Picciotto

Question 1

Central paradox of finance

Answer 1

it is a key public good although treated as a private sphere
-2008 crisis: after a long period of privatization and liberalization, extensive state nationalizations and regulations made after the crisis

Question 2

picciotto’s advise about finance

Answer 2

new structural foundations, regulation is not enough

Question 3

Two shifts from banking to financial cap.

Answer 3

• shift from commercial credit to investment credit

- growth of corporations, creation of corporate financial instruments

Question 4

Glass-Seagall act

Answer 4

after the great depression (1933):
-Seperation between commercial and investment banking
-Establishment of the federal deposit insurance corporation
Very important act, because:
-No fin crisis until 70’s
-Going back to this act

Question 5

50’s

Answer 5

• beginning of hot money through trans national com.

- beginning of offshore banking (england)

Question 6

73 collapse of BW - New World Order

Answer 6

• liberalization of fin corp
• market based financing
• financialization: growing, deepening of sector itself

Question 7

80’s - Re-regulation

Answer 7

Encouraged:

• speculation
• rapid liberalization

Question 8

Tasks of Basel meetings

Answer 8

-coordination of banks and bank supervisors
-monitoring bank’s international operations
(IMF: usa counterpart of basel)

Question 9

90’s

Answer 9

• flexibility for capital requirements
• securitization process of loans
• lots of financial instruments created - risky
• called as casino capitalism by some econ

Question 10

Securitization of loans

Answer 10

pooling and re-packaging loans

1. homeowners
2. banks
3. third party intermediary (state or private)
4. mortgage based securities to investors
5. CDO’s collateralized dept obligations

Question 11

2008 crisis reasons

Answer 11

Genrally: securitization

1. Low interest rate policies of FED from 2000
2. Dramatic increases in house prices (after 2004, despite increased rates)
3. 2006 house prices began to fall - securitized subprimes effected - the world effected
4. August 2007 - CB’s forced to inject money -crisis became global
5. FED announce: Fed bailed out Bear Steans (mistake)
6. Sptember 2008: Lehman bankruptcy
7. 2009: economic consequences - growth, unemp, foreign trade.