scholarly journals Financial Crises in Comparative Perspective – Crisis Management and its Phenomenon of Repetition/Return

2020 ◽  
Vol 66 (1) ◽  
pp. 65-77
Author(s):  
Sebastian Zemla
Keyword(s):  
Financial Crisis ◽  
Interest Rates ◽  
Crisis Management ◽  
Financial Crises ◽  
Sovereign Debt ◽  
Research Area ◽  
Comparative Approach ◽  
The Great Depression ◽  
Low Interest Rates ◽  
The Usa

AbstractCrises cause attentiveness in our society and awaken, depending on the degree of consternation, our ongoing interest. These events include financial crises, phenomenal incidents that shock the economic world and pose significant challenges for the governments. Two crises which stand out in this context are the Great Depression in 1929 and the financial crisis in 2007/2008. In addition to the comparative approach, the paper focuses directly on the typical repetitive mechanism (“recurrent pattern of banking and sovereign debt crises” (Reinhart & Rogoff, 2011): overheating, the forming of a bubble and the bursting of the bubble, largely started in the USA. Specific aspects included in this research area are crisis management in the decades mentioned above, the role of governments and banks, as well as the observation as to which crisis can be expected next. We can conclude that the current monetary systems led by complex financial instruments and addicted to low interest rates are prone to deliver another serious financial crisis.

scholarly journals Regional Governance and Macroeconomic Crisis Management in Latin America

2020 ◽  
pp. 135-142
Author(s):  
Maria Antonieta Del Tedesco Lins ◽  
Andrea Ribeiro Hoffmann
Keyword(s):  
Latin America ◽  
Financial Crisis ◽  
Crisis Management ◽  
Latin American ◽  
Financial Crises ◽  
Regional Governance ◽  
Macroeconomic Policies ◽  
Regional Institutions ◽  
The Usa ◽  
Governance Institutions

AbstractThis chapter analyses the governance institutions in Latin America, i.e. norms, instruments and mechanisms designed to deal with macroeconomic and financial crisis management, and their use during the financial crisis which started in 2008 in the USA and reached the region mostly towards the mid-2010s. It argues that Latin American regional institutions never prioritized the harmonization or the development of common macroeconomic policies or mechanisms to deal with financial crises, and the few multilateral initiatives created were not successful.

scholarly journals The Macroeconomic Effects of European Debt Crisis and Turkey

2015 ◽  
Author(s):  
Ahmet Ulusoy ◽  
Mehmet Ela
Keyword(s):  
Financial Crisis ◽  
Interest Rates ◽  
Sovereign Debt ◽  
Global Financial Crisis ◽  
Debt Crisis ◽  
Banking Regulation ◽  
Sovereign Debt Crisis ◽  
Private Debt ◽  
European Sovereign Debt Crisis ◽  
Low Interest Rates

European sovereign debt crisis is the period that because of low interest rates, government and private debt increased substantially and also financial crisis transform private debt to high sovereign debt. In this period, low interest rates made government borrowing cost cheap and so sovereign debt increased considerably. In same period, private sector consumption and debt rose and this induced the housing bubbles. The expansionary fiscal policy against the effects of global financial crisis and bail-outs given to banks which are problematic made the sovereign debt highest and debt burden unsustainable for some countries. European sovereign debt crisis affect the world globally with the financial and economic links. Countries implemented fiscal and monetary policies against the recession and unemployment. In this respect, it is worthwhile researching the European sovereign debt crisis which is multifaceted and complex and offering suggestions for Turkey. Turkey must maintain the strong fiscal position and increased country resilience against crisis. And Turkey must also maintain banking regulation and supervision which are intended to steady financial sector. The aim of this paper is analyzing the development of European sovereign debt crisis and its effects; and also emphasizing the actions Turkey can take and offering suggestions for Turkey.

Counter-cyclical public venture capital: Debt-funding as an anti-austerity innovation strategy

2017 ◽  
Vol 56 (3) ◽  
pp. 477-495 ◽  
Author(s):  
Alex Etzkowitz ◽  
Henry Etzkowitz
Keyword(s):  
Venture Capital ◽  
Interest Rates ◽  
Innovation Strategy ◽  
Productive Capacity ◽  
Knowledge Based ◽  
Low Interest Rates ◽  
The Usa ◽  
The Business Cycle ◽  
Smart Specialization ◽  
Private Venture

This article outlines a counter-cyclical innovation strategy to achieve prosperity, derived from an innovative project, the California Institute for Regenerative Medicine (CIRM). We identify an ‘innovation paradox’ in that the very point in the business cycle, when legislators are tempted to view austerity as a cure for economic downturns and to reduce innovation spend, is when an increase is most needed to create new industries and jobs and innovate out of recession or depression. It is both desirable and possible that policymakers resist the urge to capitulate to the innovation paradox. During periods that exhibit subdued inflation, elevated spare productive capacity, and low government borrowing rates, governments should increase their borrowings and use the proceeds to boost investment targeted towards innovation. We show how the State of California successfully utilized debt financing, traditionally reserved for physical infrastructure projects, to stimulate the development of intellectual infrastructure. Finally, we recommend a halt to European austerity policies and a ‘triple helix’ broadening of narrow ‘smart specialization’ policies that chase a private venture capital chimera. Europe should seize the present macroeconomic opportunity of low interest rates, borrow for innovation and be paid back manifold by ‘picking winners’, similarly to what the USA has been doing through DARPA (Defense Advanced Research Projects Agency) with GPS, as a response to Sputnik, the Internet and artificial intelligence, or the driverless car, formerly known as the ‘autonomous land vehicle’ in its military guise. Proactively targeted macroscopic investments in innovation are needed to solve the productivity/employment puzzle and foster the transition to a knowledge-based society.

scholarly journals Causes of The Outbreak of the Eurozone Crises: The Role of the Usa and the European Central Bank Monetary Policy

e-Finanse ◽  
2015 ◽  
Vol 11 (2) ◽  
pp. 47-63
Author(s):  
Natalia Białek
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Interest Rates ◽  
European Central Bank ◽  
Institutional Design ◽  
Global Financial Crisis ◽  
European Central ◽  
Low Interest Rates ◽  
The Usa ◽  
The U.S

Abstract This paper argues that the loose monetary policy of two of the world’s most important financial institutions-the U.S. Federal Reserve Board and the European Central Bank-were ultimately responsible for the outburst of global financial crisis of 2008-09. Unusually low interest rates in 2001- 05 compelled investors to engage in high risk endeavors. It also encouraged some governments to finance excessive domestic consumption with foreign loans. Emerging financial bubbles burst first in mortgage markets in the U.S. and subsequently spread to other countries. The paper also reviews other causes of the crisis as discussed in literature. Some of them relate directly to weaknesses inherent in the institutional design of the European Monetary Union (EMU) while others are unique to members of the EMU. It is rather striking that recommended remedies tend not to take into account the policies of the European Central Bank.

Lässt sich die Geldschöpfung der Geschäftsbanken noch kontrollieren? – Geldpolitik seit der jüngsten Finanzkrise 2007/2008

2018 ◽  
Vol 87 (3) ◽  
pp. 47-63
Author(s):  
Mathias Binswanger
Keyword(s):  
Monetary Policy ◽  
Financial Crisis ◽  
Interest Rates ◽  
Financial Crises ◽  
Commercial Banks ◽  
Central Banks ◽  
The Past ◽  
Monetary Authorities ◽  
Money Creation ◽  
Recent Financial Crisis

Zusammenfassung: Als Folge der jüngsten Finanzkrise ist der Einfluss der Zentralbanken auf die Geldschöpfung weitgehend verloren gegangen. Denn die Kontrolle über Reserven funktioniert nur solange, wie diese knapp sind und deren Bezug an bestimmte Bedingungen geknüpft werden kann. Seither halten die Geschäftsbanken in den ökonomisch wichtigsten Ländern de facto dermaßen viele Reserven, dass sie nicht mehr auf die jeweilige Zentralbank angewiesen sind. Diese Entwicklung lässt sich sowohl für die FED als auch für die EZB aufzeigen. Dies führt zu geldpolitisch neuen Herausforderungen, die bisher kaum beachtet wurden. Die Einflussmöglichkeit der Zentralbanken auf den Geldschöpfungsprozess der Geschäftsbanken wurde noch nie in so großem Stil ausgehebelt. Deshalb müssen Zentralbanken in Zukunft ihr Repertoire an geldpolitischen Massnahmen erweitern. Nur mit dem Drehen an der Zinsschraube wird man den Geldschöpfungsprozess in Zukunft kaum mehr in gewünschter Weise beeinflussen können. Summary: As a result of the recent financial crisis, the influence of central banks on money creation has largely disappeared. Controlling this process only works as long as money creation of commercial banks also leads to a need for additional reserves from the central bank. However, the large asset purchase programs of monetary authorities after the financial crises resulted in an enormous increase in reserves at commercial banks. Therefore, commercial banks have enough reserves to create additional money at large amounts and do not depend on central banks any more. This development is indicative for both the FED and the ECB. Therefore central banks face the challenge how they can restore their influence on the process of money creation. Just lowering or increasing interest rates, which was the major way of conducting monetary policy in the past, will not work anymore in the future.

Indonesia's new financial crisis law carries risks

2016 ◽  
Keyword(s):  
Financial Crisis ◽  
Crisis Management ◽  
Financial Crises ◽  
Deposit Insurance ◽  
Financial System ◽  
Legal Basis ◽  
Content Type ◽  
Regulatory Authorities ◽  
Crisis Prevention ◽  
First Time

Subject The new financial crisis management law. Significance On March 17, parliament approved the long-awaited 'Financial System Crisis Prevention and Mitigation' bill. For the first time, Indonesia has a law on financial crisis management that will provide the legal basis for regulatory authorities to respond better to future financial crises. Impacts Government preparedness to manage a financial crisis will rise, albeit gradually. Political stalemate during a crisis, especially in parliament, would prevent effective and timely action by the president. The Deposit Insurance Corporation has limited capitalisation and may not be strong enough to manage more than two large troubled banks.

Global investment in aircraft, housing securities up

2017 ◽  
Keyword(s):  
Financial Crisis ◽  
Interest Rates ◽  
Institutional Investors ◽  
Sparse Data ◽  
Pension Funds ◽  
Business Climate ◽  
Content Type ◽  
Mortgage Backed Securities ◽  
Rental Property ◽  
Low Interest Rates

Subject Trends in the securitisation market. Significance Investment in securitised assets fell after the financial crisis due to the role played by mortgage-backed securities as well as investor concerns about sparse data and complexity. The search for yield in a world of low interest rates has drawn investors back to securitised investment, particularly in aircraft-backed securities and rental property portfolios. Specific investor concerns have been dealt with, raising confidence, and the sector is meeting the financing shortfall arising from the pressure that traditional lenders have been under since the crisis. Impacts US-based securitisations are likely to become more available to European institutional investors if, as expected, regulation increases. The new US administration is expected to bring in measures to improve the business climate and may reduce regulation. The uptake of aircraft-backed securities will increase, but regulatory bias means that demand will still be dominated by pension funds.

scholarly journals Conjuring the spirit of multilateralism: Histories of crisis management during the ‘great credit crash’

2015 ◽  
Vol 42 (2) ◽  
pp. 227-246 ◽  
Author(s):  
AMIN SAMMAN
Keyword(s):  
Crisis Management ◽  
Financial Crises ◽  
Global Financial Crisis ◽  
Historical Narratives ◽  
The Political ◽  
Financial Instability ◽  
Historical Process ◽  
The Public ◽  
The Great Depression ◽  
Magic Trick

AbstractIn recent years, critical scholars have emphasised how the recollection of past events as traumas can both constrain and widen the political possibilities of a present. This article builds on such research by suggesting that the management of contemporary financial crises is reliant on a ritual work of repetition, wherein prior ‘crisis’ episodes are called upon to identify and authorise specific sites and modes of crisis management. In order to develop this argument, I focus on how past crises figure within the public pronouncements of four key policymaking organisations during the financial instability of 2007–9. I find that while the Great Depression does enable these organisations to reaffirm old ways of managing crises, both it and the more recent Asian crisis are also made to disclose new truths about the evolution of multilateralism as a form of governance. In so doing, I argue, these historical narratives reveal how the management of global financial crisis depends upon a kind of ‘magic trick’. Rather than a strictly rational, historical process of problem solving, contemporary crises are instead negotiated through a contingent and self-referential conjuring of crisis-histories.

scholarly journals Hall of Mirrors: The Great Depression, the Great Recession, and the Uses—and Misuses—of History

2015 ◽  
Vol 89 (3) ◽  
pp. 557-569 ◽  
Author(s):  
Per H. Hansen
Keyword(s):  
United States ◽  
Great Depression ◽  
Great Recession ◽  
Financial Crises ◽  
The United States ◽  
Comparative Approach ◽  
The Great Recession ◽  
The Great Depression ◽  
Successful Search ◽  
Similarities And Differences

Barry Eichengreen's new bookHall of Mirrorsis a detailed, excellent, and somewhat pessimistic comparison of the two most serious financial crises ever—their causes, development, and consequences. Readers well versed in the comprehensive literature on the Great Depression and the Great Recession in the United States and Europe will not find much information inHall of Mirrorsthat is completely new, but most others will. Whatisnew is the comparative approach: the detailed and analytically successful search for similarities and differences between the Great Depression and the Great Recession.

scholarly journals IS U.S. TECHNOLOGY SECTOR IN A BUBBLE?

2017 ◽  
pp. 379-394
Author(s):  
Sebastjan Strasek ◽  
Tadej Kelc
Keyword(s):  
Monetary Policy ◽  
Stock Market ◽  
Interest Rates ◽  
Quantitative Easing ◽  
Tax Rates ◽  
Technology Sector ◽  
The Great Depression ◽  
Current State ◽  
Low Interest Rates ◽  
The U.S

The paper is examines the issue if the U.S. technology sector is in the bubble. Our analysis is based on the study of relative indicators, especially on price-to-earnings ratio. We studied the last two historic bubbles and analyzed the current state on the U.S. stock market. We find that U.S. stock market is heavily overvalued, which can be argued with high values of the relative indicators compared to the historical average. Some of them indicate that market was valued higher only during the Great Depression in 1929 and during the technological bubble in 2000. Remarkably high values are the result of low interest rates and quantitative easing. The current expansive monetary policy is encouraging risky businesses and increasing margin debt. With potential abatement of tax rates and other measures of expansive fiscal politics, stock markets could reach even higher values.

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