King, Mervyn, 273 Kirby, Paul, 208 Klynveld Kraayenhof, 235 Klynveld, Piet, ix KMG, 235 Knievel, Robert Craig ‘Evel’, 182 Koch Industries, 171 Kohl, Marius, 168, 174–7 KPMG, ix–x, 2, 10, 11, 48, 97, 116–19, 141–2, 149–50, 256–9, 264–7, 276 and Barnier proposals, 255 and Bradford & Bingley, 141–2, 149 and Brexit, 203, 204 and British Aerospace/BAE Systems, 213 Canary Wharf base, 256 Chelsea Flower Show, 200 in China, 244, 245, 251–2 and Civil Service Live conference, 201 Claridges conference (2007), 122 and Co-operative Bank, 142, 149, 150 and Comroad, 240 and collateralized debt obligations (CDOs), 121 and Countrywide Financial Corporation, 48, 118, 257 ‘Cutting Through Complexity’, 11–12 Data & Analytics (D&A), 272 and defence, 188, 189, 200, 202, 216, 217, 265 establishment of (1987), 235 and European Central Bank, 10 and Federal National Mortgage Association (‘Fannie Mae’), 118–19, 257 and FIFA, 220–28 and Financial Crisis Inquiry Commission, 145 and Financial Reporting Council, 144, 209 and General Electric, 5–6 governments, advice to, 186, 187, 188, 189, 191, 192–3, 197–9, 202–6, 249 and GPT, 216, 217 and HBOS, 141, 142–3, 149, 150, 257 and Hinkley Point, 204–6 and Hollinger, 154–5 and Hong Kong protests (2014), 251–2 and House of Lords committee (2010), 146 and HS2, 197–9 and HSBC, 229–30 and Imperial Tobacco, 202, 266–7 in India, 249 integrated reporting, 18 key performance indicators, 12 and Lockheed Martin, 202, 265 and Miller Energy, 261 and Ministry of Defence, 188, 189, 202, 216, 217, 265 and National Health Service (NHS), 192–3, 202, 266 and New Century Financial Corporation, 48, 116–18, 257 No. 20, Grosvenor Street, Mayfair, ix–x, x, 277–8 ‘One Firm’ philosophy, 275 and ‘patent box’ tax breaks, 180 Performance Club 1999 trips, 160 and Petrofac, 218 and private finance initiative (PFI), 186, 187, 188, 189, 191, 249 and Privy Purse, 68 revolving door, 206, 207, 208 and Saudi British Joint Business Council, 218 Scott London Rolex scandal (2013), 15 and securitization, 121, 122 and Siemens, 240 in South Africa, 249–50 and subprime mortgages, 10, 48, 116–19 and sustainable development, 200 and tax avoidance, 154–5, 157, 158, 159–62, 180–81, 182, 186 thought leadership, 12 and thrifts, 87 and Tier One, 257 and Wachovia, 257 and Xerox, 109–10 Kreuger, Ivar, 57 Kubena, Mike, 237 Labour Party, 66, 94, 114, 178, 179, 184–92, 194, 201, 209, 230 Lake Michigan, 73 Land, Nick, 144, 182 Lang, Ian, 95 Last Supper, The (Leonardo da Vinci), 33 Lateran Council, Third (1179), 24 Law Commission, 93 Lawson, Nigel, 146 Lay, Kenneth, 99–100, 104, 107, 108 Leary, Simon, 191 Lehman Brothers, 12, 13, 92, 119, 131–3, 138, 144, 145, 148–9 Leigh, Edward, 189 Lend-Lease programme, 60 Leonardo da Vinci, 33 Levin, Carl, 159, 161 Levitt, Arthur, 96–8, 104 Lewis, Leigh, 207 Lewis, Michael, 112, 118 Liber Abaci (Fibonacci), 21–2 Liberal party, 50, 52 Liechtenstein, 220 limited liability, 50, 52, 91–5, 114 Lincoln Savings and Loan, 85–7 Linklaters, 140 Little, Royal, 61 Liverpool, Merseyside, 49 LJM, 104–5 Lloyds Bank, 140 Lockheed Martin, 202, 212, 265 London, England Big Bang (1986), 156 Canary Wharf, 256 Chelsea Flower Show, 200 Claridges, 122 Gordon Riots (1780), 38 Imperial College, 197 ‘light touch’ regulation, 114, 131, 209 Medici Bank, 26, 30 Olympic Games (2012), 196 Price Waterhouse, 54 Royal London Hospital, 190 School of Economics, 197 St Bartholomew’s Hospital, London, 190 Tate Modern, 16 Long Term Capital Management, 113 Louis XI, king of France, 31 low-balling, 79, 91 Lowe, Robert, 50 Luce, Edward, 17 Lucerne, Switzerland, 220 Luthiger, Fredy, 222, 223, 227 Luxembourg, 165–77, 179, 180, 181, 182, 245, 267–71, 278 LuxLeaks, 169–77, 179, 181, 245, 268, 269, 278 Lybrand, Ross Bros & Montgomery, 87 Lybrand, William, 56 Lynch, Loretta, 219, 223 Lyons, 31 MacGregor, John, 128 Mair, John, 42, 53 Management Consultancies Association, 190 Mandelson, Peter, 95, 207 Mapping the Market, 193 mark-to-market, 99–102, 113, 123, 124, 129–31 mark-to-model, 124–5, 126, 127, 131 mark-to-myth, 124, 131 Marlborough, Duke of, see Churchill, John Martin, William, 122–3 Marwick, James, ix, 48–9, 56, 62, 119, 158, 217, 233, 277 Marx, Karl, 3 Masters Tournament, 104 Masters, Adrian, 191 matches, 57 Mauritius, 158 Maxwell, Robert, 66, 87–8, 91 May, George, 73, 78, 82, 277 May, Theresa, 203 McConnell, Jack, 207 McCreevy, Charles, 164 McDonald’s, 170 McFall, John, 207 McKenna, Francine, 145, 274 McKinsey, 17, 74–7, 79, 81, 99, 108, 183, 191, 226, 263 McKinsey, James, 74–7 McLean, Bethany, 101 Measelle, Richard, 103 Medici family, 16, 26–32, 36 Cosimo, 26, 27, 28, 29, 31 Giovanni, 26 Lorenzo, 28, 29, 30 Medvedev, Dmitry, 17 Melbourne, Victoria, 48 mergers and acquisitions, 11, 54, 59–69, 71, 87 Merrill Lynch, 121 Mesopotamia, 1 Messezentrum conference centre, Zurich, 228 Metcalf, Lee, 80 Metz, France, 172, 173, 176 Mexico, 229 Michael, Bill, 149–50 Microsoft, 271 Milburn, Alan, 184, 191, 194, 207 Mill, John Stuart, 50 Miller Energy, 261 Ministry of Defence, UK, 188–90, 202, 212, 215–19, 265 Missal, Michael, 115, 116–17 Missouri, United States, 74 Mitchell, Andrew, 206, 208 Mitchell, Austin, 94, 230 Mitchell, Roger, 48, 56 Model T Ford, 71 Modern Times, 71 Monde, Le, 169 monetarism, 84 money laundering, 229–31 Montagu, Nicholas, 207 Monty Python, 15–16 Moore, Paul, 141 Morgan, Henry, 39 Morgan, John Pierpont, 54–5 Morgan Stanley, 119, 148 Morse, Amyas, 206 mortgage-backed securities (MBS), 120–21 Moselle, France, 171 Mossack Fonseca, 247 Mouget, Didier, 170, 171, 173 Mumbai, Maharashtra, 242 Munger, Charlie, 18, 135, 147 Myners, Paul, 146 Nally, Dennis, 5, 148 Nassau, Bahamas, 222 National Aeronautics and Space Administration (NASA), 76 National Audit Office, 187, 189, 206 National Crime Agency (NCA), 272 National Health Service (NHS), 183–4, 187, 190, 191–5, 266 National Westminster Bank (NatWest), 136 Nazi Germany (1933–45), 4, 234, 251 Neoplatonism, 28 Netherlands ABN Amro, 138 Ballast Nedam, 218–19 Klynveld Kraayenhof, 235 Royal Ahold, 238–9 Spanish (1556–1714), 36 taxation, 163, 164–5 New Century Financial Corporation, 48, 115–18, 257 New Delhi, India, 245, 249 New Labour, 114, 184–92, 194, 209 New York, United States, 57 beer business, 54 Britnell’s ‘Reform Revolution’ speech (2011), 192–3 County Law Association, 153 Deloitte compensation case (2009), 239 FIFA indictment (2015), 219, 223 Harris’ advisory services speech (2014), 264 Issuers’ and Investors’ Summit on CDOs/Credit Derivatives (2006), 121 Levitt’s ‘Numbers Game’ speech (1998), 96, 98 Marwick & Mitchell, 48 Price Waterhouse, 54 Stock Exchange, 55, 115, 234 Wall Street, 54, 69, 96, 101, 120–21 New York Times, 118, 236 New Zealand, 256 Newton, Isaac, 22 Nicholson, Kevin, 178, 182 Nieuwe Instructie (Christoffels), 36 Nike, 163 No. 20, Grosvenor Street, Mayfair, ix–x, x, 277–8 Noncomformism, 42 Norte del Valle Cartel, 229 Northern Rock, 125–9, 142–3, 148 Norway, 72 nuclear power, 204–6 ‘Numbers Game’ speech (1998), 96, 98 O’Donnell, Augustine ‘Gus’, 207 O’Rourke, Feargal, 164, 165 off-balance-sheet financing, 101, 102, 104, 106 Office of Tax Simplification, 179 oil crisis (1973), 84 oil-for-food programme, 225, 240 Olympic Games (2012), 196 Olympus, 241 One Hundred Group, 254 OPIS (Offshore Portfolio Investment Strategy), 159, 162 Oppenheimer & Co., 112–13 Organization for Economic Cooperation and Development (OECD), 170, 181, 214 Osborne, George, 149, 182, 248 Oscars, 16 Overend & Gurney, 51, 126 Oxford University, 181, 184 Oxley, Michael, 114, 122 de Pacioli, Luca Bartolomeo, 32–6, 34, 100, 124 Page, Stephen, 272 Pain, Jon, 208 Palin, Michael, 15–16 Palo Alto, Silicon Valley, 82 Panama Papers scandal (2016), 247 Panorama, 169, 220 Paradise Papers scandal (2017), 7, 247 Parmalat, 239, 243 Parrett, William, 148 partners, 8 Pearson, 169, 270 Pearson, Ian, 207 Peat, Marwick, Mitchell & Co., 48, 60, 63, 64, 79, 82, 233, 235 Peat, Michael, 68 Peat, William Barclay, ix, 48, 49, 68, 233, 277 Penn Central Transport Company, 64, 79 pension funds, 67 Pepsi, 166 Pergamon, 66 Perrin, Edouard, 168, 169, 171–2, 173, 174, 175 Persson, Mats, 208 Perugia University, 32 Pessoa, Fernando, 1 Peston, Robert, 197 Peterborough hospital, Cambridgeshire, 191 Petits secrets des grandes enterprises, Les, 169 Petrofac, 218 Pfizer, 163 Piot, Wim, 173, 181, 182 Pisa, Italy, 21 place value’ system, 21 political donations, 98 Ponzi schemes, 89 ‘pooling-of-interest’ accounting, 61–2, 63, 67, 96 post-balance sheet events, 72 Powell, Ian, 128, 201–2 Poynter, Kieran, 148, 150 premiums, 45 Presbyterianism, 42 Price, Samuel Lowell, 49 Price Waterhouse & Co., 49, 53–6, 57, 65, 67, 72, 73, 78–9, 82 and conflicts of interest, 73, 277 consultancy, 78–9, 81, 82 Coopers & Lybrand, merger with (1998), 49, 95 in Germany, 233 and Great Crash (1929), 57 in India, 233 international co-ordinating company, 234 and limited liability partnerships, 94 Palo Alto technology centre, 82 and private finance initiative (PFI), 185 in Russia, 236 and tax avoidance, 164 and tax code (1954), 153–4 and United States Steel, 55, 62, 233 PricewaterhouseCoopers (PwC), 2, 5, 6, 49, 95, 97 and American International Group, 134–5, 144, 145, 148 and Bank of Tokyo-Mitsubishi, 230–31 and Barclays, 6 Booz & Co. acquisition (2013), 263–4 and Brexit, 203 and British Home Stores (BHS), 260 Building Public Trust Awards, 256 ‘Building Relationships, Creating Value’, 12 and Cattles plc., 142 cyber-security, 272–3 establishment of (1998), 49, 95 and Financial Crisis Inquiry Commission, 145 and Financial Reporting Council, 142, 144, 209, 210 global operations, 235–6 and Goldman Sachs, 134–5, 148 and Google, 271 and GPT, 217, 218 and Heineken, 246 and Hong Kong protests (2014), 251–2 in India, 242 integrated reporting, 18 and Kanebo, 240 and Labour Party, 201 and National Health Service (NHS), 192, 194, 200 and Northern Rock, 126, 127–9, 142–3, 148 and Olympic Games (2012), 196 presentation (2017), 16 and private finance initiative (PFI), 187, 188–91, 196, 249 profits, 5 revolving door, 207, 208 and RSM Tenon, 210, 261 in Russia, 236–8 and Saudi British Joint Business Council, 218 and securitization, 121, 122, 129 and tax avoidance, 157, 165–79, 180, 182, 237, 246, 267–71, 278 thought leadership, 12 total tax contribution survey, 179 and Tyco, 109 in Ukraine, 238 and Vodafone, 165–6 Prince of Wales’s charity, 181 principal/agent problem, 13 Prior, Nick, 190 Privatbank, 238 Private Eye, 169, 180, 215, 255 private finance initiative (PFI), 185–91, 196, 203, 249 Privy Council, 94 Privy Purse, 68 production-line system, 71 productivity growth, 262–3 professional scepticism, 112, 130, 214, 224 professional services, 11, 72, 150, 183, 204–5, 251, 275, 279 Professional Standards Group, 105–7 Project Braveheart, 106 Project Nahanni, 102 Protestant work ethic, 3 Protestantism, 3, 42, 43 Prudential, 157 Public Accounts Committee, 281 Public Company Accounting Oversight Board (PCAOB), 144–5, 242–3, 253, 261, 274 Puerto Rico, 163 Putin, Vladimir, 17, 237 Qatar, 228 Quakers, 42, 49 Railway Regulation Act (1844), 45 railways United Kingdom, 44–7, 49, 115 United States, 51, 52, 53, 70, 73 Rake, Michael, 144, 149, 150, 162, 181, 257 Raptors, 105 Rayonier, 59 Reagan, Ronald, 80, 84, 154, 184 Reckoning, The (Soll), 27 Redpath, Leopold, 46 regulation, UK, 13, 127, 209–10, 213–14, 259 and Brexit, 273 deregulation (1980s), 95 and financial crisis (2007–8), 127–8, 137–45 Financial Conduct Authority, 140, 149, 281 Financial Reporting Council, 138, 142, 144, 149, 182, 209–10, 213–14, 259, 261 Financial Services Authority, 127, 128, 137, 138, 140 ‘light touch’, 114, 131, 209–10 Railway Regulation Act (1844), 45 self-regulation, 88, 90 regulation, US, 91, 260 Bush administration (2001–2009), 114, 145, 253 Celler–Kefauver Act (1950), 59, 61 competition on price, 79–80 deregulation (1980s), 84–5, 95, 112 derivatives, 122 and Enron, 99 and Lincoln Savings and Loan, 85–7 mark to market, 99 numbers-game era (1990s), 110 Public Company Accounting and Oversight Board, 242–3, 253, 260 Roosevelt, Theodore administration (1901–9), 56–7 Sarbanes–Oxley Act (2002), 114, 122 self-regulation, 61 Trump administration (2017–), 273, 274 and Westec collapse (1966), 63 see also Securities and Exchange Commission Renaissance, 3, 16, 22, 24–37 Renjen, Punit, 275 ‘Repo 105’ technique, 131–3, 149 revolving door, 206–8, 272 Ripley, William Zebina, 57 Robson, Steve, 144, 207 Rockefeller, John Davison, 53, 71 Rolex, 15, 215 Rolls-Royce, 213 Roman numerals, 22 Rome, ancient, 24 Rome, Italy, 25, 27 Roosevelt, Franklin, 58 Roosevelt, Theodore, 56 de Roover, Raymond, 27 Rowland, Roland ‘Tiny’, 66 Royal African Company, 37 Royal Ahold, 238–9 Royal Bank of Scotland, 47, 90, 136–40, 142, 157, 241, 259 Royal London Hospital, 190 RSM Tenon, 210, 261 Russian Federation, 17, 236–8 Ryan, Tim, 134, 148 Saltwater Slavery (Smallwood), 37 Samek, Steve, 103 SANGCOM, 214–19 Sansepolcro, 32 Sarbanes, Paul, 114, 122 Sarbanes–Oxley Act (2002), 114, 122 Sassetti, Francesco, 16, 29, 30, 31, 41 Satyam, 242 Saudi Arabia, 212–19, 221 Saudi British Joint Business Council, 218 Saunders, Stuart, 64 Save South Africa, 250 savings-and-loan mutuals, 84–7, 91, 99 Sberbank, 237 Scarlett, John, 207, 272 Schlich, William, 149 Schumpeter, Joseph, 3 scientific management, 71, 76 Scotland, ix, 42, 47–9, 70, 224 Scuola di Rialto, Venice, 32 Second World War (1939–45), 59, 60, 77, 234 Secret Intelligence Service, 207, 272 Securities Act (1933), 58 Securities and Exchange Commission (SEC), 281 and consulting, 80, 104 and Enron, 99, 104, 108 and Hollinger, 154 Levitt’s ‘Numbers Game’ speech (1998), 96, 98, 104 and Lincoln Savings and Loan, 85, 86 and Penn Central Transport Company, 64 and ‘pooling-of-interest’ accounting, 61, 62 and Public Company Accounting Oversight Board (PCAOB), 144 PwC India fined (2011), 242 and Xerox, 109–10 securitization, 101–2, 116, 119–23, 125, 129–31, 133–40, 148, 265 Seidler, Lee, 68–9, 79 self-regulation, 6, 61, 88 Serious Fraud Office, 213, 216, 217, 218, 219 Sexton, Richard, 129, 268, 278 shadow banking system, 115 Shanghai, China, 17 Shaxson, Nicholas, 247 Sheraton, 59 Sherlock, Neil, 208 short selling, 112, 115, 116 Siemens, 240 Sikka, Prem, 94 Silicon Valley, California, 82 Simec International Ltd, 214, 215 Sinaloa Cartel, 229 Sinclair, Upton, 14 Singapore, 163 Sino-Forest, 244 Skilling, Jeff, 99–100, 101, 105, 108 Skinner, Paul, 208 Slater, James, 65 slave trade, 4, 37 Smallwood, Stephanie, 37 Smallwood, Trevor, 158 Smartest Guys in the Room, The (McLean and Elkind), 101 Smith, Adam, 13 Smith, Jacqui, 207 Snell, Charles, 40 Social Justice Commission, 184 Soll, Jacob, 27 Sombart, Werner, 3–4, 22 SOS (Short Option Strategy), 159, 162 South Africa, 213, 223–4, 249–50 South Sea Company, 39–41, 42, 44 Soviet Union (1922–91), 236 Spacek, Leonard, 62, 77–8 Spain, 36, 39, 241 special investment vehicles, 115 Spinwatch, 201 Sproul, David, 256, 258 St Bartholomew’s Hospital, London, 190 St Louis, Missouri, 56 Standard & Poor’s, 149 Standard Chartered Bank, 230, 231 Starbucks, 178 steam engine, 43 Stein, Jeffrey, 161 Stephenson, George, 44 Stevens, Mark, 82–3 Stevenson, James, 1st Baron Stevenson, 141 Stiglitz, Joseph, 114 stock market, 68, 69, 92, 96 ‘Go-Go’ years (1960s), 62, 65 and Great Crash (1929), 57, 58 and J.

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, 248 UK Uncut, 166 Ukraine, 238 United Kingdom, 2, 6, 39–41, 42–52, 55–6, 65–9 Bank of England, 38, 91, 126, 140, 273 Banking Act (1879), 51 Barlow Clowes collapse (1988), 89–90, 136, 209 Blair ministries (1997–2007), 114, 157, 179, 184–92, 194, 209, 213 Brexit, 195, 203–4, 273 British Home Stores collapse (2015–16), 260–61 Bubble Act (1720), 44 Cabinet Office, 200, 201 Cameron ministries (2010–16), 149, 182, 192, 194, 195, 203 chartered accountancy, 14, 16, 45, 47–8, 49, 53, 67 City of Glasgow Bank collapse (1878), 51, 147 Companies Acts, 51, 52, 58, 66, 93 credit crisis (1772), 43 Davey committee (1894), 52 Department for Business, 201 Department for Exiting the EU, 204 Department of Health, 188, 191, 192 Financial Conduct Authority, 140, 149, 281 financial crisis (2007–8), see under financial crisis Financial Reporting Council, 138, 142, 144, 149, 182, 209–10, 213–14, 259, 261 Financial Services Authority, 127, 128, 137, 138, 140 First World War (1914–18), 71 GCHQ (Government Communications Headquarters), 272 Gordon Riots (1780), 38 Her Majesty’s Revenue and Customs (HMRC), 179, 182 HBOS bailout (2008), x, 140–41, 142–3, 149, 257 Home Office, 201 HS2, 197–9, 266 Income Tax Act (1842), 46 Industrial Revolution, 18, 42–7 Institute of Chartered Accountants in England and Wales (ICAEW), 49, 52, 93, 210 IAS39 rules, 123, 125, 127, 147 Johnson Matthey collapse (1984), 91, 128 Joint Stock Companies Acts (1844, 1856), 47, 50 ‘light touch’ regulation, 114, 131, 209 limited liability, 92–5 May ministries (2016–), 203 Maxwell publishing empire, 66, 87–8, 91 mergers and acquisitions, 65–9 Ministry of Defence, 188–90, 202, 212, 215–19 National Audit Office, 187, 189, 206 National Crime Agency (NCA), 272 National Health Service (NHS), 183–4, 187, 190, 191–5, 266 Northern Rock collapse (2007), 125–9, 142–3, 148 Overend & Gurney collapse (1866), 51, 126 Paradise Papers scandal (2017), 7 private finance initiative (PFI), 185–91, 196, 203, 249 Public Accounts Committee, 281 railways, 44–7, 49, 115 Railway Regulation Act (1844), 45 regulation, see under regulation Royal Bank of Scotland bailout (2008), 47, 136–40, 142, 241 Saudi Arabia, relations with, 212–19 Secret Intelligence Service, 207, 272 Serious Fraud Office, 213, 216, 217, 218, 219 South Sea Company, 39–41, 42, 44 Tate, 16 taxation, 7, 46, 67, 94, 153, 155–9, 163–6, 177–82, 203, 247–8 Thatcher ministries (1979–90), 84, 184 Treasury, 39, 68, 146, 179, 180, 189, 201, 203 War of the Spanish Succession (1707–13), 38 Wilson ministry, first (1964–70), 66, 68 United Nations, 225, 245 United States, 2, 4, 52–8, 59–65, 66–9 American Institute of Certified Public Accountants, 61 American International Group bailout (2008), 133–5, 144, 145, 148 antitrust laws, 59, 61, 75 Bear Stearns bailout (2008), 139, 145 Big Bang (1986), 156 Big Four, 2, 6, 9, 10 Bush administration (2001–2009), 98, 114, 145, 253 Celler–Kefauver Act (1950), 59, 61 certified public accountants, 53 Civil Rights Movement, 64 class-action lawsuit law (1966), 64 Congress, 56, 57, 58, 68, 73, 79–80, 98, 145 consultancy, 70–83 Department of Justice, 144, 161, 223 Eisenhower administration (1953–61), 76 Enron scandal (2001), see under Enron Federal National Mortgage Association (‘Fannie Mae’), 118–19, 145, 257 Federal Reserve, 122, 133 Federal Trade Commission, 79 FIFA indictment (2015), 219, 223 financial crisis (1873), 53 financial crisis (2007–8), see under financial crisis Founding Fathers, 53 Gilded Age (c. 1870–1900), 48 Glass–Steagall Act (1933), 60 ‘Go-Go’ years (1960s), 59, 62, 65 Great Crash and Depression (1929–39), 14, 57–8, 59–60, 66, 73, 75, 80, 118 Internal Revenue Code (1954), 154 Internal Revenue Service (IRS), 159, 160 International Accounting Standards, 123 Ivy League, 68 Johnson administration (1963–9), 63 Lehman Brothers collapse (2008), 12, 13, 92, 131–3, 138, 145, 148–9 limited liability partnerships, 91–2 Long Term Capital Management collapse (1998), 113 mergers and acquisitions, 59–62, 71 National Aeronautics and Space Administration (NASA), 76 Navy, 77 New Century Financial Corporation collapse (2007), 115–18, 257 Penn Central Transport Company collapse (1970), 64 presidential election (2000), 98 Public Company Accounting and Oversight Board (PCAOB), 144–5, 242–3, 253, 261, 274 railroads, 51, 52, 53, 70, 73 Reagan administration (1981–9), 80, 84, 154, 184 Roosevelt, Franklin administration (1933–45), 58 Roosevelt, Theodore administration (1901–9), 56–7 Sarbanes–Oxley Act (2002), 114, 122 savings-and-loan mutuals, 84–7, 91, 99 Securities Act (1933), 58 Securities and Exchange Commission (SEC), see under Securities and Exchange Commission Sunbeam collapse (2001), 97 Tax Reform Act (1986), 154 taxation, 67, 153–5, 159–63, 178 Trump administration (2017–), 17, 161, 273, 274 Vietnam War (1955–75), 63 Wall Street, 54, 69, 96, 101, 120–21 Washington Mutual collapse (2008), 145 Watergate Scandal (1972–4), 212 Westec collapse (1966), 63 World Congress of Accountants (1904), 56 WorldCom scandal (2002), 6, 10, 109, 110, 130, 209, 264, 274 United States Steel Corporation, 55, 62, 233 universal automatic computer (UNIVAC), 77–8 University of Chicago, 75, 84 University of Pennsylvania, 77 Unleashing the Department Store (Bower), 75 usury, 24, 26 Utopia, Limited, 52 Valcke, Jérôme, 225 value-added tax (VAT), 7, 179, 247 Vandemeulebroeke, Marc, 172, 173 Varley, Steve, 16, 200, 256, 258 Vatican, 25 Veihmeyer, John, 250 Venice, Republic of (697–1797), 18, 21, 24, 26, 32–6 Victoria, queen of the United Kingdom, 47 Vietnam, 102 Vietnam War (1955–75), 63 Vincent, Janice, 86 Virgil, 33 Virley, Simon, 205, 206, 207 Vodafone, 165–6 W.

Limitless: The Federal Reserve Takes on a New Age of Crisis
by Jeanna Smialek
Published 27 Feb 2023

.[*3] “The right thing to do is for us to continue our stress tests but as part of them to analyze how banks’ portfolios are responding to real, current events, not just to the hypothetical event that we announced earlier this year,” Quarles said, speaking from his personal office, a fire crackling in his modern black marble hearth. Then the Fed could “use that analysis to inform determinations we make about the supervision and regulation of the financial sector.”[19] Details were still in the works, he implied. What he said next was more surprising, coming from Washington’s most powerful champion of light-touch regulation. Quarles suggested that the Fed and the broader government were probably going to need to reassess nonbank regulations—the ones that govern savings vehicles like money market funds and hedge funds—in the wake of the March market turmoil. “As the dust settles here,” he said, it would be important to “think about whether we have the right macro-framework around that portion of the financial sector, because of the significant amount of intervention that was required at the outset of this event.”[20] The thing Randy Quarles disliked more than the government getting mixed up in the workings of capitalism was when capitalism demanded it.

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In 2006, Quarles acknowledged that officials were looking into requiring greater transparency in nontraditional mortgages and that he and other officials at the Treasury were “doing everything in our power to make our financial system even more resilient in the future,”[18] but he also seemed to play down risks building in the housing market. He said that he “would not expect to see a substantial drop in housing prices as long as income is rising and interest rates remain moderate.” A year later, home prices had fallen precipitously from their run-up, and risk-taking in mortgage-tied markets with excessively light regulation caused banks and large financial institutions to implode. Still, when Quarles was appointed to the Fed, many pro-regulation onlookers quietly admitted—though rarely or never with their names attached—that they had feared Trump would pick someone far more disruptive. Quarles was not the type of person who would burn up the rule book.

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Social policy, deciding who got cheap credit—those were tasks for elected officials and markets. Before his political life started, Toomey had been a derivatives trader. He was a longtime champion of the sort of exotic financial products that had helped make him rich, and an ardent defender of light regulation, even at moments when other Republicans agreed that more regulation was needed. Not long after bundles of mortgage-backed derivatives went bad in 2008 and nearly brought the entire financial system to its knees, setting off a crippling recession in the process, Toomey warned against excessive controls on Wall Street.

Unfinished Business
by Tamim Bayoumi

This contrasts with the smooth road to national banks in the United States, discussed in the next chapter. The second trend was the continuing rapid increase in the relatively large banking systems in the United Kingdom and Ireland that specialized in investment banking and where supervisors embraced “light touch” regulation. This continuing dynamism contrasted with the relative stagnation of the northern Euro area core in the early 2000s. Light touch regulation eroded the authority of other national supervisors, as their banks could argue that they also needed lenient supervision so as to level the playing field. National supervisors who insisted on maintaining a tough approach in the face of such regulatory competition also ran the risk that domestic banks would move major operations to UK and Irish subsidiaries, reducing national supervisors of the ability to observe the full activities of their banks.

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The banks used the newly freed capital for further expansion, often plowing it back into investment banking since the associated capital charges were so low. European regulators did little to prevent this process as competition between national regulators provided few incentives to reign in the activities of national banks. A vivid illustration of the influence of regulatory competition in eroding bank supervision was the move to “light touch” regulation in the United Kingdom and Ireland in the early 2000s, which left their banks relatively free from supervision.29 In the end, the decision by the Basel Committee to allow banks to use internal models to calculate capital buffers for market risk generated exactly the kind of diminution in capital standards on investment banking in Europe that the Committee had originally been formed to avoid

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Furthermore, despite passporting, the vast majority of such cross-border assets resided in subsidiaries rather than branches as a result of pressure from national regulators.31 Underlining the importance of such pressure, the much more open UK banking system was the most internationalized in the European Union, with fully half of bank assets owned by foreign banks (equally split between EU and non-EU banks). Boosted by light touch regulation, Ireland was the second most internationalized. The Creation of the Euro Area Mega-Banks A wave of bank mergers and acquisitions in the 1990s increased the role of a small number of large banks in the Euro area. While this can be measured in the aggregate—the share of assets in the largest five banks rose in every Euro area country between 1998 and 2002 with the exception of Finland—the more important part of the story involved the rapid rise of a small number of national mega-banks, tellingly called “national champions”.

Them And Us: Politics, Greed And Inequality - Why We Need A Fair Society
by Will Hutton
Published 30 Sep 2010

Debt and debt-related activity – construction and real estate services – had propelled half the growth since Labour had come to power, while manufacturing’s share of output had shrunk by two-fifths (to around 12 per cent) over the same period, a faster decline than in any other leading industrialised country.1 The politicians were enthusiastic cheerleaders throughout all of this. Finance was where innovation and entrepreneurship flowered, Prime Minister Blair and Chancellor Brown jointly proclaimed in a competition with the then Conservative opposition to fête the City of London. The factors that helped financial services – light-touch regulation, low taxes and labour market flexibility – allegedly helped all business. Governments should limit their intervention. Nor should they or society be concerned about City pay that was rising beyond the dreams of avarice because that was merely the price of global success. In the glory days of the boom, Britain was urged to enjoy the spiralling property prices and the rising consumption that came in the wake of the City’s credit creation and wheeler-dealing.

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The City reclaimed ancient privileges to restore its nineteenth-century position as an international financial centre, although this was now built upon proprietary trading in financial derivatives and securitisation. This was the purposeful, positive use of power to achieve a feasible aim – a dominant City of London. Light-touch regulation became as important a mantra to the City as free collective bargaining had been to the unions. Equally, the freedom to exploit tax havens and relieve foreign nationals from their tax obligations was as pivotal to City power as the unions’ insistence on legal immunity from damages in industrial disputes had been to theirs.

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This meant that New Labour in office did not have the ideological conviction or the political will to check the increasingly reckless expansion of British finance and the City of London. Indeed, by 2007, City Minister Ed Balls and Chancellor Gordon Brown had become articulate advocates of ‘light-touch regulation’ and ‘financial innovation’, regarding finance as a sector in which Britain had an apparent comparative advantage that the state should actively promote. After 1992, Labour politicians were convinced that while they might win a mandate for social investment, notably in health and education, no mandate could be won for social democratic intervention in the economy.

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

Brown also moved responsibility for supervising the banks from the Bank of England to a new regulator, the Financial Services Authority, which was given a dual brief of promoting as well as regulating the sector. Investment bankers and fund managers were warmly welcomed into numbers 10 and 11 Downing Street. They told the government that the economy worked best when markets were left to get on with things, and encouraged the authorities not to intervene. It led to light touch regulation, a laissez faire attitude to takeovers and a continuation of the City’s supremacy over other global financial capitals and within the UK economy. For Barrett’s Barclays, the political and regulatory environment for a bank could scarcely have been better. In contrast to the restrictive regime he had just left behind in Canada, Barrett found the British regulators taking seriously their new mission to promote the City, giving banks a free hand to run their businesses.

…

Such stories seemed only to add to the fun. These were the go-getting days of the free market and unfettered shareholder value in which the intervention of quasi-public bodies such as the Competition Commission were dismissed in favour of market solutions. Competition, it was believed, would protect the consumer, and light touch regulation rather than prescriptive interference was the order of the day. Barrett and the other chief executives saw off the complaints and got on with the job of making money for shareholders. Barrett saved Barclays. He came in at a time when the bank was vulnerable after the bloody departure of Martin Taylor.

…

He said: ‘Government debt in Britain is lower than France, Germany, Italy, America and Japan,’ and predicted that the economy would be ‘stronger this year than last and stronger next year than this’.10 The City was in its pomp and the regulators helped it along. In the decade since its formation in 1997, the FSA had been more successful in delivering that part of its mandate which required it to protect the City’s interests than it had been in its primary task of regulating it. It was admired as an exponent of light touch regulation which was regarded as a reason for the City’s market share gains from New York where Wall Street lobbied for an equally light touch from its own regulators. In his June 2006 Mansion House speech, Brown claimed the credit for this: ‘In 2003, just at the time of a previous Mansion House speech, the Worldcom accounting scandal broke.

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

Because the decision made by the American crisis fighters to take those questions off the table and to give absolute priority to saving the financial system shaped everything else that followed. It set the stage for a remarkable and bitterly ironic inversion. Whereas since the 1970s the incessant mantra of the spokespeople of the financial industry had been free markets and light touch regulation, what they were now demanding was the mobilization of all of the resources of the state to save society’s financial infrastructure from a threat of systemic implosion, a threat they likened to a military emergency. Chapter 7 BAILOUTS The ferocity of the financial crisis in 2008 was met with a mobilization of state action without precedent in the history of capitalism.

…

Americans for Financial Reform, “How Americans View Wall Street and Financial Regulation,” August 2017, http://ourfinancialsecurity.org/americans-view-wall-street-financial-regulation-august-2017/. 83. J. Mason and S. N. Lynch, “Trump’s Message to Bankers: Wall Street Reform Rules May Be Eliminated,” Reuters, April 11, 2017. 84. J. Dizard, “The Trump Era of Light-Touch Regulation Dawns,” Financial Times, July 2, 2017. 85. H. Levintova, “House Republicans Are Trying to Pass the Most Dangerous Wall Street Deregulation Bill Ever,” Mother Jones, June 7, 2017. 86. G. Bennett, “House Passes Bill Aimed at Reversing Dodd-Frank Financial Regulations,” NPR, June 8, 2017. 87.

…

Bennett, “House Passes Bill Aimed at Reversing Dodd-Frank Financial Regulations,” NPR, June 8, 2017. 87. “A Financial System That Creates Economic Opportunities: Banks and Credit Unions—Core Principles for Regulating the United States Financial System,” US Treasury report to President Donald J. Trump, Executive Order 13772 (June 2017). 88. J. Dizard, “The Trump Era of Light-Touch Regulation Dawns,” Financial Times, July 2, 2017. 89. A. Scaggs, “Save the OFR,” Financial Times, June 15, 2017. 90. B. Jopson, “US Regulator Moves to Loosen Volcker Rule,” Financial Times, August 2, 2017. 91. R. Tracy, “Trump Team to Recommend Keeping Dodd-Frank Liquidation Power,” Wall Street Journal, November 29, 2017. 92.

Dirty Secrets How Tax Havens Destroy the Economy
by Richard Murphy
Published 14 Sep 2017

The Marshall Islands come third, followed by Hong Kong, Singapore, the Bahamas and Malta, in that order – all of them tax havens. Gambling is another area in which tax havens provide light-touch regulation. Gibraltar is a particularly big player in this market, and is the home, according to the Financial Times, of the online gambling operations of most major UK betting companies, and of thirty-four gambling companies in all.26 The attractions are low tax and light-touch regulation, which mainstream states have not been able to match when trying to secure internet gambling revenues, in which players have little concern where the company they are dealing with is located.

…

Google has claimed, with varying degrees of tax success, that it makes almost all its sales of advertising services to countries outside the United States, from its base in Ireland.27 Investigations by the UK’s House of Commons Public Accounts Committee and others have shown that Google usually has fewer staff in Ireland servicing each international market than it has in each sales destination, and that, in a country like the UK, the locally based staff are paid more than their equivalent team members in Ireland – and yet it is still claimed by Google that it is the Irish staff who conclude contracts, not the locally based negotiators.28 This claim is supported by the suggestion that the contract between the customer and Google is finally concluded on its fileserver in Ireland: the ambiguity as to location, which is a recurring feature of the tax haven story, has been exploited in this case to massively reduce the overall rate of tax paid by Google outside the United States.29 CHAPTER 4 The Tax Haven World Tax Haven Products Putting aside the legislation that imposes light-touch regulation behind a veil of secrecy, tax havens really only offer three products. They are, in essence, companies, trusts and foundations (which are a variation on trusts). The important thing to note about offshore companies, trusts and foundations is that they are not much like the onshore varieties of the same thing.

The Long Good Buy: Analysing Cycles in Markets
by Peter Oppenheimer
Published 3 May 2020

As with the excitement about the possibilities of faster communications following the first transcontinental calls in 1915, expectations were boosted by dramatic falls in the cost of communication in the 1990s, when the speed of communication accelerated at an even faster rate than before, and with similar consequences. The cost of a three-minute telephone call from New York to London fell from $4.37 in 1990 (in 2000 dollars) to $0.40 in 2000.19 Deregulation and Financial Innovation Light touch regulation, or deregulation, is often an ingredient in the buildup of financial bubbles. In the railway boom of the early 19th century in Great Britain, for example, the repeal of the Bubble Act in 1825, introduced after the collapse of the South Sea bubble in 1720, was an important development. Aimed at controlling the formation of new companies, it limited the number of investors in joint stock companies to just five.

…

Between 1994 and 2000 the notional amounts of derivatives in interest rates and currency grew 457%, which is equivalent to the 452% growth from 2001 to 2007.21 Although derivative markets boomed in the 2000s, other forms of innovation were at play in the housing market and were central to the sub-prime boom and subsequent banking and stock market collapse of 2007/2008. This bubble was not really so evident in the stock market valuation more broadly, although its collapse did result in huge falls in stock prices. Light touch regulation of financial institutions, together with financial product innovation, were an important ingredient in the housing boom that preceded the collapse. As Carlota Perez (2009) put it, ‘the term “masters of the universe”, often quoted to refer to the financial geniuses that were supposed to have engineered the unending prosperity of the mid-2000s, expresses the way in which they were seen as powerful innovators, spreading risk and somehow magically evaporating it in the vast complexity of the financial galaxy’.

…

Index 100 year bond 34 1920s, United States 148, 154, 157, 160 1945-1968, post-war boom 129–131 1960s ‘Nifty Fifty’ 114, 130–131, 233, 235 structural bear market 130 1970s Dow Jones 131 equity cycle 56 oil crisis 108 1980s bull markets 131–133 Dow Jones 15–16, 131–132 equity cycle 56–57 Japan 114, 148–149, 155–156, 158, 160–161, 162, 164 technology 12–15 1990s 16–17 Asia crisis 108, 133 equity cycle 57 S&P concentration 114 technology bubble 33, 93–94, 149–150, 156–157, 158–159, 161, 164 2000-2007 equity cycle 57 2007-2009 financial crisis 169–174 emerging markets 171–173 forecasting 19–21 growth vs. value company effects 94–96 impact 169–170 phases 171–174 quantitative easing 173–174, 178–179 sovereign debt 170, 171–173 structural bear market 110, 118–119 A accounting, bubbles 163–165 adjustment speed 74, 89–90 Akerflof, G.A. 23 American Telephone and Telegraph (AT&T) 154, 225, 235–236, 238 Asia crisis, 1998 108, 133 ASPF see Association of Superannuation and Pension Funds asset classes across phases 66–68 contractions and expansions 63–65 cyclical 83–89 defensive 83–89 diversification 42, 45–47, 178–179 growth 83–84, 90–96 and inflation 65–66, 70 levels of yield 74–76 relationship through cycle 68–76 returns across cycle 63–79 speed of adjustment 74 structural shifts 76–79 value 83–84, 90–96 see also bonds; commodities; equities Association of Superannuation and Pension Funds (ASPF) 77 AT&T see American Telephone and Telegraph austerity 239 Austria, 100 year bond 34 B bank margins 214–215 bear markets 49, 99–125 1960s 130 characteristics 100–106, 117–118 cyclical 105, 106–107 deflation 109, 113 duration 100–101, 106–111, 117 employment 121–124 event-driven 105, 107–109 false negatives 119–120 financial crisis 118–119 growth momentum 122–123 indicators 106, 108, 109–110, 119–125 inflation 101–103, 109, 121–122 interest rates 106, 111–113 prior conditions 121–124 private sector financial balance 124 profitability 115–117 recovery 101 risk indicator vs MSCI index 124–125 S&P 500 103–105 structural 105 triggers 101–105, 106, 108, 111 valuations 123 yield curve 122 behavioural factors 5, 22–25 Berlin Wall, fall of 133 Bernanke, B. 133 betas 65, 85 ‘Big Bang’ deregulation 12 Bing 237 Black Monday 16, 102, 148 Black Wednesday 16–17 ‘bond-like’ equities 96 bonds, 100 year 34 bond yields across phases 66–68, 72–76 current cycle 95–96, 191–193, 201–220 cyclical vs. defensive companies 87–88 and demographics 215–217 and equity valuations 72–76, 206–208 and growth companies 92–94 historical 43, 202 and implied growth 210–215 and inflation 65, 70 quantitative easing 173–174, 202–205 and risk asset demand 217–220 S&P 500 correlation 72–73 speed of adjustment 74, 89–90 ultra-low 201–220 and value companies 92–94 vs. dividends 78–79 vs. equities 43–45, 68–76, 78–79 Bretton Woods monetary system 102, 130–131 broadcast radio 154, 225 Bubble Act 147, 157 bubbles 143–165 1920s US 148, 154, 157, 160 1980s Japan 114, 148–149, 155–156, 158, 160–161, 162, 164 accounting 163–165 canal mania 152 characteristics 145–146 deregulation 157–159 easy credit 160–161 famous 145 financial innovation 158–159 government-debt-for-equity swaps 151–152 Mississippi Company 147, 151 ‘new eras’ 150–157 personal computers 155 psychology 144–145 radio manufacturing 154 railways 148, 152–154, 157, 160, 163 Shanghai composite stock price index 156 South Sea Company 147, 151, 153 structural bear markets 113 sub-prime mortgages 70, 102, 118, 133, 145, 159 technology, 1990s 33, 93–94, 149–150, 156–157, 158–159, 161, 164 tulip mania 146–147 valuations 161–162 bull markets 49, 127–142 characteristics 127–141 composition 138 cyclical 134–136 disinflation 131–133 duration 136–138, 139–141 equity performance 135–136 Great Moderation 133–134, 187–189 non-trending 138–141 post-war boom 129–131 quantitative easing 134 secular 127–134 United States 136 C canal mania 152 CAPE see cyclically adjusted price-to-earnings ratio capital investment, Juglar cycle 3 CDO see collateralised debt obligations characteristics bear markets 100–109, 111, 117–118 bubbles 145–146 bull markets 127–141 cyclical bear markets 106–107 event-driven bear markets 108–109 structural bear markets 111 China 15, 156 Cold War 14–15, 133 collateralised debt obligations (CDO) 159 commodities across phases 66–68 Kitchin cycle 3 composition of bull markets 138 concentration structural bear markets 115 and technology 238–240 contractions asset performance 63–65 mini cycles 60 see also recessions Cooper, M. 162 corporate debt 65, 110, 114, 160–161 corporate profitability bear markets 107, 115–117 current equity cycle 185–186 monetary policy 239 credit crunch 78–79, 170, 171 crowds, psychology of 21–22, 144–145 cult of the equity 77–78 current equity cycle 57–58, 167–240 bank profitability 214–215 bond yields 191–193 demographic shifts 215–217 drivers 179–180 earnings per share 195–196 employment and unemployment 183–185 equity valuations 206–208 ‘first mile problem’ 226–227 future expectations 246–247 global relative performance 193–196 growth momentum 174–178, 182–183, 227–231 growth and value companies 190–196, 239–240 implied growth 210–215 inflation 180–182, 203–205 interest rates 180–182, 239–240 Japan, lessons from 196–200 lessons from 244–245 market and economy incongruence 174–178 monetary policy 178–179, 201–205 opportunities 230–231 profitability 185–186 quantitative easing 202–205 returns 174–179 risk asset demand 217–220 structural changes 76–79, 93–96, 169–200 technology 189–190, 221–241 term premium collapse 204–205 ultra-low bond yields 201–220 valuations 233–235 volatility 187–189 cycles 1970s 56 asset returns 63–79 cyclical vs. defensive companies 85–89 equities 49–62 growth vs. value companies 90–96 investment styles 81–96 long-term returns 29–47 riding 11–27 sectors 83–85 valuations 53 cyclical bear markets 105, 106–107, 117, 118 vs. event-driven 109 cyclical bull markets 134–136 cyclical companies bond yields 193 inflation 88 sectors 83–84 vs. defensive 85–89 cyclical growth 83–84 cyclically adjusted price-to-earnings ratio (CAPE) 37–38, 44–45 cyclical value 83–84 D DDM see discounted dividend model debt levels bubbles 160–161 structural bear markets 110, 114 decarbonization 13 defensive companies 63–65 bond yields 193 inflation 88 Japan 198 sectors 83–84 vs. cyclical 85–89 defensive growth 83–84 defensive value 83–84 deflation bear markets 109, 113 Volker 102, 131 delivery solutions 226–227 demographics and zero bond yields 215–217 deregulation 12, 132–133, 157–159 derivative markets 158–159 design of policy 25–26 despair phase 50–52, 53, 55–56, 60, 66–68 cyclical vs. defensive companies 86, 88 growth vs. value companies 92 Dice, C. 161 Dimitrov, O. 162 discounted dividend model (DDM) 36, 69 discount rate 68 disinflation 131–133 disruption 1980s 12–15 current equity cycle 189–190, 221–241 electricity 226 historical parallels 222–227 printing press 223–224 railway infrastructure 224–227 telecoms 225–226 divergence, and technology 238–240 diversification 42, 45–47, 178–179 dividends asset yields 38–41, 69 reinvestment 38–40 value of future streams 209 vs. bonds 78–79 Dodd, D. 163, 164 domain registrations 12–13 dominance of technology 231–233 dotcoms 12–13, 33, 93–94, 102, 161, 237 Dow Jones 1970s 131 1980s 15–16, 131 Black Monday 16, 102, 148 Draghi, M. 17, 173 drivers of bull markets 138 current equity cycle 179–180 duration bear markets 100–101, 106–111, 117 bull markets 135–138, 139–141 cyclical bear markets 106–107, 117, 118 cyclical bull markets 135–136 dominance of technology 231–233 event-driven bear markets 108–109, 117–118 non-trending bull markets 139–141 structural bear markets 109–111, 117 term premia 204–205 DVDs 227 E earnings per share (EPS) bear markets 115–117 historical 189 since pre-financial crisis peak 195–196, 209–210 easy credit, and bubbles 160–161 ECB see European Central Bank Economic Recovery Act, 1981 132 efficient market hypothesis 4 electricity 226 email 13 employment 121–124, 183–185 Enron 164 environmental issues 13 EPS see earnings per share equities across phases 66–68 ‘bond-like’ 96 and bond yields 72–73, 74–76, 206–208 bull market performance 135–136 CAPE 37–38, 44–45 dividends 38–41, 69, 78–79, 209 and inflation 65–66, 70 mini/high-frequency cycles 58–61 narrowing and structural bear markets 114–115 overextension 36–37 phases of investment 50–58 quantitative easing 173–174, 178–179 S&P 500 historical performance 42 valuations and future returns 43–45 vs. bonds 43–45, 68–76, 78–79 equity cycle 49–62 1970s 56 1980s 56–57 1990s 57 2000-2007 57 current 57–58, 76–79 historical periods 56–58 length 49 mini/high-frequency 58–61 phases 50–56 structural shifts 76–79 equity risk premium (ERP) 35–38, 69–72, 210 ERM see exchange rate mechanism ERP see equ ity risk premium ESM see European stability mechanism Europe dividends 39–40 exchange rate mechanism 16–17, 111 Maastricht Treaty 17 market narrowing in 1990s 115 privatisation 132 quantitative easing 17, 204–205 sovereign debt crisis 170, 171–173 European Central Bank (ECB) 17, 171, 173 European Recovery Plan 129–131 European stability mechanism (ESM) 173 event-driven bear markets 105, 107–109, 117–118 vs. cyclical 109 excess see bubbles exchange rate mechanism (ERM) 16–17, 111 exogenous shocks 108 expansions, asset performance 63–65 F false negatives, bear markets 119–120 fat and flat markets 128, 139 features see characteristics Federal Reserve 16, 102, 131, 134, 150–151, 157, 203 financial crisis, 2007–2009 169–174 forecasting 19–21 growth vs. value company effects 94–96 impact 169–170 structural bear market 110, 118–119 financial innovation 158–159 ‘first mile problem’ 226–227 Fish, M. 19 fixed costs 84–85, 173–174 fixed income assets 35, 65, 69–70, 205 flat markets 138–141 see also non-trending bull markets forecasting 2008 financial crisis 19–21 bear markets 106, 108, 109–110, 119–125 behavioural aspects 22–25 difficulties of 18–22 future growth 211–212 neuroeconomics 24–25 and policy setting 25–26 recessions 20–21 and sentiment 21–25 short-term 17–18 weather 18–19 France Mississippi Company 147, 151 privatisation 132 Fukuyama, F. 15 future expectations 246–247 G Galbraith, J.K. 160 GATT see General Agreement on Tariffs and Trade General Agreement on Tariffs and Trade (GATT) 129 Germany Bund yield 207 fall of Berlin Wall 133 wage inflation 185 Glasnost 14 Glass-Steagall Act, 1933 132 global growth 182–183 globalisation 14–16 global relative performance 193–196 global sales growth 212 global technology bubble 33, 93–94, 149–150, 156–157, 158–159, 161, 164 Goetzmann, F. 151 ‘Golden Age of Capitalism’ 129–131 Gold Standard 130 see also Bretton Woods monetary system Goobey, G.R. 77 Google 237 Gorbachev, M. 14 Gordon Growth model 209 government-debt-for-equity swaps 151–152 Graham, B. 161, 163, 164 Great Britain South Sea Company 147, 151, 153 see also United Kingdom Great Depression 4 Great Moderation 133–134, 187–189 Greenspan, A. 16, 113, 150–151 gross domestic product (GDP) cyclical vs. defensive companies 87 labour share of 185, 238–239 phases of cycle 52–53 profit share of, US. 186 growth bear markets 122–123 current equity cycle 174–178, 182–183, 227–231 technology impacts 227–231 and zero bond yields 208–210, 210–215 growth companies bond yields 92–94, 191–193 current cycle 190–196 definition 90–91 since financial crisis 94–96 interest rates 92–94 outperformance 239–240 sectors 83–84 vs. value 90–96 growth phase 50–52, 54–56, 67–68 cyclical vs. defensive companies 86 growth vs. value companies 92 Gulf war 102 H herding 21–22, 144–145 high-frequency cycles 58–61 historical performance 10 year bonds, US 43 bonds 43, 202 equities cycles 49, 56–58 S&P 500 38–39, 42 trends 29–31 holding periods 31–34 Holland, tulip mania 146–147 hope phase 50–52, 53–54, 55–56, 66–67 cyclical vs. defensive companies 86 growth vs. value companies 92 housing bubble, US 70, 102, 118, 133, 145, 159 Hudson, G. 163 I IBM 13, 155, 236 IMAP see Internet Message Access Protocol IMF see International Monetary Fund impacts of diversification 42, 45–47 financial crisis, 2007-2009 169–170 technology on current cycle 221–241 ultra-low bond yields 201–220 Imperial Tobacco pension fund 77 implied growth 210–215 income, Kuznets cycle 3 indicators bear markets 106, 108, 109–110, 119–125 cyclical bear markets 106 event-driven bear markets 108 structural bear markets 109–110 industrial revolution 224–226 industry leadership, S&P 500 232–233, 237–238 inflation asset performance 65–66, 70 bear markets 101–103, 109, 121–122 current equity cycle 180–182, 203–205 cyclicals 88 Volker 102, 131 Institute of Supply Management index (ISM) 59–61 bear markets 123 cyclical vs. defensive companies 86–87 interest rates bear markets 106, 111–113 current equity cycle 180–182, 239–240 growth vs. value companies 92–94 structural bear markets 111–113 and yield 69, 74–76 International Monetary Fund (IMF) 129 internet 12–13, 225–227 search 237 see also dotcoms Internet Message Access Protocol (IMAP) 13 inventories 84–85 Kitchin cycle 3 investment, Juglar cycle 3 investment cycle bear markets 122–123 current 57–58, 76–79 historical periods 56–58 lengths 49 mini/high-frequency 58–61 phases 50–56 structural shifts 76–79 see also cycles ISM see Institute of Supply Management index J Japan bubbles 114, 148–149, 155–156, 158, 160–161, 162, 164 defensive companies 198 dividends 39–40 lessons from 196–200 John Crooke and Company 160 Juglar cycle 3 K Kahneman, D. 22–23 Kennedy Slide bear market 102 Keynes, J.M. 22 Kindleberger, C.P. 22 Kitchin cycle 3 Kondratiev cycle 3 Kuznets cycle 3 L labour share of GDP 185, 238–239 land and property bubble, Japan 114, 148–149, 155–156, 158, 160–161, 162, 164 laptop computers 13 largest companies S&P 500 237–238 technology 234–237 light touch regulation 157–159 see also deregulation Live Aid 13–14 Loewenstein, G. 21–22 long-term returns 29–47 M Maastricht Treaty 17 Mackay, C. 21 market forecasts short-term 17–18 see also forecasting market narrowing structural bear markets 114–115 and technology 238–240 markets current equity cycle 174–178 psychology of 21–25, 144–145 see also bear markets; bubbles; bull markets market timing 41–43 market value of technology companies 234, 235–238 Marks, H. 6–7 Marshall Plan 129–131 MBS see mortgage-backed securities Microsoft 12, 236–237 mini cycles 58–61 Mississippi Company 147, 151 monetary policy 157–159, 178–179, 201–205, 239 austerity 239 European Central Bank 17, 171, 173 Federal Reserve 16, 102, 131, 134, 150–151, 157, 203 quantitative easing 17, 70–71, 119, 133–134, 173–174, 178–179, 202–205 Montreal Protocol 13 mortgage-backed securities (MBS) 159 MSCI indices 91 N narrow equity markets 114–115, 238–240 NASDAQ 149–150, 161 negative bond yields 201–220 demographics 215–217 and equity valuations 206–208 and growth 208–210 implied growth 210–215 monetary policy 201–205 quantitative easing 202–205 risk asset demand 217–220 neuroeconomics 24–25 ‘new eras’ 113–114, 150–157 ‘Nifty Fifty’ 114, 233 non-trending bull markets 138–141 nudges 26 O oil 108, 226 opportunities, technology 230–231 optimism phase 50–52, 54–56, 67–68 cyclical vs. defensive companies 86 growth vs. value companies 91–92 output gaps 4 Outright Monetary Transactions (OMT) 171, 173 overextension 36–37 ozone layer 13 P pension funds 77, 218–219 Perestroika 14 Perez, C. 159 performance bull markets 134–136 current equity cycle 174–179 and cycles 53–56 diversification impacts 42, 45–47 dividends 38–41 equities vs. bonds 43–45 factors 41–45 historical trends 29–31 holding periods 31–34 interest rates 69, 74–76 long-term 29–47 market timing 41–43 risks and rewards 35–38 valuations 43–45 volatility 30–31 personal computing introduction 12–13, 155 phases 2007-2009 financial crisis 171–174 asset classes 66–68 bear markets 123 cyclical vs. defensive companies 86 of equities cycle 50–56 growth vs. value companies 91–92 Phillips curve 182 Plaza Accord, 1985 148–149, 158 PMI see purchasing managers’ index policy, design of 25–26 population decline 216 post-financial crisis see current equity cycle post-war boom 129–131 prediction see forecasting price-to-earnings ratio (P/E) 53–56 printing press 223–224 prior conditions to bear markets 121–124 private sector debt 65, 110, 114, 160–161 private sector financial balance 124 privatisation 132 productivity growth 227–230 profit labour share of 185, 238–239 share of GDP, US. 186 profitability banks 214–215 bear markets 107, 115–117 current equity cycle 185–186 property and land bubble, Japan 114, 148–149, 155–156, 158, 160–161, 162, 164 psychology bubbles 144–145 of markets 21–25 policy setting 25–26 public ownership 132 purchasing managers' index (PMI) 59–61, 86–87, 89–90 Q QE see quantitative easing Qualcom 149–150 quality companies 193 quantitative easing (QE) asset returns 70–71, 119, 178–179 bond yields 173–174, 202–205 start of 17, 133–134, 171 United Kingdom 17, 204–205 United States 134, 171, 202–204 R radio, expansion of 154, 225 Radio Corporation of America (RCA) 154 railways bubbles UK 148, 152–153, 157, 163 US 153–154, 160 infrastructure development 224–227 Rau, P. 162 RCA see Radio Corporation of America Reagan, R. 14, 131–132 real assets 68 real estate bubble, US 70, 102, 118, 133, 145, 159 recessions bear markets 101–103 current equity cycle 174–178 forecasting 20–21 recovery bear markets 101 current equity cycle 174–178 reinvestment of dividends 38–40 return on equity (ROE) 43–45 returns bull markets 134–136 current equity cycle 174–179 cycles 53–56 diversification impacts 42, 45–47 dividends 38–41 equities vs. bonds 43–45 factors 41–45 historical trends 29–31 holding periods 31–34 interest rates 69, 74–76 long-term 29–47 market timing 41–43 risks and rewards 35–38 valuations 43–45 volatility 30–31 reverse yield gap 77 risk assets, demand for 217–220 risk-free interest rate 68 risk indicators bear markets 119–125 event-driven bear markets 108 structural bear markets 110–111, 113–114 risk premia equity 35–38, 69 neuroeconomics 25 term premia 204–205 ROE see return on equity Rouwenhorst, G. 151 Russian debt default, 1997 108 S S&P 500 bear markets 103–105 and bond yields 72–73 concentration in 1990s 115 dividends 38–39 historical performance 38–39, 42 industry leadership 232–233, 237–238 and ISM 60 largest companies 237–238 US Treasury yields 206 sales growth 212 savings, current equity cycle 182 Schumpeter, J. 150 search companies 237 ‘search for yield’ 217–220 secondary-market prices 229–230 sectors across the cycle 83–85 dominance 231–233 secular bull market 127–134 disinflation 131–133 Great Moderation 133–134, 187–189 post-war boom 129–131 secular stagnation hypothesis 181 sentiment 5, 21–25 see also bubbles Shanghai composite stock price index 156 Shiller, R.J. 4–5, 23 short-term market forecasts 17–18 skinny and flat markets 139–140 smartphones 226, 229–230 Solow, R. 229 South Sea Company 147, 151, 153 sovereign debt crisis 170, 171–173 Soviet Union 14–15, 133 speed of adjustment 74, 89–90, 122–123 Standard Oil 235 structural bear markets 105, 109–115 1960s 130 bubbles 113 debt levels 110, 114 deflation 113 duration 109–111, 117 financial crisis, 2007 118–119 interest rates 111–113 narrow equity markets 114–115 ‘new eras’ 113–114 risk indicators 110–111, 113–114 triggers 111 volatility 105, 115 structural changes 6 1980s 12–15 current equity cycle 76–79, 93–96, 169–200 sub-prime mortgage bubble 70, 102, 118, 133, 145, 159 Summers, L. 181 Sunstein, C.R. 26 ‘super cycle’ secular bull market 127–134 see also secular bull market T technology 1920s America 154 bubble in 1990s 33, 93–94, 149–150, 156–157, 158–159, 161, 164 current equity cycle 189–190, 221–241 and disruption in 1980s 12–15 dominance 231–233 and growth 227–231 historical parallels 222–227 industrial revolution 224–226 Kondratiev cycle 3 largest companies 234–237 market value 234, 235–238 opportunities 230–231 personal computers 12–13, 155 printing press 223–224 railway bubbles 148, 152–154, 157, 160, 163 railway infrastructure 224–227 and widening gaps 238–240 telecommunications 13, 154, 225, 235–236, 238 telegrams 225 term premium collapse 204–205 TFP see total factor productivity growth Thaler, R.H. 26 Thatcher, M. 14, 132 Tokkin accounts 158 ‘too-big-to-fail’ 133 total factor productivity (TFP) growth 238–240 triggers bear markets 101–105, 106, 108, 111 cyclical bear markets 106 event-driven bear markets 108 structural bear markets 111 tulip mania 146–147 Tversky, A. 22–23 U ultra-low bond yields 201–220 demographics 215–217 and equity valuations 206–208 and growth 208–210 implied growth 210–215 monetary policy 201–205 quantitative easing 202–205 risk asset demand 217–220 UNCTAD see United Nations Conference on Trade and Development unemployment 121–124, 183–185 unexpected shocks 108 United Kingdom (UK) Black Wednesday 16–17 bond yields, historical 202 canal mania 152 deregulation 132 exchange rate mechanism 16–17, 111 privatisation 132 quantitative easing 204–205 railway bubble 148, 152–153, 157, 163 South Sea Company 147, 151, 153 United Nations Conference on Trade and Development (UNCTAD) 129 United States (US) 10 year bond returns 43 Black Monday 16, 102, 148 bull markets 136 credit crunch 78–79, 170, 171 disinflation 132 dividends 38–39 Dow Jones 15–16, 131 equities in current cycle 207–208 housing bubble 70, 102, 118, 133, 145, 159 labour share of GDP 185, 238–239 market narrowing 114 NASDAQ 149–150, 161 ‘Nifty Fifty’ 114, 130–131, 233, 235 post-war boom 129–131 profit share of GDP 186 quantitative easing 133–134, 171, 202–204 radio manufacturing 154, 225 railway bubble 153–154, 160 stock market boom, 1920s 148, 154, 157, 160 vs.

The Extreme Centre: A Warning
by Tariq Ali
Published 22 Jan 2015

Its main function was to provide mercenaries to buttress US hegemony. There, in a nutshell, was the grim reality of New Labour Britain. Thatcherite ‘modernization’ was thus nurtured by Blair and refined by Brown into the creation of an overblown financial sector, a City of London protected by ‘light-touch’ regulation. It is shocking to note that there were fewer regulators for the whole of Britain than for the insurance industry alone in the United States. This, in turn, produced huge salaries and bonuses for the top layers and a few crumbs for the former industrial regions of the country. Blair’s subsequent electoral triumphs were used to cement the New Labour project.

…

Since British economic and foreign policies are now in tandem with those of its imperial master, British leaders sometimes attempt to stand out by pre-empting US decisions and posturing as being tougher on assorted ‘enemies’ than Washington itself.1 As Edward Snowden has revealed, British intelligence-gathering outposts like GCHQ operate with impunity. The relative autonomy they enjoy – with less restraints than the NSA – is extremely useful for the latter, which treats GCHQ as a valued surrogate. Similarly, till 2008, British politicians liked to boast that the local ‘light-touch regulation’ put the City of London well ahead of Wall Street, as Britain’s current standing as a virtual tax haven still does, approaching Luxembourg levels if not yet those of the Cayman islands. Given this reality, the right-wing obsession with the European Union seems a bit misplaced. It’s with Washington (not Brussels) that London has long been stuck in the dog-like coital lock sometimes described as a ‘special relationship’.

The Production of Money: How to Break the Power of Banks
by Ann Pettifor
Published 27 Mar 2017

Greenspan later went on to explain, ‘[I had] found a flaw in the model that I perceived as the critical functioning structure that defines how the world works, so to speak … That’s precisely the reason I was shocked, because I had been going for forty years or more with very considerable evidence that it was working exceptionally well.’ Over this period, and thanks to the pervasive influence of the economic orthodoxy espoused by Mr Greenspan and others, western governments used markets as ‘the unrivalled way to organise economies’. ‘Light-touch regulation’, ‘outsourcing’, ‘globalisation’ and other policy changes were cheered on as ways to effectively transfer control of the public good that is the monetary system to private wealth. The orthodoxy conceded two great powers to private bankers and financiers: first, the ability to create, price and manage credit without effective supervision or regulation; second, the ability to ‘manage’ global financial flows across borders – and to do so out of sight of the regulatory authorities.

…

Third, despite denying the ‘primitive commodity view of money’ classical economists think of the supply of money as potentially scarce or excessive, just as there can be gluts and shortages of commodities.16 Benes and Kumhof explain that bankers’ behaviour can lead to an ‘excess or shortage’ of the money supply which in turn leads to either inflation or deflation. By focusing on the behavior of bankers, they ignore the regulatory context: the easy ‘light-touch regulation’ under which public authorities permit banks to lend. They ignore, too, the willingness or reluctance to borrow by firms or individuals, and their role in expanding or contracting the money supply. And nor do they discuss or analyse the wider economic conditions under which bankers lend. This approach of focusing narrowly on the money supply ignores what money is lent for.

Ethics in Investment Banking
by John N. Reynolds and Edmund Newell
Published 8 Nov 2011

The US Financial Crisis Inquiry Commission blamed failures in regulation; breakdowns in corporate governance, including financial firms acting recklessly; excessive borrowing and risk by households and Wall Street; policymakers ill-prepared for the crisis; and systematic breakdown in accountability and ethics.1 The UK’s Independent Commission on Banking cited factors including “global imbalances, loose monetary policy, light-touch regulation, declining under-writing standards, widespread mis-pricing of risk, a vast expansion of banks’ balance sheets, rapid growth in securitized assets”.2 The UK economist Roger Bootle diagnosed the crisis in a more straightforward way in his 2009 book The Trouble with Markets: “greedy bankers and naive borrowers, mistaken central banks and inept regulators, insatiable Western consumers and over-thrifty Chinese savers”.3 Others have also directly cited bankers’ greed.

…

Index ABACUS, 7, 16–17, 46, 63–4, 68, 73, 78 Abrahamic faiths Christianity, 52–4 Islam, 54–5 Judaism, 56 abuse market, 14, 70, 75, 84–8 personal, 159 of resources, 127–8 abusive management practices, 157 abusive trading, 93 adult entertainment, 56 advisers financial, 109 investment banking, 111 sell-side, 107, 111–13 trusted, 108–9, 125 advisory fees, 119, 124 advisory markets, 73 agents, 65 aggressive behaviours, 118–19 Alpha International, 9 American Bar Association, 19 Anderson, Geraint “CityBoy”, 8 Anglican Communion, 53 Anglicanism, 53 annual general meeting (AGM), 29, 54 Aquinas, Thomas, 34, 37 Aristotle, 34 Arjuna, 57 attrition rate, 132 authorisation, informal, 81, 98 BAE Systems, 48 bait and switch, 102–3, 158 bank debt, 82–3, 120 banking regulations, 16 Bank of America, 16 Bank of Credit and Commerce International (BCCI), 12 Bank of England, 25 Barclays Capital, 139 Bar Council, 19 Bayly, Daniel, 8 Bear Stearns, 5, 16, 76 beauty parade, 110 behaviours aggressive, 118–19 discriminatory, 129–31 of Hedge fund, 12 investment banking, 3 management, 131–2 market, 71 misleading, 86 unethical, 68 virtuous, 37 Benedict XVI, Pope, 6, 52 Bentham, Jeremy, 36 Bernanke, Ben S., 96 Besley, Tim, 42 Beyond the Crash (Brown), 4 Bhagavad Gita, 57 bid price, 64 big cap, 65, 85 black box approach, 114 Blackstone Group, 20 Blankfein, Lloyd, 47, 63–4, 68, 78 bluffing, 113 Boesky, Ivan, 12 bonds government, 23 investment grade, 118 junk, 118 bonus pools in public ownership, 136–9 Bootle, Roger, 4 Bribery Act 2010, 129 British Academy, 42 Brown, Gordon, 4, 135 Buddhism, 57 bullying, 159 170 Index business ethics of fiduciary duties, 27 of financial crisis, 12–32 within governments, 59 of market capitalism, 12–14 of regulation, regulatory changes and, 18–21 of religion, 51–62 of shareholders, 27–9 strategic issues with, 30–1 Business Ethics Center, 56 Business Judgment Rule, 20 Business Standards Report, 46 buy recommendation, 115 capitalism market, 12–14 modern, 54 see also casino capitalism capital markets, 155 advisory markets vs., 73 conflicts of interest in, 112–14 cardinal virtues, 37 Caritas in Veritate (Benedict), 6, 52 cash compensation, 132, 134 casino capitalism emergence of, 43 in investment banking, 3 speculative, 16, 93 categorical imperative, 34, 59, 69 Caterpillar, 48 Central Finance Board of the Methodist Church (CFB), 54, 59 chief executive officer (CEO), 116 Christianity, 52–4 Anglican Communion, 53 Methodist Church, 53 Roman Catholic Church, 53 Christian Old Testament, 34 Church Investors’ Group (CIG), 135 Church of England, 9, 53, 58 Citigroup, 19, 112 claiming credit, 134 clients confidential information, 120 conflicts of interest, 105–10 171 duty of care, 105 engagement letters, 122–3 fees, 115–18 financial restructuring, 119–20 hold-out value, 120–1 honesty, 101–5 margin-calls, 121 practical issues, 110–15 promises, 100–1 restructuring fees, 121–2 syndication, 118–22 truth, 101–5 Code of Ethics, 47–50, 147–51 for Goldman Sachs business principles, 46 in investment banking, 47–9 Revised, 47 collatoralised debt obligations (CDOs), 30, 42, 75 command economies, 13 commercial banking, 19–21, 25 communication within markets, 88 Companies Act 2006, 27 compensation cash, 132, 134 defined, 132 for employees, 135 internal issues on, 8 for junior bankers, 136 levels of, 132–3, 138 objectivity of, 144 political issues with, 6, 137 restrictions on, 10 competitors, 113 compliance corporate, 20 danger of, 20 frameworks for, 68, 146 regulatory, 18 requirements of, 6 confidential information, 120 conflicts of interest, 105–10, 158 with capital markets, 109–10 with corporate finance, 107–8 personal, 47 with pre-IPO financing, 110 with private equity, 110 172 Index conflicts of interest – continued reconciling, 68–70 of trusted advisers, 108–9 consequentialist ethics, 36–7, 42 corporate compliance, 20 Corporate/Compliance Social Responsibility (CSR), 7 corporate debt, 17 corporate entertainment, 128–9, 159 corporate finance, 107–8 Corporate Sustainability Committee, 152 Costa, Ken, 9 Cox, Christopher, 96–7 creative accounting, 12 credit crunch, 17 credit default swap (CDS), 71 credit downgrade, 17, 76 Credit Lyonnais, 12 creditors, restricted, 121 credit rating, 75–7 calculating, 76 inaccurate, 5 manipulating, 75, 156, 158 unreliability of, 17 credit rating agencies, 76 Crisis and Recovery (Williams), 53 culture, 46, 136, 151 customers, 69 Daily Telegraph, 84 Debtor in Possession finance (DIP finance), 80 debts bank, 82–3, 120 corporate, 17 junior, 118 rated, 77 senior, 118 sovereign, 17 deferred equity, 5 deferred shares, 133 Del Monte Foods Co., 107 deontological ethics, 34–6 stockholders, 41–2 trust, 40–1 derivative, 27, 30 dharma, 63–4 Dharma Indexes, 57 discounted cash flow (DCF), 27 discount rate, 27 discriminatory behaviour, 129–31 distribution, 15, 35, 66 Dodd–Frank Wall Street Reform and Consumer Protection Act, 25 dotcom crisis, 94 dotcom stocks, 17 Dow Jones, 55–6 downgrade credit, 17, 76 defined, 76 multi-notch, 17, 76 duties, see rights vs. duties duty-based ethics, 66–8 duty of care, 105 Dynegy, 8 Earnings Before Interest Tax Depreciation and Amortisation (EBITDA), 27 economic free-ride, 5, 21 economic reality, 137 effective tax rate (ETR), 140 emissions trading, 14 employees, compensation for, 135 Encyclical, 52 engagement letters, 122–3, 159 Enron, 8, 12, 17, 20, 76 enterprise value (EV), 27 entertainment adult, 56 corporate, 128–9, 159 sexist, 159 equity deferred, 5 private, 2–3, 12, 110 equity research, 88–9, 113–15 insider dealing and, 83–4 ethical behaviour, 38–9 Ethical Investment Advisory Group (EIAG), 53, 58 ethical investment banking, 145–7 ethical standards, 47 Index ethics consequentialist, 36–7, 42 deontological, 34–6 duty-based, 66–8 exceptions and, effects of, 89–90 financial crisis and, 4–8 in investment banking, 1 in moral philosophy, 1 performance and, 8–10 rights-based, 66–8 virtue, 37–8, 43–4 see also business ethics; Code of Ethics Ethics Helpline, 48 Ethics of Executive Remuneration: a Guide for Christian Investors, The, 135 European Commission, 89 European Exchange Rate Mechanism (ERM), 17 exceptions, 89 external regulations, 19, 31 fair dealing, 45 Fannie Mae, 43 Federal Home Loan Mortgage Corporation, 43 Federal National Mortgage Association, 43 fees, 115–18 advisory, 107, 116 restructuring of, 121–2 2 and 20, 13 fiduciary duties, 27–8 financial advisers, 109 Financial Conduct Authority (FCA), 26 financial crisis, business ethics during CDOs during, 90 CDSs during, 90 ethics during, 4–8, 12–34 investment banking and, necessity of, 14–15 market capitalism, 12–14 necessity of, 14–15 non-failure of, 21 positive impact of, 18 problems with, 15–17 reality of, 16 speculation in, 91 173 Financial Crisis Inquiry Commission, 76 Financial Policy Committee (FPC), 25 financial restructuring, 119–20 Financial Services Modernization Act, 19 Financial Stability Oversight Council, 25 firm price, 67 Four Noble Truths, 57 Freddie Mac, 43 free-ride defined, 26 economic, 5, 21 in investment banking, 24 FTSE, 55 Fuhs, William, 8 General Board of Pension and Health Benefits, 54, 59 German FlowTex, 12 Gift Aid, 141 Glass–Steagall Act, 19 Global Settlement, 113 golden parachute arrangements, 133 Golden Rule, 35, 150 Goldman Sachs, 7, 16, 45, 63 Business Principles, 45–6 charges against, 78 Code of Business Conduct and Ethics, 45, 68 Code of Ethics for, 47–8 Goldsmith, Lord, 27 government, 59 business ethics within, 60 guarantees of, 24 intervention by, 22–3 government bonds, 23 greed, 4–5 Green, Stephen, 8–9 gross revenues, 59 Hedge fund behaviour of, 12 failure of, 21 funds for, raising, 2 investment fund, as type of, 3 rules for, 133 174 Index Hennessy, Peter, 42 Her Majesty’s Revenue and Customs (HMRC), 140–1 high returns, 28, 110 Hinduism, 56–7 Hobbes, Thomas, 36 hold-out value, 120–1 honesty, see trust hospitality, 128–9 hot IPOs, 94 hot-stock IPOs, 94 HSBC, 9, 28, 152 Ijara, 55 implicit government guarantee, 22–3 Independent Commission on Banking, 25 inequitable rewards, 6 informal authorisation, 81, 98 Initial Public Offering (IPO), 7 of dotcom stocks, 17 hot, allocation of, 94 hot-stock, 94 insider dealings, 83–4, 155 equity research and, 83–4 ethics of, 66, 70 laws on, 84 legal prohibition on, 82 legal restrictions on, 10 legal status of, 82 legislation on, 74 restrictions on, 83 rules of, 82, 90 securities, 70 insider trading, 12 insolvency, 24–5 institutional greed, 4 integrated bank, 28 integrated investment banking, 2, 30, 67, 106, 108 interest payments, 59–60 interest rate, 60 internal ethical issues, 126–43 abuse of resources, 127–8 corporate entertainment, 128–9 discriminatory behaviour, 129–31 hospitality, 128–9 management behaviour, 131–2 remuneration, 132–9 tax, 139–41 internal review process, managing, 134 investment banking, 94 casino capitalism in, 3 Code of Ethics in, 47–9 commercial and, convergence of, 20–1 defined, 2 ethics in, 1 free-ride in, 24 integrated, 2, 30, 67, 108, 112 in market position, role of, 65–6 moral reasoning and, 38 necessity of, 14–15 non-failure of, 19–20 positive impact of, 18 recommendations in, 94–7 sector exclusions for, 58–9 investment banking adviser, 121 investment banking behaviours, 3 investment banking ethics committee, 151–3 investment bubbles, 95 investment fund, 3 investment grade bonds, 118 investment grade securities, 76 investment recommendations, 94 investments personal account, 128, 156 principal, 15, 28 proprietary, 29 IRS, 140 Islam, 54–5 Islamic banking, 6, 54–5 Jewish Scriptures, 34 Joint Advisory Committee on the Ethics of Investment (JACEI), 54 JP Morgan, 16 Judaism, 56 junior bankers, 139 junior debt, 118 junk bond, 118 “just war” approach, 38 Index Kant, Immanuel, 35, 69 karma, 57 Kerviel, Jérôme, 44, 80 Krishna, 57 Law Society, 19 Lazard International, 9 leading adviser, 41 Leeson, Nick, 12, 44, 81 legislative change, 25–6 Lehman Brothers, 5–6, 15, 21, 23, 31, 43, 76 lenders, 26, 131 lending, 59–60 leverage levels of, 25 over, 75, 80, 119 Levin, Carl, 17, 63–4, 68 light-touch regulations, 4 liquidity market, 95 orderly, 25 withdrawal of, 24 loan-to-own, 80 Locke, John, 34 London Inter-Bank Offered Rate (LIBOR), 23 London School of Economics, 43 London Stock Exchange, 65, 71, 84 long-term values, 147 Lords Grand Committee, 27 LTCM, 23 lying, 101 MacIntyre, Alasdair, 38 management behaviour, 131–2 margin-calls, 121 market abuse, 14, 70, 75, 86–8, 155 market announcements, 88 market behaviours, 74 market capitalism, 12–14 market communications, 88 market liquidity, 95 market maker defined, 65–7 investment bank as, 66 primary activities of, 65 175 market manipulation, 75 market position, role of, 104 market rate, 117 markets advisory, 73 capital, 73, 117–18, 158 communication within, 88 duties to support, 71–2 primary, 103 qualifying, 70, 82 secondary, 103 market trading, 41 Maxwell, Robert, 12 Meir, Asher, 56 mergers and acquisitions (M&As), 41, 79 Merkel, Angela, 93 Merrill Lynch, 8, 16 Methodism, 53 Methodist Central Finance Board, 59 Methodist Church, 54 Midrash, 56 Milken, Michael, 12 Mill, John Stuart, 36 Mirror Newspaper Group, 12 misleading behaviours, 86, 105 mis-selling of goods and services, 77–9, 155 modern capitalism, 54 moral-free zones, 31 moral hazard, 22, 70 moral philosophy, 1 moral reasoning, 38 moral relativism, 38–9, 49, 68 Morgan Stanley, 47 multi-notch downgrade, 17, 79 natural law, 34, 37 natural virtues, 37 necessity of investment banking, 14–15 New York Stock Exchange (NYSE), 65, 71 New York Times, 8 Noble Eightfold Path, 57 Nomura Group Code of Ethics, 47 normal market trading, 71 Northern Rock, 43 176 Index offer price, 64 off-market trading, 71–3, 90, 155 Olis, Jamie, 8 on-market trading, 70–1 oppressive regimes, 61 option value, 121 Orderly Liquidation Authority, 25 orderly liquidity, 25 out-of-pocket expenses, 127–8 over-leverage, 75, 80, 119, 158 overvalued securities, 155 patronage culture, 131, 142 Paulson, Henry M., 86 Paulson & Co., 78 “people-based” activity, 67 P:E ratio, 27 performance, 8–10 personal abuse, 159 personal account investments, 128, 156 personal account trading, 128 personal conflicts of interest, 45 pitching, 102, 159 Plato, 37 practical issues, 110–15 competitors, relationships with, 113 equity research, 113–15 pitching, 111 sell-side advisers, 111–13 pre-IPO financing, 110 prescriptive regulations, 31, 145 price tension, 79, 113 primary market, 103 prime-brokerage, 2 principal investment, 15, 28 private equity, 2–3, 12, 110 private trading, 94 Project Merlin, 133, 141 promises, 100–1 proprietary investment, 29 proprietary trading, 15, 25, 66, 150, 155 Prudential Regulation Authority (PRA), 26 public ownership, bonus pools in, 136–9 “pump and dump” strategy, 86 qualifying instruments, 70, 87 qualifying markets, 70, 82 quality-adjusted life year (QALY), 36 Quantitative Easing (QE), 23 Queen Elizabeth II, 42 Qu’ran, 54 rated debt, 77 rates attrition, 132 discount, 27 interest, 60 market, 117 tax, 140 rating agencies, 76 Rawls, John, 35, 136 recognised exchanges, 71 Regal Petroleum, 84 regulations banking, 16 compliance with, 28 external, 19, 31 light-touch, 4 prescriptive, 31, 145 regulatory changes and, 18–20 securities, 114 self, and impact on legislation, 19 regulatory compliance, 18 religion, business ethics in, 51–62 Buddhism, 56 Christianity, 52–4 Governments, 59 Hinduism, 56–7 interest payments, 59–60 Islam, 54–5 Judaism, 56 lending, 59–60 thresholds, 60 usury, 59–60 remuneration, 132–9 bonus pools in public ownership and, 136–9 claiming credit, 134 ethical issues with, 142–3 internal review process, managing, 134 1 Timothy 6:10, 135–6 Index research, 156 resources, abuse of, 127–8 restricted creditors, 120 restructuring of fees, 121–2 financial, 119–20 syndication and, 118–22 retail banks, 16 returns, 28, 156 Revised Code of Ethics, 47 right livelihood, 57 rights-based ethics, 66–8 rights vs. duties advisory vs. trading/capital markets, 73 conflict between, reconciling, 68–70 duty-based ethics, 66–8 off-market trading, ethical standards to, 71–2 on-market trading, ethical standards in, 70–1 opposing views of, 63–74 reconciling conflict between, 68–70 rights-based ethics, 66–8 Roman Catholic Church, 52 Royal Dutch Shell, 85 Sarbanes–Oxley Act, 20 Schwarzman, Stephen, 20 scope of ethical issues, 7–8 secondary market, 103 sector exclusions for investment banking, 58–9 securities investment grade, 76 issuing, 103–5 overvalued, 155 Securities and Exchange Commission (SEC), 7, 16 Goldman Sachs, charges against, 78 rating agencies, review by, 77 short-selling, review of, 96–7 securities insider dealing, 70 securities mis-selling, 77–9 securities regulations, 114 self-regulation, 19 sell recommendation, 115 177 sell-side advisers, 107, 111–13 Senate Permanent Subcommittee on Investigations, 46 senior debt, 118 sexist entertainment, 159 shareholders, 27–9 shares, deferred, 133 Shariah finance, 55 short-selling, 94–7, 154–5 Smith, Adam, 14, 35–6 social cohesion, 53 socially responsible investment (SRI), 56 Société Générale, 44, 80 solidarity, 53 Soros, George, 17 South Sea Bubble, 90 sovereign debt, 17 speculation, 91–4, 155 in financial crisis, 93 traditional views of, 91–3 speculative casino capitalism, 16, 91 spread, 21 stabilisation, 89 stock allocation, 94–7 stockholders, 41–2 stocks, dotcom, 17 Strange, Susan, 43 strategic issues with business ethics, 30–1 syndication, 119 and restructuring, 118–22 systemic risk, 24–5 Takeover Panel, 109 Talmud, 56 taxes, 139–41 tax optimisation, 158 tax rates, 140 tax structuring, 140 Terra Firma Capital Partners, 79, 112 Theory of Moral Sentiments, The (Smith), 14 3iG FCI Practitioners’ Report, 51 thresholds, 60 1 Timothy 6:10, 135–6 178 Index too big to fail concept, 21–7 ethical duties, and implicit Government guarantee, 22–3 ethical implications of, 26–7 in government, 22–3 insolvency, systemic risk and, 24–5 legislative change, 25–6 Lehman, failure of, 23 systemic risk, 24–5 toxic financial products, 5 trading abusive, 93 emissions, 14 insider, 12 market, 41 normal market, 71 off-market, 71–83, 90, 155 on-market, 70–1 personal account, 128 private, 94 proprietary, 15, 25, 66, 150, 155 unauthorised, 7 “trash and cash” strategy, 86 Travellers, 19 Treasury Select Committee, 26 Trinity Church, 53 Trouble with Markets, The (Bootle), 4 trust, 40, 53 trusted adviser, 108–9, 125 truth, 101–5 bait and switch, 102–3 misleading vs. lying, 101 securities, issuing, 103–5 2 and 20 fee, 13 UBS Investment Bank, 9 unauthorised trading, 7, 80–1, 155 unethical behaviour, 68 UK Alternative Investment Market, 89 UK Business Growth Fund, 133 UK Code of Practice, 141 UK Independent Banking Commission, 4, 22 United Methodist Church, 54, 59 United Methodist Investment Strategy Statement, 59 US Federal Reserve, 24, 25 US Financial Crisis Inquiry Commission, 4 US Open, 126 US Senate Permanent Subcommittee on Investigations, 64, 73 US Treasury Department, 132 universal banks, 2, 21, 28, 67 untoward movement, 85 usury, 59–60 utilitarian, 84 utilitarian ethics, 49, 84, 139 values, 9, 46, 119–21, 148 Vedanta, 57 victimless crime, 82 virtue ethics, 37–8, 43–4 virtues, 9, 34 virtuous behaviours, 37 Vishnu, 57 Volcker, Paul, 25 Volcker Rule, 2, 25 voting shareholders, 29 Wall Street, 12, 19, 53 Wall Street Journal, 20 Wealth of Nations, The (Smith), 14 Wesley, John, 53 Wharf, Canary, 18 Williams, Rowan, 53 Wimbledon, 127 WorldCom, 12, 17, 20, 76 write-off, 80 zakat, 55 zero-sum games, 118–22 

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

The commodities they transport are often to be found on the high seas, beyond the scope of any national regulator; they typically trade through shell companies in offshore jurisdictions; and the traders have based themselves in places like Switzerland or Singapore, which are famed for their light-touch regulation. As one prominent Zurich law firm puts it: ‘Commodity trading activities are hardly regulated in Switzerland’. The company in question, Pestalozzi, is in a better position to know than most: its namesake, Peter Pestalozzi, worked for three decades as the lawyer for Marc Rich + Co and later Glencore, sitting on the company’s board of directors until 2011. 30 And so, when commodity traders have hit the headlines, it has more often than not been because of wrongdoing.

…

Morgan, 130 J&S, 208 –9 , 210 –11 Jaeggi, Daniel, 211 , 216 Jamaica, 72 –84 , 86 , 98 , 142 , 154 , 204 , 310 Jamalco, 80 James, Greg, 186 , 191 Jamison, David, 155 , 164 Jankilevitsch, Gregory, 208 –9 , 210 –11 , 216 Japan, 13 , 18 , 24 , 28 aluminium trade, 82 atomic bombings (1945), 223 coal consumption, 177 , 183 , 187 , 273 grain consumption, 39 G7 summit (1979), 70 Gulf War (1990–91), 100 oil consumption, 44 reconstruction, 179 , 180 , 223 rice futures, 102 sogo shosha , 13 Sumitomo, 250 supercycles and, 180 Jesselson, Ludwig, 8 , 24 , 25 , 27 , 28 , 35 , 37 , 41 , 326 Iran oil deal (1973), 52 –3 Rich’s resignation (1974), 58 –9 , 121 jets, 184 JOC Oil, 65 –6 Johnson, Lyndon Baines, 43 Jugometal, 29 Kabila, Joseph, 223 –4 , 225 , 227 , 229 Kabila, Laurent-Désiré, 223 Kalmin, Steve, 270 Kardashian, Kim, 152 Kashagan, 297 Katanga, Congo, 219 , 223 , 224 , 226 –9 Katumba Mwanke, Augustin, 224 , 225 , 227 Kazakhstan, 131 , 153 , 165 , 168 , 185 , 199 , 258 , 302 aluminium production, 140 , 141 , 145 , 146 , 147 oil production, 65 , 168 , 206 , 296 –9 Vitol, trade with, 296 –9 wheat production, 245 KazMunaiGas (KMG), 297 Kazzinc, 184 Kelm, Erwin, 38 Kenya, 93 , 232 KGB (Komitet Gosudarstvennoy Bezopasnosti ), 23 Khodorkovsky, Mikhail, 213 –15 , 299 Khomeini, Ruhollah, 67 , 94 , 96 Khrushchev, Nikita, 34 Kingston, Jamaica, 72 –3 , 77 Kinshasa, Democratic Republic of Congo, 33 Kirkuk, Iraq, 280 , 283 –5 , 287 , 289 Klebnikov, Paul, 149 Kleinwort Benson, 277 Klöckner & Co, 114 Klomp, Ton, 206 Knoechel, Eberhard, 258 Koch, Charles and David, 64 , 290 Kolwezi, Congo, 218 , 226 , 227 Krasnoyarsk, Russia, 141 –2 , 145 –6 , 148 Kulibayev, Timur, 298 –9 Kurdistan, 198 , 280 –91 , 295 , 298 , 299 , 302 , 328 Kuwait Gulf War (1990–91), 100 –101 , 106 , 108 –10 , 157 oil crisis, first (1973–4), 54 –5 Rotterdam market trade, 62 Kyrgyzstan, 158 Lada, 86 Lage, Carlos, 152 Lagos, Nigeria, 236 Lakhani, Murtaza, 197 –9 , 202 –3 , 284 Larocca, José, 238 Lay, Kenneth, 173 lead, 35 , 85 , 129 Lebanon, 226 Lehman Brothers, 243 , 265 Leiman, Ricardo, 244 Leopoldville, Belgian Congo, 33 letters of credit, 61 Lew, Jack, 312 Liberia, 308 Libya, 1 –8 , 64 , 92 , 166 , 247 , 283 , 285 Liechtenstein, 46 light-touch regulation, 19 Lilley, David, 195 Linetskiy, Vadim, 211 lithium, 319 Lithuania, 161 , 181 London, England, 3 , 5 , 11 , 20 , 55 , 199 Glencore–Xstrata merger (2012), 272 –3 International Petroleum Exchange, 115 property market, 147 Rotterdam market and, 63 Stock Exchange, 203 telegraph in, 26 Vitol in, 163 London Metal Exchange (LME), 79 –82 , 102 , 123 , 145 , 195 , 251 Louis Dreyfus, 10 , 19 , 39 , 241 , 244 , 248 , 262 , 277 , 320 Loya, Mike, 115 Lualaba river, 218 Lubumbashi, Congo, 33 Luckock, Ben, 285 , 286 Lutter, Gerd, 64 Lvov, Felix, 145 Mabanaft, 31 –4 , 35 –6 , 37 , 56 , 68 , 261 Oiltanking, 63 –4 Soviet deal (1954), 22 –4 , 32 , 33 –4 , 44 , 51 , 135 , 261 , 302 MacLennan, David, 17 , 31 , 231 MacMillan family, 249 , 277 , 278 MacMillan, Harold, 87 MacMillan, John, 25 , 27 , 29 –31 , 38 , 41 , 242 Madrid, Spain, 48 , 58 , 59 , 60 , 123 , 126 Mahoney, Chris, 259 malachite, 226 Mali, 294 Malta, 66 , 286 , 308 Manafort, Paul, 284 Manhattan Project (1942–6), 223 Manley, Michael, 76 –7 , 83 Mao Zedong, 177 Maradona, Diego, 152 Marathon Petroleum, 53 Marc Rich + Co, 14 , 16 , 19 , 20 , 37 , 47 , 59 –61 , 86 –7 , 117 –27 , 143 aluminium trade, 77 –84 , 122 , 125 , 144 , 165 Angola, trade with, 282 , 300 bribery, use of, 310 Cobuco, 91 –4 coup (1993–4), 125 –7 , 184 , 190 Cuba, trade with, 157 –8 Dauphin resignation (1992), 122 foundation of (1974), 59 –61 Glasenberg joins (1984), 182 Granaria acquisition (1981), 245 Hall job offer (1982), 106 indictments (1983), 96 –7 , 130 , 155 Iran, trade with, 68 –9 , 94 –7 Jamaica, trade with, 72 –4 , 77 –84 , 86 , 98 , 142 Nigeria, trade with, 61 oil team resignation (1993), 125 Philipp Bros. collapse (1990), 113 profits, 69 Russia, trade with, 122 South Africa, trade with, 88 , 89 , 90 , 94 , 98 , 122 Soviet Union, trade with, 136 –7 Strothotte resignation (1992), 121 –2 Südelektra stake (1990), 189 Tajikistan, trade with, 162 volume of trade, 293 Weiss resignation (1992), 122 zinc play (1991–2), 122 –4 , 128 , 170 , 251 margin calls, 124 Marimpex, 64 , 89 Marquard & Bahls, 32 Marsa al-Brega, Libya, 5 –6 Marshall Islands, 308 Mashkevich, Alexander, 185 Maté, Daniel, 259 Mayfair, London, 84 , 147 , 199 , 281 , 297 Mayuf, Abdeljalil, 7 McCarthy, Joseph, 22 McIntosh, Ian, 248 Meier, Henri, 127 Menatep, 213 Mercuria, 206 , 207 –9 , 210 –12 , 216 , 261 , 262 , 318 , 324 mercury, 48 Merrill Lynch, 138 Metallgesellschaft, 25 , 114 , 123 , 172 , 195 metals, 9 , 14 , 25 , 26 , 57 aluminium, see aluminium cobalt, 9 , 223 , 224 , 226 , 273 , 314 , 318 , 319 copper, see copper futures, 102 iron ore, 175 –6 , 181 , 261 , 264 lead, 35 , 85 , 129 lithium, 319 mercury, 48 nickel, 137 , 176 , 181 , 265 , 319 zinc, see zinc Mexico, 129 , 130 , 157 , 167 , 180 , 234 , 240 , 273 , 312 MG, 172 , 195 Milosevic, Slobodan, 167 Minerals & Chemicals Corporation, 276 mining, 85 , 171 , 186 –94 , 326 in Australia, 175 –6 , 186 –7 in Congo, 218 –29 Mistakidis, Telis, 194 , 259 , 270 , 272 Mitterrand, François, 161 Mobil, 170 Mobutu Sese Seko, 223 Model T car, 253 Mohammad Reza Pahlavi, Shah of Iran, 46 , 50 , 67 , 88 , 67 Mombasa, Kenya, 93 Monaco, 63 Mongolia, 140 Monte Carlo, 144 Morgan Stanley, 13 , 102 , 111 , 155 Morocco, 33 , 47 Morrison, James, 68 Mosaic, 278 Mosul, Iraq, 283 Mount Holly, South Carolina, 81 Mount Isa, Queensland, 193 –4 Mountstar Metals, 138 Mozambique, 161 Murray, Simon, 269 Muscat, Oman, 153 Mutanda, Congo, 219 , 223 , 224 , 226 –9 Namibia, 232 , 233 do Nascimento, Leopoldino Fragoso, 229 Nasmyth, Jan, 55 Nasser, Gamal Abdel, 45 –6 National Iranian Oil Company, 52 , 68 –9 Nazarbayev, Nursultan, 297 –8 Nazi Germany (1933–45), 22 , 24 , 26 , 47 , 87 Nebuchadnezzar, King of Babylon, 284 Netherlands, 48 , 65 , 120 , 163 , 164 , 236 , 237 , 243 Neverland , 286 New Comfort , 323 New Mexico, United States, 323 New York, United States Aluminum for Defense, 75 Great Grain Robbery (1972), 38 –42 Jesselson in, 24 , 28 Rich in, 37 , 47 , 58 Rotterdam market and, 63 telegraph in, 26 Weisser in, 35 New York Mercantile Exchange (Nymex), 104 Newfoundland, Canada, 170 Nicaragua, 77 , 85 , 87 , 161 nickel, 137 , 176 , 181 , 265 , 319 Nigeria, 85 , 181 , 220 , 232 , 325 Alison-Madueke corruption (2011–15), 221 Elf, trade with, 61 Glencore, trade with, 12 , 168 , 314 jihadis in, 294 Probo Koala affair (2006), 236 rice consumption, 232 Rotterdam market trade, 62 Trafigura, trade with, 130 Vitol, trade with, 166 Nixon, Richard, 51 , 254 Noble Group, 196 , 244 , 262 , 276 –7 Non-Aligned Movement, 92 North Dakota, United States, 261 , 323 North Korea, 138 , 162 North Sea oil, 114 –16 , 122 , 123 , 204 , 316 NRC Handelsblatt, 65 O’Malley, Tom, 53 , 61 , 113 Obama, Barack, 311 , 320 Och-Ziff Capital Management, 228 October War (1973), 53 Ognev, Yury, 246 Ohio, United States, 285 oil Brent oilfield, 114 –16 , 122 , 123 , 204 , 316 Chad trade, 294 –6 Chinese trade, 179 –80 , 201 coronavirus pandemic (2019–), 15 , 321 –5 crisis, first (1973–4), 53 –7 , 62 , 67 , 69 , 88 , 104 , 105 , 163 crisis, second (1979), 18 , 67 –9 , 92 , 104 Cuban trade, 151 –3 , 156 –61 Gulf War (1990–91), 100 –101 , 106 , 108 –10 Iraq trade, 197 –203 , 207 , 210 , 280 –91 Israel pipeline, 43 , 45 , 46 –7 , 49 –51 , 94 , 285 –6 Kazakhstan trade, 296 –9 Kurdistan trade, 280 –91 optionality, 205 –6 Romanian trade, 167 –9 Rotterdam market, 62 –6 Russian trade, 9 , 65 , 199 , 206 –17 , 287 , 300 –303 , 313 , 319 Seven Sisters, see Seven Sisters South African trade, 87 –91 , 94 , 98 Soviet trade, 22 –4 , 32 , 33 –4 , 44 , 51 , 66 , 156 –7 , 165 United States trade, 317 ‘Oil Crisis, The’ (Akins), 52 Oilflow SPV I DAC, 281 –2 , 287 –90 , 292 oilseeds, 9 , 39 Oiltanking, 64 Old Testament, 284 Olympic Games, 78 , 87 –8 , 182 Oman, 64 , 116 , 153 , 166 , 199 onions, 252 Onsan, South Korea, 324 Operation Desert Storm (1991), 110 optionality, 205 –6 options, 101 –2 , 103 , 110 , 116 , 123 Organisation for Economic Co-operation and Development (OECD), 106 , 275 Organization of the Petroleum Exporting Countries (OPEC), 44 –5 , 53 , 62 –3 , 67 , 114 Cobuco and, 92 , 93 coronavirus pandemic (2019–), 322 Iraq surcharges and, 200 –201 oil crisis, first (1973–4), 53 –7 , 62 , 67 , 69 , 88 , 105 , 163 oil crisis, second (1979), 68 South Africa embargo (1973), 88 World OPEC project (1988), 116 Ortega, Daniel, 87 Otto, Nikolaus, 253 Oxfam, 250 Oxford University, 105 , 147 , 154 Page, Gregory, 278 Palm Jumeirah, Dubai, 288 Panama, 46 , 201 , 308 paper barrels, 102 , 103 Paribas, 60 –61 , 95 Parque Central hotel, Havana, 151 –3 , 160 –61 Pauli, Heinz, 127 Pax Americana, 24 , 180 Peakville Limited, 201 Pechiney, 171 Pelosi, Nancy, 249 Pemex, 234 –5 Pennsylvania, United States, 280 , 281 , 290 pension funds, 102 , 131 , 269 , 271 , 278 , 280 –82 , 288 , 290 , 295 PepsiCo, 137 perestroika , 135 Perkins, Ian, 187 Permian basin, 323 Peru, 85 , 130 , 226 , 264 Peshmerga, 283 Pestalozzi, 19 Pestalozzi, Peter, 19 Peterson, Tor, 259 Petra, 64 Petraco, 287 Petrobras, 313 petrodollars, 56 , 57 , 67 , 70 , 200 , 288 Phibro Energy, 100 –101 , 106 –10 , 111 , 113 , 194 Phibro-Salomon, 112 –13 Philipp, Julius, 25 , 26 , 37 Philipp Brothers, 14 , 24 , 25 , 26 , 28 –9 , 34 –5 , 56 , 57 , 61 , 98 , 186 apprenticeships, 37 copper trade, 195 East Germany, trade with, 29 Gulf War (1990–91), 100 –101 , 107 –10 Hall joins (1982), 106 Hong Kong office, 196 Iran oil deal (1973), 52 –3 , 55 Israel pipeline trade, 49 –51 , 94 , 285 metals trade, 28 –9 , 34 –5 , 49 , 57 , 76 , 113 Mineral & Chemicals merger (1960), 276 Phibro Energy, 100 –101 , 106 –10 , 111 , 113 Phibro-Salomon merger (1981), 112 , 316 profits, 38 , 69 , 163 Rich’s resignation (1974), 57 –9 , 121 secrecy, 276 Socar’s acquisition (2015), 319 Soviet Union, trade with, 29 , 135 , 137 Yugoslavia, trade with, 28 , 29 Philippines, 86 , 241 Piercy, George, 54 Pinochet, Augusto, 87 Pittsburgh, Pennsylvania, 36 Pojdl, Pavel, 211 Poland, 208 pollution, 21 , 318 Posen, Danny, 48 , 120 , 128 , 162 Posen, Felix, 37 , 47 , 135 , 137 , 183 , 274 potatoes, 104 Probo Koala , 236 , 238 Public Employees’ Retirement Systems, 280 , 290 , 295 public relations (PR), 278 Puerto Rico, 91 Puma Energy, 230 put options, 188 Putin, Vladimir, 9 , 147 , 208 , 212 –15 , 299 –303 , 313 , 328 PVM, 65 Q book, 171 Qaboos bin Said, Sultan of Oman, 64 , 153 , 166 al-Qaeda, 294 Qatar, 2 , 5 , 6 , 7 , 272 –3 , 301 –2 Querub, Isaac, 123 , 126 Ramadi, Iraq, 283 Ramaphosa, Cyril, 185 Ras Lanuf, Libya, 5 –6 Raznoimport, 135 , 137 , 139 , 162 Reagan, Ronald, 77 Red Kite, 195 Red Scare (1947–57), 22 Reid, Trevor, 191 Republic of the Congo, 314 Reuben College, Oxford, 147 Reuben, David, 133 –5 , 137 –47 , 207 –8 Reuben, Simon, 147 Reynolds, 80 Rhodesia (1965–79), 309 rice, 102 , 177 , 232 Rice, Condoleezza, 224 Rich, Denise, 98 , 120 Rich, Marc, 14 , 20 , 45 , 46 –53 , 68 , 70 , 86 –7 , 117 –27 , 305 , 327 bribery, use of, 310 Cobuco, 91 –4 coup (1993–4), 125 –7 , 184 , 190 Dauphin resignation (1992), 122 death (2013), 325 divorce (1996), 120 early rising, 185 FBI Most Wanted status, 95 Glasenberg, relationship with, 183 indictment (1983), 96 –7 , 130 , 155 Iran, trade with, 52 –3 , 55 , 68 –9 , 94 –7 Israel pipeline trade, 49 –51 , 94 , 285 Jamaica, trade with, 72 –4 , 77 –84 , 86 , 98 knife analogy, 60 , 98 , 156 , 309 , 327 Marc Rich + Co, foundation of (1974), 59 –61 oil team resignation (1993), 125 pardoning (2001), 97 –8 politics, views on, 290 resignation from Philipp Bros. (1974), 57 –9 , 121 South Africa, trade with, 88 , 89 , 90 , 94 , 98 Strothotte resignation (1992), 121 –2 Weiss resignation (1992), 122 zinc play (1991–2), 122 –4 Rio Tinto, 273 , 274 Roche, 127 , 188 –92 , 267 Rockefeller, John, 32 Rolling Stones, The, 127 Roman Empire (27 BCE – CE 476), 252 Romania, 129 , 153 , 167 –9 Rommel, Erwin, 5 Rosenberg, David, 122 –4 Rosneft, 9 , 214 –16 , 287 , 300 –303 , 313 , 319 Rotterdam market, 62 –6 , 70 , 164 Rotterdam, Netherlands, 62 , 63 , 64 , 70 , 82 , 145 Roundhead, 201 Royal Dutch Shell, 13 , 32 , 54 , 64 , 115 , 154 , 165 , 171 –2 Rubin, Robert, 194 Rusal, 148 Russian Federation, 9 , 14 , 17 , 122 , 131 , 273 , 299 –302 aluminium trade, 133 –5 , 139 –50 animal feed trade, 261 coronavirus pandemic (2019–), 322 Crimea annexation (2014), 300 food price crisis (2007–8), 239 emerging market status, 17 , 180 Iraq, trade with, 200 , 287 oil trade, 9 , 65 , 199 , 206 , 207 –17 , 287 , 299 –302 , 303 Rosneft, 9 , 214 –16 , 287 , 300 –303 , 313 , 319 sanctions on, 300 –303 , 312 sovereign debt default (1998), 169 wheat production, 245 –7 Salomon, 113 Salomon Brothers, 69 , 108 , 112 , 316 Salvador, El, 161 Samoa, 144 sanctions, 86 , 309 , 311 –13 , 320 BNP Paribas and, 304 –8 on Cuba, 9 , 152 , 305 –8 on Deripaska, 312 on Gertler, 225 , 312 –13 on Iran, 305 , 309 , 312 , 320 –21 on Iraq, 197 –203 , 207 , 210 , 310 on Russia, 300 –303 , 312 secondary sanctions, 311 –12 on South Africa, 64 , 87 –90 , 93 , 182 , 183 , 308 , 309 on Sudan, 305 on Venezuela, 312 on Yugoslavia, 167 on Zhuhai Zhenrong, 320 dos Santos, José Eduardo, 229 Sarir–Tobruk pipeline, 6 Saudi Arabia, 36 , 181 Aramco, 51 –2 , 319 barley consumption, 241 Gulf War (1990–91), 109 oil crisis, first (1973–4), 54 –5 oil crisis, second (1979), 68 OPEC established (1960), 44 Rotterdam market trade, 62 South Africa, trade with, 88 World OPEC project (1988), 116 Saunders, Walter ‘Barney’, 38 Sayanogorsk, Russia, 148 Schönenberg club, Switzerland, 184 Schwab, Muriel, 326 Scotland, 291 Seaga, Edward, 77 Sechin, Igor, 9 , 300 –302 secondary sanctions, 311 –12 Semlitz, Stephen, 111 Senegal, 33 , 222 , 240 September 11 attacks (2001), 190 –91 Serbia, 167 Seven Sisters, 17 , 32 –3 , 44 , 49 , 51 –2 , 66 , 70 , 101 , 105 , 170 , 319 oil crisis, first (1973–4), 56 , 61 –3 , 134 Shapiro, John, 111 Sharp, Graham, 125 , 128 , 129 , 170 Shear, Neal, 111 Sheffield, Scott, 323 Shell, see Royal Dutch Shell Shetland Islands, 114 Shipping Research Bureau, 89 Siberia, Russia, 79 , 131 , 140 , 141 , 208 , 210 , 214 Singapore, 19 , 91 , 154 , 322 Sirte, Libya, 6 Skilling, Jeffrey, 173 Small, Hugh, 83 Smith, Adam, 16 Smolokowski, Wiaczeslaw, 208 –9 , 210 –11 , 216 Socar, 319 Société Générale, 95 Somalia, 309 Soros, George, 262 South Africa, 14 , 48 , 181 –2 apartheid, 64 , 87 –90 , 93 , 182 , 183 , 308 , 309 coal trade, 186 , 187 , 191 , 192 ferrochrome trade, 190 gold trade, 232 oil trade, 64 , 87 –91 , 93 , 94 , 98 , 122 , 182 –3 , 220 , 308 South Carolina, United States, 281 South Korea, 183 , 321 , 324 South Sudan, 284 , 289 Soviet Union (1922–91), 9 , 133 –50 Cargill, trade with, 31 , 38 –42 , 135 collapse (1991–2), 17 , 133 –5 , 139 –50 , 151 –3 , 161 , 165 , 207 , 208 Cuba, trade with, 151 , 152 , 153 , 156 Deuss deal (1976), 66 Exportkhleb, 38 , 135 Great Grain Robbery (1972), 38 –42 , 57 , 69 , 135 , 310 Jamaica, relations with, 77 , 86 Mabanaft, trade with, 22 –4 , 32 , 33 –4 , 44 , 51 , 135 , 261 , 302 Marc Rich + Co, trade with, 136 –7 Marimpex, trade with, 64 nuclear weapons, 141 perestroika (1985–91), 135 Philipp Brothers, trade with, 29 , 135 , 137 Raznoimport, 135 , 137 , 139 , 162 Soyuznefteexport, 23 , 34 , 35 , 65 , 135 Vitol, trade with, 165 soybeans, 114 , 181 , 240 , 318 Soyuznefteexport, 23 , 34 , 35 , 65 , 135 Spain, 97 , 98 spot markets, 68 , 70 , 84 , 93 , 94 , 109 , 251 St Moritz Hotel, New York, 35 stagflation, 56 Staley, Warren, 231 , 253 Standard Oil, 32 steamships, 25 Strait of Malacca, 323 Strategic Fuel Fund, 89 Strothotte, Willy, 98 , 120 , 131 –2 , 274 IPO (2011), 258 Jamaica, trade with, 72 –4 , 78 , 80 , 83 , 142 jet, 184 Marc Rich coup (1993), 124 –7 , 184 Marc Rich resignation (1992), 121 –2 Mount Isa Mines deal (2002), 193 –4 Roche, relations with, 188 Russia, trade with, 146 step back (2002), 185 , 187 Xstrata and, 191 –2 Sucres et Denrées, 114 , 159 Sudan, 206 , 284 , 289 , 305 Südelektra, 189 –91 Suez Canal, 36 , 43 , 45 –6 , 53 , 168 sugar, 9 , 57 , 114 , 156 –60 sulphur, 104 , 168 , 232 , 234 , 235 Sumitomo, 250 Sun, 116 Sunday Times, The , 50 , 271 supercycle, 180 –81 , 185 , 196 , 216 Africa and, 219 , 232 China and, 193 , 240 , 245 food prices and, 240 , 248 optionality and, 206 Suriname, 154 Sweden, 209 Switzerland, 7 , 8 , 11 , 12 , 14 , 55 corruption in, 20 , 69 , 310 Glencore in, 170 , 185 , 257 Iran, trade with, 95 light-touch regulation, 19 Marc Rich in, 20 , 58 –60 , 63 , 73 , 95 , 96 , 117 , 124 Trans-Asiatic Company, 46 Vitol in, 160 , 163 , 164 syphilis, 48 Syria, 8 , 45 , 53 , 248 , 283 Tajikistan, 162 Tangier, Morocco, 33 tantalum, 223 Tanzania, 232 Tarasov, Artem, 136 –7 , 139 Tashkent, Uzbekistan, 140 –41 taxation, 21 avoidance, 149 , 201 , 213 –14 , 281 bribes and, 69 , 310 ethanol industry and, 253 , 254 spinning, 115 Rich and, 20 , 95 –7 Switzerland and, 117 Vitol and, 21 Taylor, Cristina, 154 Taylor, Ian, 10 , 14 , 153 –6 , 164 , 165 –6 , 291 , 293 , 321 Conservative Party donations, 290 Cuba, trade with, 151 –3 , 156 –61 death (2020), 325 Enron bid (2001), 173 Kurdistan, trade with, 291 Libya, trade with, 1 –8 , 166 Nigeria, trade with, 166 oil peak prediction, 318 Russia, trade with, 165 , 300 telegraph, 25 Templeton, Franklin, 282 , 290 Tendler, David, 28 , 112 , 113 , 277 , 316 Texaco, 170 Texas, United States, 36 , 104 , 261 , 323 , 325 Thailand, 232 Thomajan, Robert ‘Bob’, 120 –21 Tiku, Arvind, 298 –9 Timchenko, Gennady, 209 , 212 , 214 , 216 , 300 , 313 tin, 102 Titan Oil Trading, 299 Tito, Josip Broz, 29 Titusville, Pennsylvania, 32 TNK-BP, 300 , 301 Tobruk, Libya, 3 , 6 Törnqvist, Torbjörn, 20 , 209 , 212 , 214 –16 , 230 , 313 , 327 Total, 61 , 170 toxic waste, 233 –8 , 304 Tradax International, 30 , 41 , 242 Trafford, John, 60 , 61 Trafigura, 11 , 14 , 59 , 87 , 119 , 129 –30 , 170 , 174 , 318 Angola, trade with, 229 –30 BNP Paribas, relations with, 304 –8 , 312 bonds, 261 bribery, use of, 314 , 315 coronavirus pandemic (2019–), 324 Cuba, trade with, 159 , 306 –8 foundation (1993), 129 –30 IPO, views on, 277 Iraq, trade with, 201 , 203 , 285 –6 , 287 Jamaica, trade with, 310 Kurdistan, trade with, 285 –6 , 287 profits, 249 public relations (PR), 278 Texas terminal, 261 toxic waste scandal (2006), 233 –8 , 304 volume of trade, 293 women in, 15 Trans-Asiatic Company, 46 Trans-World Group, 134 , 137 –49 , 165 , 208 Transamine, 35 Transol, 63 Transworld Oil, 66 , 89 , 95 , 114 –16 Trump, Donald, 97 , 284 , 317 Tselentis Mining, 186 Tunisia, 247 de Turckheim, Eric, 87 , 125 , 128 , 129 , 306 Turkey, 66 , 180 , 285 Turkmenistan, 161 , 165 twelve apostles, 131 20th Century Fox, 96 Ukraine, 136 , 140 , 162 , 300 , 310 –11 Unipec, 320 United Arab Emirates (UAE), 46 , 116 , 199 , 262 , 281 , 288 , 319 United Kingdom Brent oilfield, 114 –16 , 122 , 123 , 204 , 316 Cargill in, 243 corruption in, 20 , 311 Financial Services Authority (FSA), 250 FTSE 100 index, 15 , 269 , 276 , 278 , 282 Glencore-Xstrata merger (2012), 271 –3 G7 summit (1979), 70 Libyan Civil War (2011), 1 –8 pension funds, 269 , 278 Scottish independence referendum (2014), 291 shareholder spring (2012), 271 Suez Crisis (1956), 36 Tarasov in, 136 –7 United Nations Convention against Corruption, 275 Iraq sanctions, 101 , 198 , 200 , 201 , 202 sanctions, use of, 309 South Africa sanctions, 88 , 183 , 309 World Food Programme, 240 Yugoslavia sanctions, 167 United States Afghanistan War (2001–14), 311 BNP Paribas prosecution (2014), 304 –8 , 312 , 314 Central Intelligence Agency (CIA), 43 , 76 , 316 China trade war (2017–), 317 –18 Cuba sanctions, 152 , 305 –8 dollar, 311 ethanol production, 254 –5 Foreign Corrupt Practices Act (1977), 310 gold standard abandonment (1971), 51 G7 summit (1979), 70 Helms–Burton Act (1996), 160 Iran hostage crisis (1979–81), 20 , 94 , 96 Iraq War (2003–11), 201 , 283 , 311 Manhattan Project (1942–6), 223 oil production, 317 , 323 Operation Desert Storm (1991), 110 Pax Americana, 24 , 180 pension funds, 131 , 280 –82 , 288 , 290 potato futures default (1976), 104 Red Scare (1947–57), 22 Rich indictment (1983), 96 –7 , 130 Russia sanctions, 300 –303 sanctions, use of see sanctions, secondary sanctions, 311 –12 September 11 attacks (2001), 190 –91 supercycles and, 180 Watergate scandal (1972–4), 254 , 309 Zhuhai Zhenrong sanctions, 320 University of Southern California, 182 University of Witwatersrand, 182 Urals, Russia, 168 uranium, 223 Uzbekistan, 140 –41 , 162 Vale, 264 –5 , 269 Valium, 127 value-at-risk, 195 Vanol, 63 Varsano, Serge, 159 Venezuela, 20 , 34 , 44 , 73 , 154 , 157 , 199 , 312 , 314 very large crude carriers (VLCCs), 107 –8 Vidal, Edmundo, 129 Vienna, Austria, 53 , 54 , 200 Vietnam, 43 , 241 , 261 Viëtor, Henk, 163 Vishnevskiy, Igor, 148 , 149 –50 , 162 Viterra, 273 –4 Vitol, 14 , 162 –6 , 174 , 262 , 318 African petrol stations investment (2011), 261 bribery, use of, 314 Cuba, trade with, 151 –3 , 156 –61 , 306 Enron bid (2001), 173 Euromin, 143 , 165 IPO, views on, 277 Iran, trade with, 166 , 309 Iraq, trade with, 201 , 203 , 285 , 286 –7 , 291 , 310 Jamaica, trade with, 154 Kazakhstan, trade with, 296 –9 Kurdistan, trade with, 285 , 286 –7 , 291 Libya, trade with, 1 –8 , 166 , 283 , 285 Newfoundland refinery loss (1997), 170 Nigeria, trade with, 166 profits, 163 , 248 , 249 Russia, trade with, 143 , 165 , 300 , 301 shareholders, 19 Singapore, trade with, 155 South Africa, trade with, 88 Soviet Union, trade with, 165 tax avoidance, 21 women in, 15 Viëtor split (1976), 163 –4 volume of trade, 293 Vonk’s retirement (1995), 166 Yugoslavia, trade with, 167 Vodafone, 278 Voest-Alpine, 114 Volcker, Paul, 201 Volga-Urals basin, 34 Vonk, Ton, 165 , 166 Wall Street, 13 , 15 , 24 , 47 , 84 , 119 , 130 , 274 financialisation, 102 oil trade, 111 –12 , 114 supercycles and, 196 Wall Street (1987 film), 65 Watergate scandal (1972–4), 254 , 309 Waxman, Henry, 98 Weinberg, Morris ‘Sandy’, 97 Weinstein, Harvey, 20 Weir, Jeremy, 277 , 301 , 315 Weiss, Manny, 77 , 80 –82 , 120 , 121 , 125 , 142 , 145 Weisser, Alberto, 241 Weisser, Theodor, 25 , 27 , 31 –2 , 33 , 37 , 41 , 42 , 63 , 261 Soviet deal (1954), 22 –4 , 32 , 33 –4 , 44 , 51 , 135 , 261 , 302 Wen Jiabao, 239 –41 West Germany (1949–90), 22 –4 , 70 West Virginia, United States, 281 , 295 West, Kanye, 152 Weyer, Christian, 60 –61 wheat, 30 , 31 , 39 –41 , 56 , 232 , 239 –41 , 245 –7 Williams, Edward Bennett, 97 Wimar, 299 Woertz, Patricia, 254 –5 women, 15 World Bank, 80 , 85 , 294 , 303 World Food Programme, 240 World Trade Organization (WTO), 178 , 196 , 317 World War II (1939–45), 5 , 16 , 17 , 22 , 27 , 28 , 31 –2 , 47 , 87 Wyatt, Oscar, 64 , 110 , 200 , 203 Wyler, Paul, 187 , 275 , 311 Xstrata, 175 –6 , 178 , 181 , 189 –94 , 263 –73 , 276 , 301 Glencore coal mines deal (2001–2), 191 –2 Glencore merger, 264 –5 , 267 , 269 –73 Vale bid (2007), 264 –5 , 269 Yamani, Ahmed Zaki, 36 , 54 –5 Yang Qinglong, 320 Yeltsin, Boris, 147 , 213 Yemen, 168 , 206 , 247 Yom Kippur War (1973), 53 Yugoslavia (1945–92), 28 , 29 , 167 , 309 Yukos, 213 –15 , 299 Zak, Zbynek, 117 –18 , 124 , 130 , 278 –9 Zambia, 85 , 226 , 232 Zhuhai Zhenrong, 320 , 327 Zimbabwe, 220 , 230 –32 zinc, 35 , 81 , 85 , 129 Asturiana de Zinc, 123 , 191 Glencore, 258 , 273 Marc Rich play (1991–2), 122 –4 , 128 , 170 , 251 Russian production, 135 , 165 Zug, Switzerland, 58 , 59 , 60 , 63 , 73 , 95 , 96 , 117 , 124 , 182 , 183 THIS IS JUST THE BEGINNING Find us online and join the conversation Follow us on Twitter twitter.com/penguinukbooks Like us on Facebook facebook.com/penguinbooks Share the love on Instagram 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Morgan, 130 J&S, 208 –9 , 210 –11 Jaeggi, Daniel, 211 , 216 Jamaica, 72 –84 , 86 , 98 , 142 , 154 , 204 , 310 Jamalco, 80 James, Greg, 186 , 191 Jamison, David, 155 , 164 Jankilevitsch, Gregory, 208 –9 , 210 –11 , 216 Japan, 13 , 18 , 24 , 28 aluminium trade, 82 atomic bombings (1945), 223 coal consumption, 177 , 183 , 187 , 273 grain consumption, 39 G7 summit (1979), 70 Gulf War (1990–91), 100 oil consumption, 44 reconstruction, 179 , 180 , 223 rice futures, 102 sogo shosha , 13 Sumitomo, 250 supercycles and, 180 Jesselson, Ludwig, 8 , 24 , 25 , 27 , 28 , 35 , 37 , 41 , 326 Iran oil deal (1973), 52 –3 Rich’s resignation (1974), 58 –9 , 121 jets, 184 JOC Oil, 65 –6 Johnson, Lyndon Baines, 43 Jugometal, 29 Kabila, Joseph, 223 –4 , 225 , 227 , 229 Kabila, Laurent-Désiré, 223 Kalmin, Steve, 270 Kardashian, Kim, 152 Kashagan, 297 Katanga, Congo, 219 , 223 , 224 , 226 –9 Katumba Mwanke, Augustin, 224 , 225 , 227 Kazakhstan, 131 , 153 , 165 , 168 , 185 , 199 , 258 , 302 aluminium production, 140 , 141 , 145 , 146 , 147 oil production, 65 , 168 , 206 , 296 –9 Vitol, trade with, 296 –9 wheat production, 245 KazMunaiGas (KMG), 297 Kazzinc, 184 Kelm, Erwin, 38 Kenya, 93 , 232 KGB (Komitet Gosudarstvennoy Bezopasnosti ), 23 Khodorkovsky, Mikhail, 213 –15 , 299 Khomeini, Ruhollah, 67 , 94 , 96 Khrushchev, Nikita, 34 Kingston, Jamaica, 72 –3 , 77 Kinshasa, Democratic Republic of Congo, 33 Kirkuk, Iraq, 280 , 283 –5 , 287 , 289 Klebnikov, Paul, 149 Kleinwort Benson, 277 Klöckner & Co, 114 Klomp, Ton, 206 Knoechel, Eberhard, 258 Koch, Charles and David, 64 , 290 Kolwezi, Congo, 218 , 226 , 227 Krasnoyarsk, Russia, 141 –2 , 145 –6 , 148 Kulibayev, Timur, 298 –9 Kurdistan, 198 , 280 –91 , 295 , 298 , 299 , 302 , 328 Kuwait Gulf War (1990–91), 100 –101 , 106 , 108 –10 , 157 oil crisis, first (1973–4), 54 –5 Rotterdam market trade, 62 Kyrgyzstan, 158 Lada, 86 Lage, Carlos, 152 Lagos, Nigeria, 236 Lakhani, Murtaza, 197 –9 , 202 –3 , 284 Larocca, José, 238 Lay, Kenneth, 173 lead, 35 , 85 , 129 Lebanon, 226 Lehman Brothers, 243 , 265 Leiman, Ricardo, 244 Leopoldville, Belgian Congo, 33 letters of credit, 61 Lew, Jack, 312 Liberia, 308 Libya, 1 –8 , 64 , 92 , 166 , 247 , 283 , 285 Liechtenstein, 46 light-touch regulation, 19 Lilley, David, 195 Linetskiy, Vadim, 211 lithium, 319 Lithuania, 161 , 181 London, England, 3 , 5 , 11 , 20 , 55 , 199 Glencore–Xstrata merger (2012), 272 –3 International Petroleum Exchange, 115 property market, 147 Rotterdam market and, 63 Stock Exchange, 203 telegraph in, 26 Vitol in, 163 London Metal Exchange (LME), 79 –82 , 102 , 123 , 145 , 195 , 251 Louis Dreyfus, 10 , 19 , 39 , 241 , 244 , 248 , 262 , 277 , 320 Loya, Mike, 115 Lualaba river, 218 Lubumbashi, Congo, 33 Luckock, Ben, 285 , 286 Lutter, Gerd, 64 Lvov, Felix, 145 Mabanaft, 31 –4 , 35 –6 , 37 , 56 , 68 , 261 Oiltanking, 63 –4 Soviet deal (1954), 22 –4 , 32 , 33 –4 , 44 , 51 , 135 , 261 , 302 MacLennan, David, 17 , 31 , 231 MacMillan family, 249 , 277 , 278 MacMillan, Harold, 87 MacMillan, John, 25 , 27 , 29 –31 , 38 , 41 , 242 Madrid, Spain, 48 , 58 , 59 , 60 , 123 , 126 Mahoney, Chris, 259 malachite, 226 Mali, 294 Malta, 66 , 286 , 308 Manafort, Paul, 284 Manhattan Project (1942–6), 223 Manley, Michael, 76 –7 , 83 Mao Zedong, 177 Maradona, Diego, 152 Marathon Petroleum, 53 Marc Rich + Co, 14 , 16 , 19 , 20 , 37 , 47 , 59 –61 , 86 –7 , 117 –27 , 143 aluminium trade, 77 –84 , 122 , 125 , 144 , 165 Angola, trade with, 282 , 300 bribery, use of, 310 Cobuco, 91 –4 coup (1993–4), 125 –7 , 184 , 190 Cuba, trade with, 157 –8 Dauphin resignation (1992), 122 foundation of (1974), 59 –61 Glasenberg joins (1984), 182 Granaria acquisition (1981), 245 Hall job offer (1982), 106 indictments (1983), 96 –7 , 130 , 155 Iran, trade with, 68 –9 , 94 –7 Jamaica, trade with, 72 –4 , 77 –84 , 86 , 98 , 142 Nigeria, trade with, 61 oil team resignation (1993), 125 Philipp Bros. collapse (1990), 113 profits, 69 Russia, trade with, 122 South Africa, trade with, 88 , 89 , 90 , 94 , 98 , 122 Soviet Union, trade with, 136 –7 Strothotte resignation (1992), 121 –2 Südelektra stake (1990), 189 Tajikistan, trade with, 162 volume of trade, 293 Weiss resignation (1992), 122 zinc play (1991–2), 122 –4 , 128 , 170 , 251 margin calls, 124 Marimpex, 64 , 89 Marquard & Bahls, 32 Marsa al-Brega, Libya, 5 –6 Marshall Islands, 308 Mashkevich, Alexander, 185 Maté, Daniel, 259 Mayfair, London, 84 , 147 , 199 , 281 , 297 Mayuf, Abdeljalil, 7 McCarthy, Joseph, 22 McIntosh, Ian, 248 Meier, Henri, 127 Menatep, 213 Mercuria, 206 , 207 –9 , 210 –12 , 216 , 261 , 262 , 318 , 324 mercury, 48 Merrill Lynch, 138 Metallgesellschaft, 25 , 114 , 123 , 172 , 195 metals, 9 , 14 , 25 , 26 , 57 aluminium, see aluminium cobalt, 9 , 223 , 224 , 226 , 273 , 314 , 318 , 319 copper, see copper futures, 102 iron ore, 175 –6 , 181 , 261 , 264 lead, 35 , 85 , 129 lithium, 319 mercury, 48 nickel, 137 , 176 , 181 , 265 , 319 zinc, see zinc Mexico, 129 , 130 , 157 , 167 , 180 , 234 , 240 , 273 , 312 MG, 172 , 195 Milosevic, Slobodan, 167 Minerals & Chemicals Corporation, 276 mining, 85 , 171 , 186 –94 , 326 in Australia, 175 –6 , 186 –7 in Congo, 218 –29 Mistakidis, Telis, 194 , 259 , 270 , 272 Mitterrand, François, 161 Mobil, 170 Mobutu Sese Seko, 223 Model T car, 253 Mohammad Reza Pahlavi, Shah of Iran, 46 , 50 , 67 , 88 , 67 Mombasa, Kenya, 93 Monaco, 63 Mongolia, 140 Monte Carlo, 144 Morgan Stanley, 13 , 102 , 111 , 155 Morocco, 33 , 47 Morrison, James, 68 Mosaic, 278 Mosul, Iraq, 283 Mount Holly, South Carolina, 81 Mount Isa, Queensland, 193 –4 Mountstar Metals, 138 Mozambique, 161 Murray, Simon, 269 Muscat, Oman, 153 Mutanda, Congo, 219 , 223 , 224 , 226 –9 Namibia, 232 , 233 do Nascimento, Leopoldino Fragoso, 229 Nasmyth, Jan, 55 Nasser, Gamal Abdel, 45 –6 National Iranian Oil Company, 52 , 68 –9 Nazarbayev, Nursultan, 297 –8 Nazi Germany (1933–45), 22 , 24 , 26 , 47 , 87 Nebuchadnezzar, King of Babylon, 284 Netherlands, 48 , 65 , 120 , 163 , 164 , 236 , 237 , 243 Neverland , 286 New Comfort , 323 New Mexico, United States, 323 New York, United States Aluminum for Defense, 75 Great Grain Robbery (1972), 38 –42 Jesselson in, 24 , 28 Rich in, 37 , 47 , 58 Rotterdam market and, 63 telegraph in, 26 Weisser in, 35 New York Mercantile Exchange (Nymex), 104 Newfoundland, Canada, 170 Nicaragua, 77 , 85 , 87 , 161 nickel, 137 , 176 , 181 , 265 , 319 Nigeria, 85 , 181 , 220 , 232 , 325 Alison-Madueke corruption (2011–15), 221 Elf, trade with, 61 Glencore, trade with, 12 , 168 , 314 jihadis in, 294 Probo Koala affair (2006), 236 rice consumption, 232 Rotterdam market trade, 62 Trafigura, trade with, 130 Vitol, trade with, 166 Nixon, Richard, 51 , 254 Noble Group, 196 , 244 , 262 , 276 –7 Non-Aligned Movement, 92 North Dakota, United States, 261 , 323 North Korea, 138 , 162 North Sea oil, 114 –16 , 122 , 123 , 204 , 316 NRC Handelsblatt, 65 O’Malley, Tom, 53 , 61 , 113 Obama, Barack, 311 , 320 Och-Ziff Capital Management, 228 October War (1973), 53 Ognev, Yury, 246 Ohio, United States, 285 oil Brent oilfield, 114 –16 , 122 , 123 , 204 , 316 Chad trade, 294 –6 Chinese trade, 179 –80 , 201 coronavirus pandemic (2019–), 15 , 321 –5 crisis, first (1973–4), 53 –7 , 62 , 67 , 69 , 88 , 104 , 105 , 163 crisis, second (1979), 18 , 67 –9 , 92 , 104 Cuban trade, 151 –3 , 156 –61 Gulf War (1990–91), 100 –101 , 106 , 108 –10 Iraq trade, 197 –203 , 207 , 210 , 280 –91 Israel pipeline, 43 , 45 , 46 –7 , 49 –51 , 94 , 285 –6 Kazakhstan trade, 296 –9 Kurdistan trade, 280 –91 optionality, 205 –6 Romanian trade, 167 –9 Rotterdam market, 62 –6 Russian trade, 9 , 65 , 199 , 206 –17 , 287 , 300 –303 , 313 , 319 Seven Sisters, see Seven Sisters South African trade, 87 –91 , 94 , 98 Soviet trade, 22 –4 , 32 , 33 –4 , 44 , 51 , 66 , 156 –7 , 165 United States trade, 317 ‘Oil Crisis, The’ (Akins), 52 Oilflow SPV I DAC, 281 –2 , 287 –90 , 292 oilseeds, 9 , 39 Oiltanking, 64 Old Testament, 284 Olympic Games, 78 , 87 –8 , 182 Oman, 64 , 116 , 153 , 166 , 199 onions, 252 Onsan, South Korea, 324 Operation Desert Storm (1991), 110 optionality, 205 –6 options, 101 –2 , 103 , 110 , 116 , 123 Organisation for Economic Co-operation and Development (OECD), 106 , 275 Organization of the Petroleum Exporting Countries (OPEC), 44 –5 , 53 , 62 –3 , 67 , 114 Cobuco and, 92 , 93 coronavirus pandemic (2019–), 322 Iraq surcharges and, 200 –201 oil crisis, first (1973–4), 53 –7 , 62 , 67 , 69 , 88 , 105 , 163 oil crisis, second (1979), 68 South Africa embargo (1973), 88 World OPEC project (1988), 116 Ortega, Daniel, 87 Otto, Nikolaus, 253 Oxfam, 250 Oxford University, 105 , 147 , 154 Page, Gregory, 278 Palm Jumeirah, Dubai, 288 Panama, 46 , 201 , 308 paper barrels, 102 , 103 Paribas, 60 –61 , 95 Parque Central hotel, Havana, 151 –3 , 160 –61 Pauli, Heinz, 127 Pax Americana, 24 , 180 Peakville Limited, 201 Pechiney, 171 Pelosi, Nancy, 249 Pemex, 234 –5 Pennsylvania, United States, 280 , 281 , 290 pension funds, 102 , 131 , 269 , 271 , 278 , 280 –82 , 288 , 290 , 295 PepsiCo, 137 perestroika , 135 Perkins, Ian, 187 Permian basin, 323 Peru, 85 , 130 , 226 , 264 Peshmerga, 283 Pestalozzi, 19 Pestalozzi, Peter, 19 Peterson, Tor, 259 Petra, 64 Petraco, 287 Petrobras, 313 petrodollars, 56 , 57 , 67 , 70 , 200 , 288 Phibro Energy, 100 –101 , 106 –10 , 111 , 113 , 194 Phibro-Salomon, 112 –13 Philipp, Julius, 25 , 26 , 37 Philipp Brothers, 14 , 24 , 25 , 26 , 28 –9 , 34 –5 , 56 , 57 , 61 , 98 , 186 apprenticeships, 37 copper trade, 195 East Germany, trade with, 29 Gulf War (1990–91), 100 –101 , 107 –10 Hall joins (1982), 106 Hong Kong office, 196 Iran oil deal (1973), 52 –3 , 55 Israel pipeline trade, 49 –51 , 94 , 285 metals trade, 28 –9 , 34 –5 , 49 , 57 , 76 , 113 Mineral & Chemicals merger (1960), 276 Phibro Energy, 100 –101 , 106 –10 , 111 , 113 Phibro-Salomon merger (1981), 112 , 316 profits, 38 , 69 , 163 Rich’s resignation (1974), 57 –9 , 121 secrecy, 276 Socar’s acquisition (2015), 319 Soviet Union, trade with, 29 , 135 , 137 Yugoslavia, trade with, 28 , 29 Philippines, 86 , 241 Piercy, George, 54 Pinochet, Augusto, 87 Pittsburgh, Pennsylvania, 36 Pojdl, Pavel, 211 Poland, 208 pollution, 21 , 318 Posen, Danny, 48 , 120 , 128 , 162 Posen, Felix, 37 , 47 , 135 , 137 , 183 , 274 potatoes, 104 Probo Koala , 236 , 238 Public Employees’ Retirement Systems, 280 , 290 , 295 public relations (PR), 278 Puerto Rico, 91 Puma Energy, 230 put options, 188 Putin, Vladimir, 9 , 147 , 208 , 212 –15 , 299 –303 , 313 , 328 PVM, 65 Q book, 171 Qaboos bin Said, Sultan of Oman, 64 , 153 , 166 al-Qaeda, 294 Qatar, 2 , 5 , 6 , 7 , 272 –3 , 301 –2 Querub, Isaac, 123 , 126 Ramadi, Iraq, 283 Ramaphosa, Cyril, 185 Ras Lanuf, Libya, 5 –6 Raznoimport, 135 , 137 , 139 , 162 Reagan, Ronald, 77 Red Kite, 195 Red Scare (1947–57), 22 Reid, Trevor, 191 Republic of the Congo, 314 Reuben College, Oxford, 147 Reuben, David, 133 –5 , 137 –47 , 207 –8 Reuben, Simon, 147 Reynolds, 80 Rhodesia (1965–79), 309 rice, 102 , 177 , 232 Rice, Condoleezza, 224 Rich, Denise, 98 , 120 Rich, Marc, 14 , 20 , 45 , 46 –53 , 68 , 70 , 86 –7 , 117 –27 , 305 , 327 bribery, use of, 310 Cobuco, 91 –4 coup (1993–4), 125 –7 , 184 , 190 Dauphin resignation (1992), 122 death (2013), 325 divorce (1996), 120 early rising, 185 FBI Most Wanted status, 95 Glasenberg, relationship with, 183 indictment (1983), 96 –7 , 130 , 155 Iran, trade with, 52 –3 , 55 , 68 –9 , 94 –7 Israel pipeline trade, 49 –51 , 94 , 285 Jamaica, trade with, 72 –4 , 77 –84 , 86 , 98 knife analogy, 60 , 98 , 156 , 309 , 327 Marc Rich + Co, foundation of (1974), 59 –61 oil team resignation (1993), 125 pardoning (2001), 97 –8 politics, views on, 290 resignation from Philipp Bros. (1974), 57 –9 , 121 South Africa, trade with, 88 , 89 , 90 , 94 , 98 Strothotte resignation (1992), 121 –2 Weiss resignation (1992), 122 zinc play (1991–2), 122 –4 Rio Tinto, 273 , 274 Roche, 127 , 188 –92 , 267 Rockefeller, John, 32 Rolling Stones, The, 127 Roman Empire (27 BCE – CE 476), 252 Romania, 129 , 153 , 167 –9 Rommel, Erwin, 5 Rosenberg, David, 122 –4 Rosneft, 9 , 214 –16 , 287 , 300 –303 , 313 , 319 Rotterdam market, 62 –6 , 70 , 164 Rotterdam, Netherlands, 62 , 63 , 64 , 70 , 82 , 145 Roundhead, 201 Royal Dutch Shell, 13 , 32 , 54 , 64 , 115 , 154 , 165 , 171 –2 Rubin, Robert, 194 Rusal, 148 Russian Federation, 9 , 14 , 17 , 122 , 131 , 273 , 299 –302 aluminium trade, 133 –5 , 139 –50 animal feed trade, 261 coronavirus pandemic (2019–), 322 Crimea annexation (2014), 300 food price crisis (2007–8), 239 emerging market status, 17 , 180 Iraq, trade with, 200 , 287 oil trade, 9 , 65 , 199 , 206 , 207 –17 , 287 , 299 –302 , 303 Rosneft, 9 , 214 –16 , 287 , 300 –303 , 313 , 319 sanctions on, 300 –303 , 312 sovereign debt default (1998), 169 wheat production, 245 –7 Salomon, 113 Salomon Brothers, 69 , 108 , 112 , 316 Salvador, El, 161 Samoa, 144 sanctions, 86 , 309 , 311 –13 , 320 BNP Paribas and, 304 –8 on Cuba, 9 , 152 , 305 –8 on Deripaska, 312 on Gertler, 225 , 312 –13 on Iran, 305 , 309 , 312 , 320 –21 on Iraq, 197 –203 , 207 , 210 , 310 on Russia, 300 –303 , 312 secondary sanctions, 311 –12 on South Africa, 64 , 87 –90 , 93 , 182 , 183 , 308 , 309 on Sudan, 305 on Venezuela, 312 on Yugoslavia, 167 on Zhuhai Zhenrong, 320 dos Santos, José Eduardo, 229 Sarir–Tobruk pipeline, 6 Saudi Arabia, 36 , 181 Aramco, 51 –2 , 319 barley consumption, 241 Gulf War (1990–91), 109 oil crisis, first (1973–4), 54 –5 oil crisis, second (1979), 68 OPEC established (1960), 44 Rotterdam market trade, 62 South Africa, trade with, 88 World OPEC project (1988), 116 Saunders, Walter ‘Barney’, 38 Sayanogorsk, Russia, 148 Schönenberg club, Switzerland, 184 Schwab, Muriel, 326 Scotland, 291 Seaga, Edward, 77 Sechin, Igor, 9 , 300 –302 secondary sanctions, 311 –12 Semlitz, Stephen, 111 Senegal, 33 , 222 , 240 September 11 attacks (2001), 190 –91 Serbia, 167 Seven Sisters, 17 , 32 –3 , 44 , 49 , 51 –2 , 66 , 70 , 101 , 105 , 170 , 319 oil crisis, first (1973–4), 56 , 61 –3 , 134 Shapiro, John, 111 Sharp, Graham, 125 , 128 , 129 , 170 Shear, Neal, 111 Sheffield, Scott, 323 Shell, see Royal Dutch Shell Shetland Islands, 114 Shipping Research Bureau, 89 Siberia, Russia, 79 , 131 , 140 , 141 , 208 , 210 , 214 Singapore, 19 , 91 , 154 , 322 Sirte, Libya, 6 Skilling, Jeffrey, 173 Small, Hugh, 83 Smith, Adam, 16 Smolokowski, Wiaczeslaw, 208 –9 , 210 –11 , 216 Socar, 319 Société Générale, 95 Somalia, 309 Soros, George, 262 South Africa, 14 , 48 , 181 –2 apartheid, 64 , 87 –90 , 93 , 182 , 183 , 308 , 309 coal trade, 186 , 187 , 191 , 192 ferrochrome trade, 190 gold trade, 232 oil trade, 64 , 87 –91 , 93 , 94 , 98 , 122 , 182 –3 , 220 , 308 South Carolina, United States, 281 South Korea, 183 , 321 , 324 South Sudan, 284 , 289 Soviet Union (1922–91), 9 , 133 –50 Cargill, trade with, 31 , 38 –42 , 135 collapse (1991–2), 17 , 133 –5 , 139 –50 , 151 –3 , 161 , 165 , 207 , 208 Cuba, trade with, 151 , 152 , 153 , 156 Deuss deal (1976), 66 Exportkhleb, 38 , 135 Great Grain Robbery (1972), 38 –42 , 57 , 69 , 135 , 310 Jamaica, relations with, 77 , 86 Mabanaft, trade with, 22 –4 , 32 , 33 –4 , 44 , 51 , 135 , 261 , 302 Marc Rich + Co, trade with, 136 –7 Marimpex, trade with, 64 nuclear weapons, 141 perestroika (1985–91), 135 Philipp Brothers, trade with, 29 , 135 , 137 Raznoimport, 135 , 137 , 139 , 162 Soyuznefteexport, 23 , 34 , 35 , 65 , 135 Vitol, trade with, 165 soybeans, 114 , 181 , 240 , 318 Soyuznefteexport, 23 , 34 , 35 , 65 , 135 Spain, 97 , 98 spot markets, 68 , 70 , 84 , 93 , 94 , 109 , 251 St Moritz Hotel, New York, 35 stagflation, 56 Staley, Warren, 231 , 253 Standard Oil, 32 steamships, 25 Strait of Malacca, 323 Strategic Fuel Fund, 89 Strothotte, Willy, 98 , 120 , 131 –2 , 274 IPO (2011), 258 Jamaica, trade with, 72 –4 , 78 , 80 , 83 , 142 jet, 184 Marc Rich coup (1993), 124 –7 , 184 Marc Rich resignation (1992), 121 –2 Mount Isa Mines deal (2002), 193 –4 Roche, relations with, 188 Russia, trade with, 146 step back (2002), 185 , 187 Xstrata and, 191 –2 Sucres et Denrées, 114 , 159 Sudan, 206 , 284 , 289 , 305 Südelektra, 189 –91 Suez Canal, 36 , 43 , 45 –6 , 53 , 168 sugar, 9 , 57 , 114 , 156 –60 sulphur, 104 , 168 , 232 , 234 , 235 Sumitomo, 250 Sun, 116 Sunday Times, The , 50 , 271 supercycle, 180 –81 , 185 , 196 , 216 Africa and, 219 , 232 China and, 193 , 240 , 245 food prices and, 240 , 248 optionality and, 206 Suriname, 154 Sweden, 209 Switzerland, 7 , 8 , 11 , 12 , 14 , 55 corruption in, 20 , 69 , 310 Glencore in, 170 , 185 , 257 Iran, trade with, 95 light-touch regulation, 19 Marc Rich in, 20 , 58 –60 , 63 , 73 , 95 , 96 , 117 , 124 Trans-Asiatic Company, 46 Vitol in, 160 , 163 , 164 syphilis, 48 Syria, 8 , 45 , 53 , 248 , 283 Tajikistan, 162 Tangier, Morocco, 33 tantalum, 223 Tanzania, 232 Tarasov, Artem, 136 –7 , 139 Tashkent, Uzbekistan, 140 –41 taxation, 21 avoidance, 149 , 201 , 213 –14 , 281 bribes and, 69 , 310 ethanol industry and, 253 , 254 spinning, 115 Rich and, 20 , 95 –7 Switzerland and, 117 Vitol and, 21 Taylor, Cristina, 154 Taylor, Ian, 10 , 14 , 153 –6 , 164 , 165 –6 , 291 , 293 , 321 Conservative Party donations, 290 Cuba, trade with, 151 –3 , 156 –61 death (2020), 325 Enron bid (2001), 173 Kurdistan, trade with, 291 Libya, trade with, 1 –8 , 166 Nigeria, trade with, 166 oil peak prediction, 318 Russia, trade with, 165 , 300 telegraph, 25 Templeton, Franklin, 282 , 290 Tendler, David, 28 , 112 , 113 , 277 , 316 Texaco, 170 Texas, United States, 36 , 104 , 261 , 323 , 325 Thailand, 232 Thomajan, Robert ‘Bob’, 120 –21 Tiku, Arvind, 298 –9 Timchenko, Gennady, 209 , 212 , 214 , 216 , 300 , 313 tin, 102 Titan Oil Trading, 299 Tito, Josip Broz, 29 Titusville, Pennsylvania, 32 TNK-BP, 300 , 301 Tobruk, Libya, 3 , 6 Törnqvist, Torbjörn, 20 , 209 , 212 , 214 –16 , 230 , 313 , 327 Total, 61 , 170 toxic waste, 233 –8 , 304 Tradax International, 30 , 41 , 242 Trafford, John, 60 , 61 Trafigura, 11 , 14 , 59 , 87 , 119 , 129 –30 , 170 , 174 , 318 Angola, trade with, 229 –30 BNP Paribas, relations with, 304 –8 , 312 bonds, 261 bribery, use of, 314 , 315 coronavirus pandemic (2019–), 324 Cuba, trade with, 159 , 306 –8 foundation (1993), 129 –30 IPO, views on, 277 Iraq, trade with, 201 , 203 , 285 –6 , 287 Jamaica, trade with, 310 Kurdistan, trade with, 285 –6 , 287 profits, 249 public relations (PR), 278 Texas terminal, 261 toxic waste scandal (2006), 233 –8 , 304 volume of trade, 293 women in, 15 Trans-Asiatic Company, 46 Trans-World Group, 134 , 137 –49 , 165 , 208 Transamine, 35 Transol, 63 Transworld Oil, 66 , 89 , 95 , 114 –16 Trump, Donald, 97 , 284 , 317 Tselentis Mining, 186 Tunisia, 247 de Turckheim, Eric, 87 , 125 , 128 , 129 , 306 Turkey, 66 , 180 , 285 Turkmenistan, 161 , 165 twelve apostles, 131 20th Century Fox, 96 Ukraine, 136 , 140 , 162 , 300 , 310 –11 Unipec, 320 United Arab Emirates (UAE), 46 , 116 , 199 , 262 , 281 , 288 , 319 United Kingdom Brent oilfield, 114 –16 , 122 , 123 , 204 , 316 Cargill in, 243 corruption in, 20 , 311 Financial Services Authority (FSA), 250 FTSE 100 index, 15 , 269 , 276 , 278 , 282 Glencore-Xstrata merger (2012), 271 –3 G7 summit (1979), 70 Libyan Civil War (2011), 1 –8 pension funds, 269 , 278 Scottish independence referendum (2014), 291 shareholder spring (2012), 271 Suez Crisis (1956), 36 Tarasov in, 136 –7 United Nations Convention against Corruption, 275 Iraq sanctions, 101 , 198 , 200 , 201 , 202 sanctions, use of, 309 South Africa sanctions, 88 , 183 , 309 World Food Programme, 240 Yugoslavia sanctions, 167 United States Afghanistan War (2001–14), 311 BNP Paribas prosecution (2014), 304 –8 , 312 , 314 Central Intelligence Agency (CIA), 43 , 76 , 316 China trade war (2017–), 317 –18 Cuba sanctions, 152 , 305 –8 dollar, 311 ethanol production, 254 –5 Foreign Corrupt Practices Act (1977), 310 gold standard abandonment (1971), 51 G7 summit (1979), 70 Helms–Burton Act (1996), 160 Iran hostage crisis (1979–81), 20 , 94 , 96 Iraq War (2003–11), 201 , 283 , 311 Manhattan Project (1942–6), 223 oil production, 317 , 323 Operation Desert Storm (1991), 110 Pax Americana, 24 , 180 pension funds, 131 , 280 –82 , 288 , 290 potato futures default (1976), 104 Red Scare (1947–57), 22 Rich indictment (1983), 96 –7 , 130 Russia sanctions, 300 –303 sanctions, use of see sanctions, secondary sanctions, 311 –12 September 11 attacks (2001), 190 –91 supercycles and, 180 Watergate scandal (1972–4), 254 , 309 Zhuhai Zhenrong sanctions, 320 University of Southern California, 182 University of Witwatersrand, 182 Urals, Russia, 168 uranium, 223 Uzbekistan, 140 –41 , 162 Vale, 264 –5 , 269 Valium, 127 value-at-risk, 195 Vanol, 63 Varsano, Serge, 159 Venezuela, 20 , 34 , 44 , 73 , 154 , 157 , 199 , 312 , 314 very large crude carriers (VLCCs), 107 –8 Vidal, Edmundo, 129 Vienna, Austria, 53 , 54 , 200 Vietnam, 43 , 241 , 261 Viëtor, Henk, 163 Vishnevskiy, Igor, 148 , 149 –50 , 162 Viterra, 273 –4 Vitol, 14 , 162 –6 , 174 , 262 , 318 African petrol stations investment (2011), 261 bribery, use of, 314 Cuba, trade with, 151 –3 , 156 –61 , 306 Enron bid (2001), 173 Euromin, 143 , 165 IPO, views on, 277 Iran, trade with, 166 , 309 Iraq, trade with, 201 , 203 , 285 , 286 –7 , 291 , 310 Jamaica, trade with, 154 Kazakhstan, trade with, 296 –9 Kurdistan, trade with, 285 , 286 –7 , 291 Libya, trade with, 1 –8 , 166 , 283 , 285 Newfoundland refinery loss (1997), 170 Nigeria, trade with, 166 profits, 163 , 248 , 249 Russia, trade with, 143 , 165 , 300 , 301 shareholders, 19 Singapore, trade with, 155 South Africa, trade with, 88 Soviet Union, trade with, 165 tax avoidance, 21 women in, 15 Viëtor split (1976), 163 –4 volume of trade, 293 Vonk’s retirement (1995), 166 Yugoslavia, trade with, 167 Vodafone, 278 Voest-Alpine, 114 Volcker, Paul, 201 Volga-Urals basin, 34 Vonk, Ton, 165 , 166 Wall Street, 13 , 15 , 24 , 47 , 84 , 119 , 130 , 274 financialisation, 102 oil trade, 111 –12 , 114 supercycles and, 196 Wall Street (1987 film), 65 Watergate scandal (1972–4), 254 , 309 Waxman, Henry, 98 Weinberg, Morris ‘Sandy’, 97 Weinstein, Harvey, 20 Weir, Jeremy, 277 , 301 , 315 Weiss, Manny, 77 , 80 –82 , 120 , 121 , 125 , 142 , 145 Weisser, Alberto, 241 Weisser, Theodor, 25 , 27 , 31 –2 , 33 , 37 , 41 , 42 , 63 , 261 Soviet deal (1954), 22 –4 , 32 , 33 –4 , 44 , 51 , 135 , 261 , 302 Wen Jiabao, 239 –41 West Germany (1949–90), 22 –4 , 70 West Virginia, United States, 281 , 295 West, Kanye, 152 Weyer, Christian, 60 –61 wheat, 30 , 31 , 39 –41 , 56 , 232 , 239 –41 , 245 –7 Williams, Edward Bennett, 97 Wimar, 299 Woertz, Patricia, 254 –5 women, 15 World Bank, 80 , 85 , 294 , 303 World Food Programme, 240 World Trade Organization (WTO), 178 , 196 , 317 World War II (1939–45), 5 , 16 , 17 , 22 , 27 , 28 , 31 –2 , 47 , 87 Wyatt, Oscar, 64 , 110 , 200 , 203 Wyler, Paul, 187 , 275 , 311 Xstrata, 175 –6 , 178 , 181 , 189 –94 , 263 –73 , 276 , 301 Glencore coal mines deal (2001–2), 191 –2 Glencore merger, 264 –5 , 267 , 269 –73 Vale bid (2007), 264 –5 , 269 Yamani, Ahmed Zaki, 36 , 54 –5 Yang Qinglong, 320 Yeltsin, Boris, 147 , 213 Yemen, 168 , 206 , 247 Yom Kippur War (1973), 53 Yugoslavia (1945–92), 28 , 29 , 167 , 309 Yukos, 213 –15 , 299 Zak, Zbynek, 117 –18 , 124 , 130 , 278 –9 Zambia, 85 , 226 , 232 Zhuhai Zhenrong, 320 , 327 Zimbabwe, 220 , 230 –32 zinc, 35 , 81 , 85 , 129 Asturiana de Zinc, 123 , 191 Glencore, 258 , 273 Marc Rich play (1991–2), 122 –4 , 128 , 170 , 251 Russian production, 135 , 165 Zug, Switzerland, 58 , 59 , 60 , 63 , 73 , 95 , 96 , 117 , 124 , 182 , 183 THIS IS JUST THE BEGINNING Find us online and join the conversation Follow us on Twitter twitter.com/penguinukbooks Like us on Facebook facebook.com/penguinbooks Share the love on Instagram 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The Myth of Meritocracy: Why Working-Class Kids Still Get Working-Class Jobs (Provocations Series)
by James Bloodworth
Published 18 May 2016

With respect to the poor, such arguments do not stand up to even a modicum of scrutiny. Under Blair and Brown there was a serious drive to improve the lot of Britain’s most economically vulnerable citizens. New Labour spent significant sums of money on public services and on policies such as tax credits for low-paid workers. Light-touch regulation of the banks was accompanied by Sure Start Centres for underprivileged children and record spending on the National Health Service. As a result of these spending priorities, both absolute and relative income poverty fell significantly among both children and pensioners between 1997 and 2010.

SEDATED: How Modern Capitalism Created Our Mental Health Crisis
by James. Davies
Published 15 Nov 2021

This is due to an EU rule that if one national regulatory agency within the EU approves a drug, then the path to EU-wide approval is far easier. This arrangement has effectively created a market within which different national agencies compete with each other for lucrative licensing contracts. The competitive environment in which regulatory agencies now operate has been shown to incentivise light-touch regulation – if your regulatory process is too strict, you are likely to lose out on licensing fees to a more lenient competitor. Research has shown that this regulatory ‘race to the bottom’ favours industry interests over those of patients.20 What happens now that the UK has left the EU remains unclear, but with Boris Johnson’s government allegedly pushing for further deregulation,21 it is unlikely that standards will improve.

…

I asked Hinchliffe’s colleague on the Health Select Committee, David Amess, whether this could explain the aversion to reforming the MHRA, he was unequivocal: ‘That’s absolutely the reason; this was the height of New Labour – people said they weren’t privatising things when they were. You’ll remember how they exempted Formula One from certain advertising regulations; and how they deregulated the banks under Gordon Brown – we could go on … It was all about advocating light-touch regulation.’26 Hinchliffe echoed Amess’s view: ‘To have done anything about the regulatory agency would have impacted on the commercial interests of the pharmaceutical industry, which deregulation served. This was the overall thinking in government. It has been no different from the conservatives, to New Labour, to the coalition, to Cameron, to May, and now to Johnson – the central philosophy has been broadly the same: we give what industry wants, the markets must not be unduly restricted, we should not interfere.

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

So why would banks want to issue securities in the first place, and, more important, why did regulators allow them to do so? When banks started issuing securitized assets they engineered a way to increase the share of highly rated assets and subsequently reduced the amount of capital they had to hold. In combination with light-touch regulation, securitization allowed banks to leverage up to unprecedented levels (see figure 2.3). Through securitization, risks could also be transferred to legal entities called special-purpose vehicles (SPVs). These vehicles in certain respects were like a bank, with the crucial difference that they were not subject to regulation.

…

In order to remain competitive with the U.S. financial market, the European economies felt compelled to create matching opportunities for investors and similarly succumbed to deregulatory pressures. Often lobbied by bankers, politicians sought to safeguard financial services in London, Frankfurt, Singapore, and other financial nexuses. This led to a commitment to light-touch regulation and the use of overly expansionary monetary policy.37 Policy makers were taken by arguments that the future of their financial capitals and a significant share of their tax revenues required a reduction in regulatory burdens and red tape.38 They argued that regulation would constrain the innovation needed to support further economic growth and stability.39 Above all, politicians and regulators drew comfort from the economists’ consensus of “the Great Moderation,” which argued that the U.S. economy had exhibited low volatility since the 1990s and that there were no hidden risks building in the system as a result of their actions.40 The implications of national deregulation and an integrated market led to a global financial network that Andrew Haldane from the Bank of England has described as a “monoculture.”41 In the United Kingdom, the financial and insurance sector grew 108 percent between 2000 and 2011, vastly outpacing all other sectors.42 By 2011 financial and insurance services contributed over £125 billion annually to the U.K. economy and were responsible for 9.4 percent of total value added.43 As securitization of subprime mortgages increased, the government became increasingly beholden to what was becoming a homogeneous source of employment and tax revenue.

Inside the Nudge Unit: How Small Changes Can Make a Big Difference
by David Halpern
Published 26 Aug 2015

The argument also wasn’t helped by big tobacco companies, who moved from being bemused and slightly hostile observers, to becoming actively interested in the products and even, it was rumoured, buying up some of the e-cig companies. Furthermore, the slightly dubious behaviour of some e-cig companies in some countries, with rumours that they were being sold outside schools, didn’t help their cause much either. By the time the proposals came back from the MHRA, they didn’t look quite like the light-touch regulation we had in mind. The issue was also becoming a European matter, with many countries arguing for a ban, or at least very heavy regulation. Faced with the backlash in the public health sector, one of the UK’s largest retailers withdrew e-cigs from its shelves. Despite our early efforts, we were losing the battle.

…

We took the evidence back to the PM and the Cabinet Secretary. As it happens, David Cameron was one of the only people in No. 10 who had been a smoker, and had once even tried an e-cig (he wasn’t especially impressed). We took the decision to stick to our line: to ensure that, for now at least, e-cigs should be widely available; to push for light-touch regulation to ensure that they were free of other toxins but had enough nicotine to satisfy smokers’ cravings; and to legislate to ensure that they were not to be sold to under-18s. Available, but safe, was to be our line. Based on behavioural and other evidence, and with the help of a new Public Health Minister and our European and Global Issues Secretariat (EGIS), this is the line we took and pushed and more or less secured in the UK and Europe.

Planet Ponzi
by Mitch Feierstein
Published 2 Feb 2012

Because these things are now well known, I won’t labor the point further. What I would add, however, is that the problems of lobbying are as entrenched in the UK as they are in the US‌—‌arguably more so. The Labour Party of Tony Blair and Gordon Brown was notoriously banker-friendly. The ‘light touch regulation’ on which those politicians prided themselves ended up doing unspeakable damage to the national finances. Yet the contemporary Conservative Party is more or less owned by the finance industry. According to the Bureau of Investigative Journalism, the financial sector is the source of more than half the Tory party’s political funding.

…

Government debt stayed stubbornly high, when it should have all but disappeared. Household debt became excessive. Property became (and still is) bubblicious. The City of London came to rival Wall Street as a manufacturing center for financial WMDs. The regulators actively boasted of their ‘light touch’ regulation. That thirty-year road has now come to an end. Politics and the economy are in clear-up mode, much like London after the riots. There’s broken glass everywhere‌—‌broken glass and shattered businesses. But the clear-up is, in a strange way, inspirational. Tough political decisions can be made.

Value of Everything: An Antidote to Chaos The
by Mariana Mazzucato
Published 25 Apr 2018

The rules reflected policymakers' consensus that financial institutions acted at best like a lubricant for the ‘real' motors of the economy - agriculture, manufacturing and business services - and were not significantly productive in themselves. It was feared that a deregulated financial sector could become excessively speculative, causing disruption domestically and to the external value of currencies. But in the 1960s, as the idea of ‘light-touch' regulation became increasingly attractive, such measures were increasingly viewed on both sides of the Atlantic as an obstacle to circumvent. During this time, banks never ceased to lobby against the regulations that deprived them of significant markets, and others (like the Glass-Steagall Act) which restricted their scope to combine operations in different markets.

…

Rather than being critical observers of companies, equity analysts have become their cheerleaders, and largely failed to see that banks were heading for the rocks. Independent auditors and rating agencies became business partners of the companies they oversaw instead of guarding the interests of investors and the wider community. Governments moved to ‘light-touch' regulation of finance, often under pressure from the industry lobby. The media were slow to spot the scandals and uncover them. Corporate directors - who, let's not forget, in the UK have a legal responsibility to act in the best interests of shareholders - were only a limited counterweight to managerial over-reach.17 There is no doubt that the incentive to generate fees - from advising, analysing and auditing companies, for example -resulted in collusion and conflicts of interest between the gatekeepers and the public corporations that led to failures of governance.

Making It Happen: Fred Goodwin, RBS and the Men Who Blew Up the British Economy
by Iain Martin
Published 11 Sep 2013

Accountant John Connolly. The Deloitte boss was a mentor to Goodwin. The firm he ran signed off on RBS’s accounts as it headed for disaster. 18. The regulators: (top left) John Tiner, the chief executive of the Financial Services Authority (FSA) from 2003 to 2007, an advocate of ‘principles based’ light touch regulation of the banks. (top right) Investment banker Hector Sants, who succeeded Tiner and tried to overhaul the organisation, but let RBS run its capital low when it was taking over ABN Amro in the autum of 2007. (Bottom left) Sir Callum McCarthy, civil servant, banker, chairman of the FSA from 2003 and keeper of bees.

…

Accountant John Connolly. The Deloitte boss was a mentor to Goodwin. The firm he ran signed off on RBS’s accounts as it headed for disaster. 18. The regulators: (top left) John Tiner, the chief executive of the Financial Services Authority (FSA) from 2003 to 2007, an advocate of ‘principles based’ light touch regulation of the banks. (top right) Investment banker Hector Sants, who succeeded Tiner and tried to overhaul the organisation, but let RBS run its capital low when it was taking over ABN Amro in the autum of 2007. (Bottom left) Sir Callum McCarthy, civil servant, banker, chairman of the FSA from 2003 and keeper of bees.

Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else
by Chrystia Freeland
Published 11 Oct 2012

Canada raised its capital requirements as they were lowered in other parts of the world. “I think one of the things that happened was the great competition between New York and London pushed the two into more of a light touch in terms of regulation,” Martin recalled. “I remember talking to [the regulator] and we agreed that we were not prepared to take that approach. Light-touch regulation in an industry that was so dependent on liquidity didn’t make any sense.” One Bay Street financier summed it up more saltily: “Canadian regulators didn’t have penis envy.” With hindsight, that decision seems brilliant. At the time, though, to many it seemed, well, limp. One measure of how strongly the tide of world opinion was running against the Canucks is that the International Monetary Fund, meant to be the stern guardian of the global economy, chided Canada for not doing enough to promote securitization in its mortgage market—one of the American financial innovations that contributed to the crisis.

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Add to that ordinary greed and a society that has turned its capitalists into popular heroes and you have an economic elite primed to repeat the mistake of the Venetian merchants—to drink its own Kool-Aid (or maybe prosecco is the better metaphor) and to conflate its own self-interest with the interests of society as a whole. Low taxes, light-touch regulation, weak unions, and unlimited campaign donations are certainly in the best interests of the plutocrats, but that doesn’t mean they are the right way to maintain the economic system that created today’s super-elite. Elites don’t sabotage the system that created them on purpose. But even smart, farsighted plutocrats can be betrayed by their own short-term self-interest into undermining the foundations of their own society’s prosperity.

What's Left?: How Liberals Lost Their Way
by Nick Cohen
Published 15 Jul 2015

Buy the ebook here BY THE SUMMER of 2007, Britain was close to crashing. A few onlookers realised the danger, but Britain's political leaders were not among them. Politicians and civil servants boasted that the City's economy was booming because of their 'light-touch regulation' of workers in financial services whose number included potential frauds. Curiously, they never argued that the inner-city economy might boom if there was 'light touch regulation' of workers in the ghettos whose number included potential drug dealers. And artists produced works to match the times. On the same day that Lehman Brothers went bankrupt, the genial Damien Hirst auctioned at Sotheby's pieces he admitted had been mass produced in his studios and buyers still gave him £100 million.

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

Long on the Labour right – he had started out as an advisor to Anthony Crosland and James Callaghan, before turning to journalism in 1979 – the Bagehot columnist was so ‘carried away with excitement as Tony Blair threw away the baggage of Old Labour, as I had been urging’ that he ‘surreptitiously rejoined’ the party.34 As the Blair-Brown duumvirate pushed neoliberalism further than Thatcher had dared, in particular in the City – devising new ‘light-touch’ regulations, slashing capital gains from 40 to 10 per cent on long-term assets, granting the Bank of England full independence to set rates – Emmott backtracked. ‘Tiresome as third-way nonsense is to curmudgeons such as The Economist, its success as a marketing device is not in doubt.’ Downing Street spin-doctors, ‘reconciling Britain to the Thatcher revolution, consolidating it, extending it’ meant ‘voters are happy, leading-thinkers are happy, everyone except the bewildered souls who believed in Old Labour are happy.’35 Never a favourite, always shown grinning dementedly for no reason, in 2001 and 2005 Blair got the Economist’s blessing: superimposing his smiling face onto Thatcher’s head – lipstick, earrings, coiffure – it advised readers, ‘Vote conservative’.36 Pushing Buttons Abroad Each tartly-worded leader and irreverent cover raised the circulation of the Economist, as well as its profile as intellectual maverick – above all in the US, where social issues became an index of its liberalism as such.

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The loosening of what restrictions there were on finance capital came gradually in the post-war years, through the pooling of offshore Eurodollars in London from the late 1950s, then in a rush with the collapse of Bretton Woods in the early 1970s and finally with a Big Bang in 1986 – hailed by Pennant-Rea as a shot in the arm for financial services, before he left for the Bank of England in 1993. Under Emmott and Micklethwait, the neoliberal drive for the insulation, light regulation, privatization and globalization of markets, reached its apogee – culminating in the crash of 2008, and the editors’ breathtakingly unrepentant response to it. A long way from the wishful images of popular parlance in Europe or philosophical discourse in America, this is the record of actually existing liberalism, at its most powerful.

The Tyranny of Nostalgia: Half a Century of British Economic Decline
by Russell Jones
Published 15 Jan 2023

However one looks at it, the global macroeconomic configuration – and particularly that in the US – was unsustainable. And as the American economist Herbert Stein famously observed: ‘Things that can’t go on for ever, don’t.’7 The only questions were when the inevitable correction would come about, and how. free-for-all The pervasive light-touch regulation of the pre-crisis period had its roots in two theoretical propositions. The first was that well-designed monetary policy is all that is needed to encourage financial stability. This meant monetary policy based on the new classical–new Keynesian synthesis, focused predominantly on low inflation and delivered by an independent central bank.

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While admittedly hard to measure, the level of public sector productivity was estimated to be just 3.7% higher in 2019 than it had been when Tony Blair became prime minister in 1997, which amounts to an average annual rate of increase of less than 0.25%. Furthermore, policymakers seemed to put too much store both in the light-touch regulation of UK labour and product markets and in tax cuts for the corporate sector. As has been noted, the UK had been a modestly regulated economy in these respects for a generation by the mid 2010s. Corporation tax, meanwhile, was cut from 30% in 2007 to 20% in 2020 – well below the G-7 and OECD averages – and yet it appeared to have had little discernible impact on the pace of business investment spending or on overall economic performance.

Unelected Power: The Quest for Legitimacy in Central Banking and the Regulatory State
by Paul Tucker
Published 21 Apr 2018

The objectives of the old FSA, which was also the prudential supervisor of banks, were market confidence, public awareness, consumer protection, and reducing financial crime. It also had to have regard to the competitiveness of UK financial services, which some believe gave politicians a lever in pressing for “light touch” regulation. Safety and soundness were not mentioned. 19 While deputy governor, I was ex officio a nonexecutive director of the FSA. The board was not involved in individual cases. 20 On congressional influence over SEC policy through incremental legislation, see Weingast, “Congressional-Bureaucratic System,” which reviews how liberalization of equity-market trading platforms depended on Congress.

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The UK’s new Prudential Regulation Authority has around thirty such factors to weigh somehow, the Financial Conduct Authority around fifty.24 Absent case law, agency leaders and legal counsel have to decide, implicitly or explicitly, what this amounts to: are they subordinate objectives, nonbinding constraints, or what? Whatever turns out to be the correct legal construction, they can certainly make a difference.25 The old FSA was required by its mid-1990s statute to have regard to the competitiveness of the financial services industry, a harbinger for the “light-touch” regulation that was part of London’s contribution to the financial crisis a decade later. As David Currie, drawing on extensive experience of chairing UK-IA oversight boards, has commented:26 The tradition in UK regulation has been to postulate a range of duties (and ‘have regard to’s) and to place on the regulator the onus of balancing those duties.

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Regulatory Mandates That Independent Central Banks Should Not Be Given Further, following the Principles and our definition of monetary-system stability, central banks should not be responsible for competition policy, which would make them more powerful than they need to be, and therefore too powerful; the structure of the financial services industry, as it involves high-level trade-offs between efficiency and resilience; its external competitiveness, as that invites political pressure to relax resilience standards and adopt “light-touch regulation”; sponsoring the industry’s interests in government or in society, which would be liable to lead to capture by sectoral interests and so to lower resilience than desired; consumer protection, which would confuse the public about the nature of a broader “stability” mandate, as well as taking most central bankers beyond their comfort zone and vocational drive; and market regulation, as it unavoidably incorporates consumer protection and, separately, would make central banks too powerful (the Fed plus SEC!).

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

First, though, we had to deal with AIG, which was even bigger and more dangerous than Lehman, and was threatening to burn down what was left of the system. AIG: FREE MARKET DAY Like Lehman, the global insurer AIG had fallen through the cracks of our broken regulatory system. Its insurance subsidiaries were regulated at the state level, while the Office of Thrift Supervision, the light-touch regulator of choice for institutions like Countrywide, IndyMac, and WaMu, purported to oversee its holding company. None of us had visibility into AIG, and none of us had paid close attention to the firm until it started to hemorrhage late that summer. But the more we learned about the company, the more we realized that letting it follow Lehman’s path would be a recipe for a depression.

The Bankers' New Clothes: What's Wrong With Banking and What to Do About It
by Anat Admati and Martin Hellwig
Published 15 Feb 2013

Such transparency was sorely missing in the run-up to the financial crisis.51 A 2004 ruling of the SEC allowed U.S. investment banks to determine their regulatory capital on the basis of their own risk assessments, and this enabled Lehman Brothers and other investment banks to become highly indebted and vulnerable.52 The United Kingdom also insti-tuted so-called light-touch regulation in order to expand its role as a major financial center.53 An important factor in explaining the financial crisis of 2007–2009 is the failure of regulators and supervisors in the United States and in Europe to set and enforce proper rules to prevent the reckless behavior of bankers.54 Supervisors in the United States and Europe allowed banks to circumvent capital requirements by creating various entities that did not appear on the banks’ balance sheets.

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See bank lending; bank loans; borrowing Lessig, Lawrence, 319n9, 320n22, 324n46, 325n49, 326n56, 326n60, 331n25, 332n35 Leuz, Christian, 258n26 “level playing field” rhetoric, 10, 194–99 leverage: of corporations, 27; created by borrowing, 17, 19, 107–8; effects on shareholders, 108; excessive, in financial crisis of 2007–2009, 232n17; in mortgages, 19, 21–22, 107–8, 118–19; regulation of (See leverage ratio); and required return on equity, 108; risk-weighting approach and, 184–85 leveraged buyouts (LBOs), 234n26 leverage ratio: in Basel III, 177–78, 183, 235n28, 308n42; definition of, 308n42; resistance to, 183, 312n58, 325n47 Levin, Carl, 231n13, 259n52 Levitin, Adam J., 309n50, 335n46 Levitt, Arthur, 204 Lewis, Michael, 60, 240n4, 253n38, 253n42, 259n29, 259n34, 261n51, 262n53, 282n14, 285n37, 290n27, 297n33, 300n49, 320n17, 329n6, 329n8, 331n20 liabilities, in balance sheets, 48, 48f, 248n4 liability: for covered bonds versus mortgage-backed securities, 254n48; extended, 31; limited, 25–26, 30–31, 240n10; unlimited, 30–31, 153 LIBOR (London interbank offered rate): definition of, 208, 256n13, 328n2; in financial crisis of 2007–2009, 256n13; scandal involving manipulation of, 208, 209, 215, 276n5, 328n2, 328n4 light-touch regulation, in UK, 204 Liikanen Commission, 90, 270nn34–35 limited-liability businesses, 25–26; banks as, 30–31; versus extended liability, 31; forms of, 240n10; rise of, 30; versus unlimited liability, 30–31. See also corporation(s) Lincoln Savings and Loan Association, 252n35 liquid assets, definition of, 295n24; in liquidity regulations, 92–93, 272nn44–45 liquidation(s): versus bankruptcy, 37; as normal in market economies, 38 liquidity: central banks’ role in, 39–40, 63, 179, 256n13; creation of, by banks, 154, 295n23; definition of, 250n17; “need” for, 153–58; in plumbing metaphor, 210; transformation of, by banks, 155–56, 158–59, 250n17, 296n31 liquidity coverage ratio, 92–93 liquidity problems (illiquidity), 38–40; approaches to controlling, 92–94; in bank runs, 52, 93; capital regulation’s impact on, 95; central banks’ support in, 39–40, 63, 179, 256n13; contagion mechanisms in, 63; definition of, 38; in financial crisis of 2007-2009, 40, 209–12, 238n46, 246n15; guarantees and, 93–94; in maturity transformation, 159; money creation and, 158; in money market fund runs, 63; of mortgage-related securities, 156–57, 297n34; narrative of, 209–12, 330nn12–13, 330n18; pure (temporary), 32, 38–39; reserve requirements and, 92, 272n41, 272n43; safety nets for, 39–40, 93, 210–11; versus solvency problems, dangers of, 93, 152 liquidity transformation, 155–56, 158–59, 250n17, 296n31 living wills, for financial institutions, 77, 263n65 loans.

The Euro: How a Common Currency Threatens the Future of Europe
by Joseph E. Stiglitz and Alex Hyde-White
Published 24 Oct 2016

Financial firms threatened that they would leave unless regulations were reduced.14 This regulatory race to the bottom would have existed within Europe even without the euro. Indeed, the winners in the pre-2008 contest were Iceland and the UK, neither of which belong to the eurozone (and Iceland doesn’t even belong to the EU). The UK prided itself on its system of light regulation, which meant essentially self-regulation, an oxymoron. The bank managers put their own interests over those of shareholders and bondholders, and the banks as institutions put their interests over those of their clients. The UK’s Barclays bank confessed to having manipulated the market for LIBOR, the London interbank lending rate upon which some $350 trillion of derivatives and other financial products are based.15 Still, the eurozone was designed with the potential to make all of this worse.

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Somehow, the banks’ money makes their arguments seem more cogent, in spite of the historical record showing the adverse consequences of underregulated banks—up to and including the 2008 crisis.18 This political influence on regulatory reform in Europe and the United States has meant that the reforms have almost surely not been sufficient to prevent another crisis; in certain areas, such as the shadow banking system, there has been little progress, and in other areas, such as derivatives, what progress there has been has been significantly reversed, at least in the United States.19 Fixing the problem The threat of a regulatory race to the bottom is why there has to be strong regulation at the European level. But under Europe’s current governance structure, this will prove even more difficult than getting good regulation within a country. The UK has been vigorously defending its system of light regulation. It may have cost its taxpayers hundreds of billions of pounds, yet today policymakers focus on the potential loss of profits, taxes, and jobs from downsizing (or rightsizing) the financial sector. The losses of a few years ago seem ancient history, not to be mentioned in any polite conversation of regulatory reform.

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Africa, 10, 95, 381 globalization and, 51 aggregate demand, 98, 107, 111, 118–19, 189, 367 deflation and, 290 lowered by inequality, 212 surpluses and, 187, 253 tech bubble slump in, 250 as weakened by imports, 111 aggregate supply, 99, 104, 189 agricultural subsidies, 45, 197 agriculture, 89, 224, 346 airlines, 259 Akerlof, George, 132 American Express, 287 Apple, 81, 376 Argentina, 18, 100, 110, 117, 371 bailout of, 113 debt restructuring by, 205–6, 266, 267 Arrow-Debreu competitive equilibrium theory, 303 Asia, globalization and, 51 asset price bubbles, 172 Athens airport, 191, 367–68 austerity, xvi–xvii, 9, 18–19, 20, 21, 28–29, 54, 69–70, 95, 96, 98, 97, 103, 106, 140, 150, 178, 185–88, 206, 211, 235, 316–17 academics for, 208–13 debt restructuring and, 203–6 design of programs of, 188–90 Germany’s push for, 186, 232 government investment curtailed by, 217 opposition to, 59–62, 69–70, 207–8, 315, 332, 392 private, 126–27, 241–42 reform of, 263–65 Austria, 331, 343 automatic destabilizers, see built-in destabilizers automatic stabilizers, 142, 244, 247–48, 357 flexible exchange rate as, 248 bail-ins, 113 bailouts, 91–92, 111, 112–13, 201–3, 354, 362–63, 370 of banks, 127–28, 196, 279, 362–63 of East Asia, 202 of Latin America, 202 of Mexico, 202 of Portugal, 178–79 of Spanish banks, 179, 199–200, 206 see also programs balanced-budget multiplier, 188–90, 265 Balkans, 320 bank capital, 284–85 banking system, in US, 91 banking union, 129–30, 241–42, 248, 263 and common regulations, 241 and deposit insurance, 241, 242, 246 Bank of England, 359 inflation target of, 157 Bank of Italy, 158 bankruptcies, 77, 94, 102, 104, 346, 390 super–chapter 11 for, 259–60 banks, 198–201 bailouts of, 127–28, 196, 279, 362–63 capital requirements of, 152, 249 closing of, 378 credit creation by, 280–82 development, 137–38 evolution of, 386–87 forbearance of regulations on, 130–31 Greek, 200–201, 228–29, 231, 270, 276, 367, 368 lending contracted by, 126–27, 246, 282–84 money supply increased by, 277 restructuring of, 113 small, 171 in Spain, 23, 186, 199, 200, 242, 270, 354 too-big-to-fail, 360 bank transfers, 49 Barclays, 131 behavioral economics, 335 Belgium, 6, 331, 343 belief systems, 53 Berlin Wall, 6 Bernanke, Ben, 251, 351, 363, 381 bilateral investment agreement, 369 Bill of Rights, 319 bimetallic standard, 275, 277 Blanchard, Olivier, 211 bonds, 4, 114, 150, 363 confidence in, 127, 145 Draghi’s promise to support, 127, 200, 201 GDP-indexed, 267 inflation and, 161 long-term, 94 restructuring of, 159 bonds, corporate, ECB’s purchase of, 141 borrowing, excessive, 243 Brazil, 138, 370 bailout of, 113 bread, 218, 230 Bretton Woods monetary system, 32, 325 Brunnermeier, Markus K., 361 Bryan, William Jennings, xii bubbles, 249, 381 credit, 122–123 real estate, see real estate bubble stability threatened by, 264 stock market, 200–201 tech, 250 tools for controlling, 250 budget, capital, 245 Buffett, Warren, 287, 290 built-in destabilizers, 96, 142, 188, 244, 248, 357–58 common regulatory framework as, 241 Bulgaria, 46, 331 Bundesbank, 42 Bush, George W., 266 Camdessus, Michel, 314 campaign contributions, 195, 355 Canada, 96 early 1990s expansion of, 209 in NAFTA, xiv railroad privatization in, 55 tax system in, 191 US’s free trade with, 45–46, 47 capital, 76–77 bank, 284–85 human, 78, 137 return to, 388 societal vs. physical, 77–78 tax on, 356 unemployment increased by, 264 capital adequacy standards, 152 capital budget, 245 capital controls, 389–90 capital flight, 126–34, 217, 354, 359 austerity and, 140 and labor flows, 135 capital flows, 14, 15, 25, 26, 27–28, 40, 116, 125, 128, 131, 351 economic volatility exacerbated by, 28, 274 and foreign ownership, 195 and technology, 139 capital inflows, 110–11 capitalism: crises in, xviii, 148–49 inclusive, 317 capital requirements, 152, 249, 378 Caprio, Gerry, 387 capture, 158–60 carbon price, 230, 260, 265, 368 cash, 39 cash flow, 194 Catalonia, xi CDU party, 314 central banks, 59, 354, 387–88 balance sheets of, 386 capture of, 158–59 credit auctions by, 282–84 credit creation by, 277–78 expertise of, 363 independence of, 157–63 inequality created by, 154 inflation and, 153, 166–67 as lender of last resort, 85, 362 as political institutions, 160–62 regulations and, 153 stability and, 8 unemployment and, 8, 94, 97, 106, 147, 153 CEO compensation, 383 Chapter 11, 259–60, 291 childhood poverty, 72 Chile, 55, 152–53 China, 81, 98, 164, 319, 352 exchange-rate policy of, 251, 254, 350–51 global integration of, 49–50 low prices of, 251 rise of, 75 savings in, 257 trade surplus of, 118, 121, 350–52 wages controlled in, 254 as world’s largest economy, 318, 327 chits, 287–88, 290, 299–300, 387, 388–389 Citigroup, 355 climate change, 229–30, 251, 282, 319 Clinton, Bill, xiv, xv, 187 closing hours, 220 cloves, 230 cognitive capture, 159 Cohesion Fund, 243 Cold War, 6 collateral, 364 collective action, 41–44, 51–52 and inequality, 338 and stabilization, 246 collective bargaining, 221 collective goods, 40 Common Agricultural Policy, 338 common regulatory framework, 241 communism, 10 Community Reinvestment Act (CRA), 360, 382 comparative advantage, 12, 171 competition, 12 competitive devaluation, 104–6, 254 compromise, 22–23 confidence, 95, 200–201, 384 in banks, 127 in bonds, 145 and structural reforms, 232 and 2008 crisis, 280 confirmation bias, 309, 335 Congress, US, 319, 355 connected lending, 280 connectedness, 68–69 Connecticut, GDP of, 92 Constitutional Court, Greek, 198 consumption, 94, 278 consumption tax, 193–94 contract enforcement, 24 convergence, 13, 92–93, 124, 125, 139, 254, 300–301 convergence criteria, 15, 87, 89, 96–97, 99, 123, 244 copper mines, 55 corporate income tax, 189–90, 227 corporate taxes, 189–90, 227, 251 corporations, 323 regulations opposed by, xvi and shutdown of Greek banks, 229 corruption, 74, 112 privatization and, 194–95 Costa, António, 332 Council of Economic Advisers, 358 Council of State, Greek, 198 countercyclical fiscal policy, 244 counterfactuals, 80 Countrywide Financial, 91 credit, 276–85 “divorce”’s effect on, 278–79 excessive, 250, 274 credit auctions, 282–84 credit bubbles, 122–123 credit cards, 39, 49, 153 credit creation, 248–50, 277–78, 386 by banks, 280–82 domestic control over, 279–82 regulation of, 277–78 credit default swaps (CDSs), 159–60 crisis policy reforms, 262–67 austerity to growth, 263–65 debt restructuring and, 265–67 Croatia, 46, 331, 338 currency crises, 349 currency pegs, xii current account, 333–34 current account deficits, 19, 88, 108, 110, 120–121, 221, 294 and exit from euro, 273, 285–89 see also trade deficit Cyprus, 16, 30, 140, 177, 331, 386 capital controls in, 390 debt-to-GDP ratio of, 231 “haircut” of, 350, 367 Czech Republic, 46, 331 debit cards, 39, 49 debtors’ prison, 204 debt restructuring, 201, 203–6, 265–67, 290–92, 372, 390 of private debt, 291 debts, xx, 15, 93, 96, 183 corporate, 93–94 crisis in, 110–18 in deflation, xii and exit from eurozone, 273 with foreign currency, 115–18 household, 93–94 increase in, 18 inherited, 134 limits of, 42, 87, 122, 141, 346, 367 monetization of, 42 mutualization of, 242–43, 263 place-based, 134, 242 reprofiling of, 32 restructuring of, 259 debt-to-GDP ratio, 202, 210–11, 231, 266, 324 Declaration of Independence, 319 defaults, 102, 241, 338, 348 and debt mutualization, 243 deficit fetishism, 96 deficits, fiscal, xx, 15, 20, 93, 96, 106, 107–8, 122, 182, 384 and balanced-budget multiplier, 188–90, 265 constitutional amendment on, 339 and exit from euro, 273, 289–90 in Greece, 16, 186, 215, 233, 285–86, 289 limit of, 42, 87, 94–95, 122, 138, 141, 186, 243, 244, 265, 346, 367 primary, 188 problems financing, 110–12 structural, 245 deficits, trade, see trade deficits deflation, xii, 147, 148, 151, 166, 169, 277, 290 Delors, Jacques, 7, 332 democracy, lack of faith in, 312–14 Democracy in America (Tocqueville), xiii democratic deficit, 26–27, 35, 57–62, 145 democratic participation, xix Denmark, 45, 307, 313, 331 euro referendum of, 58 deposit insurance, 31, 44, 129, 199, 301, 354–55, 386–87 common in eurozone, 241, 242, 246, 248 derivatives, 131, 355 Deutsche Bank, 283, 355 devaluation, 98, 104–6, 254, 344 see also internal devaluation developing countries, and Washington Consensus, xvi discretion, 262–63 discriminatory lending practices, 283 disintermediation, 258 divergence, 15, 123, 124–44, 255–56, 300, 321 in absence of crisis, 128–31 capital flight and, 126–34 crisis policies’ exacerbation of, 140–43 free mobility of labor and, 134–36, 142–44, 242 in public investment, 136–38 reforms to prevent, 243 single-market principle and, 125–26 in technology, 138–39 in wealth, 139–40 see also capital flows; labor movement diversification, of production, 47 Dodd-Frank Wall Street Reform and Consumer Protection Act, 355 dollar peg, 50 downsizing, 133 Draghi, Mario, 127, 145, 156, 158, 165, 269, 363 bond market supported by, 127, 200, 201 Drago, Luis María, 371 drug prices, 219 Duisenberg, Willem Frederik “Wim,” 251 Dynamic Stochastic Equilibrium model, 331 East Asia, 18, 25, 95, 102–3, 112, 123, 202, 364, 381 convergence in, 138 Eastern Europe, 10 Economic Adjustment Programme, 178 economic distortions, 191 economic growth, xii, 34 confidence and, 232 in Europe, 63–64, 69, 73–74, 74, 75, 163 lowered by inequality, 212–13 reform of, 263–65 and structural reforms, 232–35 economic integration, xiv–xx, 23, 39–50 euro and, 46–47 political integration vs., 51–57 single currency and, 45–46 economic rents, 226, 280 economics, politics and, 308–18 economic security, 68 economies of scale, 12, 39, 55, 138 economists, poor forecasting by, 307 education, 20, 76, 344 investment in, 40, 69, 137, 186, 211, 217, 251, 255, 300 electricity, 217 electronic currency, 298–99, 389 electronics payment mechanism, 274–76, 283–84 emigration, 4, 68–69 see also migration employment: central banks and, 8, 94, 97 structural reforms and, 257–60 see also unemployment Employment Act (1946), 148 energy subsidies, 197 Enlightenment, 3, 318–19 environment, 41, 257, 260, 323 equality, 225–26 equilibrium, xviii–xix Erasmus program, 45 Estonia, 90, 331, 346 euro, xiv, 325 adjustments impeded by, 13–14 case for, 35–39 creation of, xii, 5–6, 7, 10, 333 creation of institutions required by, 10–11 divergence and, see divergence divorce of, 272–95, 307 economic integration and, 46–47, 268 as entailing fixed exchange rate, 8, 42–43, 46–47, 86–87, 92, 93, 94, 102, 105, 143, 193, 215–16, 240, 244, 249, 252, 254, 286, 297 as entailing single interest rate, 8, 85–88, 92, 93, 94, 105, 129, 152, 240, 244, 249 and European identification, 38–39 financial instability caused by, 131–32 growth promised by, 235 growth slowed by, 73 hopes for, 34 inequality increased by, xviii interest rates lowered by, 235 internal devaluation of, see internal devaluation literature on, 327–28 as means to end, xix peace and, 38 proponents of, 13 referenda on, 58, 339–40 reforms needed for, xii–xiii, 28–31 risk of, 49–50 weakness of, 224 see also flexible euro Eurobond, 356 euro crisis, xiii, 3, 4, 9 catastrophic consequences of, 11–12 euro-euphoria, 116–17 Europe, 151 free trade area in, 44–45 growth rates in, 63–64, 69, 73–74, 74, 75, 163 military conflicts in, 196 social models of, 21 European Central Bank (ECB), 7, 17, 80, 112–13, 117, 144, 145–73, 274, 313, 362, 368, 380 capture of, 158–59 confidence in, 200–201 corporate bonds bought by, 141 creation of, 8, 85 democratic deficit and, 26, 27 excessive expansion controlled by, 250 flexibility of, 269 funds to Greece cut off by, 59 German challenges to, 117, 164 governance and, 157–63 inequality created by, 154–55 inflation controlled by, 8, 25, 97, 106, 115, 145, 146–50, 151, 163, 165, 169–70, 172, 250, 256, 266 interest rates set by, 85–86, 152, 249, 302, 348 Ireland forced to socialize losses by, 134, 156, 165 new mandate needed by, 256 as political institution, 160–62 political nature of, 153–56 quantitative easing opposed by, 151 quantitative easing undertaken by, 164, 165–66, 170, 171 regulations by, 249, 250 unemployment and, 163 as unrepresentative, 163 European Commission, 17, 58, 161, 313, 332 European Court of Human Rights, 45 European Economic Community (EEC), 6 European Exchange Rate Mechanism (ERM), 30, 335 European Exchange Rate Mechanism II (ERM II), 336 European Free Trade Association, 44 European Free Trade Association Court, 44 European Investment Bank (EIB), 137, 247, 255, 301 European Regional Development Fund, 243 European Stability Mechanism, 23, 246, 357 European Union: budget of, 8, 45, 91 creation of, 4 debt and deficit limits in, 87–88 democratic deficit in, 26–27 economic growth in, 215 GDP of, xiii and lower rates of war, 196 migration in, 90 proposed exit of UK from, 4 stereotypes in, 12 subsidiarity in, 8, 41–42, 263 taxes in, 8, 261 Euro Summit Statement, 373 eurozone: austerity in, see austerity banking union in, see banking union counterfactual in, 235–36 double-dip recessions in, 234–35 Draghi’s speech and, 145 economic integration and, xiv–xx, 23, 39–50, 51–57 as flawed at birth, 7–9 framework for stability of, 244–52 German departure from, 32, 292–93 Greece’s possible exit from, 124 hours worked in, 71–72 lack of fiscal policy in, 152 and move to political integration, xvi, 34, 35, 51–57 Mundell’s work on dangers of, 87 policies of, 15–17 possible breakup of, 29–30 privatization avoided in, 194 saving, 323–26 stagnant GDP in, 12, 65–68, 66, 67 structure of, 8–9 surpluses in, 120–22 theory of, 95–97 unemployment in, 71, 135, 163, 177–78, 181, 331 working-age population of, 70 eurozone, proposed structural reforms for, 239–71 common financial system, see banking union excessive fiscal responsibility, 163 exchange-rate risks, 13, 47, 48, 49–50, 125, 235 exchange rates, 80, 85, 288, 300, 338, 382, 389 of China, 251, 254, 350–51 and competitive devaluation, 105–6 after departure of northern countries, 292–93 of euro, 8, 42–43, 46–47, 86–87, 92, 93, 94, 102, 105, 215–16, 240, 244, 249, 252, 254, 286, 297 flexible, 50, 248, 349 and full employment, 94 of Germany, 254–55, 351 gold and, 344–45 imports and, 86 interest rates and, 86 quantitative easing’s lowering of, 151 real, 105–6 and single currencies, 8, 42–43, 46–47, 86–87, 92, 93, 94, 97–98 stabilizing, 299–301 and trade deficits, 107, 118 expansionary contractions, 95–96, 208–9 exports, 86, 88, 97–99, 98 disappointing performance of, 103–5 external imbalances, 97–98, 101, 109 externalities, 42–43, 121, 153, 301–2 surpluses as, 253 extremism, xx, 4 Fannie Mae, 91 farmers, US, in deflation, xii Federal Deposit Insurance Corporation (FDIC), 91 Federal Reserve, US, 349 alleged independence of, 157 interest rates lowered by, 150 mandate of, 8, 147, 172 money pumped into economy by, 278 quantitative easing used by, 151, 170 reform of, 146 fiat currency, 148, 275 and taxes, 284 financial markets: lobbyists from, 132 reform of, 214, 228–29 short-sighted, 112–13 financial systems: necessity of, xix real economy of, 149 reform of, 257–58 regulations needed by, xix financial transaction system, 275–76 Finland, 16, 81, 122, 126, 292, 296, 331, 343 growth in, 296–97 growth rate of, 75, 76, 234–35 fire departments, 41 firms, 138, 186–87, 245, 248 fiscal balance: and cutting spending, 196–98 tax revenue and, 190–96 Fiscal Compact, 141, 357 fiscal consolidation, 310 fiscal deficits, see deficits, fiscal fiscal policy, 148, 245, 264 in center of macro-stabilization, 251 countercyclical, 244 in EU, 8 expansionary, 254–55 stabilization of, 250–52 fiscal prudence, 15 fiscal responsibility, 163 flexibility, 262–63, 269 flexible euro, 30–31, 272, 296–305, 307 cooperation needed for, 304–5 food prices, 169 forbearance, 130–31 forecasts, 307 foreclosure proposal, 180 foreign ownership, privatization and, 195 forestry, 81 France, 6, 14, 16, 114, 120, 141, 181–82, 331, 339–40, 343 banks of, 202, 203, 231, 373 corporate income tax in, 189–90 euro creation regretted in, 340 European Constitution referendum of, 58 extreme right in, xi growth in, 247 Freddie Mac, 91 Freefall (Stiglitz), 264, 335 free mobility of labor, xiv, 26, 40, 125, 134–36, 142–44, 242 Friedman, Milton, 151, 152–53, 167, 339 full employment, 94–97, 379 G-20, 121 gas: import of, 230 from Russia, 37, 81, 93 Gates Foundation, 276 GDP-indexed bonds, 267 German bonds, 114, 323 German Council of Economic Experts, 179, 365 Germany, xxi, 14, 30, 65, 108, 114, 141, 181–82, 207, 220, 286, 307, 331, 343, 346, 374 austerity pushed by, 186, 232 banks of, 202, 203, 231–32, 373 costs to taxpayers of, 184 as creditor, 140, 187, 267 debt collection by, 117 debt in, 105 and debt restructuring, 205, 311 in departure from eurozone, 32, 292–93 as dependent on Russian gas, 37 desire to leave eurozone, 314 ECB criticized by, 164 EU economic practices controlled by, 17 euro creation regretted in, 340 exchange rate of, 254–55, 351 failure of, 13, 78–79 flexible exchange of, 304 GDP of, xviii, 92 in Great Depression, 187 growing poverty in, 79 growth of, 78, 106, 247 hours worked per worker in, 72 inequality in, 79, 333 inflation in, 42, 338, 358 internal solidarity of, 334 lack of alternative to euro seen by, 11 migrants to, 320–21, 334–35, 393 minimum wage in, 42, 120, 254 neoliberalism in, 10 and place-based debt, 136 productivity in, 71 programs designed by, 53, 60, 61, 202, 336, 338 reparations paid by, 187 reunification of, 6 rules as important to, 57, 241–42, 262 share of global employment in, 224 shrinking working-age population of, 70, 78–79 and Stability and Growth Pact, 245 and structural reforms, 19–20 “there is no alternative” and, 306, 311–12 trade surplus of, 117, 118–19, 120, 139, 253, 293, 299, 350–52, 381–82, 391 “transfer union” rejected by, 22 US loans to, 187 victims blamed by, 9, 15–17, 177–78, 309 wages constrained by, 41, 42–43 wages lowered in, 105, 333 global financial crisis, xi, xiii–xiv, 3, 12, 17, 24, 67, 73, 75, 114, 124, 146, 148, 274, 364, 387 and central bank independence, 157–58 and confidence, 280 and cost of failure of financial institutions, 131 lessons of, 249 monetary policy in, 151 and need for structural reform, 214 originating in US, 65, 68, 79–80, 112, 128, 296, 302 globalization, 51, 321–23 and diminishing share of employment in advanced countries, 224 economic vs. political, xvii failures of, xvii Globalization and Its Discontents (Stig-litz), 234, 335, 369 global savings glut, 257 global secular stagnation, 120 global warming, 229–30, 251, 282, 319 gold, 257, 275, 277, 345 Goldman Sachs, 158, 366 gold standard, 148, 291, 347, 358 in Great Depression, xii, 100 goods: free movement of, 40, 143, 260–61 nontraded, 102, 103, 169, 213, 217, 359 traded, 102, 103, 216 Gordon, Robert, 251 governance, 157–63, 258–59 government spending, trade deficits and, 107–8 gravity principle, 124, 127–28 Great Depression, 42, 67, 105, 148, 149, 168, 313 Friedman on causes of, 151 gold standard in, xii, 100 Great Malaise, 264 Greece, 14, 30, 41, 64, 81, 100, 117, 123, 142, 160, 177, 265–66, 278, 307, 331, 343, 366, 367–68, 374–75, 386 austerity opposed by, 59, 60–62, 69–70, 207–8, 392 balance of payments, 219 banks in, 200–201, 228–29, 231, 270, 276, 367, 368 blaming of, 16, 17 bread in, 218, 230 capital controls in, 390 consumption tax and, 193–94 counterfactual scenario of, 80 current account surplus of, 287–88 and debt restructuring, 205–7 debt-to-GDP ratio of, 231 debt write-offs in, 291 decline in labor costs in, 56, 103 ECB’s cutting of funds to, 59 economic growth in, 215, 247 emigration from, 68–69 fiscal deficits in, 16, 186, 215, 233, 285–86, 289 GDP of, xviii, 183, 309 hours worked per worker in, 72 inequality in, 72 inherited debt in, 134 lack of faith in democracy in, 312–13 living standards in, 216 loans in, 127 loans to, 310 migrants and, 320–21 milk in, 218, 223, 230 new currency in, 291, 300 oligarchs in, 16, 227 output per working-age person in, 70–71 past downturns in, 235–36 pensions in, 16, 78, 188, 197–98, 226 pharmacies in, 218–20 population decline in, 69, 89 possible exit from eurozone of, 124, 197, 273, 274, 275 poverty in, 226, 261, 376 primary surplus of, 187–88, 312 privatization in, 55, 195–96 productivity in, 71, 342 programs imposed on, xv, 21, 27, 60–62, 140, 155–56, 179–80, 181, 182–83, 184–85, 187–88, 190–93, 195–96, 197–98, 202–3, 205, 206, 214–16, 218–23, 225–28, 229, 230, 231, 233–34, 273, 278, 308, 309–11, 312, 315–16, 336, 338 renewable energy in, 193, 229 social capital destroyed in, 78 sovereign spread of, 200 spread in, 332 and structural reforms, 20, 70, 188, 191 tax revenue in, 16, 142, 192, 227, 367–368 tools lacking for recovery of, 246 tourism in, 192, 286 trade deficits in, 81, 194, 216–17, 222, 285–86 unemployment in, xi, 71, 236, 267, 332, 338, 342 urgency in, 214–15 victim-blaming of, 309–11 wages in, 216–17 youth unemployment in, xi, 332 Greek bonds, 116, 126 interest rates on, 4, 114, 181–82, 201–2, 323 restructuring of, 206–7 green investments, 260 Greenspan, Alan, 251, 359, 363 Grexit, see Greece, possible exit from eurozone of grocery stores, 219 gross domestic product (GDP), xvii decline in, 3 measurement of, 341 Growth and Stability Pact, 87 hedge funds, 282, 363 highways, 41 Hitler, Adolf, 338, 358 Hochtief, 367–68 Hoover, Herbert, 18, 95 human capital, 78, 137 human rights, 44–45, 319 Hungary, 46, 331, 338 hysteresis, 270 Iceland, 44, 111, 307, 354–55 banks in, 91 capital controls in, 390 ideology, 308–9, 315–18 imports, 86, 88, 97–99, 98, 107 incentives, 158–59 inclusive capitalism, 317 income, unemployment and, 77 income tax, 45 Independent Commission for the Reform of International Corporate Taxation, 376–377 Indonesia, 113, 230–31, 314, 350, 364, 378 industrial policies, 138–39, 301 and restructuring, 217, 221, 223–25 Industrial Revolution, 3, 224 industry, 89 inequality, 45, 72–73, 333 aggregate demand lowered by, 212 created by central banks, 154 ECB’s creation of, 154–55 economic performance affected by, xvii euro’s increasing of, xviii growth’s lowering of, 212 hurt by collective action, 338 increased by neoliberalism, xviii increase in, 64, 154–55 inequality in, 72, 212 as moral issue, xviii in Spain, 72, 212, 225–26 and tax harmonization, 260–61 and tax system, 191 inflation, 277, 290, 314, 388 in aftermath of tech bubble, 251 bonds and, 161 central banks and, 153, 166–67 consequences of fixation on, 149–50, 151 costs of, 270 and debt monetization, 42 ECB and, 8, 25, 97, 106, 115, 145, 146–50, 151, 163, 165, 169–70, 172, 255, 256, 266 and food prices, 169 in Germany, 42, 338, 358 interest rates and, 43–44 in late 1970s, 168 and natural rate hypothesis, 172–73 political decisions and, 146 inflation targeting, 157, 168–70, 364 information, 335 informational capital, 77 infrastructure, xvi–xvii, 47, 137, 186, 211, 255, 258, 265, 268, 300 inheritance tax, 368 inherited debt, 134 innovation, 138 innovation economy, 317–18 inputs, 217 instability, xix institutions, 93, 247 poorly designed, 163–64 insurance, 355–356 deposit, see deposit insurance mutual, 247 unemployment, 91, 186, 246, 247–48 integration, 322 interest rates, 43–44, 86, 282, 345, 354 in aftermath of tech bubble, 251 ECB’s determination of, 85–86, 152, 249, 302, 348 and employment, 94 euro’s lowering of, 235 Fed’s lowering of, 150 on German bonds, 114 on Greek bonds, 4, 114, 181–82 on Italian bonds, 114 in late 1970s, 168 long-term, 151, 200 negative, 316, 348–49 quantitative easing and, 151, 170 short-term, 249 single, eurozone’s entailing of, 8, 85–88, 92, 93, 94, 105, 129, 152, 240, 244, 249 on Spanish bonds, 114, 199 spread in, 332 stock prices increased by, 264 at zero lower bound, 106 intermediation, 258 internal devaluation, 98–109, 122, 126, 220, 255, 388 supply-side effects of, 99, 103–4 International Commission on the Measurement of Economic Performance and Social Progress, 79, 341 International Labor Organization, 56 International Monetary Fund (IMF), xv, xvii, 10, 17, 18, 55, 61, 65–66, 96, 111, 112–13, 115–16, 119, 154, 234, 289, 309, 316, 337, 349, 350, 370, 371, 381 and Argentine debt, 206 conditions of, 201 creation of, 105 danger of high taxation warnings of, 190 debt reduction pushed by, 95 and debt restructuring, 205, 311 and failure to restore credit, 201 global imbalances discussed by, 252 and Greek debts, 205, 206, 310–11 on Greek surplus, 188 and Indonesian crisis, 230–31, 364 on inequality’s lowering of growth, 212–13 Ireland’s socialization of losses opposed by, 156–57 mistakes admitted by, 262, 312 on New Mediocre, 264 Portuguese bailout of, 178–79 tax measures of, 185 investment, 76–77, 111, 189, 217, 251, 264, 278, 367 confidence and, 94 divergence in, 136–38 in education, 137, 186, 211, 217, 251, 255, 300 infrastructure in, xvi–xvii, 47, 137, 186, 211, 255, 258, 265, 268, 300 lowered by disintermediation, 258 public, 99 real estate, 199 in renewable energy, 229–30 return on, 186, 245 stimulation of, 94 in technology, 137, 138–39, 186, 211, 217, 251, 258, 265, 300 investor state dispute settlement (ISDS), 393–94 invisible hand, xviii Iraq, refugees from, 320 Iraq War, 36, 37 Ireland, 14, 16, 44, 113, 114–15, 122, 178, 234, 296, 312, 331, 339–40, 343, 362 austerity opposed in, 207 debt of, 196 emigrants from, 68–69 GDP of, 18, 231 growth in, 64, 231, 247, 340 inherited debt in, 134 losses socialized in, 134, 156–57, 165 low debt in, 88 real estate bubble in, 108, 114–15, 126 surplus in, 17, 88 taxes in, 142–43, 376 trade deficits in, 119 unemployment in, 178 irrational exuberance, 14, 114, 116–17, 149, 334, 359 ISIS, 319 Italian bonds, 114, 165, 323 Italy, 6, 14, 16, 120, 125, 331, 343 austerity opposed in, 59 GDP per capita in, 352 growth in, 247 sovereign spread of, 200 Japan, 151, 333, 342 bubble in, 359 debt of, 202 growth in, 78 quantitative easing used by, 151, 359 shrinking working-age population of, 70 Java, unemployment on, 230 jobs gap, 120 Juncker, Jean-Claude, 228 Keynes, John Maynard, 118, 120, 172, 187, 351 convergence policy suggested by, 254 Keynesian economics, 64, 95, 108, 153, 253 King, Mervyn, 390 knowledge, 137, 138–39, 337–38 Kohl, Helmut, 6–7, 337 krona, 287 labor, marginal product of, 356 labor laws, 75 labor markets, 9, 74 friction in, 336 reforms of, 214, 221 labor movement, 26, 40, 125, 134–36, 320 austerity and, 140 capital flows and, 135 see also migration labor rights, 56 Lamers, Karl, 314 Lancaster, Kelvin, 27 land tax, 191 Latin America, 10, 55, 95, 112, 202 lost decade in, 168 Latvia, 331, 346 GDP of, 92 law of diminishing returns, 40 learning by doing, 77 Lehman Brothers, 182 lender of last resort, 85, 362, 368 lending, 280, 380 discriminatory, 283 predatory, 274, 310 lending rates, 278 leverage, 102 Lichtenstein, 44 Lipsey, Richard, 27 liquidity, 201, 264, 278, 354 ECB’s expansion of, 256 lira, 14 Lithuania, 331 living standards, 68–70 loans: contraction of, 126–27, 246 nonperforming, 241 for small and medium-size businesses, 246–47 lobbyists, from financial sector, 132 location, 76 London interbank lending rate (LIBOR), 131, 355 Long-Term Refinancing Operation, 360–361 Lucas, Robert, xi Luxembourg, 6, 94, 142–43, 331, 343 as tax avoidance center, 228, 261 luxury cars, 265 Maastricht Treaty, xiii, 6, 87, 115, 146, 244, 298, 339, 340 macro-prudential regulations, 249 Malta, 331, 340 manufacturing, 89, 223–24 market failures, 48–49, 86, 148, 149, 335 rigidities, 101 tax policy’s correction of, 193 market fundamentalism, see neoliberalism market irrationality, 110, 125–26, 149 markets, limitations of, 10 Meade, James, 27 Medicaid, 91 medical care, 196 Medicare, 90, 91 Mellon, Andrew, 95 Memorandum of Agreement, 233–34 Merkel, Angela, 186 Mexico, 202, 369 bailout of, 113 in NAFTA, xiv Middle East, 321 migrant crisis, 44 migration, 26, 40, 68–69, 90, 125, 320–21, 334–35, 342, 356, 393 unemployment and, 69, 90, 135, 140 see also labor movement military power, 36–37 milk, 218, 223, 230 minimum wage, 42, 120, 254, 255, 351 mining, 257 Mississippi, GDP of, 92 Mitsotakis, Constantine, 377–78 Mitsotakis, Kyriakos, 377–78 Mitterrand, François, 6–7 monetarism, 167–68, 169, 364 monetary policy, 24, 85–86, 148, 264, 325, 345, 364 as allegedly technocratic, 146, 161–62 conservative theory of, 151, 153 in early 1980s US, 168, 210 flexibility of, 244 in global financial crisis, 151 political nature of, 146, 153–54 recent developments in theory of, 166–73 see also interest rates monetary union, see single currencies money laundering, 354 monopolists, privatization and, 194 moral hazard, 202, 203 mortgage rates, 170 mortgages, 302 multinational chains, 219 multinational development banks, 137 multinationals, 127, 223, 376 multipliers, 211–12, 248 balanced-budget, 188–90, 265 Mundell, Robert, 87 mutual insurance, 247 mutualization of debt, 242–43, 263 national development banks, 137–38 natural monopolies, 55 natural rate hypothesis, 172 negative shocks, 248 neoliberalism, xvi, 24–26, 33, 34, 98–99, 109, 257, 265, 332–33, 335, 354 on bubbles, 381 and capital flows, 28 and central bank independence, 162–63 in Germany, 10 inequality increased by, xviii low inflation desired by, 147 recent scholarship against, 24 Netherlands, 6, 44, 292, 331, 339–40, 343 European Constitution referendum of, 58 New Democracy Party, Greek, 61, 185, 377–78 New Mediocre, 264 New World, 148 New Zealand, 364 Nokia, 81, 234, 297 nonaccelerating inflation rate of unemployment (NAIRU), 379–80 nonaccelerating wage rate of unemployment (NAWRU), 379–80 nongovernmental organizations (NGOs), 276 nonperforming loans, 241 nontraded goods sector, 102, 103, 169, 213, 217, 359 North American Free Trade Agreement (NAFTA), xiv North Atlantic Treaty Organization (NATO), 196 Norway, 12, 44, 307 referendum on joining EU, 58 nuclear deterrence, 38 Obama, Barack, 319 oil, import of, 230 oil firms, 36 oil prices, 89, 168, 259, 359 oligarchs: in Greece, 16, 227 in Russia, 280 optimal currency area, 345 output, 70–71, 111 after recessions, 76 Outright Monetary Transactions program, 361 overregulate, 132 Oxfam, 72 panic of 1907, 147 Papandreou, Andreas, 366 Papandreou, George, xiv, 60–61, 184, 185, 220, 221, 226–27, 309, 312, 366, 373 reform of banks suggested by, 229 paradox of thrift, 120 peace, 34 pensions, 9, 16, 78, 177, 188, 197–98, 226, 276, 370 People’s Party, Portugal, 392 periphery, 14, 32, 171, 200, 296, 301, 318 see also specific countries peseta, 14 pharmacies, 218–20 Phishing for Phools (Akerlof and Shiller), 132 physical capital, 77–78 Pinochet, Augusto, 152–53 place-based debt, 134, 242 Pleios, George, 377 Poland, 46, 333, 339 assistance to, 243 in Iraq War, 37 police, 41 political integration, xvi, 34, 35 economic integration vs., 51–57 politics, economics and, 308–18 pollution, 260 populism, xx Portugal, 14, 16, 64, 177, 178, 331, 343, 346 austerity opposed by, 59, 207–8, 315, 332, 392 GDP of, 92 IMF bailout of, 178–79 loans in, 127 poverty in, 261 sovereign spread of, 200 Portuguese bonds, 179 POSCO, 55 pound, 287, 335, 346 poverty, 72 in Greece, 226, 261 in Portugal, 261 in Spain, 261 predatory lending, 274, 310 present discount value, 343 Price of Inequality, The (Stiglitz), 154 prices, 19, 24 adjustment of, 48, 338, 361 price stability, 161 primary deficit, 188, 389 primary surpluses, 187–88 private austerity, 126–27, 241–42 private sector involvement, 113 privatization, 55, 194–96, 369 production costs, 39, 43, 50 production function, 343 productivity, 71, 332, 348 in manufacturing, 223–24 after recessions, 76–77 programs, 17–18 Germany’s design of, 53, 60, 61, 187–88, 205, 336, 338 imposed on Greece, xv, 21, 27, 60–62, 140, 155–56, 179–80, 181, 182–83, 184–85, 187–88, 190–93, 195–96, 197–98, 202–3, 205, 206, 214–16, 218–23, 225–28, 229, 230, 231, 233–34, 273, 278, 308, 309–11, 312, 315–16, 336, 338 of Troika, 17–18, 21, 155–57, 179–80, 181, 182–83, 184–85, 187–93, 196, 202, 205, 207, 208, 214–16, 217, 218–23, 225–28, 229, 231, 233–34, 273, 278, 308, 309–11, 312, 313, 314, 315–16, 323–24, 346, 366, 379, 392 progressive automatic stabilizers, 244 progressive taxes, 248 property rights, 24 property taxes, 192–93, 227 public entities, 195 public goods, 40, 337–38 quantitative easing (QE), 151, 164, 165–66, 170–72, 264, 359, 361, 386 railroads, 55 Reagan, Ronald, 168, 209 real estate bubble, 25, 108, 109, 111, 114–15, 126, 148, 172, 250, 301, 302 cause of, 198 real estate investment, 199 real exchange rate, 105–6, 215–16 recessions, recovery from, 94–95 recovery, 76 reform, 75 theories of, 27–28 regulations, 24, 149, 152, 162, 250, 354, 355–356, 378 and Bush administration, 250–51 common, 241 corporate opposition to, xvi difficulties in, 132–33 of finance, xix forbearance on, 130–31 importance of, 152–53 macro-prudential, 249 in race to bottom, 131–34 Reinhardt, Carmen, 210 renewable energy, 193, 229–30 Republican Party, US, 319 research and development (R&D), 77, 138, 217, 251, 317–18 Ricardo, David, 40, 41 risk, 104, 153, 285 excessive, 250 risk markets, 27 Rogoff, Kenneth, 210 Romania, 46, 331, 338 Royal Bank of Scotland, 355 rules, 57, 241–42, 262, 296 Russia, 36, 264, 296 containment of, 318 economic rents in, 280 gas from, 37, 81, 93, 378 safety nets, 99, 141, 223 Samaras, Antonis, 61, 309, 377 savings, 120 global, 257 savings and loan crisis, 360 Schäuble, Wolfgang, 57, 220, 314, 317 Schengen area, 44 schools, 41, 196 Schröeder, Gerhard, 254 self-regulation, 131, 159 service sector, 224 shadow banking system, 133 shareholder capitalism, 21 Shiller, Rob, 132, 359 shipping taxes, 227, 228 short-termism, 77, 258–59 Silicon Valley, 224 silver, 275, 277 single currencies: conflicts and, 38 as entailing fixed exchange rates, 8, 42–43, 46–47, 86–87, 92, 93, 94, 97–98 external imbalances and, 97–98 and financial crises, 110–18 integration and, 45–46, 50 interest rates and, 8, 86, 87–88, 92, 93, 94 Mundell’s work on, 87 requirements for, 5, 52–53, 88–89, 92–94, 97–98 and similarities among countries, 15 trade integration vs., 393 in US, 35, 36, 88, 89–92 see also euro single-market principle, 125–26, 231 skilled workers, 134–35 skills, 77 Slovakia, 331 Slovenia, 331 small and medium-sized enterprises (SMEs), 127, 138, 171, 229 small and medium-size lending facility, 246–47, 300, 301, 382 Small Business Administration, 246 small businesses, 153 Smith, Adam, xviii, 24, 39–40, 41 social cohesion, 22 Social Democratic Party, Portugal, 392 social program, 196 Social Security, 90, 91 social solidarity, xix societal capital, 77–78 solar energy, 193, 229 solidarity fund, 373 solidarity fund for stabilization, 244, 254, 264, 301 Soros, George, 390 South Dakota, 90, 346 South Korea, 55 bailout of, 113 sovereign risk, 14, 353 sovereign spreads, 200 sovereign wealth funds, 258 Soviet Union, 10 Spain, 14, 16, 114, 177, 178, 278, 331, 335, 343 austerity opposed by, 59, 207–8, 315 bank bailout of, 179, 199–200, 206 banks in, 23, 186, 199, 200, 242, 270, 354 debt of, 196 debt-to-GDP ratio of, 231 deficits of, 109 economic growth in, 215, 231, 247 gold supply in, 277 independence movement in, xi inequality in, 72, 212, 225–26 inherited debt in, 134 labor reforms proposed for, 155 loans in, 127 low debt in, 87 poverty in, 261 real estate bubble in, 25, 108, 109, 114–15, 126, 198, 301, 302 regional independence demanded in, 307 renewable energy in, 229 sovereign spread of, 200 spread in, 332 structural reform in, 70 surplus in, 17, 88 threat of breakup of, 270 trade deficits in, 81, 119 unemployment in, 63, 161, 231, 235, 332, 338 Spanish bonds, 114, 199, 200 spending, cutting, 196–98 spread, 332 stability, 147, 172, 261, 301, 364 automatic, 244 bubble and, 264 central banks and, 8 as collective action problem, 246 solidarity fund for, 54, 244, 264 Stability and Growth Pact, 245 standard models, 211–13 state development banks, 138 steel companies, 55 stock market, 151 stock market bubble, 200–201 stock market crash (1929), 18, 95 stock options, 259, 359 structural deficit, 245 Structural Funds, 243 structural impediments, 215 structural realignment, 252–56 structural reforms, 9, 18, 19–20, 26–27, 214–36, 239–71, 307 from austerity to growth, 263–65 banking union, 241–44 and climate change, 229–30 common framework for stability, 244–52 counterproductive, 222–23 debt restructuring and, 265–67 of finance, 228–29 full employment and growth, 256–57 in Greece, 20, 70, 188, 191, 214–36 growth and, 232–35 shared prosperity and, 260–61 and structural realignment, 252–56 of trade deficits, 216–17 trauma of, 224 as trivial, 214–15, 217–20, 233 subsidiarity, 8, 41–42, 263 subsidies: agricultural, 45, 197 energy, 197 sudden stops, 111 Suharto, 314 suicide, 82, 344 Supplemental Nutrition Assistance Program (SNAP), 91 supply-side effects: in Greece, 191, 215–16 of investments, 367 surpluses, fiscal, 17, 96, 312, 379 primary, 187–88 surpluses, trade, see trade surpluses “Swabian housewife,” 186, 245 Sweden, 12, 46, 307, 313, 331, 335, 339 euro referendum of, 58 refugees into, 320 Switzerland, 44, 307 Syria, 321, 342 Syriza party, 309, 311, 312–13, 315, 377 Taiwan, 55 tariffs, 40 tax avoiders, 74, 142–43, 227–28, 261 taxes, 142, 290, 315 in Canada, 191 on capital, 356 on carbon, 230, 260, 265, 368 consumption, 193–94 corporate, 189–90, 227, 251 cross-border, 319, 384 and distortions, 191 in EU, 8, 261 and fiat currency, 284 and free mobility of goods and capital, 260–61 in Greece, 16, 142, 192, 193–94, 227, 367–68 ideal system for, 191 IMF’s warning about high, 190 income, 45 increase in, 190–94 inequality and, 191 inheritance, 368 land, 191 on luxury cars, 265 progressive, 248 property, 192–93, 227 Reagan cuts to, 168, 210 shipping, 227, 228 as stimulative, 368 on trade surpluses, 254 value-added, 190, 192 tax evasion, in Greece, 190–91 tax laws, 75 tax revenue, 190–96 Taylor, John, 169 Taylor rule, 169 tech bubble, 250 technology, 137, 138–39, 186, 211, 217, 251, 258, 265, 300 and new financial system, 274–76, 283–84 telecoms, 55 Telmex, 369 terrorism, 319 Thailand, 113 theory of the second best, 27–28, 48 “there is no alternative” (TINA), 306, 311–12 Tocqueville, Alexis de, xiii too-big-to-fail banks, 360 tourism, 192, 286 trade: and contractionary expansion, 209 US push for, 323 trade agreements, xiv–xvi, 357 trade balance, 81, 93, 100, 109 as allegedly self-correcting, 98–99, 101–3 and wage flexibility, 104–5 trade barriers, 40 trade deficits, 89, 139 aggregate demand weakened by, 111 chit solution to, 287–88, 290, 299–300, 387, 388–89 control of, 109–10, 122 with currency pegs, 110 and fixed exchange rates, 107–8, 118 and government spending, 107–8, 108 of Greece, 81, 194, 215–16, 222, 285–86 structural reform of, 216–17 traded goods, 102, 103, 216 trade integration, 393 trade surpluses, 88, 118–21, 139–40, 350–52 discouragement of, 282–84, 299–300 of Germany, 118–19, 120, 139, 253, 293, 299, 350–52, 381–82, 391 tax on, 254, 351, 381–82 Transatlantic Trade and Investment Partnership, xv, 323 transfer price system, 376 Trans-Pacific Partnership, xv, 323 Treasury bills, US, 204 Trichet, Jean-Claude, 100–101, 155, 156, 164–65, 251 trickle-down economics, 362 Troika, 19, 20, 26, 55, 56, 58, 60, 69, 99, 101–3, 117, 119, 135, 140–42, 178, 179, 184, 195, 274, 294, 317, 362, 370–71, 373, 376, 377, 386 banks weakened by, 229 conditions of, 201 discretion of, 262 failure to learn, 312 Greek incomes lowered by, 80 Greek loan set up by, 202 inequality created by, 225–26 poor forecasting of, 307 predictions by, 249 primary surpluses and, 187–88 privatization avoided by, 194 programs of, 17–18, 21, 155–57, 179–80, 181, 182–83, 184–85, 187–93, 196, 197–98, 202, 204, 205, 207, 208, 214–16, 217, 218–23, 225–28, 229, 231, 233–34, 273, 278, 308, 309–11, 312, 313, 314, 315–16, 323–24, 348, 366, 379, 392 social contract torn up by, 78 structural reforms imposed by, 214–16, 217, 218–23, 225–38 tax demand of, 192 and tax evasion, 367 see also European Central Bank (ECB); European Commission; International Monetary Fund (IMF) trust, xix, 280 Tsipras, Alexis, 61–62, 221, 273, 314 Turkey, 321 UBS, 355 Ukraine, 36 unemployment, 3, 64, 68, 71–72, 110, 111, 122, 323, 336, 342 as allegedly self-correcting, 98–101 in Argentina, 267 austerity and, 209 central banks and, 8, 94, 97, 106, 147 ECB and, 163 in eurozone, 71, 135, 163, 177–78, 181, 331 and financing investments, 186 in Finland, 296 and future income, 77 in Greece, xi, 71, 236, 267, 331, 338, 342 increased by capital, 264 interest rates and, 43–44 and internal devaluation, 98–101, 104–6 migration and, 69, 90, 135, 140 natural rate of, 172–73 present-day, in Europe, 210 and rise of Hitler, 338, 358 and single currency, 88 in Spain, 63, 161, 231, 235, 332, 338 and structural reforms, 19 and trade deficits, 108 in US, 3 youth, 3, 64, 71 unemployment insurance, 91, 186, 246, 247–48 UNICEF, 72–73 unions, 101, 254, 335 United Kingdom, 14, 44, 46, 131, 307, 331, 332, 340 colonies of, 36 debt of, 202 inflation target set in, 157 in Iraq War, 37 light regulations in, 131 proposed exit from EU by, 4, 270 United Nations, 337, 350, 384–85 creation of, 38 and lower rates of war, 196 United States: banking system in, 91 budget of, 8, 45 and Canada’s 1990 expansion, 209 Canada’s free trade with, 45–46, 47 central bank governance in, 161 debt-to-GDP of, 202, 210–11 financial crisis originating in, 65, 68, 79–80, 128, 296, 302 financial system in, 228 founding of, 319 GDP of, xiii Germany’s borrowing from, 187 growing working-age population of, 70 growth in, 68 housing bubble in, 108 immigration into, 320 migration in, 90, 136, 346 monetary policy in financial crisis of, 151 in NAFTA, xiv 1980–1981 recessions in, 76 predatory lending in, 310 productivity in, 71 recovery of, xiii, 12 rising inequality in, xvii, 333 shareholder capitalism of, 21 Small Business Administration in, 246 structural reforms needed in, 20 surpluses in, 96, 187 trade agenda of, 323 unemployment in, 3, 178 united currency in, 35, 36, 88, 89–92 United States bonds, 350 unskilled workers, 134–35 value-added tax, 190, 192 values, 57–58 Varoufakis, Yanis, 61, 221, 309 velocity of circulation, 167 Venezuela, 371 Versaille, Treaty of, 187 victim blaming, 9, 15–17, 177–78, 309–11 volatility: and capital market integration, 28 in exchange rates, 48–49 Volcker, Paul, 157, 168 wage adjustments, 100–101, 103, 104–5, 155, 216–17, 220–22, 338, 361 wages, 19, 348 expansionary policies on, 284–85 Germany’s constraining of, 41, 42–43 lowered in Germany, 105, 333 wage stagnation, in Germany, 13 war, change in attitude to, 38, 196 Washington Consensus, xvi Washington Mutual, 91 wealth, divergence in, 139–40 Weil, Jonathan, 360 welfare, 196 West Germany, 6 Whitney, Meredith, 360 wind energy, 193, 229 Wolf, Martin, 385 worker protection, 56 workers’ bargaining rights, 19, 221, 255 World Bank, xv, xvii, 10, 61, 337, 357, 371 World Trade Organization, xiv youth: future of, xx–xxi unemployment of, 3, 64, 71 Zapatero, José Luis Rodríguez, xiv, 155, 362 zero lower bound, 106 ALSO BY JOSEPH E.

Swimming With Sharks: My Journey into the World of the Bankers
by Joris Luyendijk
Published 14 Sep 2015

We’re not predators but, when you hear us coming, you pay attention … I suppose the elephants.’ The regulators attract very bright people from the top universities, he insisted, referring to the trader’s ‘idiots’ comment. What’s more, he continued: ‘Banks have been so wrong about their risks. There was a clamour for light-touch regulation, to leave the industry in peace, because they knew best. People blame the regulators for missing all sorts of things in years past, and there were regulatory failures. But the senior management and risk people inside the banks should have caught them in the first place. Then again, those risk officers who did issue warnings in those years may have been let go.’

The Corona Crash: How the Pandemic Will Change Capitalism
by Grace Blakeley
Published 14 Oct 2020

In the UK, the imperative for the governing Conservatives remains squaring the interests of their voter base with those of a highly internationalised and financialised capitalist class centred in the City of London; or, as Colin Leys puts it, how to ‘resolve the tension between the requirements of global capital and the interests of the population whose votes they need to stay in power’.17 There are some clear shared interests that unite all sections of British capital. A preference for light regulation and low corporate, income and wealth taxation (along with ways to avoid it) is one. Capital mobility is the foundation of the British economy’s financialised and internationalised business model and is therefore another critical common interest of the British capitalist class. All sections of British capital require a strong British state capable of acting as a regulator and lender of last resort, an enforcer of contracts and a source of safe assets.

I.O.U.: Why Everyone Owes Everyone and No One Can Pay
by John Lanchester
Published 14 Dec 2009

Regulatory bodies should have access to the perspective of outsiders looking in at the industry from its periphery and prepared to ask obvious, which sometimes means obviously unpopular, questions. The FSA wasn’t like that: it didn’t have somebody saying “I don’t understand, please explain.” It was dedicated to what was often called the principle of “light touch” regulation. As Adair Turner, the head of the FSA, said in his postcrash report: An underlying assumption of financial regulation in the US, the UK and across the world, has been that financial innovation is by definition beneficial, since market discipline will winnow out any unnecessary or value destructive innovations.

Broken Markets: A User's Guide to the Post-Finance Economy
by Kevin Mellyn
Published 18 Jun 2012

Governments of both the center-left and center-right embraced the financedriven economy because it delivered the goods in the form of economic growth and job creation.The so-called Anglo-Saxon economies with their dynamic capital markets and global investment banks outpaced other developed economies in Europe and Asia. Bill Clinton and Tony Blair both enjoyed long periods in office and in return delivered “light-touch” regulation to the bankers who were among their largest financial supporters. In Financial Market Meltdown (Praeger, 2009) I basically update the great Victorian banker and journalist Walter Bagehot, who wrote the great financial classic Lombard Street (1873), which tells the lay reader how finance works.

The Fix: How Bankers Lied, Cheated and Colluded to Rig the World's Most Important Number (Bloomberg)
by Liam Vaughan and Gavin Finch
Published 22 Nov 2016

Overnight, Thatcher cleared the way for retail banks to set up integrated investment banks that could make markets, advise clients, sell them securities and place their own side bets, all under one roof. She also removed obstacles to foreign banks taking over U.K. firms, leading to an influx of big U.S. and international lenders that brought with them a more aggressive, cutthroat ethos. The advent of light-touch regulation, with markets more or less left to police themselves, made London a highly attractive place to do business. The market for derivatives, bonds and syndicated loans exploded. Beware of Greeks Bearing Gifts 17 By the 1990s, Libor was baked into the system as the benchmark for everything from mortgages and student loans to swaps.

Unhappy Union: How the Euro Crisis - and Europe - Can Be Fixed
by John Peet , Anton La Guardia and The Economist
Published 15 Feb 2014

The hyperactive Sarkozy then flew off to Camp David (taking along the president of the European Commission, José Manuel Barroso) to persuade President George Bush to call a global summit on the financial crisis (it would become the G20 summit). Under the Irish single-market commissioner, Charlie McCreevy, the Commission had hitherto favoured light-touch regulation of finance. But in October Barroso enlisted a former IMF boss and French central-bank governor, Jacques de Larosière, to produce a report on how to tighten control over the financial sector. It was delivered within three months. After much resistance from the UK, the report would lead to the creation in 2011 of four new European financial supervisory bodies: three new regulators for banks, insurance and markets, and the European Systemic Risk Board to monitor threats to the overall financial system.

99%: Mass Impoverishment and How We Can End It
by Mark Thomas
Published 7 Aug 2019

These were three of the key principles of Reaganomics, principles that brought our country over twenty years of economic growth and prosperity.’5 Market capitalism, therefore, has two main objectives: 1. to free-up the private sector 2. to shrink the role of the state True to these principles, since 1980 in both the US and the UK (as well as many other countries), the direction of policy has been to deregulate (reduce governmental control) wherever possible – and in particular to impose ‘light-touch’ regulation of financial services; to privatize wherever possible and to contract-out where full privatization is not possible; to reduce rates of income tax; to contain public spending; and to reduce the power of the union movement. In other words, the government has simply been trying to get out of the way – and get everyone else out of the way – of business.

The Cost of Inequality: Why Economic Equality Is Essential for Recovery
by Stewart Lansley
Published 19 Jan 2012

In power, the political love-affair with the City launched by the Conservatives continued. Brown and Blair struck a Faustian pact with the City. The new government wanted finance to continue to play the vanguard role in the economy. To help make finance the engine of growth and prosperity, Labour promised to continue the policy of light touch regulation and turn a blind eye to some of the seedier activities of the business elite. New Labour embraced the new market experiment launched by Mrs Thatcher more or less in full. The government introduced some changes to moderate the more extreme aspects of the labour market—with measures such as the minimum wage and greater workplace protection.

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

Worse, the regulators have castrated themselves because they perceive an unspoken message from their governments that they prefer a handful of whales, which they believe they can influence and draw on for economic muscle, to having to deal with a multiplicity of sprats. Our governments have lost faith in genuinely open markets, while protecting free markets for the wealthy alone. Light touch regulation of the financial sector is now seen as a major factor leading up to the global economic crash of 2008. 86 THE NEW ECONOMICS But money itself is a measuring tool that also encourages monoculture. Different currencies might measure a variety of assets differently, but since they are all increasingly linked, so the yardstick they use is increasingly the same.

Stolen: How to Save the World From Financialisation
by Grace Blakeley
Published 9 Sep 2019

This was initially catalysed by Thatcher’s policies — from bank deregulation, to right-to-buy, to the Big Bang. But Blair and Brown took this process one step further. They developed a complex and arcane regulatory architecture for the City that was easy for insiders to manipulate. These organisations were given a mandate to implement “light touch” regulation on the finance sector, to encourage “innovation” and promote investment.7 Meanwhile, billions of pounds were pumped into the UK’s real estate market, inflating a bubble that would eventually burst in the biggest financial crisis since 1929. The revenues from this model were then used to expand the provision of welfare and public services for those left out of the boom, under the auspices of the private sector, which was given responsibility for delivering public services.

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

Now, the real trouble is that what countries like Iceland and Ireland were implementing were only more extreme forms of the economic strategy being pursued by many countries – a growth strategy based on financial deregulation, first adopted by the US and the UK in the early 1980s. The UK put its financial deregulation programme into a higher gear in the late 1980s, with the so-called ‘Big Bang’ deregulation and since then has prided itself on ‘light-touch’ regulation. The US matched it by abolishing the 1933 Glass-Steagall Act in 1999, thereby tearing down the wall between investment banking and commercial banking, which had defined the US financial industry since the Great Depression. Many other countries followed suit. What was encouraging more and more countries to adopt a growth strategy based on deregulated finance was the fact that in such a system it is easier to make money in financial activities than through other economic activities – or so it seemed until the 2008 crisis.

Nine Crises: Fifty Years of Covering the British Economy From Devaluation to Brexit
by William Keegan
Published 24 Jan 2019

Two other points made to me repeatedly by Treasury officials over the years were: first, that decisions about whether to change interest rates tended to take up an inordinate amount of time; and, secondly, that the pursuit of sound policies was frequently thwarted on Budget Day by seeing their Chancellors, often encouraged by their Prime Minister, give way to the temptation to announce a surprise cut in interest rates. The trouble was that the wonders of Bank independence were eventually subject to Macmillan’s famous obstacle of ‘events’. Anxious to please the City, Brown and Balls were happy to go along with light-touch regulation, although Brown had for some years been calling for stronger global financial regulation – ‘a proper monitoring of risk and an early warning system’. But, as he wrote after the deluge, ‘I had to accept that I had lost the argument.’ However, Brown freely acknowledged in retrospect that it had been a mistake to subscribe to what had become an international consensus.

Butler to the World: How Britain Became the Servant of Tycoons, Tax Dodgers, Kleptocrats and Criminals
by Oliver Bullough
Published 10 Mar 2022

The ‘third way’ politics of the Tony Blair and Bill Clinton years loved to reject what it saw as the pious moralising of old-style politics and demonstratively treat citizens as responsible consumers. If multinational betting companies just happened to massively increase their profits in the process – or banks just happened massively to expand risky lending as a result of the parallel move towards the ‘light touch regulation’ of the financial sector – then that was all for the good. A member of Parliament quoted John Brown, the bookie who came up with the idea, in a debate in the House of Commons without any suggestion that he and his company might have an interest in arguing for a lower tax rate. ‘This is great news for the British punter, for UK plc and the Treasury,’ Brown was quoted as saying.

Small Change: Why Business Won't Save the World
by Michael Edwards
Published 4 Jan 2010

In conventional market thinking, “the social responsibility of business is to increase its profits,” as Milton Friedman famously declared almost forty years ago in the pages of the New York Times. That is because the invisible hand is supposed “to be beneficial for the people it orders,” maximizing social welfare as a by-product of self-interested but unconscious interactions, with some light regulation to ensure that business operates inside a framework of agreed-upon social rules.2 One of the virtues the high cost of mission drift 65 of markets is that, at least in theory, they can ensure that each resource is used where returns are highest and is combined with other resources in the most efficient way, even though producers and consumers do not coordinate their decisions.

Capitalism: Money, Morals and Markets
by John Plender
Published 27 Jul 2015

In the same paper, Haldane and Madouros point out that in the UK, for example, there was one regulator in 1980 for roughly every 11,000 people employed in the UK financial sector. By 2011, there was one for every 300 people employed in finance. This manic escalation in regulatory enthusiasm – nonetheless referred to as ‘light-touch’ regulation before 2007 – was wholly ineffective in preventing the financial crisis. It also leads to manic escalation in the number of bankers engaged in compliance activities. In September 2013, Jamie Dimon, chief executive of JPMorgan Chase, America’s biggest bank, sent a memo to staff revealing that the bank had added a whopping 3,000 employees to bolster controls, devoted 500 people to fulfilling the Federal Reserve’s stress tests, and given staff 750,000 hours of training on compliance matters.

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

The transactions had no American nexus in many cases, other than US dollar payments made via New York. The UK argues that allegations of banking misconduct are designed to tarnish the integrity of London and its status as one of the world's major financial centers. The US argues that the problems relate to the laxity of Britain's famous light-touch regulations, which have been a factor in the rise of London as a global finance hub. Europeans argue that the prosecution of BNP Paribas was related to US opposition to the French sale of two helicopter assault ships for €1.2 billion to Russia, or to General Electric's unsuccessful bid for Alstom, manufacturer of France's TGV high-speed train.

The Pay Off: How Changing the Way We Pay Changes Everything
by Gottfried Leibbrandt and Natasha de Teran
Published 14 Jul 2021

And no one, because as payers and payees, we can do exactly what we want, where we want, how we want, with whatever we want when we pay each other – unless our chosen payment providers (like Stripe or Square) choose to limit what we can do, or perhaps if we want to pay large amounts in cash. In the middle somewhere sit the non-bank providers like FinTechs, which, alongside the banks’ many outsourcers and service providers, are able to operate through lighter-touch regulatory sandboxes and/or face only light-touch regulation. Finally, in regulatory never-never land we have (or had, until recently) Alipay and Tenpay in China, both of which, at least in their early days, escaped any significant form of regulation or oversight and yet (or thus) have grown to become as big or even bigger than banks when it comes to payments.

Why Aren't They Shouting?: A Banker’s Tale of Change, Computers and Perpetual Crisis
by Kevin Rodgers
Published 13 Jul 2016

Morgan, 168 jumper analogy, 11–12, 17, 31, 45, 72, 80, 91 K Keynes, John Maynard, 205 Knight Capital, 79 Korea, 120, 135, 139 Kuwait, xi, 22, 95 L Labour Party (UK), 120, 201 lattice methods, 112, 150, 157 Lava FX, 59 law of one price, 91 Lehman Brothers, 32, 75, 90, 161, 163, 167, 172–4, 179, 180, 217, 226, 230, 232 LendingClub, 234 leverage, 60, 81, 83, 90, 104–5, 109, 120, 124, 132, 134, 149–50, 172–3, 208, 210, 219, 228 liabilities, 124 libertarianism, 202 LIBOR (London Interbank Offered Rate), 109, 181–7, 188, 189, 190, 197, 198 light touch regulation, see principles-based regulation Liikanen Report (2012), 230 liquidity, 9, 18–19, 21, 27, 80–1, 83, 138, 148, 153, 172, 174, 184, 185, 209, 210, 233 Lisbon, Portugal, 173 Liszt, Franz, 60 loans, 7–8, 89, 92, 94, 119, 120, 124–5, 151–2, 154–6, 160–1, 163, 171, 173, 181–2, 231 logarithms, 128 London, England, vii–x, xi, 3, 9, 15, 35, 69, 72, 76, 79, 91, 120, 121, 137, 140, 193, 199, 202, 209 London Business School, 91 London Clearing House, 209 London Zoo, ix Long-Term Capital Management (LTCM), xi, 29, 114, 116, 122, 131–5, 142–3, 156, 172, 202 lookbacks, 107 Lord’s Cricket Ground, London, 87 Los Alamos County, New Mexico, 111 Lowenstein, Roger, 122 M M.

Paper Promises
by Philip Coggan
Published 1 Dec 2011

None of this would have happened under the gold standard or the Bretton Woods system. Under the former, the US reserves would have run out long before China had built up such huge surpluses; under the latter, trade deficits could not last for ever (indeed that is why the system broke down). REGULATION This ‘markets are right’ philosophy was also reflected in light-touch regulation. It was assumed that the private sector would act to regulate itself. It would not lend money to those who might not pay it back; it would not take risks that might destroy its balance sheet. After all, the executives of banks were also shareholders. Why should they risk the loss of their fortunes?

Don't Be Evil: How Big Tech Betrayed Its Founding Principles--And All of US
by Rana Foroohar
Published 5 Nov 2019

We should also consider whether the public sector, rather than private companies, should be the repository of some data wealth, and help ensure that private sector actors have equal access to it and that citizens have more control over just how it is monetized. The conventional wisdom has been that in the brave new world of big data and artificial intelligence, which will drive global growth over the next several decades, there can be only two models: China’s surveillance state, in which the government knows and directs all; or the light touch regulation of the United States, which has bred a collection of monopoly powers that may well be choking off job creation and growth in the larger economy. But there is a third way—one that France and other countries are pursuing—that aims for a middle ground. In Europe, the public sector already holds a large amount of data—in health, transportation, defense, security, and the environment—of the sort that will be needed to develop artificial intelligence and other big data applications.

Boom and Bust: A Global History of Financial Bubbles
by William Quinn and John D. Turner
Published 5 Aug 2020

According to the Parliamentary Commission on Banking Standards, politicians in the United Kingdom tended to succumb to bank lobbying.92 In Ireland and Spain, there was a deep and unhealthy symbiotic relationship between property developers, banks and politicians, which strengthened as the housing boom progressed.93 Irish property developers became the ‘sugar daddy’ of politicians, and Irish banks used their growing influence to press for light-touch regulation.94 In the United States, the lobbying efforts of the real estate and financial industry are part of the public record. This industry influenced politicians via campaign contributions and direct lobbying efforts. In real terms, between 1992 and 2008, its campaign contributions increased threefold and were inclined to flow to whichever party controlled Congress.95 Between 1999 and 2008, the industry became one of the leading contributors to campaign war chests, giving more than $1 billion.96 In terms of reported lobbying efforts, this industry spent a staggering $2.7 billion during these 9 years, a near-threefold increase over the previous period.97 During these years, Fannie and Freddie, in terms of dollars spent, were the second and third largest lobbying institutions in the sector.98 According to the Financial Crisis Inquiry Commission, these efforts exerted pressure on legislators to weaken regulatory constraints.

EuroTragedy: A Drama in Nine Acts
by Ashoka Mody
Published 7 May 2018

Regulators allowed the banks to hold only modest amounts of “high-​quality” capital—​ cash and equity rather than bonds of various kinds that required repayment to creditors.43 Thus, banks could invest in government bonds without setting aside any capital; regulators assumed that governments would not default on their bonds. In addition, riding on Basel I, a 1988 international agreement on minimum capital requirements, regulators allowed banks to classify home mortgages as relatively low-​risk assets, which, therefore, required limited capital backing. Then after 2004, the “light-​touch” regulation philosophy in an updated international accord, Basel II, gave “sophisticated” banks great latitude in reaching their own judgments on how risky their assets were and, therefore, on how much capital they needed to set aside for potential losses. Banks had more scope to under-​report and even hide their risks.

…

euro-​area banks were boosting their lending with unreliable funds and weak capital shock absorbers. European banks were becoming steadily riskier, but their regulators were not concerned. To be sure, some large US banks developed the same fragilities as European banks. After all, Fed Chairman Greenspan was the philosopher who promoted “light-​touch” regulation and its transformation into Basel II.46 The cap on leverage for US investment banks was lifted in 2004 by their regulator, the US Securities and Exchange Commission (SEC). Investment banks promptly ratcheted up their leverage and used the borrowed funds to invest furiously in mortgage-​backed securities.47 The US Financial Crisis Inquiry Commission would later conclude: “The Securities and Exchange Commission’s poor oversight of the five largest investment banks failed to restrict their risky activities and did not require them to hold adequate capital and liquidity for their activities.”48 But Basel II had its true home in Europe, where regulators applied it indiscriminately across the continent’s vast banking system.

The Economics of Enough: How to Run the Economy as if the Future Matters
by Diane Coyle
Published 21 Feb 2011

A whole generation of policy makers has been mesmerized by Wall Street, always and utterly convinced that whatever the banks said was true.24 John Kay, another eminent economist, made a similar point about the UK government in a Financial Times column, “Investment bankers had become the most powerful political lobby in the country and there was no vestige of political support for action to restrain City excess. Light touch regulation was not just a matter of policy but a matter of pride. . . . Little has changed. The government continues to see financial services through the eyes of the financial services industry, for which the priority is to restore business as usual.”25 The failures of government go wider, however.

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

In reports in July 2008 Stewart investigated the Dublin International Financial Services Centre (IFSC), a secrecy jurisdiction set up in 1987 under the corrupt Irish politician Charles Haughey with help primarily from City of London interests.41 A showcase for high-risk, Wild West financial capitalism, the Dublin IFSC emerged the year after London’s giant deregulatory Big Bang and now hosts over half the world’s top 50 financial institutions. It became a big player in the shadow banking system and now hosts eight thousand funds with $1.5 trillion in assets. Perhaps most alluring of all Dublin’s lures, Stewart said, is its “light touch regulation.”42 In June 2007 two Bear Stearns hedge funds incorporated in the Cayman Islands announced huge losses, presaging its collapse. Bear Stearns had two investment funds and six debt securities listed on the Irish Stock Exchange and operated three subsidiaries in the Dublin IFSC through a holding company, Bear Stearns Ireland Ltd., for which every dollar of equity financed $119 of gross assets—an exceedingly high and dangerous ratio.

The City on the Thames
by Simon Jenkins
Published 31 Aug 2020

The Shard proved near unlettable, and had to be rescued by that last resort of London’s extravaganzas, a Qatari wealth fund. The Gherkin cost more to build than its valuation on completion. The bulging Walkie-Talkie was saved by Chinese money. But yield mattered little to overseas investors. What they wanted was secrecy and security, which London’s light-touch regulators offered in abundance. The inevitable result was for investment to proceed from commercial to high-end residential properties. In 2007 Livingstone obtained new powers to override local boroughs and encourage more skyscrapers, where they ‘contribute to regeneration and improve London’s skyline’.

Other People's Money: Masters of the Universe or Servants of the People?
by John Kay
Published 2 Sep 2015

Some regulators were essentially placemen, put there by the industry and its political cronies to represent the interests of the businesses over which they exerted nominal oversight. But others were honest and committed public servants: they were, however, constantly aware of the political influence of the industry. ‘Light touch regulation’ was the product not of idle regulators but of the demands of the industry transmitted through the political process. Compare the remarks of Gordon Brown (Chapters 1 and 9) with those of Theodore (Chapter 1) and Franklin (frontispiece) Roosevelt. In northern Europe and North America there is little evidence of overt corruption in regulatory agencies, or at the senior levels of politics, finance and business.

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

They [HMRC] would base the way they dealt with large companies on trust, on building a partnership, a relationship, with “customer relationship managers” instead of case directors.’ Brooks sums up this new attitude pithily: ‘It became one of essentially believing what you were told.’ This outlook is wholly consistent with the prevailing laissez-faire ideology of the Establishment. ‘It was all entirely in keeping with the ascendancy of light-touch regulation,’ Brooks says. ‘They took this light touch to a ridiculous extreme.’ Those in the HMRC who opposed this new approach faced being written off in the same way as other opponents of the Establishment. ‘If you challenged it,’ he recalls, ‘you were made out like a dinosaur, an opponent of modernization.

Buy Now, Pay Later: The Extraordinary Story of Afterpay
by Jonathan Shapiro and James Eyers
Published 2 Aug 2021

In the past 14 months alone, Afterpay has raised more than $450 million in a mixture of debt and equity. This has been done in part to fund the company’s entry into the US and UK markets. However, it is apparent that growth for Afterpay comes at a cost to both its earnings per share and returns.’4 Afterpay’s already low returns, he argued, would decline in the future as the privilege of light-touch regulation was whittled away, and as more competition moved in to erode its margins. Those fund managers who didn’t own Afterpay shares may have been comfortable with their logic, but the rising share price remained a source of considerable discomfort. In the second quarter of 2019, NovaPort Capital, which ran a $100 million micro-cap stock fund from Sydney, told investors that not owning Afterpay shares was the second-biggest drag on its quarterly investment return relative to the market.

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

Until Snowden, conventional wisdom included a free pass to Big Tech operating alongside a borderless internet free of regulation. This argument now sounds complacent, he writes. ‘In reality the ground had already been shifting, as politicians and regulators took a keener interest in the expanding digital realm. Any hopes of retaining the light-touch regulation of the internet’s earlier days, when governments were grappling with its implications, already looked like wishful thinking. But the shock from the Snowden disclosures has greatly accelerated the shift.’ FRIDAY, 5 SEPTEMBER Martin Wolf has delivered a fresh broadside against Scottish independence.

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

Not so long before, the West’s apparent triumph in the Cold War, the rise of market finance, the miracles of information technology, and the widening orbit of economic growth all together appeared to cement the capitalist economy as the all-conquering driver of modern history.10 In the 1990s, the answer to most political questions had seemed simple: “It’s the economy, stupid.”11 As economic growth transformed the lives of billions, there was, Margaret Thatcher liked to say, “no alternative.” That is, there was no alternative to an order based on privatization, light-touch regulation, and the freedom of movement of capital and goods. As recently as 2005, Britain’s centrist prime minister Tony Blair could declare that to argue about globalization made as much sense as arguing about whether autumn should follow summer.12 By 2020, both globalization and the seasons were very much in question.

Kleptopia: How Dirty Money Is Conquering the World
by Tom Burgis
Published 7 Sep 2020

The laurels might have sat a little uneasily on Nigel’s rebellious brows. But perhaps times were finally changing. George Osborne had picked Martin Wheatley, a tough former head of the Hong Kong market regulator, to run the new Financial Conduct Authority. His appointment was a departure from the ‘light touch’ regulation with which Blair’s New Labour had sought to prolong Thatcher’s big bang. Wheatley’s stated approach to the City was, ‘Shoot first and ask questions later.’ Still, Nigel could not help but wonder why the warning he had delivered back in 2008 had gone unheeded by the very watchdog to which he now commuted from Kensington every day.

The Secret Club That Runs the World: Inside the Fraternity of Commodity Traders
by Kate Kelly
Published 2 Jun 2014

A strong believer in the importance of government service, Francesca, whose father had been at Pearl Harbor, had encouraged Gensler to leave the private sector and had helped him compose a letter to Robert Rubin, the fellow Goldman alum who was then treasury secretary, inquiring about a post. Gensler had already made a lot of money at Goldman, and a job at Treasury seemed worth uprooting their lives for. It was an era of light regulation in Washington, and it was the dot-com boom: Internet companies like Netscape, Yahoo, and Amazon were hitting the public markets with wild success, and small investors were shifting in mass numbers into stocks. Under the guidance of the conservative Fed chairman Alan Greenspan and, later, Rubin’s successor at Treasury, Lawrence Summers, officials were beating back attempts to curb trading in off-exchange commodities and other risky contracts—including a notable push by Brooksley Born, the female lawyer who was chair of the CFTC.

What Went Wrong: How the 1% Hijacked the American Middle Class . . . And What Other Countries Got Right
by George R. Tyler
Published 15 Jul 2013

Even now, there isn’t a major power in the world that wouldn’t happily change places with the United States.”14 With American wages stagnant for a generation, productivity growth poor, and investment weak, this sort of economic jingoism is dismissed by economists, such as these at the OECD: “It has been claimed by some that only countries which emphasize market-oriented policies (limited welfare benefits, light regulation) may enjoy both successful employment performance and strong labour productivity growth simultaneously…. This claim is not supported by the evidence in this chapter, however. Indeed the chapter finds that other successful employment performers (which combine strong work incentives with generous welfare protection and well-designed regulation) had, on average over the past decade, similar GDP per capita growth to that recorded in more market-reliant counties.”15 Moreover, most voters in Australia or northern Europe would find risible the notion of switching places with the 95 percent of Americans whose wages have stagnated for a generation.

…

Indeed, more respondents believed that income differences are a source of conflict (66 percent) than believe the nation is divided instead by immigrants versus native born (62 percent) or on questions of race (38 percent).12 These polling results, coupled with financial crises and weak economic recovery, have led some to conclude that reform is inevitable. Here is Financial Times journalist Francesco Guerrera writing during the depths of the stock market decline in March 2009 about corporate governance reforms: “Long-held tenets of corporate faith—the pursuit of shareholder value, the use of stock options to motivate employees, and a light regulator touch allied with board oversight of management—are being blamed for the turmoil and look likely to be overhauled…. As a result, the composition of boards is likely to change dramatically.”13 Mutual fund manager John P. Hussman is similarly optimistic: “Economies that generate high profits, weak wage gains, and low capital accumulation are like old-style monopolies that … fail to produce long-term prosperity or growth.

The Global Minotaur
by Yanis Varoufakis and Paul Mason
Published 4 Jul 2015

While President Obama’s administration was busily accepting the Wall Street mantra about no full-blown nationalizations (i.e. the bogus argument that recapitalizing banks by means of temporary nationalizations, as in Sweden in 1993, would quash the public’s confidence in the financial system, thus creating more instability, which might in turn jeopardize any eventual recovery), Wall Street’s banks were already plotting against the administration, intent on using their renewed financial vigour to promote Obama’s political opponents (who offered them promises of offensively light regulation). This twist assumed added significance in January 2010, when the US Supreme Court, by a 5-4 vote, overturned the Tillman Act of 1907, which President Teddy Roosevelt had passed in a bid to ban corporations from using their cash to buy political influence. On that fateful Thursday, the floodgates of Wall Street money were flung open as the court ruled that the managers of a corporation can decide, without consulting with anyone, to write out a cheque to the politician who offers them the best deal, especially regarding regulation of the financial sector in the aftermath of 2008.

What They Do With Your Money: How the Financial System Fails Us, and How to Fix It
by Stephen Davis , Jon Lukomnik and David Pitt-Watson
Published 30 Apr 2016

But let’s put it more plainly: boards are paying CEOs to do the wrong things, and those compensation packages were deeply implicated in the financial crisis. The official Financial Crisis inquiry commission in the United States concluded, “Compensation systems—designed in an environment of cheap money, intense competition, and light regulation—too often rewarded the quick deal, the short-term gain—without proper consideration of long-term consequences. Often, those systems encouraged the big bet—where the payoff on the upside could be huge and the downside limited.”28 Yet the same compensation systems continue today, and banks are no different from other corporations.

Computer: A History of the Information Machine
by Martin Campbell-Kelly and Nathan Ensmenger
Published 29 Jul 2013

On 30 April 1995, the old NSFnet backbone was shut down, ending altogether US government ownership of the Internet’s infrastructure. The explosive growth of the Internet was in large part due to its informal, decentralized structure; anyone was free to join in. However, the Internet could not function as a commercial entity in a wholly unregulated way—or chaos and lawlessness would ensue. The minimal, light-touch regulation that the Internet pioneers evolved was one of its most impressive features. A good example of this is the domain-name system. Domain names—such as amazon.com, whitehouse.gov, and princeton.edu—soon became almost as familiar as telephone numbers. In the mid-1980s the Internet community adopted the domain-name system devised by Paul Mockapetris of the Information Sciences Institute at the University of Southern California.

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

This, then, is the topic of Chapter Nine. 6 Orthodoxy Overthrown The message London’s success sends out to the whole British economy is that we will succeed if like London we think globally. Move forward if we are not closed but open to competition and to new ideas. Progress if we invest in and nurture the skills of the future, advance with light touch regulation, a competitive tax environment and flexibility. Grow even stronger if this is founded on a strong domestic market built on the foundation of stability. And whether it be in advanced high value-added manufacturing, our creative industries, pharmaceuticals, digital electronics, in fast-growing education exports, I believe, just as you have done in financial services, we can demonstrate that just as in the 19th century industrialization was made for Britain, in the twenty-first century globalization is made for Britain too.

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

It is clear that Northern Rock and the FSA initially believed that funding markets would never close; even if they did, the Bank of England would be there as the UK’s lender of last resort. Northern Rock’s mortgages, profits and bonuses were all built on the backstop of the Bank of England. With my own eyes, on the first day of the Northern Rock run, I saw one of Britain’s top regulators struggling with the reality that the glory days of light-touch regulation were over. ‘We’ve got to allow innovation,’ he repeatedly insisted, his face contorted with fear. It was as if he could not quite bring himself to utter the unspoken question: ‘Don’t we?’ Those that work inside Northern Rock point out that holders of Granite bonds have not lost even a penny (although any investors who sold at the bottom of the market did lose their shirts).

The Finance Curse: How Global Finance Is Making Us All Poorer
by Nicholas Shaxson
Published 10 Oct 2018

From ‘Over-the-Counter Derivatives Markets and the Commodity Exchange Act: Report of The President’s Working Group on Financial Markets’, US Treasury, November 1999; and from my telephone interview with Black, 15 September 2012. As Dunbar described (in a telephone interview on 16 May 2018) the general dynamics of the regulatory processes to me in the decade or more leading up to the global financial crisis, the UK Financial Services Authority was seen as a light-touch regulator, so ‘US banks were then able to go back to the SEC or whoever it was in Washington, and say, “We are doing all our business over in London, because you are not being flexible enough.” I think they used that as a stick to beat US regulators with, and that created this race to the bottom.’ 30.

Fully Grown: Why a Stagnant Economy Is a Sign of Success
by Dietrich Vollrath
Published 6 Jan 2020

ALEC and Laffer combined information on several measures of state economic policies to determine which states are the most competitive. The ranking is not always clear about what is meant by competitive, but the publications associated with the rankings (released every year) show this to be a combination of low taxation and light regulation. Some elements ALEC considers include personal and corporate tax rates, whether there is an inheritance tax, number of public employees, quality of the state legal system, whether or not it is a so-called right-to-work state (meaning that workers cannot be obligated to join a union), and whether there are tax or expenditure limits on the state government.

Mr Five Per Cent: The Many Lives of Calouste Gulbenkian, the World's Richest Man
by Jonathan Conlin
Published 3 Jan 2019

Gulbenkian managed an issue of additional Roxana shares in 1917, bringing its capital to $5 million and funding construction of new pipelines and a refinery at St Louis.28 President Woodrow Wilson’s attempt to eliminate holding companies proved less of an obstacle than might have been feared, largely thanks to the light-touch regulation offered by the state of Delaware.29 Soon Royal Dutch-Shell was lifting more oil inside the United States than Jersey Standard.30 The natural corollary of this was the introduction of Royal Dutch to the New York stock exchange. Although he never travelled to the United States, Gulbenkian had been building ties with the New York investment bank Kuhn Loeb since at least 1907, often working through their Paris representative, Lionel Hauser.

Rentier Capitalism: Who Owns the Economy, and Who Pays for It?
by Brett Christophers
Published 17 Nov 2020

Today, minimalist licenses define band contours and attempt to mitigate interference risks; but otherwise they ‘delegate the choice of technologies, services, and business models largely to the licensee’.63 The result is predictable enough. ‘Mobile phone and other modern licenses’, writes Hazlett, ‘convey airwave rights tantamount to spectrum ownership.’64 This is the very definition of ‘light touch’ regulation. This regulatory cossetting of infrastructure asset owners has not been limited to one sector or one asset type; it is a much more generalized phenomenon. In fact, it would be difficult to overstate either the depth or breadth of the government’s and its regulators’ longstanding subservience to infrastructure-oriented rentier capital.

Economists and the Powerful
by Norbert Haring , Norbert H. Ring and Niall Douglas
Published 30 Sep 2012

This led the OECD, in its 2004 employment outlook, to downgrade their own assessment of negative effects of high minimum wages to a “plausibility” and to admit that the evidence is fragile. By 2007 the attitude of the organization had changed even further. According to the OECD’s new assessment, empirical evidence does not support the claim that only countries that emphasize market-oriented policies, characterized by limited welfare benefits and light regulation, 204 ECONOMISTS AND THE POWERFUL can have low unemployment with strong labor productivity growth. The OECD stressed that the labor market institutions of various lowunemployment countries in Europe differed a great deal. This implies that there is no unambiguous right or wrong with regard to achieving a low rate of unemployment.

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

Which of these two outcomes should monetary and fiscal institutions be designed to deliver? More often than not, exporters’ preferences will do the most good for the economy as a whole, and hence the economies where finance does not have the upper hand politically will prosper. More generally, banking interests tend to have a preference for very light regulation regardless of the implications for the rest of the economy. Their influence can have quite a corrupting effect on politics and institutions when it goes unchallenged by others. Indeed, the mortal blow to the “collateral benefits” argument was struck by the subprime mortgage meltdown, which demonstrated finance’s remarkable ability to undermine governance—and to do so in the richest and oldest democracy in the world.

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

This meant the liberalisation of markets, the commodification and privatisation of everything that could be commodified and privatised and the systematic dismantling of all institutions of social solidarity that protected people from ‘market forces’. Regulations were justifiable only if they promoted economic growth; if not, they had to go. The agenda involved strict re-regulation of labour markets and only light regulation of financial markets. The argument was that, if left alone, financial markets would reward efficient firms and punish inefficient ones, which would go out of business; meanwhile, financiers could help with mergers and transfers of ownership to the more efficient. This reasoning also bolstered demands for the privatisation of state enterprises, which was soon embraced with almost as much enthusiasm by social democratic parties as by their right-wing opponents – witness the French socialist government of Lionel Jospin and the New Labour government of Tony Blair.

Falter: Has the Human Game Begun to Play Itself Out?
by Bill McKibben
Published 15 Apr 2019

But given the size of America, people could vote for him for president on the theory that he’d “shake things up,” reasonably confident that they wouldn’t be hit by the falling pieces. What I’m trying to say is what worked in the past doesn’t automatically work in the future. At one point, growth provided more benefit than cost. Light regulation spurred expansion. Larger scale offered efficiencies that made us richer. Fine. You want your child to grow—if she doesn’t, you take her to the doctor. But if she’s twenty-two and still shooting up by six inches a year, you take her to the doctor, too. There’s a time and a place for growth, and a time and a place for maturity, for balance, for scale.

Talking to Strangers: What We Should Know About the People We Don't Know
by Malcolm Gladwell
Published 9 Sep 2019

“If you’re accused of profiling or pretextual stops, you can bring your daily logbook to court and document that pulling over motorists for ‘stickler’ reasons is part of your customary pattern,” Remsberg writes, “not a glaring exception conveniently dusted off in the defendant’s case.” That’s exactly what Encinia did. He had day after day like September 11, 2014. He got people for improper mud flaps and for not wearing a seat belt and for straddling lanes and for obscure violations of vehicle-light regulations. He popped in and out of his car like a Whac-A-Mole. In just under a year on the job, he wrote 1,557 tickets. In the twenty-six minutes before he stopped Sandra Bland, he stopped three other people. So: Encinia spots Sandra Bland on the afternoon of July 10. In his deposition given during the subsequent investigation by the Inspector General’s office of the Texas Department of Public Safety, Encinia said he saw Bland run a stop sign as she pulled out of Prairie View University.

Digital Empires: The Global Battle to Regulate Technology
by Anu Bradford
Published 25 Sep 2023

Vogels, 56% of Americans Support More Regulation of Major Technology Companies, Pew Research Ctr. (July 20, 2021), https://www.pewresearch.org/fact-tank/2021/07/20/56-of-americans-support-more-regulation-of-major-technology-companies/. 186.Tanya Snyder & Janosch Delcker, US Pushes Light Regulations for AI, in Contrast to Europe, Politico (Jan. 9, 2020), https://www.politico.eu/article/us-pushes-light-regulations-for-ai-in-contrast-to-europe/. 187.Jake Sullivan (@JakeSullivan46), Twitter (Apr. 21, 2021), https://twitter.com/JakeSullivan46/status/1384970668341669891. 188.See Cristiano Lima, Biden’s Commerce Chief Is Under Fire From Warren, Progressives for Defending U.S.

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

In addition, the first president of the powerful Federal Reserve Bank of New York was none other than Benjamin Strong, J. P. Morgan’s lieutenant and the ultimate Wall Street insider. As a result, the initial “solution” to the problem revealed by the Panic of 1907 would prove to be anything but. Instead, light regulation and cheap money would encourage banks to take on enough speculative risk to threaten the entire economy. Theodore Roosevelt was able to curtail the growth of industrial trusts and shift the mainstream consensus so that large concentrations of economic power came to be seen by most people as dangerous to society.74 But despite this success against the trusts, the movement to constrain the power of big banks failed, even with one of its leading advocates, Louis Brandeis, as an adviser to President Wilson.

B Is for Bauhaus, Y Is for YouTube: Designing the Modern World From a to Z
by Deyan Sudjic
Published 17 Feb 2015

This is, then, apparently, not just a Krier who has changed his mind about tactics but also a Krier who is attempting to present a less unremitting fury about the world around him. But Krier, even when he is being conciliatory, flavours his words with invective. His opponents are guilty, he says, of ‘unjustifiable nonsense’. Even if they are concerned with nothing more controversial than street lighting, regulations that Krier takes objection to are ‘insane’. Naturally, ‘the idea of replacing the world’s rich panoply of traditional architecture by a single international style is dangerously insane’, an observation which, given that it would be all but impossible to find anyone who would suggest such a thing, seems a little redundant.

Zucked: Waking Up to the Facebook Catastrophe
by Roger McNamee
Published 1 Jan 2019

The goal of regulation is to change incentives. Industries that ignore political pressure for reform, as the internet platforms have, should expect ever more onerous regulatory initiatives until they cooperate. The best way for tech to avoid heavy regulation is for the industry leaders to embrace light regulation and make appropriate changes to their business practices. In July 2017, when Tristan and I arrived in Washington, DC, the town remained comfortably in the embrace of the major tech platforms. Google and Facebook led a large tech industry presence on Capitol Hill. Facebook director Peter Thiel continued to advise President Trump, leading high-profile meetings in the White House with technology executives.

Our Moon: How Earth's Celestial Companion Transformed the Planet, Guided Evolution, and Made Us Who We Are
by Rebecca Boyle
Published 16 Jan 2024

Meador, Betty De Shong, and John Maier. Princess, Priestess, Poet: The Sumerian Temple Hymns of Enheduanna. Austin: University of Texas Press, 2009. Messeri, Lisa. Placing Outer Space: An Earthly Ethnography of Other Worlds. Durham, N.C.: Duke University Press, 2016. Milosavljevic, Nina. “How Does Light Regulate Mood and Behavioral State?” Clocks and Sleep 1, no. 3 (July 12, 2019): 319–31. https://doi.org/10.3390/CLOCKSSLEEP1030027. Moller, Violet. The Map of Knowledge: How Classical Ideas Were Lost and Found; A History in Seven Cities. London: Picador, 2020. Montgomery, Scott L. The Moon and the Western Imagination.

The Future of Money: How the Digital Revolution Is Transforming Currencies and Finance
by Eswar S. Prasad
Published 27 Sep 2021

If these risks do not materialize and finance becomes truly open and decentralized, that still does not mean that regulators can breathe easier. Whether a decentralized system will be subject to effective checks and balances in the absence of robust government oversight and regulation is an unresolved question. The history of financial markets provides little room for optimism that market discipline with light-touch regulation is a recipe for stability. The nature of risks might simply be transformed from those related to big, connected institutions that can take the system down with them to smaller institutions that could face a widespread loss of confidence if one or a few of them failed. Even with low entry barriers, network effects could result in a handful of providers of payment and other financial services becoming dominant, as has happened in China.

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

1 Simplifying, if we consider just neo-classical and Keynesian economics, we find near one end of all three curves the Chicago School, and near the other end the Keynesian School. Chicago School proponents believe that smooth and rapid selfadjustment to full employment is normal within a framework of rulebased monetary policy and ‘light touch’ regulation. Keynesians deny that a market system has an automatic tendency to full employment. It achieves this happy state only in ‘moments of excitement’. In the Keynesian perspective, the dynamics of adjustment to ‘shocks’ point the economy away from, not back towards, an optimum equilibrium. Therefore, governments should actively pursue full employment policies, with such regulation of private sector activity as is necessary to bring this about.

The Devil's Playground: A Century of Pleasure and Profit in Times Square
by James Traub
Published 1 Jan 2004

In early October, Lehman bought the building, for $700 million. The sign, which had been four years in the making, was an afterthought. By the time Lehman formally took title, in early December, three of the six segments were up and running, but Lehman had suspended work on the rest. In order to comply with the Times Square lighting regulations, Lehman continued to run the sign, but it kept only the most literal-minded images—the suspension bridge and the gallery of pedestrians— and ran them over and over until it was difficult to remember why the sign had been worth caring about in the first place. It was understandable that after the tremendous shock of 9/11, and the sheer logistical challenge of moving, reprogramming the sign was not exactly a top priority.

Black Edge: Inside Information, Dirty Money, and the Quest to Bring Down the Most Wanted Man on Wall Street
by Sheelah Kolhatkar
Published 7 Feb 2017

The SEC knew what it was supposed to be looking for when it monitored them. Over the previous ten years, however, billions of dollars had moved out of the heavily regulated big banks and into hedge funds, which were aggressive investment vehicles promising enormous returns. Hedge funds were subject to only light regulation, and most operated behind a veil of secrecy. “When you look at the nature of the regulatory cases that have been brought against the big banks—I’m not saying the conduct wasn’t bad,” Bowe told Kang. “But a lot of the cases involved stepping over a line that was far away from the type of stuff going on at the hedge funds.”

Samuelson Friedman: The Battle Over the Free Market
by Nicholas Wapshott
Published 2 Aug 2021

But the logic of Austrian economics was as far from the Chicago School’s reasoning as the Chicago School was from Keynesianism. Inspired by the teachings of von Mises, Hayek believed an economy should be totally free of government intervention, except to ensure the efficient working of the market through light regulation. He thought no one knew enough about the workings of the economy for government involvement to be anything but reckless interference. Friedman, and much of the Chicago School, promoted the virtues of free-market forces but concentrated their energies on determining how an economy works most efficiently, for instance through study of the price mechanism and incentives for growth.

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

Our bankers forgot that their job was to prudently manage risk and allocate capital. They became gambling casinos—gambling with other people’s money, knowing that the taxpayer would step in if the losses were too great. They misallocated capital, with massive amounts going into housing that was ultimately unaffordable. Loose money and light regulation were a toxic mixture. It exploded. A GLOBAL CRISIS What made America’s recklessness truly dangerous is that we exported it. A few months ago, some talked about decoupling—that Europe would carry on even as the U.S. suffered a downturn. I always thought that decoupling was a myth, and events have proven that right.

Trading at the Speed of Light: How Ultrafast Algorithms Are Transforming Financial Markets
by Donald MacKenzie
Published 24 May 2021

People’s Warrior: John Moss and the Fight for Freedom of Information and Consumer Rights. Madison, NJ: Fairleigh Dickinson University Press. Lenglet, Marc. 2011. “Conflicting Codes and Codings: How Algorithmic Trading Is Reshaping Financial Regulation.” Theory, Culture & Society 28/6: 44–66. Lenglet, Marc, and Joeri Mol. 2016. “Squaring the Speed of Light? Regulating Market Access in Algorithmic Finance.” Economy and Society 45/2: 201–229. Levine, Josh. n.d. “Island ECN 10th Birthday Source Code Release!” Available at http://www.josh.com/notes/island-ecn-10th-birthday, accessed August 13, 2012. Levy, Jonathan Ira. 2006. “Contemplating Delivery: Futures Trading and the Problem of Commodity Exchange in the United States, 1875–1905.”

Stolen Focus: Why You Can't Pay Attention--And How to Think Deeply Again
by Johann Hari
Published 25 Jan 2022

There are two things that helped me make up my mind about what I think we should do next. One was a thought experiment, and the other was hard evidence from inside Facebook itself. Let’s imagine Nir is wrong, and we all follow his advice anyway—we allow surveillance capitalism to continue getting us “fiendishly hooked,” with only light regulation. Then let’s imagine Tristan is wrong, and we all follow his advice anyway—we regulate the Big Tech companies to stop their invasive practices. If Tristan is wrong and we still follow his advice, you would have been tricked into creating a world where you get targeted with a lot less advertising, you spend less, you get spied on less, and in return, you have to pay a small sum each month to subscribe to a few social-media companies, or those companies have in some way been taken over as public utilities run in our collective interests, like the sewers or the highways.

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

After four disappointing decades, development agencies have recognized this and used their authority to demand reforms. But the prescriptions have often been facile. What was offered to Russia was not American institutions, but the nostrums of the American business model. The institutions of the market-secure property rights, minimal government economic intervention, light regulation-were supposed to be simple and universal. If these prescriptions were implemented, growth would follow. But the truth about markets is far more complex. Rich states are the product of-literally-centuries of coevolution of civil society, politics, and economic institutions. A coevolution that we only partially understand and cannot transplant.

Virtual Competition
by Ariel Ezrachi and Maurice E. Stucke
Published 30 Nov 2016

And none of us know how this note is helping sway the public discourse in ways that benefit the super-platform. As we increasingly rely on our personal assistant, we may not recognize its toll on our well-being. As the personal assistant increasingly controls mundane household tasks, like turning off lights, regulating room temperature, and adjusting our water heater, it will be harder to turn off. But the online (and increasingly offline) tracking of our behavior can impede our creativity, solitude, and mental repose.21 George Orwell famously discussed in 1984 how monitoring our behav ior can adversely affect intellectual freedom: “You had to live—did live, from habit that became instinct—in the assumption that every sound you made was overheard and, except in darkness, every movement scrutinized.”22 As the U.S.

The Future Is Asian
by Parag Khanna
Published 5 Feb 2019

He decollectivized agriculture, allowed private enterprise, and opened the country to foreign trade and investment as the “tiger” economies had done in the preceding decade. In May 1980, Shenzhen in the Pearl River delta became the first Chinese Special Economic Zone, luring foreign capital with tax exemptions and light regulation. It rapidly achieved a 30 percent annual growth rate and mushroomed from a village with a population of 30,000 to a bustling city of 10 million. While making China the leading developing-country destination for foreign investment, Deng also signed a landmark Treaty of Peace and Friendship with Japan and improved ties with both the US and USSR.

The Brain That Changes Itself: Stories of Personal Triumph From the Frontiers of Brain Science
by Norman Doidge
Published 15 Mar 2007

BDNF regulates the maturation of inhibition and the critical period of plasticity in mouse visual cortex. Cell, 98:739–55. See also M. Fagiolini and T. K. Hensch. 2000. Inhibitory threshold for critical-period activation in primary visual cortex. Nature, 404(6774): 183–86; E. Castrén, F. Zafra, H. Thoenen, and D. Lindholm. 1992. Light regulates expression of brain-derived neurotrophic factor mRNA in rat visual cortex. Proceedings of the National Academy of Sciences, USA, 89(20): 9444–48. The fourth and final service that BDNF…is to help close down the critical period: M. Ridley. 2003. Nature via nurture: Genes, experience, and what makes us human.

No Such Thing as Society
by Andy McSmith
Published 19 Nov 2010

Even so, Live Aid was one of the greatest displays of generosity that Britain has ever seen, and it is the single most lasting image of Britain in the 1980s – which might seem odd, because the decade is not thought of as a charitable one. In the USA, the 1980s is known as the ‘decade of greed’ because of the way light regulation and tax changes allowed money to pour into the bank accounts of those who were already wealthy, creating a culture in which the corrupt investor Ivan Boesky told an audience in California that ‘you can be greedy and still feel good about yourself’.7 There was a similar phenomenon in 1980s Britain, though the phrase used to sum it up was not coined by an investor but by a satirical stand-up comic, Harry Enfield.

This Changes Everything: Capitalism vs. The Climate
by Naomi Klein
Published 15 Sep 2014

And yet as Hertsgaard acknowledges, the kind of policies that would be enough “seem preposterous to the political and economic status quo.”43 This state of affairs is, of course, yet another legacy of the free market counterrevolution. In virtually every country, the political class accepts the premise that it is not the place of government to tell large corporations what they can and cannot do, even when public health and welfare—indeed the habitability of our shared home—are clearly at stake. The guiding ethos of light-touch regulation, and more often of active deregulation, has taken an enormous toll in every sector, most notably the financial one. It has also blocked commonsense responses to the climate crisis at every turn—sometimes explicitly, when regulations that would keep carbon in the ground are rejected outright, but mostly implicitly, when those kinds of regulations are not even proposed in the first place, and so-called market solutions are favored for tasks to which they are wholly unequipped.

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

They fought to keep it.”) Oddly enough, the “agriculture guys” who backed the Enron loophole and thought nothing of loosening the trading rules on the energy and financial markets, did not want their sector, the agricultural sector, to be treated the same way. They believed light regulation of farm products to be very dangerous. The regulation of agricultural products, such as futures on corn, wheat, and cattle, has always been treated with extreme care, says Newsome. The reason is that the farmers have traditionally been much quicker than the nation’s energy consumers to assert themselves before Congress.

Generations: The Real Differences Between Gen Z, Millennials, Gen X, Boomers, and Silents—and What They Mean for America's Future
by Jean M. Twenge
Published 25 Apr 2023

In general, individualism has the advantage of more individual freedom and choice, and the downside of more social disconnection; collectivism offers less choice but tighter social connections. Second, it’s important not to conflate individualism and collectivism with political ideologies—they are not the same. Conservatism embraces some aspects of individualism (favoring light regulation of the individual by government) and some aspects of collectivism (emphasizing family and religion). Liberalism prizes individualism’s insistence that race, gender, and sexual orientation should not restrict rights or opportunities, but also supports collectivistic social policies such as government-funded health care.

Imagining India
by Nandan Nilekani
Published 25 Nov 2008

But the market economy is nevertheless pushing relentlessly against old systems, urging them toward reform, and penalizing policies that fail. The question remains, however, whether we can enable reform fast enough to leverage the opportunities we now have both domestically and globally. Reform requires key, controversial steps: we need to move toward a model of light regulation, where we have an independent regulator distanced from government. The oversight of educational institutions must be transparent and allow new institutions to enter easily. An open system that welcomes private investment both from India and from abroad is essential to create institutions with ambitions to be world-class.

Owning the Earth: The Transforming History of Land Ownership
by Andro Linklater
Published 12 Nov 2013

During the twenty-five years from 1951 to 1976 when the United States labored under a business-deterring, high-taxation, heavily regulated regime, America launched no fewer than twenty-three of the largest companies in the world, three more than were created in the thirty-year Austrian period of low taxation, high rewards, and light regulation from 1976 to 2007. And after recording annual returns close to 10 percent from 1950 to 1970, Wall Street’s returns dropped to a pallid reward of 5.58 percent for the two decades from 1988 to 2008. Far from equality being bought at the expense of economic efficiency, the economy expanded faster during the very years when, as the author Robert Putnam judged it, “America was . . . more egalitarian than it had been in more than a century.”

Austerity Britain: 1945-51
by David Kynaston
Published 12 May 2008

(Judy Haines) 14 February. Long queues for potatoes . . . Reduced clothing coupon 14 allowances. No wonder people steal coupons and clothes . . . Blackout so batteries for torches are scarce. (Gladys Langford) 16 February. Restrictions and arctic conditions persist . . . Several people here ignore lighting regulations and use lamps & radios at forbidden hours. (Gladys Langford) 18 February. Yesterday Selfridge’s was packed as though there was a bargain sale there. ‘Nothing else to do, nowhere to go,’ we heard a man say, obviously one of the nearly 3½ millions stood off through the fuel crisis. Today we saw men carrying their wives’ shopping baskets.