capital controls

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Global Governance and Financial Crises by Meghnad Desai, Yahia Said

Asian financial crisis, bank run, banking crisis, Bretton Woods, business cycle, capital controls, central bank independence, corporate governance, creative destruction, credit crunch, crony capitalism, currency peg, deglobalization, financial deregulation, financial innovation, Financial Instability Hypothesis, financial intermediation, financial repression, floating exchange rates, frictionless, frictionless market, German hyperinflation, information asymmetry, Japanese asset price bubble, knowledge economy, liberal capitalism, liberal world order, Long Term Capital Management, low interest rates, market bubble, Meghnad Desai, Mexican peso crisis / tequila crisis, moral hazard, Nick Leeson, Nixon triggered the end of the Bretton Woods system, oil shock, open economy, Post-Keynesian economics, price mechanism, price stability, Real Time Gross Settlement, rent-seeking, short selling, special drawing rights, structural adjustment programs, Tobin tax, transaction costs, Washington Consensus

There were also numerous regulations regarding minimum sums and ratings for bond and ADR issues on the external market.41 Figure 7.17 shows the Mexico, Korea and Brazil 141 US$ (1999) billions 12 10 8 Capital controls imposed FDI Capital controls strengthened 12 10 Port. ‘Other’ Exp. trend 8 6 6 4 4 2 2 0 0 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 Figure 7.17 Chile: composition of net private capital inflows (WB), 1988–97. Notes Exp. trend simple exponential trend. Source and definitions of components of inflows as in Figure 7.12. level and composition of net private capital inflows in Chile before and during capital controls. As is fairly evident from the graph, in terms of levels, capital controls in Chile seem to have had a significant but rather short-term effect.

Of course, this phenomenon is not independent from the level that these price controls actually reached (which, as mentioned earlier, although high for a standard Tobin-tax level, were lower than those of Colombia, and, in practice, much milder than Malaysia’s controls in 1994); unfortunately, there is no sufficient data from which to construct a proper measurement for the relevant elasticity. 142 Gabriel Palma 5.0 US$ (1999) billions 5.0 2.5 2.5 0 0 Capital controls imposed Capital controls strengthened –2.5 –2.5 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 Figure 7.18 Chile: net equity securities and other investment (IMF), 1988–97. Source: IMF (2000b). See this source for definitions. Exchange rate (1988 = 100) 105 100 Capital controls imposed Reserves (US$ billions) 105 Capital controls strengthened 100 2 95 95 1 90 90 85 85 80 80 75 75 70 1988 1989 1990 1991 1992 1993 1994 1995 70 1996 1997 1998 Figure 7.19 Chile: real effective exchange rate and foreign exchange reserves, 1988–98.

Then the strengthening of controls in 1995 had an immediate impact on this new bubble, bringing the index down considerably; and when it began to recover again in early 1997, with the new Mexico, Korea and Brazil 145 1,000 Capital controls imposed 1,000 Capital controls strengthened 800 800 600 600 1 400 400 2 200 200 0 0 3 1 3 1 3 1 3 1 3 1 3 1 3 1 3 1 3 1 3 1 89 | 90 | 91 | 92 | 93 | 94 | 95 | 96 | 97 | 98 | 99 Figure 7.21 Chile: quarterly stock market index, 1989–99, (US$ terms, 3/89 100). Source: Datastream. Note 1, Chile’s quarterly stock market index in US dollar terms and 2, Dow Jones. 1,200 Capital controls imposed Capital controls strengthened 1,000 1,200 1,000 800 800 600 600 400 400 200 200 0 0 3 1 3 1 3 1 3 1 3 1 3 1 3 1 3 1 3 1 3 1 89 | 90 | 91 | 92 | 93 | 94 | 95 | 96 | 97 | 98 | 99 Figure 7.22 Chile: quarterly real estate index, 1989–99 (local currency, 3/89 100).


pages: 356 words: 103,944

The Globalization Paradox: Democracy and the Future of the World Economy by Dani Rodrik

"World Economic Forum" Davos, affirmative action, Alan Greenspan, Asian financial crisis, bank run, banking crisis, Bear Stearns, bilateral investment treaty, borderless world, Bretton Woods, British Empire, business cycle, capital controls, Carmen Reinhart, central bank independence, classic study, collective bargaining, colonial rule, Corn Laws, corporate governance, corporate social responsibility, credit crunch, Credit Default Swap, currency manipulation / currency intervention, David Ricardo: comparative advantage, deindustrialization, Deng Xiaoping, Doha Development Round, en.wikipedia.org, endogenous growth, eurozone crisis, export processing zone, financial deregulation, financial innovation, floating exchange rates, frictionless, frictionless market, full employment, George Akerlof, guest worker program, Hernando de Soto, immigration reform, income inequality, income per capita, industrial cluster, information asymmetry, joint-stock company, Kenneth Rogoff, land reform, liberal capitalism, light touch regulation, Long Term Capital Management, low interest rates, low skilled workers, margin call, market bubble, market fundamentalism, Martin Wolf, mass immigration, Mexican peso crisis / tequila crisis, microcredit, Monroe Doctrine, moral hazard, Multi Fibre Arrangement, night-watchman state, non-tariff barriers, offshore financial centre, oil shock, open borders, open economy, Paul Samuelson, precautionary principle, price stability, profit maximization, race to the bottom, regulatory arbitrage, Savings and loan crisis, savings glut, Silicon Valley, special drawing rights, special economic zone, subprime mortgage crisis, The Wealth of Nations by Adam Smith, Thomas L Friedman, Tobin tax, too big to fail, trade liberalization, trade route, transaction costs, tulip mania, Washington Consensus, World Values Survey

As Professor Rawi Abdelal of the Harvard Business School notes, the Treaty of Rome, which established the European Economic Community in 1957, treated capital flows as a distinctly second-class citizen.13 Most countries in Europe maintained capital controls well into the 1980s. Even though Germany favored greater openness to capital flows, opposition from France and others frustrated any move in that direction. The United States did not employ capital controls until the early 1960s, but neither did it pressure other countries to remove theirs. In 1963, faced with a capital outflow, the United States imposed a special tax on interest earnings on foreign deposits, a measure it maintained until 1974. In developing countries, of course, capital controls were very much the norm, with very rare exceptions. Capital controls were effective through the 1960s, and they worked as the architects of the Bretton Woods regime imagined they would, opening up space for domestic macroeconomic management.14 The Achilles’ heel of the Bretton Woods regime was that it did not address a fundamental conundrum for the international economy: What will play the role of international money in the system?

The IMF continued to goad countries it dealt with to remove domestic impediments on international finance, and the United States pushed its partners in trade agreements to renounce capital controls. This signaled a momentous transformation in policy beliefs. We need to return to the original Bretton Woods agreement to appreciate its full significance. The Bretton Woods Consensus on Capital Controls It would be difficult to overstate the strength of the consensus in favor of capital controls in the immediate aftermath of World War II. As one American economist put it in 1946: “It is now highly respectable doctrine, in academic and banking circles alike, that a substantial measure of direct control over private capital movements, especially of the so-called ‘hot money’ varieties, will be desirable for most countries not only in the years immediately ahead but also in the long run as well.”11 The Bretton Woods arrangements fully reflected this consensus.

Hence the paradox: reduced transaction costs in trade required higher transaction costs in international finance—in other words, capital controls. Free capital mobility was out and capital controls were in. The Bretton Woods regime championed the principle that national economies needed management to ensure full employment and adequate growth. This in turn required that they have sufficient “policy space” to conduct their monetary and fiscal policies. In addition to capital controls, there were two features of the new system geared toward providing that space. The first of these was the provision of short-term financing from the IMF to help countries weather temporary shortages of foreign currency and difficulties in external payments.


pages: 823 words: 206,070

The Making of Global Capitalism by Leo Panitch, Sam Gindin

accounting loophole / creative accounting, active measures, airline deregulation, Alan Greenspan, anti-communist, Asian financial crisis, asset-backed security, bank run, banking crisis, barriers to entry, Basel III, Bear Stearns, Big bang: deregulation of the City of London, bilateral investment treaty, book value, Branko Milanovic, Bretton Woods, BRICs, British Empire, business cycle, call centre, capital controls, Capital in the Twenty-First Century by Thomas Piketty, carbon credits, Carmen Reinhart, central bank independence, classic study, collective bargaining, continuous integration, corporate governance, creative destruction, Credit Default Swap, crony capitalism, currency manipulation / currency intervention, currency peg, dark matter, democratizing finance, Deng Xiaoping, disintermediation, ending welfare as we know it, eurozone crisis, facts on the ground, financial deregulation, financial innovation, Financial Instability Hypothesis, financial intermediation, floating exchange rates, foreign exchange controls, full employment, Gini coefficient, Glass-Steagall Act, global value chain, guest worker program, Hyman Minsky, imperial preference, income inequality, inflation targeting, interchangeable parts, interest rate swap, Kenneth Rogoff, Kickstarter, land reform, late capitalism, liberal capitalism, liquidity trap, London Interbank Offered Rate, Long Term Capital Management, low interest rates, manufacturing employment, market bubble, market fundamentalism, Martin Wolf, means of production, military-industrial complex, money market fund, money: store of value / unit of account / medium of exchange, Monroe Doctrine, moral hazard, mortgage debt, mortgage tax deduction, Myron Scholes, new economy, Nixon triggered the end of the Bretton Woods system, non-tariff barriers, Northern Rock, oil shock, precariat, price stability, proprietary trading, quantitative easing, Ralph Nader, RAND corporation, regulatory arbitrage, reserve currency, risk tolerance, Ronald Reagan, Savings and loan crisis, scientific management, seigniorage, shareholder value, short selling, Silicon Valley, sovereign wealth fund, special drawing rights, special economic zone, stock buybacks, structural adjustment programs, subprime mortgage crisis, Tax Reform Act of 1986, The Chicago School, The Great Moderation, the payments system, The Wealth of Nations by Adam Smith, too big to fail, trade liberalization, transcontinental railway, trickle-down economics, union organizing, vertical integration, very high income, Washington Consensus, We are all Keynesians now, Works Progress Administration, zero-coupon bond, zero-sum game

It was simply a last resort when, by general assent, the effort to maintain par values or central rates seemed too difficult in the face of speculative movements of capital across the world’s exchanges.”49 Just as Volcker also explains the US imposition of an import surcharge in August 1971 as a bargaining counter to secure currency revaluation and agricultural tariff reductions from the Europeans (a tactic that would again and again be deployed as part and parcel of the US push for “free trade”),50 so were the Europeans’ calls for capital controls mainly tactical. Indeed, Volcker himself thought the Europeans had not pushed the option of extending capital controls nearly as much as they should have.51 Those among the German political elite who were in favor of the temporary use of capital controls were in fact the most conservative and monetarist and the least oriented to the guiding principles of Bretton Woods; German Keynesians (above all the social democratic finance minister, Karl Schiller) were at one with US economists like Galbraith and Kindleberger in viewing capital controls as antithetical to liberal internationalism.52 In fact, among the nine leading industrialized countries, by 1973 Germany’s financial system was already the most liberalized.53 The fact was that, by this time, the degree of financial interpenetration among the leading capitalist states was such that controls would have had to be very extensive—and they could only have been imposed against the strong opposition of the most powerful sections of the European and Japanese capitalist classes.

The exchanges were privately controlled bodies whose purpose was to organize arenas for particular sorts of gambling, not to provide funds for industrial investment.” Politics of the Financial Services Revolution, pp. 112–13. 54 Iwami, “Removing Capital Controls,” p. 23. 55 See K. Osugi, “Japan’s Experience of Financial Deregulation since 1984 in an International Perspective,” BIS Economic Papers, no. 26 (January 1990); Iwami, “Removing Capital Controls,” p. 5; Goodman and Pauly, “The Obsolescence of Capital Controls?” p. 309. 56 Paul Volcker and Toyoo Gyohten, Changing Fortunes, New York: Times Books, 1992, p. 239. 57 R. Taggart Murphy, The Weight of the Yen, New York: Norton, 1996, pp. 144–5. 58 Ibid., p. 64. 59 Tett, Saving the Sun, p. 22. 60 In 1980 the US and Southeast Asia each accounted for 24 percent of Japanese exports, and Western Europe accounted for 17 percent; by 1984 Southeast Asia’s portion had fallen to 22 percent and Western Europe’s to 14 percent, while the US portion had risen to 35 percent.

Writing in the Wall Street Journal, John Kenneth Galbraith declared: “[T]he fruits of great strenuous private efforts and of the most carefully conceived public policy extending over the last several decades are about to be extinguished.”59 Although Galbraith complained of the weakness of American business in failing to stop the controls program, Wall Street’s reaction to them (like that of the central bankers in Europe) was to demand instead higher American interest rates to cope with the problem, and these were indeed instituted in the Fed by 1969, as we shall see in the next chapter. The argument has been made in retrospect that the US government’s adoption of capital controls at this time proves that “finance was clearly weak” in the 1960s.60 This is extremely misleading. Not only does this fail to address the growing material strength and international reach of US financial capital (as shown in its very high profits in the latter half of the 1960s despite the move from voluntary to mandatory capital controls); it also fails to put this in the context of the trajectory of the longer-term development of policy and further strengthening of finance in the subsequent decades.


pages: 322 words: 87,181

Straight Talk on Trade: Ideas for a Sane World Economy by Dani Rodrik

3D printing, airline deregulation, Asian financial crisis, bank run, barriers to entry, behavioural economics, Berlin Wall, Bernie Sanders, blue-collar work, Bretton Woods, BRICs, business cycle, call centre, capital controls, Capital in the Twenty-First Century by Thomas Piketty, carbon tax, Carmen Reinhart, carried interest, central bank independence, centre right, collective bargaining, conceptual framework, continuous integration, corporate governance, corporate social responsibility, currency manipulation / currency intervention, David Ricardo: comparative advantage, deindustrialization, Donald Trump, endogenous growth, Eugene Fama: efficient market hypothesis, eurozone crisis, export processing zone, failed state, financial deregulation, financial innovation, financial intermediation, financial repression, floating exchange rates, full employment, future of work, general purpose technology, George Akerlof, global value chain, income inequality, inflation targeting, information asymmetry, investor state dispute settlement, invisible hand, Jean Tirole, Kenneth Rogoff, low interest rates, low skilled workers, manufacturing employment, market clearing, market fundamentalism, meta-analysis, moral hazard, Nelson Mandela, new economy, offshore financial centre, open borders, open economy, open immigration, Pareto efficiency, postindustrial economy, precautionary principle, price stability, public intellectual, pushing on a string, race to the bottom, randomized controlled trial, regulatory arbitrage, rent control, rent-seeking, Richard Thaler, Robert Gordon, Robert Shiller, Ronald Reagan, Sam Peltzman, Silicon Valley, Solyndra, special economic zone, spectrum auction, Steven Pinker, tacit knowledge, The Rise and Fall of American Growth, the scientific method, The Wealth of Nations by Adam Smith, Thomas L Friedman, too big to fail, total factor productivity, trade liberalization, transaction costs, Tyler Cowen, unorthodox policies, Washington Consensus, World Values Survey, zero-sum game, éminence grise

In a study on OECD countries, researchers found that when other countries reduce their average statutory corporate tax rate by 1 percentage point, the home country follows by reducing its tax rate by 0.7 percentage points.33 The study indicated that international tax competition takes place only among countries that have removed their capital controls. When such controls are in place, capital and profits cannot move as easily across national borders and there is no downward pressure on capital taxes. So, the removal of capital controls appears to be a factor in driving the reduction in corporate tax rates. On the other hand, there is scant evidence of similar races to the bottom in labor and environmental standards or in financial regulation.

Global Capital Rules In a remarkable reversal, in 2012 the International Monetary Fund put its stamp of approval on capital controls, thereby legitimizing the use of taxes and other restrictions on cross-border financial flows. Not so long ago, the global institution had pushed hard for countries—rich or poor—to open up to foreign finance. Now it has endorsed the reality that financial globalization can be disruptive—inducing financial crises and inappropriate movements in the value of currencies. So here we are with yet another twist in the never-ending saga of our love-and-hate relationship with capital controls. Under the classical Gold Standard that prevailed until 1914, free capital mobility had been sacrosanct.

The turbulence of the interwar period convinced many, including most famously John Maynard Keynes, that an open capital account is incompatible with macroeconomic stability. The new consensus was reflected in the Bretton Woods agreement of 1944, which enshrined capital controls in the IMF’s Articles of Agreement. As Keynes said at the time, “what used to be heresy is now endorsed as orthodoxy.” By the late 1980s, policy makers had become enamored yet again with capital mobility. The European Union made capital controls illegal in 1992, and the Organization for Economic Cooperation and Development enforced free finance on its new members, paving the way for financial crises in Mexico and South Korea in 1994 and 1997, respectively.


pages: 868 words: 147,152

How Asia Works by Joe Studwell

affirmative action, anti-communist, Asian financial crisis, bank run, banking crisis, barriers to entry, borderless world, Bretton Woods, British Empire, call centre, capital controls, central bank independence, collective bargaining, crony capitalism, cross-subsidies, currency manipulation / currency intervention, David Ricardo: comparative advantage, deindustrialization, demographic dividend, Deng Xiaoping, failed state, financial deregulation, financial repression, foreign exchange controls, Gini coefficient, glass ceiling, Great Leap Forward, high-speed rail, income inequality, income per capita, industrial robot, Joseph Schumpeter, Kenneth Arrow, land reform, land tenure, large denomination, liberal capitalism, low interest rates, market fragmentation, megaproject, non-tariff barriers, offshore financial centre, oil shock, open economy, passive investing, purchasing power parity, rent control, rent-seeking, Right to Buy, Ronald Coase, South China Sea, The Wealth of Nations by Adam Smith, TSMC, urban sprawl, Washington Consensus, working-age population

The major prerequisite of the system is that the government’s industrial policy targets are realistic and not too wasteful of funds – something made more achievable by the closure of state sector ‘zombie’ firms in the 1990s. Capital controls are the essential adjunct of a financial system that supports China’s development objectives because they prevent money leaving the country in search of better returns. The restrictions also prevent international investors from moving capital in and out of China at will, something which would make the government’s job of pointing the financial system at developmental targets much harder. Capital controls are policed by an enormous bureaucracy at the State Administration of Foreign Exchange, which falls under the control of the central bank.

But governments directed the hefty investments this made possible to the wrong ends – to lower-yield, large-scale agriculture, and to companies that were either not focused on manufacturing or only on manufacturing for protected domestic markets. South-east Asian states then made their developmental prospects even worse by following rich country advice to deregulate banking, to open up other financial markets, and to lift capital controls. The same advice had been proffered to Japan, Korea, Taiwan and China in the early stages of their development, but they sensibly resisted for as long as possible. Premature financial deregulation in south-east Asia led to a proliferation of family-business-controlled banks which did nothing to support exportable manufacturing and which indulged in vast amounts of illegal related-party lending.

Years before the Asian financial crisis, the Korean finance scholar Jung-en Woo warned Asian states about Latin America’s IMF-sponsored reforms: ‘Privatisation in the Latin American Southern Cone had its conglomerates run amok,’ she wrote, ‘buying up banks to buy up other enterprises, stacking up loan portfolios with loans made out to affiliated firms …[It] led to Chilean and Argentine grupos profiting like bandits.’8 Despite the evidence from Latin America about the risks of premature bank deregulation – not to mention what was seen after financial deregulation in Russia in the early 1990s – south-east Asia went ahead with very similar policies. Once again, political leaders knew too little history and were too easily bewitched by economists. South-east Asian states also got rid of capital controls on IMF advice. Japan had faced formal, repeated demands from the IMF and the secretariat of the General Agreement on Tariffs and Trade (the GATT, the forerunner of the World Trade Organisation) to move to currency convertibility from 1959, but hung on to its highly restrictive Foreign Capital Law until 1980.9 Korea and Taiwan were similarly recalcitrant in resisting demands to free up capital flows until the 1990s.


pages: 661 words: 185,701

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

access to a mobile phone, Adam Neumann (WeWork), Airbnb, algorithmic trading, altcoin, bank run, barriers to entry, Bear Stearns, Ben Bernanke: helicopter money, Bernie Madoff, Big Tech, bitcoin, Bitcoin Ponzi scheme, Bletchley Park, blockchain, Bretton Woods, business intelligence, buy and hold, capital controls, carbon footprint, cashless society, central bank independence, cloud computing, coronavirus, COVID-19, Credit Default Swap, cross-border payments, cryptocurrency, deglobalization, democratizing finance, disintermediation, distributed ledger, diversified portfolio, Dogecoin, Donald Trump, Elon Musk, Ethereum, ethereum blockchain, eurozone crisis, fault tolerance, fiat currency, financial engineering, financial independence, financial innovation, financial intermediation, Flash crash, floating exchange rates, full employment, gamification, gig economy, Glass-Steagall Act, global reserve currency, index fund, inflation targeting, informal economy, information asymmetry, initial coin offering, Internet Archive, Jeff Bezos, Kenneth Rogoff, Kickstarter, light touch regulation, liquidity trap, litecoin, lockdown, loose coupling, low interest rates, Lyft, M-Pesa, machine readable, Mark Zuckerberg, Masayoshi Son, mobile money, Money creation, money market fund, money: store of value / unit of account / medium of exchange, Network effects, new economy, offshore financial centre, open economy, opioid epidemic / opioid crisis, PalmPilot, passive investing, payday loans, peer-to-peer, peer-to-peer lending, Peter Thiel, Ponzi scheme, price anchoring, profit motive, QR code, quantitative easing, quantum cryptography, RAND corporation, random walk, Real Time Gross Settlement, regulatory arbitrage, rent-seeking, reserve currency, ride hailing / ride sharing, risk tolerance, risk/return, Robinhood: mobile stock trading app, robo advisor, Ross Ulbricht, Salesforce, Satoshi Nakamoto, seigniorage, Sheryl Sandberg, Silicon Valley, Silicon Valley startup, smart contracts, SoftBank, special drawing rights, the payments system, too big to fail, transaction costs, uber lyft, unbanked and underbanked, underbanked, Vision Fund, Vitalik Buterin, Wayback Machine, WeWork, wikimedia commons, Y Combinator, zero-sum game

Spillovers Rey (2018) makes the case for a global financial cycle in capital flows, asset prices, and credit growth and highlights the constraints this imposes on the monetary policy independence of EMEs. Clark et al. (2019) make the case that country fundamentals are more important than US monetary policy actions in driving capital flows to EMEs. Requiem for Capital Controls? For a rationale and description of Iceland’s capital controls, see https://www.cb.is/financial-stability/foreign-exchange/capital-controls/. The Greek capital controls, imposed in June 2015 in tandem with a bank holiday, are reported in Kerin Hope, Henry Foy, Claire Jones, and Peter Spiegel, “Greece Closes Banks after Bailout Talks Break Down,” Financial Times, June 29, 2015, https://www.ft.com/content/49775bac-1d83-11e5-ab0f-6bb9974f25d0.

Other Cases of Capital Flight through Cryptocurrencies The capital controls in Greece are described in Kerin Hope, Henry Foy, Claire Jones, and Peter Spiegel, “Greece Closes Banks after Bailout Talks Break Down,” Financial Times, June 28, 2015, https://www.ft.com/content/49775bac-1d83-11e5-ab0f-6bb9974f25d0. For a description of how the capital controls affected demand for Bitcoin in Greece, see Jemima Kelly, “Fearing Return to Drachma, Some Greeks Use Bitcoin to Dodge Capital Controls,” Reuters, July 3, 2015, https://www.reuters.com/article/us-eurozone-greece-bitcoin/fearing-return-to-drachma-some-greeks-use-bitcoin-to-dodge-capital-controls-idUSKCN0PD1B420150703.

Requiem for Capital Controls? Most advanced economies have eliminated capital controls—restrictions on cross-border capital flows—although there are recent instances in which such controls have been used in exceptional circumstances. In late 2008, Iceland faced a financial and economic meltdown as confidence in the financial system collapsed. Foreign and domestic investors were pulling their money out, sending the value of the country’s currency, the Icelandic króna, plummeting. To prevent further damage, Iceland banned all capital outflows. Similarly, Greece instituted capital controls in 2015 to prevent capital flight and a collapse of its banking system in the midst of the eurozone debt crisis.


pages: 182 words: 53,802

The Production of Money: How to Break the Power of Banks by Ann Pettifor

Alan Greenspan, Ben Bernanke: helicopter money, Bernie Madoff, Bernie Sanders, bitcoin, blockchain, bond market vigilante , borderless world, Bretton Woods, capital controls, Carmen Reinhart, central bank independence, clean water, credit crunch, Credit Default Swap, cryptocurrency, David Graeber, David Ricardo: comparative advantage, debt deflation, decarbonisation, distributed ledger, Donald Trump, eurozone crisis, fiat currency, financial deregulation, financial engineering, financial innovation, financial intermediation, financial repression, fixed income, Fractional reserve banking, full employment, Glass-Steagall Act, green new deal, Hyman Minsky, inflation targeting, interest rate derivative, invisible hand, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Kenneth Rogoff, Kickstarter, land bank, Leo Hollis, light touch regulation, London Interbank Offered Rate, low interest rates, market fundamentalism, Martin Wolf, mobile money, Money creation, Naomi Klein, neoliberal agenda, offshore financial centre, Paul Samuelson, Ponzi scheme, Post-Keynesian economics, pushing on a string, quantitative easing, rent-seeking, Satyajit Das, savings glut, secular stagnation, The Chicago School, the market place, Thomas Malthus, Tobin tax, too big to fail

Closing doors to footloose, speculative, mobile capital Keynes understood that under a bank-money system, not only was reliance on foreign capital over but that, in order to manage the economy, countries should actually close their borders to footloose, mobile international capital. To do so he advocated capital control: the taxing of cross-border capital flows. Capital controls are taxes, and differ from exchange controls. The latter place limits on the amount of a nation’s currency that can be taken abroad. Instead, the financial transaction tax or Tobin tax is a form of capital control, a tax on and ‘sand in the wheels’ of capital flows. Today’s excessively complex globalised financial system is very different from that of Keynes’s day. But given that complexity, and given the propensity of risk assessors, CEOs and the part-time members of globalised company boards to make catastrophic errors of judgement, a sound regulatory system is now an even greater imperative.

They include professors Dani Rodrik and Kevin P. Gallagher, and have lately been joined by some orthodox economists, including the highly respected Professor Hélène Rey, who has argued that the armoury of macroprudential tools should not exclude capital control. Until now their voices have been eclipsed by effective lobbying from financiers on Wall Street and the City of London. At the same time the arguments for capital control have not attracted support from the Left or from social democratic parties. On the contrary, most social democratic governments both accept and reinforce a form of hyperglobalisation. To bring global capital back onshore would be transformational of the global monetary order.

But given that complexity, and given the propensity of risk assessors, CEOs and the part-time members of globalised company boards to make catastrophic errors of judgement, a sound regulatory system is now an even greater imperative. Of course capital controls are often dismissed on the grounds that they can be evaded. But then, so can taxes – and yet nobody argues for the abolition of taxes. Governments and institutions that oppose capital controls are often the very same governments that have in the past applied controls over ‘hot money’ as they pursued their own domestic economic goals. Now that they believe their country to be strong enough to withstand the headwinds of mobile capital, they deny those powers to the minnows of the global economy, the emerging markets and poorest countries.


pages: 324 words: 90,253

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

Alan Greenspan, Albert Einstein, Apollo 11, Asian financial crisis, asset-backed security, banking crisis, Basel III, Bear Stearns, Berlin Wall, Bernie Madoff, bond market vigilante , British Empire, business cycle, capital controls, central bank independence, collapse of Lehman Brothers, collateralized debt obligation, congestion charging, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, cross-subsidies, currency risk, debt deflation, Deng Xiaoping, Diane Coyle, endowment effect, eurozone crisis, Fall of the Berlin Wall, financial innovation, financial repression, fixed income, floating exchange rates, Ford Model T, full employment, George Akerlof, German hyperinflation, Glass-Steagall Act, Hyman Minsky, income inequality, income per capita, inflation targeting, invisible hand, John Maynard Keynes: Economic Possibilities for our Grandchildren, joint-stock company, junk bonds, Kickstarter, liquidationism / Banker’s doctrine / the Treasury view, liquidity trap, London Interbank Offered Rate, loss aversion, low interest rates, market clearing, mass immigration, Minsky moment, moral hazard, mortgage debt, Neil Armstrong, new economy, New Urbanism, Nick Leeson, Northern Rock, Occupy movement, oil shale / tar sands, oil shock, old age dependency ratio, price mechanism, price stability, quantitative easing, railway mania, rent-seeking, reserve currency, rising living standards, risk free rate, Savings and loan crisis, seminal paper, South Sea Bubble, sovereign wealth fund, technology bubble, The Market for Lemons, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, Tobin tax, too big to fail, trade route, trickle-down economics, Washington Consensus, women in the workforce, working-age population

After all, Mahathir's decision was a direct challenge to the Washington Consensus. And it wasn't long before the Consensus had its say. Some suggested that capital controls were merely a device to provide financial benefits to those Malaysian companies with strong ties to Mahathir.11 Others noted that both South Korea and Thailand managed to recover in 1998 without using capital controls, thereby suggesting that Mahathir's decision was, at best, irrelevant. Still others simply regarded capital controls as the devil's work. In reality, the situation was more nuanced. While South Korea and Thailand were showing signs of financial recovery in the summer of 1998, the same couldn't be said about Malaysia.12 Those who were theologically opposed to capital controls too often forgot that open international capital markets had both advantages and disadvantages: in effect, there was a trade-off between efficient resource allocation – reducing the risk of cronyism by keeping capital markets ‘pure’ – and heightened vulnerability to financial crises – a reflection of increased dependency on ‘hot money’ inflows.13 Mahathir, however, was less concerned with an academic debate about the pros and cons of capital controls and much more focused on clinging on to power.

On 1 September 1998, Bank Negara – the Malaysian central bank – released a statement announcing the imposition of capital controls, giving those holding ringgit offshore a month to bring their money back home. Later that day, Mahathir gave an interview to the media where he explained that: where the ringgit's value is in an unstable situation, business could not be continued in a way that would be profitable … when the ringgit's value is brought down, our income will be reduced … we have to fix the ringgit permanently … the currency traders … make huge profits, while at the same time impoverishing a whole country, regions and peoples. At the time, the imposition of capital controls led to howls of protest.

While South Korea and Thailand were showing signs of financial recovery in the summer of 1998, the same couldn't be said about Malaysia.12 Those who were theologically opposed to capital controls too often forgot that open international capital markets had both advantages and disadvantages: in effect, there was a trade-off between efficient resource allocation – reducing the risk of cronyism by keeping capital markets ‘pure’ – and heightened vulnerability to financial crises – a reflection of increased dependency on ‘hot money’ inflows.13 Mahathir, however, was less concerned with an academic debate about the pros and cons of capital controls and much more focused on clinging on to power. Suharto's fall earlier in 1998 followed shortly after Indonesia's adoption of a typically brutal IMF programme.


pages: 561 words: 87,892

Losing Control: The Emerging Threats to Western Prosperity by Stephen D. King

"World Economic Forum" Davos, Admiral Zheng, Alan Greenspan, asset-backed security, barriers to entry, Berlin Wall, Bernie Madoff, Bretton Woods, BRICs, British Empire, business cycle, capital controls, Celtic Tiger, central bank independence, collateralized debt obligation, corporate governance, credit crunch, crony capitalism, currency manipulation / currency intervention, currency peg, David Ricardo: comparative advantage, demographic dividend, demographic transition, Deng Xiaoping, Diane Coyle, Fall of the Berlin Wall, financial deregulation, financial innovation, fixed income, foreign exchange controls, Francis Fukuyama: the end of history, full employment, G4S, George Akerlof, German hyperinflation, Gini coefficient, Great Leap Forward, guns versus butter model, hiring and firing, income inequality, income per capita, inflation targeting, invisible hand, Isaac Newton, junk bonds, knowledge economy, labour market flexibility, labour mobility, liberal capitalism, low interest rates, low skilled workers, market clearing, Martin Wolf, mass immigration, Meghnad Desai, Mexican peso crisis / tequila crisis, Naomi Klein, new economy, old age dependency ratio, Paul Samuelson, Ponzi scheme, price mechanism, price stability, purchasing power parity, rent-seeking, reserve currency, rising living standards, Ronald Reagan, Savings and loan crisis, savings glut, Silicon Valley, Simon Kuznets, sovereign wealth fund, spice trade, statistical model, technology bubble, The Great Moderation, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, The Market for Lemons, The Wealth of Nations by Adam Smith, Thomas Malthus, trade route, transaction costs, Washington Consensus, We are all Keynesians now, women in the workforce, working-age population, Y2K, Yom Kippur War

As that consensus began to unravel in the 1970s with the failure of the Bretton Woods system of fixed but adjustable exchange rates, countries slowly moved away from capital controls to the world we’re now living in. In a world of constant financial innovation, it became increasingly difficult to impose capital controls successfully. Moreover, capital controls allowed countries to pursue bad domestic policies for too long, ultimately to their own detriment. Nevertheless, the abolition of capital controls has hardly been plain sailing. Some economists foresaw the problems associated with newly liberalized capital markets. James Tobin (1918–2002), for example, suggested in 1972 a (now-eponymous) tax – to be paid on foreign-exchange transactions – to limit speculative cross-border capital flows.

James Tobin (1918–2002), for example, suggested in 1972 a (now-eponymous) tax – to be paid on foreign-exchange transactions – to limit speculative cross-border capital flows. He feared that the failures of Bretton Woods would be replaced by anarchy in the capital markets. On occasion, he was proved right. Enthusiasm for some kind of capital control has recently returned (as I wrote this book, capital controls were making a comeback: Brazil and Taiwan, for example, introduced capital controls in November 2009). In the light of the 2007/8 credit crunch, central banks began to argue the need for two separate policy instruments: short-term interest rates to control inflation and some kind of ‘macro-prudential’ policy to limit the impact of unstable capital inflows on domestic bank lending.

Dealing with the Paradox of a Single Capital Market and Many Nations Policymakers have to stop the pretence and confront head-on the conflict between a single global capital market and the proliferation of nation states, many of which have their own currencies. Either nations can attempt to hang on to their financial sovereignty by reintroducing capital controls or, instead, new institutions need to be developed which can pool financial sovereignty effectively. The idea of dampening down capital markets through capital controls has a long and rich history and was, of course, part of the post-war international financial consensus: if countries wanted to control simultaneously their exchange rates and their domestic inflation rates, they had no choice but to regulate capital inflows and outflows.


pages: 233 words: 66,446

Bitcoin: The Future of Money? by Dominic Frisby

3D printing, Alan Greenspan, altcoin, bank run, banking crisis, banks create money, barriers to entry, bitcoin, Bitcoin Ponzi scheme, blockchain, capital controls, Chelsea Manning, cloud computing, computer age, cryptocurrency, disintermediation, Dogecoin, Ethereum, ethereum blockchain, fiat currency, financial engineering, fixed income, friendly fire, game design, Hacker News, hype cycle, Isaac Newton, John Gilmore, Julian Assange, land value tax, litecoin, low interest rates, M-Pesa, mobile money, Money creation, money: store of value / unit of account / medium of exchange, Occupy movement, Peter Thiel, Ponzi scheme, prediction markets, price stability, printed gun, QR code, quantitative easing, railway mania, Ronald Reagan, Ross Ulbricht, Satoshi Nakamoto, Silicon Valley, Skype, slashdot, smart contracts, Snapchat, Stephen Hawking, Steve Jobs, Ted Nelson, too big to fail, transaction costs, Turing complete, Twitter Arab Spring, Virgin Galactic, Vitalik Buterin, War on Poverty, web application, WikiLeaks

However, there were capital controls in those days. He could go, but he couldn’t take his money with him. The way he got round the problem, like his parents before him, was with gold. He bought 60 Krugerrands (about $80,000 in today’s money) and got on a flight to London. Those 60 Krugers were enough to get him started in his new life in the UK. But he had to take considerable risk. He could have lost those Krugers, or they might have been stolen or confiscated. There was also the possibility he would be caught and charged with smuggling. In the 1970s there were capital controls across the West.

Until 1979 in the UK you had to get permission to take more than £25 – less than 50 dollars – abroad.179 Those controls may not exist to anything like the same extent now, but they do exist elsewhere. China, for example, is the world’s second-largest economy, yet individuals may not withdraw more than $50,000 per annum from the country. The banking crisis in Cyprus in 2013 saw capital controls introduced there. Currently, cash withdrawals are limited to €300 a day, the cashing of cheques is banned and large cash transfers are vetted. Accounts with over €100,000 saw funds confiscated. Capital controls now seem to be being imposed in the Ukraine due to its current instability. Reports suggest nationals are finding it harder and harder to get their money out of Spain and other parts of impoverished Southern Europe, and the insolvency of Spain’s banks makes another banking crisis in the region look probable.

Reports suggest nationals are finding it harder and harder to get their money out of Spain and other parts of impoverished Southern Europe, and the insolvency of Spain’s banks makes another banking crisis in the region look probable. The investment bank JP Morgan has declared it is ‘inevitable that capital controls and a capital freeze will be imposed’180 in Southern Europe; senior employees tell me many of their current strategies are based on this inevitability. Where there is an economic or political crisis, capital controls often follow. Innocent people are made to pay for the profligacies of their banks, their financial system or their governments. Bitcoin has been dubbed ‘money without government’ and ‘money without borders’.


pages: 376 words: 109,092

Paper Promises by Philip Coggan

accounting loophole / creative accounting, activist fund / activist shareholder / activist investor, Alan Greenspan, balance sheet recession, bank run, banking crisis, barriers to entry, Bear Stearns, Berlin Wall, Bernie Madoff, Black Monday: stock market crash in 1987, Black Swan, bond market vigilante , Bretton Woods, British Empire, business cycle, call centre, capital controls, Carmen Reinhart, carried interest, Celtic Tiger, central bank independence, collapse of Lehman Brothers, collateralized debt obligation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency manipulation / currency intervention, currency peg, currency risk, debt deflation, delayed gratification, diversified portfolio, eurozone crisis, Fall of the Berlin Wall, falling living standards, fear of failure, financial innovation, financial repression, fixed income, floating exchange rates, full employment, German hyperinflation, global reserve currency, Goodhart's law, Greenspan put, hiring and firing, Hyman Minsky, income inequality, inflation targeting, Isaac Newton, John Meriwether, joint-stock company, junk bonds, Kenneth Rogoff, Kickstarter, labour market flexibility, Les Trente Glorieuses, light touch regulation, Long Term Capital Management, low interest rates, manufacturing employment, market bubble, market clearing, Martin Wolf, Minsky moment, Money creation, money market fund, money: store of value / unit of account / medium of exchange, moral hazard, mortgage debt, Myron Scholes, negative equity, Nick Leeson, Northern Rock, oil shale / tar sands, paradox of thrift, peak oil, pension reform, plutocrats, Ponzi scheme, price stability, principal–agent problem, purchasing power parity, quantitative easing, QWERTY keyboard, railway mania, regulatory arbitrage, reserve currency, Robert Gordon, Robert Shiller, Ronald Reagan, savings glut, short selling, South Sea Bubble, sovereign wealth fund, special drawing rights, Suez crisis 1956, The Chicago School, The Great Moderation, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, The Wealth of Nations by Adam Smith, time value of money, too big to fail, trade route, tulip mania, value at risk, Washington Consensus, women in the workforce, zero-sum game

As Reinhart and Sbrancia remark, financial repression may re-emerge in ‘the guise of prudential regulation’. Russell Napier, a financial historian, takes a similar line, writing: It is time to bring back capital controls. Only with such controls can government debt burdens be inflated away. With capital controls, private savings can be more easily forced into public sector debt. It was capital controls that ensured the UK’s gilt yields could be below its inflation rate in the 1970s.13 The post-1945 rules were difficult to evade thanks to the imposition of capital controls. In those days, payments took time to process, and rules were easier to enforce; British tourists were even limited in the amount of sterling they could take abroad.

The main fear was a return of high unemployment rates and politicians wanted the flexibility to adjust monetary (and fiscal) policy to boost the economy. They no longer wanted the unemployed to be crucified on a ‘cross of gold’. Capital controls protected countries from the threat that speculators, alarmed by the direction of monetary policy, might undermine exchange rate targets. Many countries had already imposed capital controls during the war so it was not that difficult to extend them. The choice did attract contemporary criticism. Economist Frank Graham wrote: We should know that we must either forgo fixed exchange rates or national monetary sovereignty if we are to avoid the disruption of equilibrium in freely conducted international trade or the system of controls and inhibitions which is the only alternative when the internal values of independent currencies deviate – as they always tend to do.4 Graham added that the system contained ‘not even the slightest provision for the adoption, by the various participating countries, of the congruent monetary policies without which a system of fixed exchange rates simply does not make sense’.

The emerging countries were unable to defeat the deal in the face of support for Lagarde from both Europe and the US. THE OUTLINES OF A SYSTEM Any target for exchange rates, or current-account surpluses, would have to be flexible. Fixed exchange rates require either subordination of monetary policy or capital controls to be effective. The Chinese, who already restrict investment, might favour capital controls, but it is hard to see the US, with its huge financial services industry, agreeing to a worldwide restriction. However, there is one factor that might persuade the US government to change its mind – its debt burden. As has already been discussed, reducing debt via an austerity programme is unpalatable, and outright default is almost unthinkable.


pages: 429 words: 120,332

Treasure Islands: Uncovering the Damage of Offshore Banking and Tax Havens by Nicholas Shaxson

Asian financial crisis, asset-backed security, bank run, battle of ideas, Bear Stearns, Bernie Madoff, Big bang: deregulation of the City of London, Bretton Woods, British Empire, business climate, call centre, capital controls, collapse of Lehman Brothers, computerized trading, corporate governance, corporate social responsibility, creative destruction, Credit Default Swap, David Ricardo: comparative advantage, Double Irish / Dutch Sandwich, export processing zone, failed state, financial deregulation, financial engineering, financial innovation, Fractional reserve banking, full employment, Glass-Steagall Act, Global Witness, Golden arches theory, high net worth, income inequality, Kenneth Rogoff, laissez-faire capitalism, land reform, land value tax, light touch regulation, Londongrad, Long Term Capital Management, low interest rates, Martin Wolf, Money creation, money market fund, New Journalism, Northern Rock, offshore financial centre, oil shock, old-boy network, out of africa, passive income, plutocrats, Ponzi scheme, race to the bottom, regulatory arbitrage, reserve currency, Ronald Reagan, shareholder value, Suez crisis 1956, The Spirit Level, too big to fail, transfer pricing, vertical integration, Washington Consensus

He believed that financing was usually best when it happens inside, rather than between, countries. Capital controls would give governments more room to pursue objectives like maintaining full employment: Instead of limiting the scope of democracy in the interests of speculators and financiers, the plan was to limit the international mobility of capital: Finance would be society’s servant, not its master. “Let goods be homespun whenever it is reasonably and conveniently possible,” he wrote. “Above all, let finance be primarily national.” The Bretton Woods plan, for all its faults, was designed to tame the forces of international finance.17 Capital controls can be hard to imagine for those who have not experienced them.

As Britain’s prime minister Harold Macmillan put it in 1957, “Most of our people have never had it so good.” From 1950 to 1973, annual growth rates amid widespread capital controls (and extremely high tax rates) averaged 4.0 percent in the United States and 4.6 percent in Europe. Not only that, but as the Cambridge economist Ha-Joon Chang notes, the per capita income of developing countries grew by a full 3.0 percent21 per year in the 1960s and 1970s, significantly faster than the record since then. And from the 1970s, as capital controls were progressively relaxed around the world, and as tax rates fell and the offshore system really began to flower, growth rates fell sharply.

., Europe’s Post-War Recovery (Cambridge: Cambridge University Press, 1995), p. 99. 16.Geoff Tily, the author of a book on Keynes, believes that the main reason Keynes supported capital controls was his belief that interest rates should be set and held low. This would place Keynes firmly on the side of the industrialist (for whom interest payments were a cost) against the financier (for whom interest payments were income). See Geoff Tily, “The Policy Implications of the General Theory,” Real-World Economics Review, no. 50 (2009): 16–33, http://www.paecon.net/PAEReview/issue50/Tily50.pdf. 17.Capital controls had emerged during the First World War as countries had sought to stop capital fleeing their countries in order to be able to tax capital income and keep interest rates low in order to finance their war efforts.


pages: 511 words: 151,359

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

Alan Greenspan, Asian financial crisis, asset allocation, bank run, banking crisis, banks create money, Berlin Wall, book value, Bretton Woods, business cycle, Buy land – they’re not making it any more, capital controls, central bank independence, colonial rule, corporate governance, COVID-19, creative destruction, credit crunch, crony capitalism, currency manipulation / currency intervention, currency peg, currency risk, debt deflation, Deng Xiaoping, desegregation, discounted cash flows, diversification, Donald Trump, equity risk premium, financial engineering, financial innovation, floating exchange rates, Fractional reserve banking, full employment, Glass-Steagall Act, hindsight bias, Hyman Minsky, If something cannot go on forever, it will stop - Herbert Stein's Law, if you build it, they will come, impact investing, inflation targeting, interest rate swap, invisible hand, Japanese asset price bubble, Jeff Bezos, junk bonds, Kickstarter, laissez-faire capitalism, lateral thinking, Long Term Capital Management, low interest rates, market bubble, mass immigration, means of production, megaproject, Mexican peso crisis / tequila crisis, Michael Milken, Money creation, moral hazard, Myron Scholes, negative equity, offshore financial centre, open borders, open economy, Pearl River Delta, price mechanism, profit motive, quantitative easing, Ralph Waldo Emerson, regulatory arbitrage, rent-seeking, reserve currency, risk free rate, risk-adjusted returns, Ronald Reagan, Savings and loan crisis, savings glut, Scramble for Africa, short selling, social distancing, South China Sea, The Wealth of Nations by Adam Smith, too big to fail, yield curve

For foreign investors in Asia at this time, one of the greatest risks was that the Asian authorities would resort to draconian administrative measures in an attempt to stabilise their exchange rates while seeking to bolster economic growth. As someone who read financial history, I was very well aware that capital controls had been the rule rather than the exception through most of the post-war period. Indeed they had only been lifted relatively recently but still long enough ago that most investors in Asia were very unfamiliar with them as a policy tool. Capital controls had been lifted partially in recognition of their failure as part of a grander economic policy that had refused to allow markets to determine prices. This orthodoxy in 1996 was that they were a failed policy and the implementation of policies that would reduce the role of markets in determining prices, through administrative measures, seemed highly unlikely to just about everyone.

So there is yet another potential event out there which could even further undermine confidence in Malaysia. The prime minister of Malaysia was not the only person who supported the introduction of capital controls. At the annual meeting of the IMF and World Bank in Hong Kong in September 1997, Joseph Stiglitz, then chief economist of the World Bank, had also recommended their introduction. Before the year end, both the governments of the UK and Canada were recommending that capital controls might be part of the answer for the growing Asian crisis. Portfolio investors in Asia knew nothing of this and Mahathir was seen as isolated on this issue, but it was to be almost another year before he acted unilaterally despite the fact that he had publicly raised the prospect of capital controls in late 1997.

Portfolio investors in Asia knew nothing of this and Mahathir was seen as isolated on this issue, but it was to be almost another year before he acted unilaterally despite the fact that he had publicly raised the prospect of capital controls in late 1997. The longer he raised the spectre of capital controls and nothing happened, the more unlikely it seemed that they would be imposed – until they were. His intentions however had been made fairly clear in his speech in Hong Kong on 20 September 1997: I know I am taking a big risk to suggest it but I am saying that currency trading is unnecessary, unproductive and immoral. It should be stopped. It should be made illegal. We don’t need currency trading.


pages: 371 words: 98,534

Red Flags: Why Xi's China Is in Jeopardy by George Magnus

"World Economic Forum" Davos, 3D printing, 9 dash line, Admiral Zheng, AlphaGo, Asian financial crisis, autonomous vehicles, balance sheet recession, banking crisis, Bear Stearns, Bretton Woods, Brexit referendum, BRICs, British Empire, business process, capital controls, carbon footprint, Carmen Reinhart, cloud computing, colonial exploitation, corporate governance, crony capitalism, currency manipulation / currency intervention, currency peg, demographic dividend, demographic transition, Deng Xiaoping, Doha Development Round, Donald Trump, financial deregulation, financial innovation, financial repression, fixed income, floating exchange rates, full employment, general purpose technology, Gini coefficient, global reserve currency, Great Leap Forward, high net worth, high-speed rail, hiring and firing, Hyman Minsky, income inequality, industrial robot, information security, Internet of things, invention of movable type, Joseph Schumpeter, Kenneth Rogoff, Kickstarter, labour market flexibility, labour mobility, land reform, Malacca Straits, means of production, megacity, megaproject, middle-income trap, Minsky moment, money market fund, moral hazard, non-tariff barriers, Northern Rock, offshore financial centre, old age dependency ratio, open economy, peer-to-peer lending, pension reform, price mechanism, purchasing power parity, regulatory arbitrage, rent-seeking, reserve currency, rising living standards, risk tolerance, Shenzhen special economic zone , smart cities, South China Sea, sovereign wealth fund, special drawing rights, special economic zone, speech recognition, The Wealth of Nations by Adam Smith, total factor productivity, trade route, urban planning, vertical integration, Washington Consensus, women in the workforce, working-age population, zero-sum game

For now, China can sustain its monetary autonomy and its exchange rate system but only, of course, by maintaining the regime of tighter controls over capital leaving the country. Capital controls, though, can become quite porous when the confidence to keep capital at home dissipates and drives people to take it out of the country. Even though the capital flight of 2015–16 was stemmed, the steady trickle of money leaving China and of people queuing up for visas at the embassies of foreign countries are reminders that the better-off in China feel insecure. In any event, capital controls run counter to broader ambitions for the Renminbi to play a bigger role as a global currency and for its use in Belt and Road financing and funding.

Yet, whether this happens or not, eventually China will have to inflate or deflate its way out of debt, both of which would entail outcomes in which capital would most likely try to flee China. Since China is susceptible to capital flight in spite of capital controls, we should expect the Renminbi to be weaker in future. The existence of capital controls buys China time, but not in perpetuity. In any event, because a significant liberalisation of outward capital movements is unlikely, and an external balance of payments surplus will persist for the time being, the often propagated belief that the Renminbi will become a major international or even significant global reserve currency is another example of the triumph of rhetoric over reality.

Removing restrictions on outward capital movements has always lagged behind, therefore, and there has always been an unresolvable tension between managing an open capital account in which Chinese citizens and companies have full access to foreign markets and assets, and the control which the Party has never wanted to cede. After some protracted financial turbulence in 2015–16, Chinese capital controls were again tightened significantly. Financial reform Over time, China has broadened and deepened its financial system from what was originally a rigid, unsophisticated and doctrinaire means of financial control. Broadening refers to the growth of financial assets as a share of GDP, as well as to a wider universe of financial institutions and financial products on offer.


pages: 339 words: 95,270

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

Alan Greenspan, Albert Einstein, Asian financial crisis, asset allocation, asset-backed security, Berlin Wall, Bernie Sanders, Branko Milanovic, Bretton Woods, British Empire, business climate, business cycle, capital controls, centre right, collective bargaining, currency manipulation / currency intervention, currency peg, David Ricardo: comparative advantage, deglobalization, deindustrialization, Deng Xiaoping, Donald Trump, Double Irish / Dutch Sandwich, Fall of the Berlin Wall, falling living standards, financial innovation, financial repression, fixed income, full employment, George Akerlof, global supply chain, global value chain, Great Leap Forward, high-speed rail, illegal immigration, income inequality, intangible asset, invention of the telegraph, joint-stock company, land reform, Long Term Capital Management, low interest rates, Malcom McLean invented shipping containers, manufacturing employment, Martin Wolf, mass immigration, Mikhail Gorbachev, Money creation, money market fund, mortgage debt, New Urbanism, Nixon triggered the end of the Bretton Woods system, offshore financial centre, oil shock, open economy, paradox of thrift, passive income, reserve currency, rising living standards, Robert Shiller, Ronald Reagan, savings glut, Scramble for Africa, sovereign wealth fund, stock buybacks, subprime mortgage crisis, The Nature of the Firm, The Wealth of Nations by Adam Smith, Tim Cook: Apple, trade liberalization, Wolfgang Streeck

That transfer discouraged domestic spending relative to domestic production and therefore minimized China’s reliance on foreign financing. Maintaining the peg was a challenge, however, because foreign savers were eager to invest in China. Capital controls kept some foreign money out, but more than enough was still coming in. Left unchecked, these flows would have pushed up China’s exchange rate and increased Chinese spending on goods and services. The Chinese government could have offset some of those foreign inflows by loosening its outbound capital controls and allowing Chinese savers to buy foreign assets. Liberalization, however, would have threatened the government’s control of the economy and financial system.

Recycling the inflows, as in the 1950s, by buying an equivalent amount of foreign—in practice, European—assets would have been theoretically possible, but highly impractical and likely unprofitable. Taxes or regulations to discourage or prevent foreign purchases of U.S. assets might have helped but would have been fundamentally opposed by the intellectual consensus of the time. Moreover, any form of capital controls would have looked hypocritical in light of American advice to other countries in the 1990s. Even if capital controls had diverted inflows from the United States to Europe, they would not have addressed the underlying problem of excessive saving and insufficient demand. Similarly, trade protections against imports would, at best, have shifted the problem elsewhere rather than addressed the fundamental imbalances in the global economy.

BIS, “Effective Exchange Rate Indices,” https://www.bis.org/statistics/eer.htm; Central Bank of the Republic of Turkey, “Weighted Average Interest Rates for Banks’ Loans,” https://www.tcmb.gov.tr/wps/wcm/connect/EN/TCMB+EN/Main+Menu/Statistics/Interest+Rate+Statistics/Weighted+Average+Interest+Rates+For+Banks+Loans/. 21. Matthew C. Klein, “If Spain Didn’t Need Capital Controls, Why Would Anyone?,” FT Alphaville, July 15, 2016, https://ftalphaville.ft.com/2016/07/15/2168347/if-spain-didnt-need-capital-controls-why-would-anyone/; Bank of Spain, “Spanish Securities Markets,” https://www.bde.es/webbde/en/estadis/infoest/temas/sb_tiimerval.html; Bank of Spain, “Consumer Price Index (CPI) and Harmonised Index of Consumer Prices (HICP),” https://www.bde.es/webbde/en/estadis/infoest/temas/sb_ipc.html; Bank of Spain, “Economic Indicators,” https://www.bde.es/webbde/en/estadis/infoest/indeco.html; Bank of Spain, “Interest Rates and Exchange Rates,” https://www.bde.es/webbde/en/estadis/infoest/tipos/tipos.html; BIS, “Effective Exchange Rates,” https://www.bis.org/statistics/eer.htm; BIS, “Residential Property Prices: Detailed Series (Nominal),” https://www.bis.org/statistics/pp_detailed.htm. 22.


pages: 263 words: 80,594

Stolen: How to Save the World From Financialisation by Grace Blakeley

"Friedman doctrine" OR "shareholder theory", activist fund / activist shareholder / activist investor, asset-backed security, balance sheet recession, bank run, banking crisis, banks create money, Basel III, basic income, battle of ideas, Berlin Wall, Big bang: deregulation of the City of London, Big Tech, bitcoin, bond market vigilante , Bretton Woods, business cycle, call centre, capital controls, Capital in the Twenty-First Century by Thomas Piketty, capitalist realism, Carmen Reinhart, central bank independence, collapse of Lehman Brothers, collective bargaining, corporate governance, corporate raider, credit crunch, Credit Default Swap, cryptocurrency, currency peg, David Graeber, debt deflation, decarbonisation, democratizing finance, Donald Trump, emotional labour, eurozone crisis, Extinction Rebellion, extractivism, Fall of the Berlin Wall, falling living standards, financial deregulation, financial innovation, Financial Instability Hypothesis, financial intermediation, fixed income, full employment, G4S, gender pay gap, gig economy, Gini coefficient, global reserve currency, global supply chain, green new deal, Greenspan put, housing crisis, Hyman Minsky, impact investing, income inequality, inflation targeting, Intergovernmental Panel on Climate Change (IPCC), Jeremy Corbyn, job polarisation, junk bonds, Kenneth Rogoff, Kickstarter, land value tax, light touch regulation, low interest rates, low skilled workers, market clearing, means of production, Modern Monetary Theory, money market fund, Mont Pelerin Society, moral hazard, mortgage debt, negative equity, neoliberal agenda, new economy, Nixon triggered the end of the Bretton Woods system, Northern Rock, offshore financial centre, paradox of thrift, payday loans, pensions crisis, Phillips curve, Ponzi scheme, Post-Keynesian economics, post-war consensus, price mechanism, principal–agent problem, profit motive, quantitative easing, race to the bottom, regulatory arbitrage, reserve currency, Right to Buy, rising living standards, risk-adjusted returns, road to serfdom, Robert Solow, savings glut, secular stagnation, shareholder value, Social Responsibility of Business Is to Increase Its Profits, sovereign wealth fund, the built environment, The Great Moderation, too big to fail, transfer pricing, universal basic income, Winter of Discontent, working-age population, yield curve, zero-sum game

The implications of this change would be far more profound than anyone could have seen at the time.16 With the demise of Bretton Woods, capital was finally released from its cage. Many countries continued to maintain capital controls and strict financial regulation. But the glut of dollars that had emerged at the international level needed somewhere to go. Meanwhile, the capital that had been stored up within states like the UK under Bretton Woods was desperate to be released into the global economy. It pushed and strained against the continued existence of capital controls, finding ever more ingenious ways of getting around the system. Finance capital had returned with a vengeance, and it sought to remove all obstacles to its continued growth.

Whilst the negotiators at Bretton Woods were undoubtedly concerned with securing the profitability of their domestic banking industry — not least the emerging power of Wall Street — just one banker was invited to the summit by the US delegation.4 Between the eating, the drinking, and the flirting, delegates at the conference hammered out an historic agreement for a set of institutions that would govern the global economy during the golden age of capitalism. The world’s currencies would be pegged to the dollar at a pre-determined level, supervised by the Federal Reserve, and the dollar would be pegged to gold. Capital controls were implemented to prevent financiers from the kind of currency speculation that could cause wild swings in exchange rates. The system of exchange-rate pegging and controls on capital mobility served to hem in those powerful pools of capital that had wreaked such havoc in the global economy in the period before 1929.

Toyota, General Electric, and Volkswagen couldn’t afford to keep their subsidiaries across the globe insulated from one another — money had to be moved, even if that meant undermining the monetary architecture of the international economy. Technological change also facilitated direct transfers of capital between different parts of the world. All this meant that, despite the continued existence of capital controls, capital mobility had increased substantially by the 1970s. The combination of the emergence of the Eurodollar markets and the rise of the multinational corporation were beginning to place serious strain on Bretton Woods. But it was the US government — not the banks — that dealt the final blow to the system that it had helped to create.


pages: 381 words: 101,559

Currency Wars: The Making of the Next Gobal Crisis by James Rickards

"World Economic Forum" Davos, Alan Greenspan, Asian financial crisis, bank run, Bear Stearns, behavioural economics, Benoit Mandelbrot, Berlin Wall, Big bang: deregulation of the City of London, Black Swan, borderless world, Bretton Woods, BRICs, British Empire, business climate, buy and hold, capital controls, Carmen Reinhart, Cass Sunstein, collateralized debt obligation, complexity theory, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, cross-border payments, currency manipulation / currency intervention, currency peg, currency risk, Daniel Kahneman / Amos Tversky, deal flow, Deng Xiaoping, diversification, diversified portfolio, Dr. Strangelove, Fall of the Berlin Wall, family office, financial innovation, floating exchange rates, full employment, game design, German hyperinflation, Gini coefficient, global rebalancing, global reserve currency, Great Leap Forward, guns versus butter model, high net worth, income inequality, interest rate derivative, it's over 9,000, John Meriwether, Kenneth Rogoff, laissez-faire capitalism, liquidity trap, Long Term Capital Management, low interest rates, mandelbrot fractal, margin call, market bubble, Mexican peso crisis / tequila crisis, Money creation, money market fund, money: store of value / unit of account / medium of exchange, Myron Scholes, Network effects, New Journalism, Nixon shock, Nixon triggered the end of the Bretton Woods system, offshore financial centre, oil shock, one-China policy, open economy, paradox of thrift, Paul Samuelson, power law, price mechanism, price stability, private sector deleveraging, proprietary trading, quantitative easing, race to the bottom, RAND corporation, rent-seeking, reserve currency, Ronald Reagan, short squeeze, sovereign wealth fund, special drawing rights, special economic zone, subprime mortgage crisis, The Myth of the Rational Market, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Kuhn: the structure of scientific revolutions, time value of money, too big to fail, value at risk, vertical integration, War on Poverty, Washington Consensus, zero-sum game

Alternatively, the president may eschew a return to gold and use an array of capital controls and global IMF money creation to reliquify and stabilize the situation. This IMF global bailout will not be in old, nonconvertible dollars but in a newly printed global currency called the SDR. Life will go on but the international monetary system will never be the same. This isn’t far-fetched speculation. It has all happened before. Time and again, paper currencies have collapsed, assets have been frozen, gold has been confiscated and capital controls have been imposed. The United States has not been immune to these acts; in fact, America has been a leading advocate of dollar debasement from the 1770s to the 1970s, through the Revolution, the Civil War, the Great Depression and Carter-era hyperinflation.

Brazil is an important case because of its geographic, demographic and economic scale, but it is by no means the only country caught in the cross fire of a currency war among the dollar, euro and yuan. Other countries implementing or considering capital controls to stem inflows of hot money, especially dollars, include India, Indonesia, South Korea, Malaysia, Singapore, South Africa, Taiwan and Thailand. In every case, the fear is that their currencies will become overvalued and their exports will suffer as the result of the Fed’s easy money policies and the resulting flood of dollars sloshing around the world in search of high yields and more rapid growth. These capital controls took various forms depending on the preferences of the central banks and finance ministries imposing them.

The devaluation means higher unemployment in developing economies as their exports become more expensive for Americans. The resulting inflation also means higher prices for inputs needed in developing economies like copper, corn, oil and wheat. Foreign countries have begun to fight back against U.S.-caused inflation through subsidies, tariffs and capital controls; the currency war is expanding fast. While Fed money printing on a trillion-dollar scale may be new, currency wars are not. Currency wars have been fought before—twice in the twentieth century alone—and they always end badly. At best, currency wars offer the sorry spectacle of countries stealing growth from trading partners.


pages: 614 words: 174,226

The Economists' Hour: How the False Prophets of Free Markets Fractured Our Society by Binyamin Appelbaum

90 percent rule, airline deregulation, Alan Greenspan, Alvin Roth, Andrei Shleifer, anti-communist, battle of ideas, Benoit Mandelbrot, Big bang: deregulation of the City of London, Bretton Woods, British Empire, business cycle, capital controls, Carmen Reinhart, Cass Sunstein, Celtic Tiger, central bank independence, clean water, collective bargaining, Corn Laws, correlation does not imply causation, Credit Default Swap, currency manipulation / currency intervention, David Ricardo: comparative advantage, deindustrialization, Deng Xiaoping, desegregation, Diane Coyle, Donald Trump, Dr. Strangelove, ending welfare as we know it, financial deregulation, financial engineering, financial innovation, fixed income, flag carrier, floating exchange rates, full employment, George Akerlof, George Gilder, Gini coefficient, greed is good, Greenspan put, Growth in a Time of Debt, Ida Tarbell, income inequality, income per capita, index fund, inflation targeting, invisible hand, Isaac Newton, It's morning again in America, Jean Tirole, John Markoff, Kenneth Arrow, Kenneth Rogoff, land reform, Les Trente Glorieuses, long and variable lags, Long Term Capital Management, low cost airline, low interest rates, manufacturing employment, means of production, Menlo Park, minimum wage unemployment, Mohammed Bouazizi, money market fund, Mont Pelerin Society, Network effects, new economy, Nixon triggered the end of the Bretton Woods system, oil shock, Paul Samuelson, Philip Mirowski, Phillips curve, plutocrats, precautionary principle, price stability, profit motive, public intellectual, Ralph Nader, RAND corporation, rent control, rent-seeking, Richard Thaler, road to serfdom, Robert Bork, Robert Gordon, Robert Solow, Ronald Coase, Ronald Reagan, Sam Peltzman, Savings and loan crisis, Silicon Valley, Simon Kuznets, starchitect, Steve Bannon, Steve Jobs, supply-chain management, The Chicago School, The Great Moderation, The Myth of the Rational Market, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, transaction costs, trickle-down economics, ultimatum game, Unsafe at Any Speed, urban renewal, War on Poverty, Washington Consensus, We are all Keynesians now

“Nothing is more certain,” Keynes wrote in the 1940s, “than that the movement of capital funds must be regulated.”44 Ending those restrictions was a goal dear to Friedman and the financial industry. Friedman’s objections went beyond his normal distaste for government. He noted the Nazis had used capital controls to consolidate political power; in his view, it was one of the most powerful tools available “to enable the state to control its citizens.”45 Just as anything less than free trade was a step toward communism, anything less than the free flow of money moved society toward totalitarianism. As Keynesianism crumbled in the 1970s, capital controls crumbled, too — a victim of the change in the ideological weather and of practical difficulties in checking the resurgence of finance.

“I rejoice,” he told investors, in the restoration of “the freedom to invest your funds where you think the prospects are most promising.”46 The first time Friedman met Margaret Thatcher, over dinner in 1978, he urged her to make elimination of Britain’s capital controls, in place since World War II, her first priority upon taking office. Thatcher suspended the controls in October 1979, a few months after she became prime minister. “Hooray for Margaret Thatcher!” Friedman said upon hearing the news.47 Chile was one of the first smaller countries to get rid of its capital controls — just as the Latin American debt boom was ramping up. The country also sharply reduced financial regulation, among other things allowing the nation’s two largest conglomerates to acquire the two largest banks.

That this freedom was a cause of Chile’s crisis did not alter their view that it was also a remedy.52 Interestingly, the radicalization of the IMF was catalyzed by French socialists — not the conservative governments in the United States and Britain.53 The French finance minister Jacques Delors argued that capital controls mostly punished the middle class, since the wealthy simply evaded the rules. Ending the controls, he said, was a blow against inequality. West Germany had long shared Friedman’s aversion to capital controls, and for the same historical reasons.54 With the French on board, the European Community mandated an end to all controls in 1988. The next year, again at the behest of the French, the Organization for Economic Cooperation and Development (OECD), which seeks to coordinate the economic policies of developed nations with democratic governments, adopted an informal but influential commitment to eliminate capital controls.


pages: 405 words: 109,114

Unfinished Business by Tamim Bayoumi

Alan Greenspan, algorithmic trading, Asian financial crisis, bank run, banking crisis, Basel III, battle of ideas, Bear Stearns, behavioural economics, Ben Bernanke: helicopter money, Berlin Wall, Big bang: deregulation of the City of London, book value, Bretton Woods, British Empire, business cycle, buy and hold, capital controls, Celtic Tiger, central bank independence, collapse of Lehman Brothers, collateralized debt obligation, credit crunch, currency manipulation / currency intervention, currency peg, Doha Development Round, facts on the ground, Fall of the Berlin Wall, financial deregulation, floating exchange rates, full employment, Glass-Steagall Act, Greenspan put, hiring and firing, housing crisis, inflation targeting, junk bonds, Just-in-time delivery, Kenneth Rogoff, liberal capitalism, light touch regulation, London Interbank Offered Rate, Long Term Capital Management, market bubble, Martin Wolf, moral hazard, oil shale / tar sands, oil shock, price stability, prisoner's dilemma, profit maximization, quantitative easing, race to the bottom, random walk, reserve currency, Robert Shiller, Rubik’s Cube, Savings and loan crisis, savings glut, technology bubble, The Great Moderation, The Myth of the Rational Market, the payments system, The Wisdom of Crowds, too big to fail, trade liberalization, transaction costs, value at risk

Indeed, the evidence suggests that selling reserves to defend an overvalued exchange rate is generally ineffective, although once the exchange rate has fallen to a sustainable level such intervention can break market momentum and avoid “overshooting” of the exchange rate to excessively depreciated values. Capital controls are another self-insurance mechanism. They work best as a preemptive device, countering excessive inflows of debt from the rest of the world. However, such foresight is not a characteristic of past international financial crises. Rather, in the crises discussed in this chapter, policymakers and investors alike believed that the capital inflows reflected high returns combined with bright prospects for future growth. Imposing capital controls after a crisis has started is clearly much less effective. In addition, there is an issue of timing.

The costs involved in swapping one currency for another discouraged cross-border banking. While the charges for a single transfer between (say) the Deutsche mark and the French franc were only a few percentage points, they added up quickly if the same funds had to be transferred back and forth several times as would typically occur in a truly integrated cross-border bank. Capital controls added further headaches by disallowing some transactions and adding time, cost, and paperwork to others. Such controls were particularly prevalent in countries suffering from relatively high inflation, including major European Community countries such as France, Italy, and the United Kingdom.

These controls reflected the strains these members faced in maintaining international competitiveness given the commitment to limiting exchange rate fluctuations contained in the European Exchange Rate Mechanism. Finally, every Community country except the United Kingdom required foreign-owned banks to raise local capital, adding costs that further fragmented the European banking system. Irritating as the costs of different currencies, capital controls, and local capital levies were for banks, the most permanent barrier to cross-country banking would turn out to be the informal barriers created by national regulators. Each country had its own set of banking regulations with which any foreign venture had to comply. Since any entry into the domestic market by a foreign bank required the approval of national governments, regulators could easily block foreign ventures.


pages: 332 words: 106,197

The Divide: A Brief Guide to Global Inequality and Its Solutions by Jason Hickel

"World Economic Forum" Davos, Alan Greenspan, Andrei Shleifer, Asian financial crisis, Atahualpa, Bartolomé de las Casas, Bernie Sanders, Bob Geldof, Bretton Woods, British Empire, Cape to Cairo, capital controls, carbon credits, carbon footprint, carbon tax, clean water, collective bargaining, colonial rule, Cornelius Vanderbilt, David Attenborough, David Graeber, David Ricardo: comparative advantage, declining real wages, degrowth, dematerialisation, Doha Development Round, Elon Musk, European colonialism, falling living standards, financial deregulation, flying shuttle, Fractional reserve banking, Francisco Pizarro, full employment, Glass-Steagall Act, Global Witness, Hans Rosling, happiness index / gross national happiness, Howard Zinn, income inequality, Intergovernmental Panel on Climate Change (IPCC), investor state dispute settlement, James Watt: steam engine, laissez-faire capitalism, land reform, land value tax, liberal capitalism, Live Aid, Mahatma Gandhi, Money creation, Monroe Doctrine, Mont Pelerin Society, moral hazard, Naomi Klein, negative emissions, Nelson Mandela, offshore financial centre, oil shale / tar sands, out of africa, Phillips curve, planned obsolescence, plutocrats, purchasing power parity, race to the bottom, rent control, road to serfdom, Ronald Reagan, Scramble for Africa, shareholder value, sharing economy, Silicon Valley, Simon Kuznets, structural adjustment programs, TED Talk, The Chicago School, The Spirit Level, trade route, transatlantic slave trade, transfer pricing, trickle-down economics, Washington Consensus, WikiLeaks, women in the workforce, Works Progress Administration

Keynes’s system allowed countries to impose ‘capital controls’ that prevented this from happening. But free-trade reforms have gradually dismantled these capital controls, and investors and lenders have gained the ability to send massive amounts of capital around the world at lightning speed, putting money in and pulling it out wherever and whenever they please. For poor economies with not much capital base, this poses a serious danger, for even a little bit of unexpected capital flight can spin the economy into crisis. But it also has a more insidious effect. Abolishing capital controls has transferred an enormous amount of power to international investors.

A similarly large amount flows out annually through ‘abusive transfer pricing’, a mechanism that multinational companies use to steal money from developing countries by shifting profits illegally between their own subsidiaries in different countries.24 Usually the goal of these practices is to evade taxes, but sometimes they are used to launder money or circumvent capital controls. Three trillion dollars in total net outflows per year is twenty-four times more than the annual aid budget. In other words, for every dollar of aid that developing countries receive, they lose $24 in net outflows. Of course, this is an aggregate figure; for some countries the ratio is larger, while for others it is smaller.

The South was rising, and leading the way to a better world for the planet’s majority. * One might think that Europe and the United States would be thrilled to watch this success unfold; after all, the new policies that global South countries were rolling out – tariffs, nationalisation, land reform, capital controls – were bringing about real development, and Western governments, in the spirit of Truman, claimed to be in favour of development. But they were not amused. Western states had become accustomed to having easy access to cheap labour, raw materials and consumer markets in global South countries, and the rise of developmentalism was beginning to restrict this access.


India's Long Road by Vijay Joshi

Affordable Care Act / Obamacare, barriers to entry, Basel III, basic income, blue-collar work, book value, Bretton Woods, business climate, capital controls, carbon tax, central bank independence, clean water, collapse of Lehman Brothers, collective bargaining, colonial rule, congestion charging, Cornelius Vanderbilt, corporate governance, creative destruction, crony capitalism, decarbonisation, deindustrialization, demographic dividend, demographic transition, Doha Development Round, eurozone crisis, facts on the ground, failed state, financial intermediation, financial repression, first-past-the-post, floating exchange rates, foreign exchange controls, full employment, germ theory of disease, Gini coefficient, global supply chain, global value chain, hiring and firing, income inequality, Indoor air pollution, Induced demand, inflation targeting, invisible hand, land reform, low interest rates, Mahatma Gandhi, manufacturing employment, Martin Wolf, means of production, microcredit, moral hazard, obamacare, Pareto efficiency, price elasticity of demand, price mechanism, price stability, principal–agent problem, profit maximization, profit motive, purchasing power parity, quantitative easing, race to the bottom, randomized controlled trial, rent-seeking, reserve currency, rising living standards, school choice, school vouchers, secular stagnation, Silicon Valley, smart cities, South China Sea, special drawing rights, The Future of Employment, The Market for Lemons, too big to fail, total factor productivity, trade liberalization, Tragedy of the Commons, transaction costs, universal basic income, urban sprawl, vertical integration, working-age population

Monetary autonomy would also be lost in the bargain. T h e R e q u i s i t e s of M a c r o e c o n o mic S ta b i l i t y [ 155 ] 156 India’s regime of ‘managed floating’ plus capital controls has been helpful in avoiding these various pitfalls. It has enabled the authorities to target the exchange rate from time to time to preserve trade competitiveness, while letting the market dictate the level of the exchange rate most of the time. At the same time, since the capital controls have been specific, not pervasive, they have allowed the economy to enjoy many of the benefits of free capital flows (while protecting it against movements of ‘hot money’).

As things stand, the United States and the EU have a stranglehold on IMF decision-​making.30 The third problem with the IMS is volatility of capital flows, which has the potential to cause financial havoc. Capital controls are a measure that attacks this problem directly. They used to be regarded by the IMF as beyond the pale but India has maintained them, even after overall liberalization, to good effect. This is a case where the IMF’s position has moved closer to India’s over the years. The IMF now recognizes that capital controls may be necessary to defend national financial stability. The East Asian crisis of 1997 was partly responsible for the change of view. More recently, in the aftermath of the GFC, this was reinforced by the experience of the highly expansionary monetary policies (including so-​ called ‘quantitative easing’ [QE]) that were undertaken by central banks in the advanced countries.

The IMF has acknowledged that liberalization of the capital account ‘may not be the right goal for all countries at all times’ but it wants to establish multilateral ‘rules of the game’ for capital controls since they may have harmful spill-​over effects on other countries. For example capital inflow controls may act as a ‘beggar-​my-​neighbour’ policy by keeping the imposing country’s exchange rate more depreciated than it would otherwise be. In practice, it would be impossible to lay down operationally useful criteria to distinguish benign from harmful capital controls. There is a danger that the ‘rules of the game’ may degenerate into rigidly applied tick-​boxes, which harass small countries that do not have clout with the IMF.


pages: 233 words: 75,712

In Defense of Global Capitalism by Johan Norberg

anti-globalists, Asian financial crisis, capital controls, clean water, correlation does not imply causation, creative destruction, Deng Xiaoping, Edward Glaeser, export processing zone, Gini coefficient, Great Leap Forward, half of the world's population has never made a phone call, Hernando de Soto, illegal immigration, income inequality, income per capita, informal economy, James Carville said: "I would like to be reincarnated as the bond market. You can intimidate everybody.", Joseph Schumpeter, Kenneth Rogoff, land reform, Lao Tzu, liberal capitalism, market fundamentalism, Mexican peso crisis / tequila crisis, Naomi Klein, new economy, open economy, prediction markets, profit motive, race to the bottom, rising living standards, Silicon Valley, Simon Kuznets, structural adjustment programs, The Wealth of Nations by Adam Smith, Tobin tax, trade liberalization, trade route, transaction costs, trickle-down economics, Tyler Cowen, union organizing, zero-sum game

Chile was hit by a real economic crisis in 1981–82, with bank failures and a 90 percent devaluation. That crisis happened at the same time as its capital controls were at their most rigorous, when inflows of capital were prohibited unless the capital remained in the country for at least five and a half years. Wise from the crisis, Chile decided to reform and consolidated its chaotic banking sector, which is probably the main reason why it has avoided further crises. (Incidentally, Chile’s decision to cancel its capital regulations came at the height of the Asian crisis.)5 Capital controls often serve as a means of lulling investors and politicians into a false sense of security.

Those with the lightest regulations—Hong Kong, Singapore, and Taiwan—fared far better.6 Brazil too was hard hit; politicians there had thought that restrictions against short-term capital would steer them clear of the crisis. Sooner or later, mismanaged policy leads to crisis. And if capital controls make politicians believe that they are free to pursue any policy they like, the odds are that they will aggravate the crisis. In theory, temporary capital controls in a crisis could give the country breathing room to modernize its banking and finance sector, iron out problems in the budget, and liberalize the economy. Often, though, regulations are put to the opposite use, as a means of avoiding painful reforms.

We can compare the rapid recovery of many Asian states after the Asian crisis with Latin America’s crisis of the early 1980s, after which Latin American countries imposed controls on capital outflows and refrained from liberal reforms. The result was a lost decade of inflation, prolonged unemployment, and low growth. Compare Mexico’s rapid recovery after the ‘‘Tequila crisis’’ of 1995 with the same country’s prolonged depression after the debt crisis of 1982. Another problem with capital controls is that they are hard to maintain in a world of ever-improving, ever-faster communication. They are in practice an invitation to crime, and a great deal of investors’ time is devoted to circumventing the regulations. The longer a regulation has been in force, the less effective it becomes, because investors then have time to find ways around it.


pages: 475 words: 155,554

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

"World Economic Forum" Davos, Alan Greenspan, Asian financial crisis, asset-backed security, balance sheet recession, bank run, banking crisis, Basel III, Ben Bernanke: helicopter money, Berlin Wall, Big bang: deregulation of the City of London, bond market vigilante , book value, Boris Johnson, British Empire, capital controls, carbon credits, carbon footprint, carbon tax, Celtic Tiger, central bank independence, centre right, collapse of Lehman Brothers, credit crunch, Credit Default Swap, crony capitalism, Crossrail, currency risk, dark matter, deindustrialization, Deng Xiaoping, disintermediation, energy security, Eugene Fama: efficient market hypothesis, eurozone crisis, Eyjafjallajökull, financial deregulation, financial engineering, financial innovation, financial repression, floating exchange rates, forensic accounting, forward guidance, full employment, G4S, ghettoisation, global rebalancing, global reserve currency, high-speed rail, hiring and firing, inflation targeting, Irish property bubble, junk bonds, Just-in-time delivery, labour market flexibility, light touch regulation, London Whale, Long Term Capital Management, low interest rates, margin call, market clearing, megacity, megaproject, Mikhail Gorbachev, mini-job, mittelstand, Money creation, moral hazard, mortgage debt, mortgage tax deduction, mutually assured destruction, Myron Scholes, negative equity, North Sea oil, Northern Rock, offshore financial centre, open economy, paradox of thrift, Pearl River Delta, pension reform, price mechanism, price stability, profit motive, quantitative easing, quantitative trading / quantitative finance, race to the bottom, regulatory arbitrage, reserve currency, reshoring, Right to Buy, rising living standards, Ronald Reagan, savings glut, shareholder value, sovereign wealth fund, tail risk, The Chicago School, the payments system, too big to fail, trade route, transaction costs, two tier labour market, unorthodox policies, uranium enrichment, urban planning, value at risk, WikiLeaks, working-age population, zero-sum game

Ms Júlíusdóttir’s government has been fiscally austere, cutting a 14.6 per cent deficit down to 0.2 per cent in four years. But other shibboleths of the market have been dispensed with. As the króna tumbled, capital controls were introduced by the Central Bank as an emergency measure. Iceland has to move delicately in her plan to lift capital controls. About a quarter of the value of the entire economy in Icelandic króna is owned by foreigners, but trapped by capital controls, and waiting for a route off the island. The amount of capital that will potentially leave Iceland will surge once the likes of Kaupthing are unwound. The controls will be slowly lifted for individuals, but Iceland will need tools to control the potential outflow.

Exporters of halloumi cheese could not pay their suppliers. Economists normally say an economy has ‘stalled’ if it has stopped growing. In Cyprus the economy had stalled in the truest sense of the word. It had stopped. It had suffered a heart attack. Contingencies were being drawn up for capital controls in Cyprus, as they had been in Greece the year before. In essence Cyprus already had temporary capital controls with the announcement of multiple impromptu bank holidays. These six days of unplanned and two planned bank shutdowns – making for twelve consecutive days when the banks were closed, including weekends – were already an extraordinary development.

The shutdown was the longest recorded by the IMF. Capital controls were being prepared, in contravention of the very point of the European Union single market. The Cypriot parliament had little choice. The ECB was holding a gun to its head. After a majority on the ECB governing council voted for a public threat, Frankfurt issued a statement announcing it would cut off Emergency Liquidity Assistance to Cypriot banks if a deal was not agreed with the EU and IMF within four days. On Day 12 of the crisis, plans were finally put in place to reopen the banks the following morning – subject to draconian new capital controls. And then, as dusk fell over Nicosia, the shouts of the increasingly irate protestors were drowned out as the air filled with the angry buzzing of helicopters and the deafening wail of police sirens.


pages: 665 words: 146,542

Money: 5,000 Years of Debt and Power by Michel Aglietta

accelerated depreciation, Alan Greenspan, bank run, banking crisis, Basel III, Berlin Wall, bitcoin, blockchain, Bretton Woods, British Empire, business cycle, capital asset pricing model, capital controls, cashless society, central bank independence, circular economy, collapse of Lehman Brothers, collective bargaining, corporate governance, David Graeber, debt deflation, dematerialisation, Deng Xiaoping, double entry bookkeeping, energy transition, eurozone crisis, Fall of the Berlin Wall, falling living standards, financial deregulation, financial innovation, Financial Instability Hypothesis, financial intermediation, floating exchange rates, forward guidance, Francis Fukuyama: the end of history, full employment, German hyperinflation, income inequality, inflation targeting, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), invention of writing, invisible hand, joint-stock company, Kenneth Arrow, Kickstarter, land bank, liquidity trap, low interest rates, margin call, means of production, Money creation, money market fund, moral hazard, Nash equilibrium, Network effects, Northern Rock, oil shock, planetary scale, plutocrats, precautionary principle, price stability, purchasing power parity, quantitative easing, race to the bottom, reserve currency, secular stagnation, seigniorage, shareholder value, special drawing rights, special economic zone, stochastic process, Suez crisis 1956, the payments system, the scientific method, tontine, too big to fail, trade route, transaction costs, transcontinental railway, Washington Consensus

The process of meeting these two objectives led to sharp disputes, which lasted for almost two years. The major differences between the two plans concerned the nature of the initial quotas (whether these would be drawing rights on a bank, or subscription to a Fund’s capital); the role of the exchange market and the extent of capital controls; and, finally, the symmetry or asymmetry of compulsory adjustments. In Keynes’s view, capital controls had to be permanent, since floating exchange rates were not capable of leading to an economically satisfying equilibrium in the balances of payments. The Clearing Union would much more effectively take over this role, just as the banking principle had unified currencies within nations by eliminating the dualist system of the Middle Ages, as well as the confusion among different units of account that resulted from it.

As we move from any given side towards the opposite point, we move away from the full realisation of the criterion that this side represents. The three medians and the opposite sides mark out three segments defining three types of IMS: one is dominated by capital controls (vertex A), the second by fixed exchange rates (B), and the third by the independence of monetary policies (C). We can say that the IMS is coherent if countries with convertible currencies choose to situate themselves within the same diamond. The Bretton Woods system is close to the line AB (fixed exchanges), with a staggered pattern of capital controls: these are low for the United States, high for France and very high for Japan. The large economic powers that had been close to the fixed exchange rate system (segment AB) have migrated towards segment BC by accepting greater capital mobility and thus floating exchanges.

There was thus a sort of dual division of labour between governments. This was a very imperfect substitute for the banking hierarchy that Keynes had envisaged for his International Clearing Union system. N–1 countries had to advance an exchange-rate target and accumulate dollar reserves to this end. Capital controls were indispensable for neutralising the monetary impact of variations in reserves levels, for a purely monetary sterilisation could not alone suffice. But this constraint entered into conflict with American businesses’ desire to export their capital. They exerted pressure for controls to be lifted in the countries in which they planned to invest.


pages: 829 words: 187,394

The Price of Time: The Real Story of Interest by Edward Chancellor

"World Economic Forum" Davos, 3D printing, activist fund / activist shareholder / activist investor, Airbnb, Alan Greenspan, asset allocation, asset-backed security, assortative mating, autonomous vehicles, balance sheet recession, bank run, banking crisis, barriers to entry, Basel III, Bear Stearns, Ben Bernanke: helicopter money, Bernie Sanders, Big Tech, bitcoin, blockchain, bond market vigilante , bonus culture, book value, Bretton Woods, BRICs, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, carried interest, cashless society, cloud computing, cognitive dissonance, collapse of Lehman Brothers, collateralized debt obligation, commodity super cycle, computer age, coronavirus, corporate governance, COVID-19, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, cryptocurrency, currency peg, currency risk, David Graeber, debt deflation, deglobalization, delayed gratification, Deng Xiaoping, Detroit bankruptcy, distributed ledger, diversified portfolio, Dogecoin, Donald Trump, double entry bookkeeping, Elon Musk, equity risk premium, Ethereum, ethereum blockchain, eurozone crisis, everywhere but in the productivity statistics, Extinction Rebellion, fiat currency, financial engineering, financial innovation, financial intermediation, financial repression, fixed income, Flash crash, forward guidance, full employment, gig economy, Gini coefficient, Glass-Steagall Act, global reserve currency, global supply chain, Goodhart's law, Great Leap Forward, green new deal, Greenspan put, high net worth, high-speed rail, housing crisis, Hyman Minsky, implied volatility, income inequality, income per capita, inflation targeting, initial coin offering, intangible asset, Internet of things, inventory management, invisible hand, Japanese asset price bubble, Jean Tirole, Jeff Bezos, joint-stock company, Joseph Schumpeter, junk bonds, Kenneth Rogoff, land bank, large denomination, Les Trente Glorieuses, liquidity trap, lockdown, Long Term Capital Management, low interest rates, Lyft, manufacturing employment, margin call, Mark Spitznagel, market bubble, market clearing, market fundamentalism, Martin Wolf, mega-rich, megaproject, meme stock, Michael Milken, Minsky moment, Modern Monetary Theory, Mohammed Bouazizi, Money creation, money market fund, moral hazard, mortgage debt, negative equity, new economy, Northern Rock, offshore financial centre, operational security, Panopticon Jeremy Bentham, Paul Samuelson, payday loans, peer-to-peer lending, pensions crisis, Peter Thiel, Philip Mirowski, plutocrats, Ponzi scheme, price mechanism, price stability, quantitative easing, railway mania, reality distortion field, regulatory arbitrage, rent-seeking, reserve currency, ride hailing / ride sharing, risk free rate, risk tolerance, risk/return, road to serfdom, Robert Gordon, Robinhood: mobile stock trading app, Satoshi Nakamoto, Satyajit Das, Savings and loan crisis, savings glut, Second Machine Age, secular stagnation, self-driving car, shareholder value, Silicon Valley, Silicon Valley startup, South Sea Bubble, Stanford marshmallow experiment, Steve Jobs, stock buybacks, subprime mortgage crisis, Suez canal 1869, tech billionaire, The Great Moderation, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Thorstein Veblen, Tim Haywood, time value of money, too big to fail, total factor productivity, trickle-down economics, tulip mania, Tyler Cowen, Uber and Lyft, Uber for X, uber lyft, Walter Mischel, WeWork, When a measure becomes a target, yield curve

A decade after the financial crisis, President Trump was fighting trade wars with China and America’s erstwhile ally the European Union. At the same time, Britain’s decision to leave the European Union threatened the free movement of goods and services across Europe. After 2008, capital controls were introduced on several occasions in Europe (in Iceland, Cyprus and Greece) and a number of emerging markets (Azerbaijan, Egypt, Nigeria and Turkmenistan). Beijing strengthened its own capital controls, making it more difficult for foreign multinationals to repatriate profits, and for its own firms and citizens to take money out of the People’s Republic. After capital flight from emerging markets took off in 2015, the head of Mexico’s central bank suggested it was time for them to ‘become unconventional’.

CAPITAL FLIGHT The chief reason the authorities could prevent credit problems from escalating was that capital controls trapped domestic savings in China. The logic of financial repression, however, drove savings out of the country in search of better returns abroad. As long as the US Federal Reserve kept interest rates close to zero and continued printing money, the pressure on China’s capital account was limited. But once the Fed moved to tighten monetary policy, as it did five years after the Lehman crisis, large sums of money started to leak out of the People’s Republic. There were countless ways, legal and illegal, for citizens to evade capital controls. In Macau, casinos provided a ‘laundry service’ taking in yuan and paying out in Hong Kong dollars.

To find a specific word or phrase from the index, please use the search feature of your ebook reader. 3G Capital, 161, 169 AEG (German company), 159 African American households, 211 AIG (insurance giant), 175, 221 Alberti, Leon Battista, 21 Alexander the Great, 12 Alibaba, 283 Altman, Edward, 223 Amazon (company), 203 AmeriCredit Corp, 167* Amsterdam, 35–6, 39, 47 Anbang Insurance, 285–6 Anderson, Benjamin, 87, 88, 90, 91, 92 Anglo-Dutch Wars, 33 annuities, 26, 69, 195, 197, 229 Antiphanes (Athenian playwright), 18 Antiphon (Greek orator), 20 Apple, 54, 149, 166, 176, 241 Aquinas, Thomas, Summa Theologica, 19, 25 Arab Spring (2011), xxiii, 255–6 Argentina, 79–80, 79*, 242–3, 263 aristocracy/landed classes: in Ancien Régime France, 49, 51; in ancient Mesopotamia, 200; and price of land, 34–5, 39, 42, 44 Aristotle, 9, 18, 19, 20, 28, 40 Arnd, Karl, 4 art market, 180, 208–9, 271 Artemis Capital, 231 Asian economic development model, 267, 278; Asian crisis, 114, 252, 278 asset price bubbles: before 2008 crisis, xxiii, 32, 44, 111–19, 204; and Arab Spring, 255–6; bond market in 2010s, 226; and Borio’s financial cycle, 132–3, 134, 135; bubble economy term, 184–7; Cantillon’s view, 58, 60–61; Chinese real-estate bubble, xxiii, 271, 272–4, 282, 288, 289; in commodities (from 2010), 173–4, 255–6, 257; construction booms, 62–3, 69, 74, 90, 112, 144, 148, 258–60, 273–9; crypto bubbles, 177–9; Dotcom bubble, 111–12, 136–7, 176, 204; Everything Bubble in post-crisis decade, 44, 138–9, 173–80, 180, 181–3, 185, 193–5, 206–10, 215, 306–9; expansive monetary policy as common feature, xxiii, 116*, 123, 135, 172–87, 180, 220; idea of creating a bubble to deal with, 113*; Japanese economy in 1980s, xxiii, 105–8, 145, 182, 184, 271, 273, 279, 285–6; misallocation of capital during, 43, 114, 148–50, 266–81, 289; relation to real economy, 182–3, 185, 237; stock market bubble in 1920s USA, xxiii, 87–91, 90*, 92–4, 96–8, 98*, 112, 203; at times of low inflation, xxiii, 134, 135; unstable bubbles in China, 270, 271–4, 282, 288; vast investment boom in China, xxiii, 128, 267–81, 280*, 282–9; and wealth illusion, 193–5 see also Mississippi bubble asset-backed securities, 175, 225, 226–7 Assyrian empire, 12 AT&T, 167, 168 Augsburg, 202 Augustus, Roman Emperor, 12, 15 Australia, 175, 192, 239 Austria, 93, 93*, 97, 261; Wörgl’s currency experiment, 243, 294 Austrian economists, 32, 94–6, 100, 108 see also Hayek, Friedrich; Schumpeter, Joseph Ayr Bank, collapse of (1772), 63 Azerbaijan, 262 Babylonia, 3–4, 5–8, 9–12, 13, 13, 14–15 Bacon, Francis (artist), 208 Bacon, Sir Francis, ‘On Usury’ (1612), 34, 35, 40, 43, 44 Bagehot, Walter, 62, 63–4, 66–8, 70–71, 72, 74, 149, 155, 251; Bagehot rule, xxiii, 74–6, 80; and dangers of foreign lending, 66, 77, 78; on foreign lending craze, 78; warnings over easy money, 64, 66, 67, 68, 69, 72, 78, 80–81, 220, 233; Lombard Street (1873), 69, 74, 75, 76, 81 Bain Capital, 163 Balding, Christopher, 277* Bank for International Settlements (BIS), 11, 101, 107, 113–14, 131–4, 135–9, 144, 153, 168, 261 Bank of Amsterdam (Wisselbank), 47, 68 Bank of England: during 1920s, 82–3, 85–6, 92, 93; acquires foreign corporate securities (2016), 241†; Bagehot on role of, xxiii, 64, 66, 74, 75–6; Bank Charter Act (1844), 75–6, 76*; ‘corset’ in Bretton Woods era, 291; ‘credit easing’ policy, 242; dominion over credit markets, 292–3, 293*; and financialization, 168; founding of (1694), 47; and Gold Standard, 85, 251; inflation targeting, 119, 121, 241; as lender of last resort, 66, 74–6, 80; nationalization (1946), 172; NICE (non-inflationary consistent expansion), 112; in nineteenth-century, 42, 65, 66, 70, 71–2, 75–6, 79, 80; policies in post-crisis decade, 151, 153, 174, 233, 235, 241, 293; and regulation, 232, 233; and secular stagnation narratives, 126, 205–6 Bank of France, 82, 83, 92, 93 Bank of Japan (BOJ), 105–8, 119, 122, 146, 192, 224, 241, 242, 244–5, 271, 294 Bank of Spain, 117 banking: 1825 crisis, 64–7, 75; back-alley banking in China, 281–3; bankers as unpopular, 18; Casa di San Giorgio, Genoa, 47–8; development in Middle Ages, 22–4, 35; expansion in Britain during Napoleonic Wars, 69–70; and fountain-pen money, xxiv, 42, 269, 312; Law establishes General Bank (1716), 49–50; merchant banks in ancient world, 7, 8; National Banking System in USA, 157; ‘net interest margin’ eroded by ultra-low rates, 136; pre-twentieth-century panics/crises, 63, 64–8, 69, 70, 72–6, 79–81; repo market, 236*, 239, 245; UK and US economies shift towards, 167–8; vast expansion in China, 265–6; and zombification, 147, 148 see also financial sector Baoding Tianwei Group, 280 Baoshang Bank, 285 Baradaran, Mehrsa, 215* Barbon, Nicholas, 15 Barcelona, 23 Baring, Alexander, 65 Baring, Sir Francis, 74–5, 76 Baring Brothers, 74, 76, 80 Basel Committee, 232 basketball, shot clock, 141 Bastiat, Frédéric, xvii, xviii–xx, xxi, xxii, xxv, 9, 188–9, 215, 306 Batista, Eike, 257, 258 Bavarian Soviet Republic, 243 Bayer (German firm), 225 Bear Stearns, 175 behavioural research, 29 Belgium, 225 Benda, Julien, La Trahison des Clercs (1927), 297 Bentham, Jeremy, 30, 189 Berkshire Hathaway, 161 Berlusconi, Silvio, 293 Bernanke, Ben: actions during 2008 crisis, 76, 253–4; on causes of 2008 crisis, 114, 115–16, 118, 128–9; and easy money before 2008 crisis, 111–12, 113, 115–17, 115†, 118–19; evades consequences for 2008 crisis, 119; and inflation targeting, 119, 119*, 241; joins Federal Reserve (2002), 111–12; and legacy of John Law, 61; on monetary policy, 98, 98*, 115, 115*, 131, 155, 207, 230, 238; policy of dealing with aftermath of bubbles, 111–12, 114; and savings glut hypothesis, 128–9, 191; and taper tantrum (June 2013), 239, 256–7, 259, 263; and ultra-easy money after 2008 crisis, 124, 131, 133, 137–8, 153, 155, 181–3, 207, 215, 230, 238–40, 243–4, 262; view of Great Depression, 98, 98*, 99, 100, 101 Bernard, Samuel, 55* Bernardino of Siena, 25 Bernstein, Richard, 306 Bernstein, William, 128 Beyond Meat, 177 Bezos, Jeff, 203 bills of exchange, 22, 23, 24, 47, 50, 65‡, 71, 130 Bitcoin, 177–9, 307–8 BlackRock, 209, 227, 246 Blackstone Sir William, Commentaries on the Laws of England (1765), 17 BNP Paribas, 253† Bo Xilai, 288 Böhm-Bawerk, Eugen von, xxiii–xxiv, xxv, xxvi*, 13, 16, 19*, 29, 30, 31, 95, 246 Borio, Claudio, 132–4, 135–9, 153, 232–3, 240, 262–3, 269, 311 Borman, Frank, 143 bottomry loans, 6, 26 Bouazizi, Mohamed, 255 Bourbon, Duke of, 55 Brandeis, Justice Louis, 156, 158, 159, 202 Branson, Richard, 213 Braudel, Fernand, 21 Brazil, xxiii, 225, 254–5, 257–8, 291 Bretton Woods system, 133, 251, 290–91, 302 Bridgewater Associates, 229 Britain: 1825 banking crisis, 64–7, 75; building boom in mid-eighteenth-century, 62–3; calamities of 1660s, 33; decision to leave EU, 187, 241, 262; default on sovereign debt (1672), 33, 38; early twentieth century monopolies in, 159; economy in Bretton Woods era, 291, 302*; financial repression today, 292–3; foreign lending manias (1860s-80s), 77–8, 79–80; housing affordability crisis in, 212–13; loss of manufacturing jobs to China, 261*; low economic vitality in post-crisis decade, 124, 150–51, 153, 192; post-1571 debates on excessively high rates, 34–44; Productive Finance Working Group, 293, 293*; railway mania of 1840s, 70–72, 73; return to the Gold Standard (1920s), 43, 82, 85, 86; reversal of global capital flows (late-1920s), 93; Revolutionary/Napoleonic Wars, 41–2, 69–70; shift from manufacturing towards services, 167–8; South Sea Bubble (1720), 69; trade cycle from early eighteenth century, 62–4; usury in, 24, 26, 27, 34, 40, 42, 65‡, 65; zombification in, 146 see also Bank of England British Association of Recovery Professionals, 146 British Home Stores (BHS), 196–7 Brown, Brendan, 218 Brown, Gordon, 112 Brunnermeier, Markus, 236 Bryan, William Jennings, 99 bubble economy term, 184–7 Buchan, James, 54, 56*, 59 Buenos Aires Water Supply and Drainage Company, 80 Buffett, Warren, 126, 161, 225, 307, 308, 308* Bullard, James, 239 Burry, Michael, 198 buyout firms, 160–63, 183†, 204, 207, 222, 223, 237 Byzantium, 25 Calvin, John, 26 Campbell, Donald, 120–21 Canada, 119, 174–5, 192, 196*, 241 Canterbury, Justin Welby, Archbishop of, 17, 201 Cantillon, Richard, 58, 60–61, 60* capital flows, global: in 1920s, 82, 91, 261; Bretton Woods capital controls, 291; capital controls return after 2008, 262, 291; ‘commodity super-cycle (from 2010), 173–4, 255–6, 257; cross-border lending in Eurozone, 144–5; and Dollar Standard, 251–2, 253, 261, 262–3; foreign lending manias (1860s-80s), 77–8, 79–80, 79†; ‘global banking glut’ notion, 132, 252–3; global credit bubble in early 2000s, 252–3, 261; international carry trade, 137, 237–8, 252, 253–4, 256–7, 258; ‘persistent expansion bias’ of monetary system, 262; post-crisis flows into emerging markets, xxiii, 253–9, 262–3; protectionism of 1930s, 261–2; recirculation of in run-up to 2008 crisis, 115‡; recording/measuring of, 137; reversals of, 63, 93, 93*, 261; and role of interest, 139, 251–7, 259–61, 262–3; ‘second phase of global liquidity’ after 2008 crisis, 253–9, 262–3; taper tantrum (June 2013), xxiii, 137, 239, 256–7, 259, 263; Turkish debt, 258–60; and US interest rates, 137, 251–5, 256–7, 259–61, 262–3, 285 capitalism: Bastiat on broad consequences of actions, xix–xx; capital defined, 28, 28*; distortions/disruptions by unicorns, 148–50; distrust of in 1930s, 299; Hayek on, 96, 295–6, 298; Hazlitt on price system, xx; interest rates as at heart of, xxii, xxv, 16, 28, 141, 297; low marginal costs in New Economy, 127–8; Marxist-Leninist critique of, 159–60, 217*, 298; primacy of finance in modern era, 138–9; process of ‘creative destruction’, xx, 140–43, 143*, 153, 296–7; Proudhon on, xvii; role of risk in, 220, 298; Schumpeter on, 140, 153, 296–7; Adam Smith on mutual self-interest, 27–8; state capitalism, 280, 284, 292–5, 297, 298; takes off in medieval Italy, 21–3, 23 Cappadocia, 12 Carillion (construction company), 197 Carnegie, Andrew, 157–8 Carney, Mark, 235 Carroll, Lewis, 309, 311 carry trading, 220–22, 227, 229, 233, 234, 236; international, 137, 237–8, 252, 253–5, 256–7, 258; new regime emerges after 2008 crisis, 221–4, 253–5, 256–7, 258 cars, 173, 179, 210, 220; manufacture of, 142, 166–7, 176–7, 261; and revival of subprime market, 215, 224 Carstens, Agustín, 214* Carter, Jimmy, 108–9 Case, Anne, 213 Cassel, Gustav, xxvi, 36*, 88, 190, 192, 195, 246 Catholic church, 18–19, 23–4, 25–6 central banks: attitudes to risk, 230–31; Bagehot rule, xxiii, 74–6, 80; direct involvement in stock market, 172–3, 241–2, 293–4; dominion over credit markets, xxii, 292–3, 293*; double standards in approach to bail outs, 215; and duration risk, 225; fuelling of asset price bubbles by, 43, 60–61, 88, 110, 113, 115–16, 118–19, 132–6, 174–6, 181–2, 185, 194–5; goal of stable price level, xxiii, 42, 86–8, 94, 96–8, 105–8, 109–13, 133, 203; influence on long-term rates, 133, 134–5; issuing of ‘fiat money’, xxiv, 13, 312; Long Island meeting (1927), 82–3, 88, 92; and March 2020 crash, 305–6; money supply targets in 1980s, 121; move to ‘active’ monetary policy in 1920s, 84, 85–8, 85†, 92–4, 96–8; and responsibility for inequality, 214–17; ‘Taylor Rule’, 116–17 see also quantitative easing and also entries for individual institutions central planning: in Bretton Woods era, 291, 292–5; Hayek’s The Road to Serfdom (1944), 295–6, 298; and misallocation of capital, 264, 266, 269; and problem of regulation, 232–3; reappearance of, 297, 298, 302; during Second World War, 295, 302, 311; and ‘tyranny of metrics’, 120* da Certaldo, Paolo, 21 Chamberlain, Austen, 86 Chamberlen, Hugh, 59* Chan, Melissa, 274 Chang Ying, Remarks on a Regular Livelihood, 265 Chapman, D.


Globalists: The End of Empire and the Birth of Neoliberalism by Quinn Slobodian

"World Economic Forum" Davos, Alan Greenspan, Asian financial crisis, Berlin Wall, bilateral investment treaty, borderless world, Bretton Woods, British Empire, business cycle, capital controls, central bank independence, classic study, collective bargaining, David Ricardo: comparative advantage, Deng Xiaoping, desegregation, Dissolution of the Soviet Union, Doha Development Round, eurozone crisis, Fall of the Berlin Wall, floating exchange rates, full employment, Garrett Hardin, Greenspan put, Gunnar Myrdal, Hernando de Soto, invisible hand, liberal capitalism, liberal world order, Mahbub ul Haq, market fundamentalism, Martin Wolf, Mercator projection, Mont Pelerin Society, Norbert Wiener, offshore financial centre, oil shock, open economy, pattern recognition, Paul Samuelson, Pearl River Delta, Philip Mirowski, power law, price mechanism, public intellectual, quantitative easing, random walk, rent control, rent-seeking, road to serfdom, Ronald Reagan, special economic zone, statistical model, Suez crisis 1956, systems thinking, tacit knowledge, The Chicago School, the market place, The Wealth of Nations by Adam Smith, theory of mind, Thomas L Friedman, trade liberalization, urban renewal, Washington Consensus, Wolfgang Streeck, zero-sum game

In a strong statement he proposed that “exchange control in time of peace should be considered an act of aggression and a violation of h ­ uman rights in international law.”72 By exchange control, Cortney meant what is better known as capital controls: the right to change money from one currency to another, specifically with the goal of transferring the money over a national border. The right to use capital controls was included in the framework of the IMF at Bretton Woods, a fact A W o r l d of Rights 135 that Heilperin condemned as one of its crucial failings. Though many observers felt that the flow of “hot money” being invested by speculators back and forth across the Atlantic in the 1920s had helped precipitate the crash, Heilperin turned the prob­lem around.

Though many observers felt that the flow of “hot money” being invested by speculators back and forth across the Atlantic in the 1920s had helped precipitate the crash, Heilperin turned the prob­lem around. “It is not the money that is ‘hot,’ ” he said, “but the place from which it takes flight.”73 If capital controls ­were removed, countries that had drawn investors would have to establish conditions hospitable enough to induce foreign capital to remain. Cortney’s rhetorical move was to reframe the question from an economic ­matter into a ­matter of ­human rights. He linked capital control to the right to leave a country as such. ­Because “the right to leave a country is for all practical purposes, meaningless ­unless one is entitled to take with him belongings,” he argued that one must u ­ nder all circumstances be allowed to exchange and export capital.74 Cortney described the right to emigrate as the “basis of all his other ­human rights,” noting that it is included in the Universal Declaration of ­Human Rights (Article 13) but suggesting that this should have gone further by linking it to its necessary prerequisite: the right of f­ree capital movement.75 Cortney was effectively proposing the h ­ uman right of capital flight.

An early expression of doubt came from Joseph Stiglitz ­after the Asian financial crisis of 1997.9 World Bank chief economist from 1997 to 2000 and winner of the Nobel Memorial Prize in Economics, Stiglitz became a vocal critic of neoliberal globalization. In the late 1990s other critics declared that the un­regu­la­ted global ­free market was “the last utopia”—­and the international financial institutions partly agreed.10 They dropped their doctrinaire opposition to capital controls, the very subject of the 2016 Fortune article. The World Trade Organ­ization (WTO) underwent a similar facelift. ­After protests shut down its 1999 meeting, it pivoted to emphasize the h ­ uman side of globalization. Even though the policies described as neoliberal had long been criticized, the IMF report was still significant for recognizing the label “neoliberalism.”


pages: 363 words: 28,546

Portfolio Design: A Modern Approach to Asset Allocation by R. Marston

asset allocation, Bob Litterman, book value, Bretton Woods, business cycle, capital asset pricing model, capital controls, carried interest, commodity trading advisor, correlation coefficient, currency risk, diversification, diversified portfolio, equity premium, equity risk premium, Eugene Fama: efficient market hypothesis, family office, financial engineering, financial innovation, fixed income, German hyperinflation, global macro, high net worth, hiring and firing, housing crisis, income per capita, index fund, inventory management, junk bonds, Long Term Capital Management, low interest rates, managed futures, mortgage debt, Nixon triggered the end of the Bretton Woods system, passive investing, purchasing power parity, risk free rate, risk-adjusted returns, Robert Shiller, Ronald Reagan, Sharpe ratio, Silicon Valley, stocks for the long run, superstar cities, survivorship bias, transaction costs, Vanguard fund

The second phase began in the Great Depression of the 1930s when capital controls were imposed by most countries and when many previously issued foreign securities went into default. Private international investing almost ceased for three decades thereafter.3 Many of the capital controls were left in place throughout the 1950s and 1960s, severely inhibiting international investing. During this period, financing was available primarily through loans from national governments and (in the postwar period) international agencies such as the World Bank. Even banks were wary of foreign lending. The third phase began in the early 1970s when capital controls began to be lifted.

The Eurobond or international bond market was initially developed to allow U.S. and foreign companies to raise debt financing in foreign markets to fund their foreign operations. Since many countries had capital controls inhibiting the flow of financing from their domestic markets, the international bond market offered a way to finance the multinational operations of these companies. Capital controls have largely been abolished in the industrial countries, so this market is now closely integrated with the national bond market in the same currency. See Solnik and McLeavy (2004), Chapter 7. Recall that Chapter 6 analyzed the bonds of emerging markets.

Chapter 3 will show how small-cap stocks fit into the overall stock market and will present evidence about whether there is a premium for small-caps. Chapter 4 will examine value and growth stocks and present evidence on the value premium. In the 1980s, investment in foreign equities gained favor. Capital controls had been lifted making it possible for investors in the industrial countries to spread their investments to other industrial countries. In doing so, investors were able to invest in a wider variety of firms and industries than would have been possible by sticking to U.S. stocks alone. And, because correlations between U.S. and foreign stocks were relatively low, investors were able to reduce risks in the overall portfolio.


pages: 354 words: 105,322

The Road to Ruin: The Global Elites' Secret Plan for the Next Financial Crisis by James Rickards

"World Economic Forum" Davos, Affordable Care Act / Obamacare, Alan Greenspan, Albert Einstein, asset allocation, asset-backed security, bank run, banking crisis, barriers to entry, Bayesian statistics, Bear Stearns, behavioural economics, Ben Bernanke: helicopter money, Benoit Mandelbrot, Berlin Wall, Bernie Sanders, Big bang: deregulation of the City of London, bitcoin, Black Monday: stock market crash in 1987, Black Swan, blockchain, Boeing 747, Bonfire of the Vanities, Bretton Woods, Brexit referendum, British Empire, business cycle, butterfly effect, buy and hold, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, cellular automata, cognitive bias, cognitive dissonance, complexity theory, Corn Laws, corporate governance, creative destruction, Credit Default Swap, cuban missile crisis, currency manipulation / currency intervention, currency peg, currency risk, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, debt deflation, Deng Xiaoping, disintermediation, distributed ledger, diversification, diversified portfolio, driverless car, Edward Lorenz: Chaos theory, Eugene Fama: efficient market hypothesis, failed state, Fall of the Berlin Wall, fiat currency, financial repression, fixed income, Flash crash, floating exchange rates, forward guidance, Fractional reserve banking, G4S, George Akerlof, Glass-Steagall Act, global macro, global reserve currency, high net worth, Hyman Minsky, income inequality, information asymmetry, interest rate swap, Isaac Newton, jitney, John Meriwether, John von Neumann, Joseph Schumpeter, junk bonds, Kenneth Rogoff, labor-force participation, large denomination, liquidity trap, Long Term Capital Management, low interest rates, machine readable, mandelbrot fractal, margin call, market bubble, Mexican peso crisis / tequila crisis, Minsky moment, Money creation, money market fund, mutually assured destruction, Myron Scholes, Naomi Klein, nuclear winter, obamacare, offshore financial centre, operational security, Paul Samuelson, Peace of Westphalia, Phillips curve, Pierre-Simon Laplace, plutocrats, prediction markets, price anchoring, price stability, proprietary trading, public intellectual, quantitative easing, RAND corporation, random walk, reserve currency, RFID, risk free rate, risk-adjusted returns, Robert Solow, Ronald Reagan, Savings and loan crisis, Silicon Valley, sovereign wealth fund, special drawing rights, stock buybacks, stocks for the long run, tech billionaire, The Bell Curve by Richard Herrnstein and Charles Murray, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, theory of mind, Thomas Bayes, Thomas Kuhn: the structure of scientific revolutions, too big to fail, transfer pricing, value at risk, Washington Consensus, We are all Keynesians now, Westphalian system

They will be frozen in place. The ice-nine solution is not limited to individuals and institutions. It even applies to countries. Nations can freeze investor funds with capital controls. A dollar investor in a nondollar economy relies on the local central bank for dollars if she wants to withdraw her investment. A central bank can impose capital controls and refuse to allow the dollar investor to reconvert local currency and remit the proceeds. Capital controls were common in the 1960s even in developed economies. Later, these controls largely disappeared from developed economies, and were greatly reduced in emerging markets.

The system would be administered by the International Monetary Fund, a de facto world central bank. IMF governance was structured in such a way that the United States maintained a veto over all important decisions. Bretton Woods participants were allowed to use capital controls to maintain dollar reserves and limit volatile capital flows in order to support their obligations under the fixed rate system. Capital controls in major Western economies were lifted in stages beginning in 1958. Full convertibility of all major currencies was not achieved until 1964. Currency pegs to the dollar were not immutable. Members could apply for exchange rate adjustments under IMF supervision.

Cutting through the jargon, this is a call for coordination between capital “source countries” (mainly the United States) and “destination countries” (emerging markets) to change tax and banking rules to discourage short-term debt and encourage equity and long-term bonds instead. In a liquidity crisis, equity and long-term debt are easy to lock down by closing brokers and exchanges. Residual short-term debt can then be locked down with capital controls on countries. At the other end of the spectrum from big banks, institutional investors, and nations is the humble ATM. Consumers have been lulled into believing cash is readily available by swiping their bank cards at ubiquitous cash machines. Is it really? ATMs are already programed to limit withdrawals on a daily basis.


pages: 576 words: 105,655

Austerity: The History of a Dangerous Idea by Mark Blyth

"there is no alternative" (TINA), accounting loophole / creative accounting, Alan Greenspan, balance sheet recession, bank run, banking crisis, Bear Stearns, Black Swan, book value, Bretton Woods, business cycle, buy and hold, capital controls, Carmen Reinhart, Celtic Tiger, central bank independence, centre right, collateralized debt obligation, correlation does not imply causation, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency peg, debt deflation, deindustrialization, disintermediation, diversification, en.wikipedia.org, ending welfare as we know it, Eugene Fama: efficient market hypothesis, eurozone crisis, financial engineering, financial repression, fixed income, floating exchange rates, Fractional reserve banking, full employment, German hyperinflation, Gini coefficient, global reserve currency, Greenspan put, Growth in a Time of Debt, high-speed rail, Hyman Minsky, income inequality, information asymmetry, interest rate swap, invisible hand, Irish property bubble, Joseph Schumpeter, Kenneth Rogoff, liberal capitalism, liquidationism / Banker’s doctrine / the Treasury view, Long Term Capital Management, low interest rates, market bubble, market clearing, Martin Wolf, Minsky moment, money market fund, moral hazard, mortgage debt, mortgage tax deduction, Occupy movement, offshore financial centre, paradox of thrift, Philip Mirowski, Phillips curve, Post-Keynesian economics, price stability, quantitative easing, rent-seeking, reserve currency, road to serfdom, Robert Solow, savings glut, short selling, structural adjustment programs, tail risk, The Great Moderation, The Myth of the Rational Market, The Wealth of Nations by Adam Smith, Tobin tax, too big to fail, Two Sigma, unorthodox policies, value at risk, Washington Consensus, zero-sum game

The Popular Front increased wages, reduced working time, and reformed the structure of the Bank of France so that the Regents did not control the governing council.89 This was all very laudable, but it simply led to another round of capital flight, interest-rate increases, and more deflation. Reflationary policy, in the absence of effective capital controls, means that capital flight wins, especially when it is aided and abetted by the central bank. When the leader of the popular front Léon Blum suggested capital controls to make reflation and greater spending possible, he was forced out by the increasing capital flight that the Bank of France once again did nothing to forestall. Even when France eventually abandoned gold in September 1936, little improved.

The opposition Seiyukai party, now in power, appointed Takahashi Korekiyo as finance minister. Takahashi left the gold standard as quickly as possible and then cut the discount rate on commercial bills (the de facto lowest interest rate) from 6.57 percent in early 1932 to 3.65 percent in July 1934.74 He drastically increased the money supply and instituted capital controls to stop its flight. He instructed the Bank of Japan to underwrite long-term government bond issues.75 Government spending increased by an initial 34 percent, and by the end of 1932 it totaled an extra 10 percent of GDP.76 Prices rose, debt burdens fell, and the Japanese economy rocketed out of the depression, growing 4 percent a year in real terms each year between 1932 and 1936.

Its bank assets to GDP ratio in 2007 was nearly 1000 percent. So when Iceland got into trouble, it was going to be the mother of all banking crises. But there was one important difference. Where Ireland followed the mantra of austerity, slashed spending, and bailed its banks, Iceland let its banks go bankrupt, devalued its currency, put up capital controls, and bolstered welfare measures. A comparison of the two is as close to a natural experiment of the effects of austerity and bailouts as you are likely to find. Iceland’s transformation from a protectionist social democracy to a laissez faire center of international finance was fast and furious.


pages: 497 words: 143,175

Pivotal Decade: How the United States Traded Factories for Finance in the Seventies by Judith Stein

1960s counterculture, accelerated depreciation, activist lawyer, affirmative action, airline deregulation, Alan Greenspan, anti-communist, Ayatollah Khomeini, barriers to entry, Berlin Wall, blue-collar work, Bretton Woods, business cycle, capital controls, centre right, collective bargaining, Credit Default Swap, crony capitalism, David Ricardo: comparative advantage, deindustrialization, desegregation, do well by doing good, Dr. Strangelove, energy security, Fall of the Berlin Wall, falling living standards, feminist movement, financial deregulation, floating exchange rates, full employment, Glass-Steagall Act, Gunnar Myrdal, guns versus butter model, Ida Tarbell, income inequality, income per capita, intermodal, invisible hand, knowledge worker, laissez-faire capitalism, Les Trente Glorieuses, liberal capitalism, Long Term Capital Management, low interest rates, manufacturing employment, market bubble, Martin Wolf, new economy, Nixon triggered the end of the Bretton Woods system, oil shale / tar sands, oil shock, open economy, Paul Samuelson, payday loans, post-industrial society, post-oil, price mechanism, price stability, Ralph Nader, RAND corporation, reserve currency, Robert Gordon, Robert Solow, Ronald Reagan, Savings and loan crisis, Simon Kuznets, strikebreaker, three-martini lunch, trade liberalization, union organizing, urban planning, urban renewal, War on Poverty, Washington Consensus, working poor, Yom Kippur War

Fixed rates married to the free movement of capital spelled trouble and made it difficult for countries to maintain independent monetary policies. Any attempt to set interest rates, say, below world levels because of a domestic slowdown would result in the movement of capital out of that country. Like all countries, the United States had used capital controls to stem the outflows of capital in the 1960s. President Kennedy instituted the Interest Equalization Tax, a 1 percent levy on foreign security issues in the United States, to level the cost of borrowing in the United States and Europe without raising long-term interest rates for domestic borrowers.

In 1970, to counter the recession, the Fed reduced interest rates. The high U.S. interest rates of the late 1960s, set to restrain inflation, kept money at home. Now the low rates in the United States reversed the money stream, and capital flowed from the United States to Europe. (Nixon opposed capital controls.) Making matters worse, in 1971 the United States suffered its first merchandise trade deficit since 1893. U.S. dollars swelled world reserves in 1970 and 1971, and American gold reserves dwindled. The dollar was the sun around which the other currencies revolved, and now it was in trouble. Countries could demand gold for dollars under the rules of Bretton Woods.

Everyone agreed that the overvalued dollar and the trade deficit eroded U.S. economic and thus its international power. No one argued that the current account should be balanced by deflating the economy, producing a recession to reduce imports. No one wanted to diminish the scope of foreign policy to rein in the outflow of dollars. No one advocated intensifying or expanding capital controls. No one supported outright devaluation because other countries would simply devalue their currencies.76 Connally did not create the idea that American foreign policy privileged strategic over economic interests and was not the first to discover the link between the domestic and international economy.


Propaganda and the Public Mind by Noam Chomsky, David Barsamian

"World Economic Forum" Davos, Alan Greenspan, Albert Einstein, AOL-Time Warner, Asian financial crisis, Bretton Woods, business cycle, capital controls, deindustrialization, digital divide, European colonialism, experimental subject, Howard Zinn, Hyman Minsky, interchangeable parts, language acquisition, liberation theology, Martin Wolf, one-state solution, precautionary principle, public intellectual, Ralph Nader, RAND corporation, school vouchers, Silicon Valley, structural adjustment programs, Thomas L Friedman, Tobin tax, Washington Consensus

There’s one possibility that Krugman rules out, and that is capital controls. He rules it out on theoretical grounds. He says capital controls leads to inefficient use of resources, and we can’t have that. That’s certainly true in a certain abstract model of the economy, the neoclassical model. Whether that model has anything to do with the real world is another question. The evidence doesn’t seem to support it. During the period in which some degree of capital controls were in place, there was substantial growth. The period of elimination of capital controls was one of slow growth and these crises we’re talking about.

The government keeps raising the interest rate to try to keep the capital inside, and speculators are betting that they’re not going to be able to get it high enough. There is a way to stop it. The flow of capital is not like the flow of water, not like a tidal wave. It’s under human control. But you have to decide to stop it. Brazil alone couldn’t decide. Capital controls have to be at both ends. During the Bretton Woods era, the period of rapid growth of the world economy, when capital controls still worked, controls existed at both ends. So the recipient countries, the country from which the capital was flying, agreed to block capital flight. If there are a couple of rich countries like the United States that won’t play the game, then the game’s over.


pages: 586 words: 160,321

The Euro and the Battle of Ideas by Markus K. Brunnermeier, Harold James, Jean-Pierre Landau

"there is no alternative" (TINA), Affordable Care Act / Obamacare, Alan Greenspan, asset-backed security, bank run, banking crisis, battle of ideas, Bear Stearns, Ben Bernanke: helicopter money, Berlin Wall, Bretton Woods, Brexit referendum, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Celtic Tiger, central bank independence, centre right, collapse of Lehman Brothers, collective bargaining, credit crunch, Credit Default Swap, cross-border payments, currency peg, currency risk, debt deflation, Deng Xiaoping, different worldview, diversification, Donald Trump, Edward Snowden, en.wikipedia.org, Fall of the Berlin Wall, financial deregulation, financial repression, fixed income, Flash crash, floating exchange rates, full employment, Future Shock, German hyperinflation, global reserve currency, income inequality, inflation targeting, information asymmetry, Irish property bubble, Jean Tirole, Kenneth Rogoff, Les Trente Glorieuses, low interest rates, Martin Wolf, mittelstand, Money creation, money market fund, Mont Pelerin Society, moral hazard, negative equity, Neil Kinnock, new economy, Northern Rock, obamacare, offshore financial centre, open economy, paradox of thrift, pension reform, Phillips curve, Post-Keynesian economics, price stability, principal–agent problem, quantitative easing, race to the bottom, random walk, regulatory arbitrage, rent-seeking, reserve currency, risk free rate, road to serfdom, secular stagnation, short selling, Silicon Valley, South China Sea, special drawing rights, tail risk, the payments system, too big to fail, Tyler Cowen, union organizing, unorthodox policies, Washington Consensus, WikiLeaks, yield curve

A widespread response to the great financial crisis of 1931 was the imposition of capital controls, which brought the state further into the micromanagement of economic activity. Economic planning, as Hayek recognized, was inherently discriminatory: “It cannot tie itself down in advance to general and formal rules which prevent arbitrariness. . . . It must constantly decide questions which cannot be answered by formal principles only, and in making these decisions it must set up distinctions of merit between the needs of different people.”8 The issue of arbitrariness applies in a particular way to the actual implementation of capital controls. They were implemented in both Austria and Germany from 1931, that is, before the onset of the political dictatorship (Hitler came to power in January 1933, and Austrian conservatives created the reactionary corporate state, or Ständestaat, in 1934).

The logical conclusion was that capital should flow freely and exchange rates should be left free to adjust, restoring the balance between countries. The French view was diametrically opposed, calling instead for even more active management of capital flows (through tighter capital controls) as well as inflationary policies in surplus countries. This is the spirit of Keynes, who back in the early 1940s called for the entire international monetary system to be structured so that countries running excessive surpluses would be penalized, while those in deficit were to be supported. The tightening of capital controls was related to the deep-seated French belief that exchange rates, if left to float freely, are excessively volatile, and similarly so are capital flows.

International Economics Another important dimension of economic thinking along which the German and French philosophies differ markedly is international economic relations, in particular as regards cross-border capital flows. These disagreements also flared up during the negotiations preceding the ratification of the Maastricht Treaty in 1992. The German philosophy calls for free trade, fair (or undistorted) competition, and open international capital markets. Capital controls were considered as arbitrary, favoring certain industries, and inviting political lobbying. Thus, a world in which exchange rates are free to move, in which no coordinated multilateral interventions are necessary to deal with macroeconomic shocks, and in which capital can flow freely is very much in keeping with the German tradition.


pages: 108 words: 27,451

Magic Internet Money: A Book About Bitcoin by Jesse Berger

Alan Greenspan, barriers to entry, bitcoin, blockchain, Bretton Woods, Cambridge Analytica, capital controls, carbon footprint, correlation does not imply causation, cryptocurrency, diversification, diversified portfolio, Ethereum, ethereum blockchain, fiat currency, Firefox, forward guidance, Fractional reserve banking, George Gilder, inflation targeting, invisible hand, Johann Wolfgang von Goethe, liquidity trap, litecoin, low interest rates, Marshall McLuhan, Metcalfe’s law, Money creation, money: store of value / unit of account / medium of exchange, moral hazard, Network effects, Nixon shock, Nixon triggered the end of the Bretton Woods system, oil shale / tar sands, planned obsolescence, price mechanism, Ralph Waldo Emerson, rent-seeking, reserve currency, ride hailing / ride sharing, risk tolerance, Robert Metcalfe, Satoshi Nakamoto, the medium is the message, Vitalik Buterin

3.5 Fiat Functionality 3.6 Bitcoin on Point 3.7 Bitcoin Functionality Chapter 4: Growth 4.1 The Root of All Growth 4.2 The Value of Price 4.3 Time Is Money 4.4 Calculated Risk 4.5 Divestment Advice Chapter 5: Innovation 5.1 Evolution & Revolution 5.2 The Smart Money 5.3 Blockchain 101 Chapter 6: Resilience 6.1 An Unstoppable Force 6.2 Teamwork Makes the Dream Work 6.3 An Immovable Object 6.4 Harder, Better, Faster, Stronger Chapter 7: Scarcity 7.1 Limited Edition 7.2 $€¥£: A Sea of Fiat 7.3 Setting a Precedent 7.4 Pushing Limits 7.5 Making a Statement 7.6 No Second Chance for First Impressions Chapter 8: Competition 8.1 A New Frontier 8.2 Bitcoin Versus Fiat 8.3 Bitcoin Versus Gold 8.4 Bitcoin Versus Crypto 8.5 Bitcoin Versus Forks 8.6 Bitcoin Versus Stablecoins Chapter 9: Governance 9.1 Fair Is Rare 9.2 Tilted 9.3 Balanced 9.4 Ground Rules 9.5 Lead by Example Chapter 10: Freedom 10.1 The Golden Rule 10.2 The Dependency Trap 10.3 Home of the Brave 10.4 Capital Control 10.5 Moral Hazard 10.6 Amoral Safeguard 10.7 Unchained Chapter 11: Drawbacks 11.1 Mind the Gap 11.2 Ease of Use 11.3 Speed & Scale 11.4 Full Custody 11.5 Dark Mode 11.6 Mining 11.7 On Apathy & Atlas 11.8 Upset the Setup Chapter 12: Outlook 12.1 Monopoly Money 12.2 The Debtor’s Dilemma 12.3 From Sapling to Sequoia 12.4 Forward Guidance 12.5 The Bottom Line Resources Endnotes Key Terms Acknowledgments What Is Money?

It is an organization with no owners and no headquarters. At no point does it act as a trusted third party to custody funds or store personal data. Instead, it matches trading partners for direct exchange to be carried out using security features embedded in the core functionality of Bitcoin. 10.4 Capital Control “Bitcoin is a global phenomenon. An idea and a movement that represents a more connected and free world.” Jack Mallers, Founder of Zap The advantages of using Bitcoin as sovereign money can be learnt by taking a single step. Whether it’s experiencing the quiet exhilaration that comes from independently signing and verifying a transaction; or the latitude that comes from sending bitcoins across borders that fiat is restricted from traversing; or the relief of rapidly sending emergency funds to someone in need when traditional banking options are unavailable; or, perhaps, finding the peace of mind that comes from saving scarce and unencumbered money for the future.

On any given day, money’s accessibility could be tightly restricted through unexpected governance changes. Recent instances of money being held captive by central authorities include Iceland in 2008, Cyprus in 2013, Greece in 2015, and Argentina in 2019, among many others. In these examples, capital controls were implemented to restrict cash withdrawals, or limit and tax wire transfers crossing domestic borders. This ability to exert control over other people’s money is the ability to deny property rights, which only accentuates injustice since it breaks the golden rule. 10.5 Moral Hazard “With great power comes great responsibility.”


pages: 267 words: 74,296

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

"World Economic Forum" Davos, bank run, banking crisis, Berlin Wall, Bretton Woods, business cycle, capital controls, Celtic Tiger, central bank independence, centre right, collapse of Lehman Brothers, credit crunch, Credit Default Swap, debt deflation, Doha Development Round, electricity market, eurozone crisis, Fall of the Berlin Wall, financial engineering, fixed income, Flash crash, illegal immigration, labour market flexibility, labour mobility, light touch regulation, low interest rates, market fundamentalism, Money creation, moral hazard, Northern Rock, oil shock, open economy, pension reform, price stability, quantitative easing, special drawing rights, supply-chain management, The Great Moderation, too big to fail, transaction costs, éminence grise

The ECB would have flooded the financial system with liquidity to try to ensure that credit markets did not dry up, as they had done after the collapse of Lehman Brothers, and to forestall runs on both banks and sovereigns. Large quantities of banknotes would have been made available in the south to reassure anxious depositors especially if, as during the Cyprus crisis, banks were shut down and capital controls imposed. The ECB would probably have engaged in unprecedented bond-buying to hold down the borrowing costs of vulnerable countries. Loans to countries already under bail-out programmes would have been increased, and some kind of precautionary loan extended to Spain and Italy. The IMF would have helped Greece manage the reintroduction of the drachma.

This would probably have required a transition period (perhaps as short as one month) involving a parallel currency, or IOUs akin to the “patacones” that circulated in Argentina after it left its dollar peg in 2000, though EU lawyers thought these would be illegal. The ECB would have dealt with the technicalities of adapting European electronic payment systems to the departure of a member. The Commission would introduce guidelines for capital controls. Greece might have needed additional aid to manage the upheaval, not least to buy essential goods. In what remained of the euro zone there would have been difficult decisions to take over the allocation of losses arising within the Eurosystem of central banks. National governments would have to decide who should be compensated for losses in case of default and the inevitable bankruptcies caused by the abrupt mismatch between assets and liabilities as the values of currencies shifted.

This was crucial to the adoption of the 1992 programme for completing the single market. With this step, what was about to become the European Union at last embraced, more or less in full, the four freedoms that had supposedly underpinned the project from its very beginnings: free movement of goods, services, labour and capital (the last remaining capital controls were abolished in 1990).12 The link between the single market and the single currency is not always clear, especially to Eurosceptics, who tend to prefer the first to the second. The reason it exists lies mostly in the fourth of the four freedoms: movement of capital. It is best summed up by the notion of the “impossible trinity” that became popular in the economics literature in the 1980s: the combination of free movement of capital, wholly national monetary policies and independent control of exchange rates was declared to be unworkable or even impossible because the three were likely to contradict each other.


pages: 935 words: 267,358

Capital in the Twenty-First Century by Thomas Piketty

accounting loophole / creative accounting, Asian financial crisis, banking crisis, banks create money, Berlin Wall, book value, Branko Milanovic, British Empire, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, carbon tax, central bank independence, centre right, circulation of elites, collapse of Lehman Brothers, conceptual framework, corporate governance, correlation coefficient, David Ricardo: comparative advantage, demographic transition, distributed generation, diversification, diversified portfolio, European colonialism, eurozone crisis, Fall of the Berlin Wall, financial intermediation, full employment, Future Shock, German hyperinflation, Gini coefficient, Great Leap Forward, high net worth, Honoré de Balzac, immigration reform, income inequality, income per capita, index card, inflation targeting, informal economy, invention of the steam engine, invisible hand, joint-stock company, Joseph Schumpeter, Kenneth Arrow, low interest rates, market bubble, means of production, meritocracy, Money creation, mortgage debt, mortgage tax deduction, new economy, New Urbanism, offshore financial centre, open economy, Paul Samuelson, pension reform, power law, purchasing power parity, race to the bottom, randomized controlled trial, refrigerator car, regulatory arbitrage, rent control, rent-seeking, Robert Gordon, Robert Solow, Ronald Reagan, Simon Kuznets, sovereign wealth fund, Steve Jobs, Suez canal 1869, Suez crisis 1956, The Nature of the Firm, the payments system, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, trade liberalization, twin studies, very high income, Vilfredo Pareto, We are the 99%, zero-sum game

But countries wishing to move in this direction could very well do so incrementally, starting at the regional level (in Europe, for instance). Unless something like this happens, a defensive reaction of a nationalist stripe would very likely occur. For example, one might see a return to various forms of protectionism coupled with imposition of capital controls. Because such policies are seldom effective, however, they would very likely lead to frustration and increase international tensions. Protectionism and capital controls are actually unsatisfactory substitutes for the ideal form of regulation, which is a global tax on capital—a solution that has the merit of preserving economic openness while effectively regulating the global economy and justly distributing the benefits among and within nations.

Chapter 14 proposes a rethinking of the progressive income tax based on past experience and recent trends. Chapter 15 describes what a progressive tax on capital adapted to twenty-first century conditions might look like and compares this idealized tool to other types of regulation that might emerge from the political process, ranging from a wealth tax in Europe to capital controls in China, immigration reform in the United States, and revival of protectionism in many countries. Chapter 16 deals with the pressing question of public debt and the related issue of the optimal accumulation of public capital at a time when natural capital may be deteriorating. One final word.

Such a tax would provide a way to avoid an endless inegalitarian spiral and to control the worrisome dynamics of global capital concentration. Whatever tools and regulations are actually decided on need to be measured against this ideal. I will begin by analyzing practical aspects of such a tax and then proceed to more general reflections about the regulation of capitalism from the prohibition of usury to Chinese capital controls. A Global Tax on Capital: A Useful Utopia A global tax on capital is a utopian idea. It is hard to imagine the nations of the world agreeing on any such thing anytime soon. To achieve this goal, they would have to establish a tax schedule applicable to all wealth around the world and then decide how to apportion the revenues.


pages: 207 words: 86,639

The New Economics: A Bigger Picture by David Boyle, Andrew Simms

Abraham Maslow, Alan Greenspan, Alvin Toffler, Apollo 11, Asian financial crisis, back-to-the-land, banking crisis, behavioural economics, Bernie Madoff, Big bang: deregulation of the City of London, Bonfire of the Vanities, Bretton Woods, capital controls, carbon footprint, carbon tax, clean water, collateralized debt obligation, colonial rule, Community Supported Agriculture, congestion charging, corporate raider, corporate social responsibility, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, Crossrail, delayed gratification, deskilling, digital divide, en.wikipedia.org, energy transition, financial deregulation, financial exclusion, financial innovation, full employment, garden city movement, Glass-Steagall Act, green new deal, happiness index / gross national happiness, if you build it, they will come, income inequality, informal economy, Intergovernmental Panel on Climate Change (IPCC), Jane Jacobs, John Elkington, junk bonds, Kickstarter, land bank, land reform, light touch regulation, loss aversion, mega-rich, microcredit, Mikhail Gorbachev, Money creation, mortgage debt, neoliberal agenda, new economy, North Sea oil, Northern Rock, offshore financial centre, oil shock, peak oil, pension time bomb, pensions crisis, profit motive, purchasing power parity, quantitative easing, Ronald Reagan, seigniorage, Simon Kuznets, sovereign wealth fund, special drawing rights, systems thinking, the long tail, The Wealth of Nations by Adam Smith, Thomas L Friedman, too big to fail, trickle-down economics, Vilfredo Pareto, Washington Consensus, wealth creators, working-age population

Finance will have to be returned to its role as servant, not master, of the global economy, to dealing prudently with people’s savings and providing regular APPENDICES 169 capital for productive and sustainable investment. Regulation of finance, and the restoration of policy autonomy to democratic government, implies the reintroduction of capital controls. Governments need the freedom to use capital control as an active component of economic policy, to encourage certain types of capital flow and to discourage others. The Asian financial crisis of the late 1990s made it very clear that countries with capital controls were both insulated from the crisis and retained policy autonomy to pursue their national economic priorities. The current crisis drives the final nail in the coffin of the idea that countries should simply abandon all interference with international financial markets.

People’s worth is increasingly judged by the value they create in the economy contributing to GDP growth, a process that seems to have been internalized so that people often see material possessions as the main source of self-worth. Yet beyond a relatively low level of satisfying needs, we are no happier. Thanks to the deregulation of capital controls, the state itself is also increasingly subordinate to the needs of business and finance, and openly so. This is partly a logical consequence of the focus on income and profit growth: the business and financial sector are seen as the means through which this can be delivered, and so their needs are given priority.

Another way of doing this is to make sure that the public services that depend on the financial resources drawn from taxation and professional expertise work in equal partnership with the people they are supposed to serve. Doing so would dramatically increase their resource base and radically transform the way they operate, creating a positive upward spiral. 13 Improve checks and balances by introducing capital controls Re-regulating the international finance sector is an urgent priority, as is reducing its size in relation to the real economy, to prevent a repeat of the recent destructive distortions. This is a precondition to transforming both national economies and the global economy. Finance will have to be returned to its role as servant, not master, of the global economy, to dealing prudently with people’s savings and providing regular APPENDICES 169 capital for productive and sustainable investment.


pages: 438 words: 84,256

The Great Demographic Reversal: Ageing Societies, Waning Inequality, and an Inflation Revival by Charles Goodhart, Manoj Pradhan

asset-backed security, banks create money, Berlin Wall, bonus culture, Boris Johnson, Branko Milanovic, Brexit referendum, business cycle, capital controls, carbon tax, central bank independence, commodity super cycle, coronavirus, corporate governance, COVID-19, deglobalization, demographic dividend, demographic transition, Deng Xiaoping, en.wikipedia.org, Fall of the Berlin Wall, financial independence, financial repression, fixed income, full employment, gig economy, Gini coefficient, Greta Thunberg, housing crisis, income inequality, inflation targeting, interest rate swap, job automation, Kickstarter, long term incentive plan, longitudinal study, low interest rates, low skilled workers, manufacturing employment, Martin Wolf, mass immigration, middle-income trap, non-tariff barriers, offshore financial centre, oil shock, old age dependency ratio, open economy, paradox of thrift, Pearl River Delta, pension reform, Phillips curve, price stability, private sector deleveraging, quantitative easing, rent control, savings glut, secular stagnation, shareholder value, special economic zone, The Great Moderation, The Wealth of Nations by Adam Smith, total factor productivity, working poor, working-age population, yield curve, zero-sum game

A series of frictions supported this asymmetry. Global capital was largely prevented from accessing China’s financial markets, while the early returns from China’s financial markets were not attractive enough for overseas investment to chase. As a result, global capital flowed into physical investment. Strict capital controls allowed China to maintain a competitive global advantage. That same strategy allowed financial repression to be pursued at home in order to direct the domestic pool of saving towards state-owned enterprises (SOEs) with government-owned banks as the conduit. China’s contribution to global disinflation of the last 35 years and its coming reversal needs to be understood through the lens of history and an understanding of its growth model in the global context.

Capital: Most emerging markets accumulate capital when its cost falls because of global forces or is forcefully lowered through policy-led distortions. China recouped the benefits of both. The multi-decade, global decline in nominal and real interest rates has already been documented. The domestic cost of capital was lowered through three mechanisms. First, China dealt with the ‘impossible trinity’ by imposing strict capital controls, allowing the exchange rate to be fixed and domestic monetary policy to be independent of global monetary conditions. The ‘impossible trinity’ dictates that an economy has to choose two out of the trio of free capital flows, a fixed exchange rate and monetary independence—having all three is not possible.

With capital free to move in and out quickly, there would have been large capital outflows and that would have put enough pressure on the exchange rate that it could no longer remain fixed. But if capital is not free to flow in and out of China, then the exchange rate can remain fixed and the PBoC can set interest rates to suit the needs of the domestic growth strategy. And it did. Besides strict capital controls on financial flows both in and out of the country, the PBoC intervened heavily in foreign exchange markets to prevent the inflows of investment funds from raising the value of the Renminbi. Over 2001–2015, the PBoC intervened regularly in foreign exchange markets, the intervention peaking at nearly 18% of GDP in 2007 according to official estimates, resulting in a massive accumulation of central bank reserves.


The Permanent Portfolio by Craig Rowland, J. M. Lawson

Alan Greenspan, Andrei Shleifer, asset allocation, automated trading system, backtesting, bank run, banking crisis, Bear Stearns, Bernie Madoff, buy and hold, capital controls, correlation does not imply causation, Credit Default Swap, currency risk, diversification, diversified portfolio, en.wikipedia.org, fixed income, Flash crash, high net worth, High speed trading, index fund, inflation targeting, junk bonds, low interest rates, margin call, market bubble, money market fund, new economy, passive investing, Ponzi scheme, prediction markets, risk tolerance, stocks for the long run, survivorship bias, technology bubble, transaction costs, Vanguard fund

Having a portion of your wealth in a foreign location makes the likelihood very low of a natural disaster affecting all of your wealth at once. Government Confiscation Governments have been known to react to emergencies by confiscating assets and/or implementing capital controls to prevent assets from leaving the country. It has even happened in the United States, with a sweeping gold confiscation in 1933 that was followed by controls on gold ownership that lasted until 1974. Other countries have implemented capital controls to prevent investors from removing assets from within a country's borders, nationalizing assets, and/or freezing bank accounts of all citizens. 1933 U.S. Gold Seizure The clipping in Figure 15.1 is from the New York Times in 1933.

These changes are making American citizens very unappealing as customers to overseas banks and much of the information written on this topic in prior years has become obsolete. The actions of the U.S. government in recent years can be interpreted in a number of ways. One interpretation is that a form of de facto capital controls are being put in place incrementally through red tape instead of overt legislation. The actions of the U.S. government in recent years can be interpreted in a number of ways. One interpretation is that a form of de facto capital controls are being put in place incrementally through red tape instead of overt legislation. One day it may no longer be possible to find a foreign financial institution that is willing to do business with U.S. citizens, even if it is still technically legal to hold assets outside of U.S. borders.

In the United States, investors spend and save in the form of dollars and have no need to hold a currency like the European Union's euro, the British pound, or the Japanese yen. One reason to avoid holding foreign currencies in the Permanent Portfolio is that, just like foreign bond holdings, a political decision in another country can put foreign currency holders at great risk. In a crisis, it is not uncommon for countries to implement capital controls in an attempt to control the situation by limiting the flows of money into or out of the country. These policies will adversely affect holders of that currency. Even the currencies perceived to be the safest in the world are not immune to political risk. In the summer of 2011, the Swiss National Bank surprised the markets by taking steps to control the value of the Swiss franc, which proceeded to lose almost 10 percent in comparison to the U.S. dollar in one week.


pages: 561 words: 138,158

Shutdown: How COVID Shook the World's Economy by Adam Tooze

2021 United States Capitol attack, air freight, algorithmic trading, Anthropocene, Asian financial crisis, asset-backed security, Ayatollah Khomeini, bank run, banking crisis, Basel III, basic income, Ben Bernanke: helicopter money, Benchmark Capital, Berlin Wall, Bernie Sanders, Big Tech, bitcoin, Black Lives Matter, Black Monday: stock market crash in 1987, blue-collar work, Bob Geldof, bond market vigilante , Boris Johnson, Bretton Woods, Brexit referendum, business cycle, business process, business process outsourcing, buy and hold, call centre, capital controls, central bank independence, centre right, clean water, cognitive dissonance, contact tracing, contact tracing app, coronavirus, COVID-19, credit crunch, Credit Default Swap, cryptocurrency, currency manipulation / currency intervention, currency peg, currency risk, decarbonisation, deindustrialization, Donald Trump, Elon Musk, energy transition, eurozone crisis, facts on the ground, failed state, fake news, Fall of the Berlin Wall, fear index, financial engineering, fixed income, floating exchange rates, friendly fire, George Floyd, gig economy, global pandemic, global supply chain, green new deal, high-speed rail, housing crisis, income inequality, inflation targeting, invisible hand, It's morning again in America, Jeremy Corbyn, junk bonds, light touch regulation, lockdown, low interest rates, margin call, Martin Wolf, mass immigration, mass incarceration, megacity, megaproject, middle-income trap, Mikhail Gorbachev, Modern Monetary Theory, moral hazard, oil shale / tar sands, Overton Window, Paris climate accords, Pearl River Delta, planetary scale, Potemkin village, price stability, Productivity paradox, purchasing power parity, QR code, quantitative easing, remote working, reserve currency, reshoring, Robinhood: mobile stock trading app, Ronald Reagan, secular stagnation, shareholder value, Silicon Valley, six sigma, social distancing, South China Sea, special drawing rights, stock buybacks, tail risk, TikTok, too big to fail, TSMC, universal basic income, Washington Consensus, women in the workforce, yield curve

Steil, “Central Bank Currency Swaps Tracker,” Council on Foreign Relations, November 5, 2019. 17. J. Frost, H. Ito, and R. van Stralen, “The Effectiveness of Macroprudential Policies and Capital Controls Against Volatile Capital Inflows,” BIS Working Papers, June 2, 2020. 18. I. Grabel, “The Rebranding of Capital Controls in an Era of Productive Incoherence,” Review of International Political Economy 22, no. 1 (2015): 7–43. I. Grabel, “Capital Controls in a Time of Crisis,” in G. A. Epstein, ed., The Political Economy of International Finance in an Age of Inequality (Edward Elgar Publishing, 2018), 69–105. 19.

In emerging markets, that meant checking the foreign exchange exposure of banks and other corporations large enough by themselves to upset the national economy.17 This kind of regulation was intrusive and apt to provoke opposition from the business lobby, but it was essential to securing financial stability. Finally, if all else failed, capital controls were no longer taboo.18 Between the 1970s and the 1990s the push to liberalize the movement of capital across borders had been the great crusade of neoliberalism. But in a world in which the Fed, the European Central Bank, and the Bank of Japan were engaged in wholesale manipulation of their bond markets, sending trillions of dollars sloshing around the world in search of yield, even agencies such as the IMF and the BIS acknowledged that the emerging markets were within their rights to ward off the inflow of capital and where necessary to slow the outflow.

But that was to reckon without the mercurial Turkish president. Without warning, on Saturday, March 20, 2021, Erdoğan fired the head of the central bank and then his deputy. It was almost as if Ankara was setting out to provoke a crisis. Behind the scenes, to stop the drain of both domestic and foreign funds, the central bank resorted to capital controls by stealth, limiting the capacity of investors to exit their lira positions.81 * * * — The hierarchy of the world economy has many tiers and at every level trials of strength were played out. To reassure bondholders and stabilize the growth in its debt short of 100 percent of GDP, South Africa was preparing to undertake painful efforts at budget consolidation.82 In 2021, Brazil would face the choice as to whether to continue the subsidy to low-income households that had made such a difference during the first wave of the coronavirus crisis.


pages: 580 words: 168,476

The Price of Inequality: How Today's Divided Society Endangers Our Future by Joseph E. Stiglitz

affirmative action, Affordable Care Act / Obamacare, airline deregulation, Alan Greenspan, Andrei Shleifer, banking crisis, barriers to entry, Basel III, battle of ideas, Bear Stearns, behavioural economics, Berlin Wall, business cycle, capital controls, Carmen Reinhart, Cass Sunstein, central bank independence, collapse of Lehman Brothers, collective bargaining, colonial rule, corporate governance, Credit Default Swap, Daniel Kahneman / Amos Tversky, Dava Sobel, declining real wages, deskilling, electricity market, Exxon Valdez, Fall of the Berlin Wall, financial deregulation, financial innovation, Flash crash, framing effect, full employment, George Akerlof, Gini coefficient, Glass-Steagall Act, Great Leap Forward, income inequality, income per capita, indoor plumbing, inflation targeting, information asymmetry, invisible hand, jobless men, John Bogle, John Harrison: Longitude, John Markoff, John Maynard Keynes: Economic Possibilities for our Grandchildren, Kenneth Arrow, Kenneth Rogoff, London Interbank Offered Rate, lone genius, low interest rates, low skilled workers, Marc Andreessen, Mark Zuckerberg, market bubble, market fundamentalism, mass incarceration, medical bankruptcy, microcredit, moral hazard, mortgage tax deduction, negative equity, obamacare, offshore financial centre, paper trading, Pareto efficiency, patent troll, Paul Samuelson, Paul Volcker talking about ATMs, payday loans, Phillips curve, price stability, profit maximization, profit motive, public intellectual, purchasing power parity, race to the bottom, rent-seeking, reserve currency, Richard Thaler, Robert Shiller, Robert Solow, Ronald Coase, Ronald Reagan, Savings and loan crisis, search costs, shareholder value, short selling, Silicon Valley, Simon Kuznets, spectrum auction, Steve Jobs, stock buybacks, subprime mortgage crisis, technology bubble, The Chicago School, The Fortune at the Bottom of the Pyramid, The Myth of the Rational Market, The Spirit Level, The Wealth of Nations by Adam Smith, too big to fail, trade liberalization, Tragedy of the Commons, transaction costs, trickle-down economics, ultimatum game, uranium enrichment, very high income, We are the 99%, wealth creators, women in the workforce, zero-sum game

The suggestion that under certain circumstances capital controls might be desirable was greeted with suggestions that I was trying to sell snake oil. Ten years later, the battlefield looks different. There has been a major change in perceptions, to which my book may have contributed, and there is a broad consensus on the need for governance reform—with some already under way, and more scheduled for the future. The IMF has admitted that capital controls may be desirable under certain circumstances.69 In some of its programs, such as that for Iceland, it has accepted capital controls and has pushed for much less austerity than was its wont.

In fact, fears of contagion have motivated bailouts of banks in the magnitude of tens and hundreds of billions of dollars. The response to contagious diseases is “quarantine,” and finally, in the spring of 2011, the IMF recognized the desirability of the analogous response in the financial markets. This takes the form of capital controls, or limiting the volatile movement of capital across borders, especially during a crisis.23 The irony is that in the crises that finance brings about, workers and small businesses bear the brunt of the costs. Crises are accompanied by high unemployment that drives down wages, so workers are hurt doubly.

The United States, in its bilateral trade agreement with Singapore, attempted to restrict that country’s regulations concerning chewing gum: it was worried that they might discourage U.S. exports of one of our “major” export commodities, chewing gum. In its bilateral agreement with Chile, the United States attempted to prevent the imposition of capital controls, rules that the country had used successfully to stabilize its economy. Other agreements have tried to prevent countries from discouraging the purchase of gasoline-guzzling vehicles, because those are the kinds of cars in which America specializes. Chapter 11 of the North American Free Trade Agreement and other bilateral investment agreements (and other economic agreements that the United States and Europe have signed with developing countries) arguably provides compensation to firms for loss of profits incurred as a result of a regulatory change, something that both Congress and the U.S. courts have refused to do.


pages: 388 words: 125,472

The Establishment: And How They Get Away With It by Owen Jones

anti-communist, Asian financial crisis, autism spectrum disorder, bank run, battle of ideas, Big bang: deregulation of the City of London, bonus culture, Boris Johnson, Bretton Woods, British Empire, call centre, capital controls, Capital in the Twenty-First Century by Thomas Piketty, centre right, citizen journalism, collapse of Lehman Brothers, collective bargaining, disinformation, don't be evil, Edward Snowden, Etonian, eurozone crisis, falling living standards, Francis Fukuyama: the end of history, full employment, G4S, glass ceiling, hiring and firing, housing crisis, inflation targeting, Intergovernmental Panel on Climate Change (IPCC), investor state dispute settlement, James Dyson, Jon Ronson, laissez-faire capitalism, land bank, light touch regulation, low interest rates, market fundamentalism, mass immigration, Monroe Doctrine, Mont Pelerin Society, moral hazard, Neil Kinnock, night-watchman state, Nixon triggered the end of the Bretton Woods system, Northern Rock, Occupy movement, offshore financial centre, old-boy network, open borders, Overton Window, plutocrats, popular capitalism, post-war consensus, profit motive, quantitative easing, race to the bottom, rent control, road to serfdom, Ronald Reagan, shareholder value, short selling, sovereign wealth fund, stakhanovite, statistical model, subprime mortgage crisis, Suez crisis 1956, The Wealth of Nations by Adam Smith, transfer pricing, Tyler Cowen, union organizing, unpaid internship, Washington Consensus, We are all Keynesians now, wealth creators, Winter of Discontent

So there was a seismic shift when, in December 2012, the IMF dropped its blanket opposition to capital controls – or restrictions on the movement of capital in and out of a country’s borders, such as taxes – even if it believed they should be ‘targeted, transparent, and generally temporary’. Growing economies that have imposed such controls over the last few years include powerhouses such as Brazil, South Korea and India, and China never got rid of them. When Iceland was plunged into economic ruin by the financial collapse, capital controls were fundamental to its recovery. Brazil, for example, imposed a financial transactions tax that went up to 6 per cent, and was hailed by its government as a success because it prevented its exchange rate jumping too quickly.

Brazil, for example, imposed a financial transactions tax that went up to 6 per cent, and was hailed by its government as a success because it prevented its exchange rate jumping too quickly. Malaysia survived the 1997 Asian financial crisis better than competitor economies precisely because it had capital controls. Capital controls monitor the flow of money in and out of a given economy, guarding against asset bubbles and investors’ short-term interests that may be on a collision course with the interests of society as a whole. Capital can surge in, hiking up property prices and exchange rates, and then suddenly withdraw, precipitating a violent crash.

When it came to the City, Thatcher claimed, all previous governments did was place ‘barriers … in the way of its improvements’. Those barriers would be toppled.4 On the eve of Thatcher’s 1979 election victory, shares on the London Stock Exchange reached record levels in anticipation. ‘Shares Vote for Maggie!’ proclaimed the Evening Standard.5 She did not disappoint. Thatcher swiftly abolished capital controls, or taxes on the movement of capital, meaning that capital could be moved freely in and out of the country without restriction. It meant both a dramatic strengthening of the power of the financial markets, and a diminishing of the power of elected governments over the economy, because policies unpopular with the markets could suddenly trigger an unchecked and economically destructive flight of capital.


pages: 1,066 words: 273,703

Crashed: How a Decade of Financial Crises Changed the World by Adam Tooze

"there is no alternative" (TINA), "World Economic Forum" Davos, Affordable Care Act / Obamacare, Alan Greenspan, Apple's 1984 Super Bowl advert, Asian financial crisis, asset-backed security, bank run, banking crisis, Basel III, Bear Stearns, Berlin Wall, Bernie Sanders, Big bang: deregulation of the City of London, bond market vigilante , book value, Boris Johnson, bread and circuses, break the buck, Bretton Woods, Brexit referendum, BRICs, British Empire, business cycle, business logic, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, Celtic Tiger, central bank independence, centre right, collateralized debt obligation, company town, corporate governance, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency manipulation / currency intervention, currency peg, currency risk, dark matter, deindustrialization, desegregation, Detroit bankruptcy, Dissolution of the Soviet Union, diversification, Doha Development Round, Donald Trump, Edward Glaeser, Edward Snowden, en.wikipedia.org, energy security, eurozone crisis, Fall of the Berlin Wall, family office, financial engineering, financial intermediation, fixed income, Flash crash, forward guidance, friendly fire, full employment, global reserve currency, global supply chain, global value chain, Goldman Sachs: Vampire Squid, Growth in a Time of Debt, high-speed rail, housing crisis, Hyman Minsky, illegal immigration, immigration reform, income inequality, interest rate derivative, interest rate swap, inverted yield curve, junk bonds, Kenneth Rogoff, large denomination, light touch regulation, Long Term Capital Management, low interest rates, margin call, Martin Wolf, McMansion, Mexican peso crisis / tequila crisis, military-industrial complex, mittelstand, money market fund, moral hazard, mortgage debt, mutually assured destruction, negative equity, new economy, Nixon triggered the end of the Bretton Woods system, Northern Rock, obamacare, Occupy movement, offshore financial centre, oil shale / tar sands, old-boy network, open economy, opioid epidemic / opioid crisis, paradox of thrift, Peter Thiel, Ponzi scheme, Post-Keynesian economics, post-truth, predatory finance, price stability, private sector deleveraging, proprietary trading, purchasing power parity, quantitative easing, race to the bottom, reserve currency, risk tolerance, Ronald Reagan, Savings and loan crisis, savings glut, secular stagnation, Silicon Valley, South China Sea, sovereign wealth fund, special drawing rights, Steve Bannon, structural adjustment programs, tail risk, The Great Moderation, Tim Cook: Apple, too big to fail, trade liberalization, upwardly mobile, Washington Consensus, We are the 99%, white flight, WikiLeaks, women in the workforce, Works Progress Administration, yield curve, éminence grise

On the global credit cycle see the highly influential paper by Hélène Rey, originally delivered in August 2013 at Jackson Hole, “Dilemma Not Trilemma: The Global Financial Cycle and Monetary Policy Independence” (NBER Working Paper 21162, May 2015). On the evolution of the IMF’s view on capital controls see IMF Survey, “IMF Adopts Institutional View on Capital Flows,” December 3, 2012, http://www.imf.org/en/News/Articles/2015/09/28/04/53/sopol120312a. 14. “Just in Case: Capital Controls Are Back as Part of Many Countries’ Financial Armoury,” Economist, October 13, 2013. 15. C. Jones, R. Wigglesworth and J. Politi, “Fed Fights Back Against ‘Feral Hogs,’” Financial Times, June 24, 2013. 16.

12 Not for nothing the financial officials of booming emerging markets like Brazil complained about the influx of hot money from the United States. At the G20 in Seoul in November 2010 they had lambasted Bernanke for adopting QE2, dropping US interest rates and allowing the dollar to slide. By 2013 many emerging markets had gone beyond the war of words to adopt capital controls. Brazil, South Korea, Thailand, Indonesia all took steps to slow the inflow of funds and curb the appreciation of their currencies. Fifteen years earlier in the heyday of the “Washington consensus” this would have put them beyond the pale. Restraining international capital movement was a retreat from the most fundamental liberalizing policy of the 1970s and 1980s.

For the emerging markets the funding boom was over. The exchange rates of what Morgan Stanley dubbed the “Fragile Five”—Turkey, Brazil, India, South Africa and Indonesia—declined precipitously. Western investors pulled their money.18 Interest rates went up to counter the “vacuum cleaner” effect of Fed policy.19 Capital controls put in place to curb excessive inflows did not prevent foreign money from leaving. But they limited the scale of the damage. As one Brazilian central banker remarked: “We knew this was going to come, and we prepared ourselves.”20 Stern American observers noted that the global credit cycle was not fate.21 Countries that had allowed their currencies to appreciate had been subject to a smaller inflow of funds.


pages: 352 words: 98,561

The City by Tony Norfield

accounting loophole / creative accounting, air traffic controllers' union, anti-communist, Asian financial crisis, asset-backed security, bank run, banks create money, Basel III, Berlin Wall, Big bang: deregulation of the City of London, Bretton Woods, BRICs, British Empire, capital controls, central bank independence, colonial exploitation, colonial rule, continuation of politics by other means, currency risk, dark matter, Edward Snowden, Fall of the Berlin Wall, financial innovation, financial intermediation, foreign exchange controls, Francis Fukuyama: the end of history, G4S, global value chain, Goldman Sachs: Vampire Squid, interest rate derivative, interest rate swap, Irish property bubble, Leo Hollis, linked data, London Interbank Offered Rate, London Whale, Londongrad, low interest rates, Mark Zuckerberg, Martin Wolf, means of production, Money creation, money market fund, mortgage debt, North Sea oil, Northern Rock, Occupy movement, offshore financial centre, plutocrats, purchasing power parity, quantitative easing, Real Time Gross Settlement, regulatory arbitrage, reserve currency, Ronald Reagan, seigniorage, Sharpe ratio, sovereign wealth fund, Suez crisis 1956, The Great Moderation, transaction costs, transfer pricing, zero-sum game

For the US, the UK and Japan, a key motivation for lifting capital controls was to boost their own financial markets and gain a bigger share of this growing business. By 1981, the US authorities had become more favourably disposed towards the euromarkets, passing laws to establish ‘offshore’ International Banking Facilities that were located in the US but, by running a separate set of accounts, would be free from most national ‘onshore’ banking regulations.25 Japan also set up its own ‘Japanese Offshore Market’ from 1985. By the end of the 1980s, the major capitalist countries had eliminated most forms of capital control. One indication of this was shown by the narrowing gap, down to zero in most cases, between the interest rates paid for ‘onshore’ versus ‘offshore’ interbank deposits.26 Financial business boomed as a result, not only in the volume of eurocurrency lending and borrowing, but also in eurobond issuance and trading and in the large-scale buying by foreign investors of government bonds and equities.27 The key financial centres’ access to foreign capital was not without its problems, however.

This fuelled the growth of an offshore pool of dollar funds held by foreign governments and companies. Konings notes that: Concern regarding the stability of the dollar was widespread by the early 1960s, but the [US] Treasury opposed any proposals for fundamental reforms to the financial system and instead adopted capital controls. The latter, however, did little to reduce the outflows of capital associated with foreign direct investment by American companies.31 By 1960, and more evidently in the early 1960s, foreign holdings of US dollar assets had begun to exceed US government holdings of gold at the official price of $35.32 If the value of the US government’s gold bars held in Fort Knox and in the New York Federal Reserve’s basement in Manhattan was less than the dollar assets held by foreigners, then this raised the question: how much was the dollar actually worth?

By 1974, the US had removed almost all the controls on international capital outflows, partly due to its new-found freedom in not having to defend the dollar’s value and partly on the expectation that OPEC oil revenues would be invested in US securities.21 Before 1979, several other countries had followed the US in cutting back capital controls, including Canada and Germany. The collapse of Bretton Woods in the early 1970s had also brought about a boom in financial market activity. For example, the value of outstanding international bank loans rose by two-thirds between 1977 and 1979 to exceed $1,000bn, and it was in the 1970s that major US exchanges began trading in financial futures contracts on US government bonds and currencies.22 By 1979, the euromarkets had also already passed their teenage years.


pages: 318 words: 77,223

The Only Game in Town: Central Banks, Instability, and Avoiding the Next Collapse by Mohamed A. El-Erian

"World Economic Forum" Davos, activist fund / activist shareholder / activist investor, Airbnb, Alan Greenspan, balance sheet recession, bank run, barriers to entry, Bear Stearns, behavioural economics, Black Monday: stock market crash in 1987, break the buck, Bretton Woods, British Empire, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, carried interest, collapse of Lehman Brothers, corporate governance, currency peg, disruptive innovation, driverless car, Erik Brynjolfsson, eurozone crisis, fear index, financial engineering, financial innovation, Financial Instability Hypothesis, financial intermediation, financial repression, fixed income, Flash crash, forward guidance, friendly fire, full employment, future of work, geopolitical risk, Hyman Minsky, If something cannot go on forever, it will stop - Herbert Stein's Law, income inequality, inflation targeting, Jeff Bezos, Kenneth Rogoff, Khan Academy, liquidity trap, low interest rates, Martin Wolf, megacity, Mexican peso crisis / tequila crisis, moral hazard, mortgage debt, Norman Mailer, oil shale / tar sands, price stability, principal–agent problem, quantitative easing, risk tolerance, risk-adjusted returns, risk/return, Second Machine Age, secular stagnation, sharing economy, Sheryl Sandberg, sovereign wealth fund, The Great Moderation, The Wisdom of Crowds, too big to fail, University of East Anglia, yield curve, zero-sum game

Not surprisingly, citizens opted in the 2015 national elections for what they believed would be a completely different approach under a new government led by Syriza, the Coalition for the Radical Left. But even this new, energetic government, led by the charismatic and skilled prime minister Alexis Tsipras, found it hard to buck the system and deliver the needed policy pivot. After months of tortuous negotiations, capital controls, a national referendum, repeated games of chicken, and a three-week closure of Greek banks, the government was forced to do more of the same—the so-called extend-and-pretend approach. (Data from Thomson Reuters) Figure 6. Greece GDP (2008 = 100) Inadequate growth has also been a persistent problem for Italy and, of course, Japan (Figure 7).

Geographically, these four global transitions need to interact with four historic policy transitions: • China, where the authorities are navigating the tricky middle-income transition in what has been an impressive multi-decade developmental process; • Europe, where governments are trying to complete the needed components of an historical economic integration project while avoiding fragmentation and dealing with the Graccident, which has already included the economic implosion of the economy, capital controls, closed banks, and debt arrears to the IMF, one of the world’s very few preferred and senior creditors; • Japan, where, having engaged the fiscal stimulus and gone quite far along the path of unconventional monetary policy, Prime Minister Shinzo Abe’s government is struggling to deploy the “third arrow” of structural reform to avoid a third consecutive lost decade; and • the United States, where the Fed is waiting for less political dysfunction to enable other policy-making entities to deploy their better-suited tools and hardwired solutions to make possible a robust economic recovery.

Meanwhile, deposits continued to flee the banking system, sucking even more oxygen out of the system and increasing the country’s dependence on an already reluctant ECB. At one point the government was forced to close the banks for three weeks, set strict daily limits on ATM withdrawals, and impose capital controls. In all this, the question was not whether the major players involved were interested in keeping Greece within the Eurozone. They certainly were. The problem is that none of them took the type of decisive policy actions needed. To make things worse, each side had difficulties convincing the other of its seriousness.


pages: 272 words: 76,154

How Boards Work: And How They Can Work Better in a Chaotic World by Dambisa Moyo

"Friedman doctrine" OR "shareholder theory", activist fund / activist shareholder / activist investor, Airbnb, algorithmic trading, Amazon Web Services, AOL-Time Warner, asset allocation, barriers to entry, Ben Horowitz, Big Tech, bitcoin, Black Lives Matter, blockchain, Boeing 737 MAX, Bretton Woods, business cycle, business process, buy and hold, call centre, capital controls, carbon footprint, collapse of Lehman Brothers, coronavirus, corporate governance, corporate social responsibility, COVID-19, creative destruction, cryptocurrency, deglobalization, don't be evil, Donald Trump, fake news, financial engineering, gender pay gap, geopolitical risk, George Floyd, gig economy, glass ceiling, global pandemic, global supply chain, hiring and firing, income inequality, index fund, intangible asset, Intergovernmental Panel on Climate Change (IPCC), Jeff Bezos, knowledge economy, labor-force participation, long term incentive plan, low interest rates, Lyft, money: store of value / unit of account / medium of exchange, multilevel marketing, Network effects, new economy, old-boy network, Pareto efficiency, passive investing, Pershing Square Capital Management, proprietary trading, remote working, Ronald Coase, Savings and loan crisis, search costs, shareholder value, Shoshana Zuboff, Silicon Valley, social distancing, Social Responsibility of Business Is to Increase Its Profits, SoftBank, sovereign wealth fund, surveillance capitalism, The Nature of the Firm, Tim Cook: Apple, too big to fail, trade route, Travis Kalanick, uber lyft, Vanguard fund, Washington Consensus, WeWork, women in the workforce, work culture

Twenty-first-century companies are buffeted by unprecedented economic headwinds. Particularly after the onset of the coronavirus pandemic, the global economy is facing a deep and protracted recession, adding to already slowing long-term economic growth trends. Furthermore, de-globalization—in the form of new trade tariffs, capital controls, and increased barriers to immigration—threatens to harm global commerce and limit investment flows and the movement of labor, thereby worsening an already dire economic outlook. As many nations abandon their strict commitment to the values of liberal democracy and market capitalism, it is becoming increasingly difficult for corporations to operate effectively.

Another example of challenges stemming from government can be seen with energy and mining companies. When these companies make multibillion-dollar investments, they sometimes enter into direct contracts with governments on specific and well-defined terms regarding taxes, employment, royalties, and capital controls. However, as history has shown, governments have been known to renege on these agreements after a company has invested, demanding better terms and, in extremis, seizing company assets. This can force the board and management to reassess and even write off large amounts of investment. In essence, companies that operate internationally must always bear in mind that their investments can sometimes take a stark turn for the worse, and those risks must be analyzed and mitigated as much as possible.

A “carry trade” is a strategy of borrowing at low interest rates in developed countries and investing in higher-yielding emerging markets. It is a strategy that many businesses engage in, but it may become increasingly untenable in the years ahead. The climate of global retrenchment has led to rising capital controls, which can hamper a company’s ability to move money to its business units in other countries and repatriate any profits to pay its shareholders. Because the carry trade assumes that capital can move freely across borders, a world of separate, nationally focused financial institutions forces corporations to overhaul how they fund their operations and return capital to their shareholders.


pages: 515 words: 142,354

The Euro: How a Common Currency Threatens the Future of Europe by Joseph E. Stiglitz, Alex Hyde-White

"there is no alternative" (TINA), "World Economic Forum" Davos, Alan Greenspan, bank run, banking crisis, barriers to entry, battle of ideas, behavioural economics, Berlin Wall, Bretton Woods, business cycle, buy and hold, capital controls, carbon tax, Carmen Reinhart, cashless society, central bank independence, centre right, cognitive dissonance, collapse of Lehman Brothers, collective bargaining, corporate governance, correlation does not imply causation, credit crunch, Credit Default Swap, currency peg, dark matter, David Ricardo: comparative advantage, disintermediation, diversified portfolio, eurozone crisis, Fall of the Berlin Wall, fiat currency, financial innovation, full employment, George Akerlof, Gini coefficient, global supply chain, Great Leap Forward, Growth in a Time of Debt, housing crisis, income inequality, incomplete markets, inflation targeting, information asymmetry, investor state dispute settlement, invisible hand, Kenneth Arrow, Kenneth Rogoff, knowledge economy, light touch regulation, low interest rates, manufacturing employment, market bubble, market friction, market fundamentalism, Martin Wolf, Mexican peso crisis / tequila crisis, money market fund, moral hazard, mortgage debt, neoliberal agenda, new economy, open economy, paradox of thrift, pension reform, pensions crisis, price stability, profit maximization, purchasing power parity, quantitative easing, race to the bottom, risk-adjusted returns, Robert Shiller, Ronald Reagan, Savings and loan crisis, savings glut, secular stagnation, Silicon Valley, sovereign wealth fund, the payments system, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, transfer pricing, trickle-down economics, Washington Consensus, working-age population

However, if the creditor wanted to convert the Greek-euros into ordinary or German euros, he would have to purchase the foreign exchange, using chits. Alternatively, the country could impose capital controls, paying the creditor in euros but not allowing the euros to leave the country. For instance, it could set up euro-bank accounts within the country, with money being able to move smoothly from one euro-bank account to another but not being able to be converted into currency or euros in a foreign euro account. Capital controls have been used in the context of crises in Iceland, Greece, and Cyprus. This proposal is, in effect, a more efficient and simplified way of implementing such constraints. 29 We may have underestimated the costs of bankruptcy: with many of the debts contracted under foreign law, as we have noted, redenomination may not be possible.

., 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.

., 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.


pages: 353 words: 81,436

Buying Time: The Delayed Crisis of Democratic Capitalism by Wolfgang Streeck

"there is no alternative" (TINA), "World Economic Forum" Davos, activist fund / activist shareholder / activist investor, air traffic controllers' union, Alan Greenspan, banking crisis, basic income, Bretton Woods, business cycle, capital controls, Carmen Reinhart, central bank independence, collective bargaining, corporate governance, creative destruction, currency risk, David Graeber, deindustrialization, Deng Xiaoping, Eugene Fama: efficient market hypothesis, financial deregulation, financial engineering, financial repression, fixed income, full employment, Garrett Hardin, Gini coefficient, Growth in a Time of Debt, income inequality, Joseph Schumpeter, Kenneth Rogoff, Kickstarter, knowledge economy, labour market flexibility, labour mobility, late capitalism, liberal capitalism, low interest rates, means of production, moral hazard, Myron Scholes, Occupy movement, open borders, open economy, Plutonomy: Buying Luxury, Explaining Global Imbalances, profit maximization, risk tolerance, shareholder value, too big to fail, Tragedy of the Commons, union organizing, winner-take-all economy, Wolfgang Streeck

Rogoff, Growth in a Time of Debt, NBER Working Paper No. 15639, Cambridge, MA: National Bureau of Economic Research, 2009). If this is true – like all econometric ‘laws’, it should be treated with utmost caution – many developed economies are already incapable of growth. 73 See a few thoughts on the subject in chapter 4 below. 74 In combination with low interest rates, capital controls and high inflation, this may add up to a public debt reduction strategy. The technical name for it is ‘financial repression’ (C. Reinhart and M. Sbrancia, The Liquidation of Government Debt, NBER Working Paper No. 16893, Cambridge, MA: National Bureau of Economic Research, 2011). 75 Systems to regulate state bankruptcies have often been proposed.

In the internationally ‘embedded liberalism’29 of the 1950s and 1960s, the nation-states of the capitalist West had their own currencies and were able, within certain limits, to devalue them to compensate for a loss of external ‘competitiveness’ resulting from concessions to powerful trade unions and Communist parties. In this way, states and governments could distort markets and yield to domestic political demands for social justice, without being punished in their external economy. Capital flight could be prevented, or at least restricted, by means of capital controls, and this weakened the bargaining power of investors with respect to the minimum profit level they could demand from society in return for investing their, more or less captive, capital. Central to the Keynesian political economy were the corporatist interest associations of labour and capital, together with the negotiating system established between them.30 Supporting itself on these, government policy aimed to ensure full employment and a distribution acceptable to the working class, by means of negotiated tripartite incomes and, if possible, also price policy.

Unlike in the 1970s, inflation today would be driven not by the labour market but by central bank efforts to rescue lenders by bailing out debtors; it could therefore not as easily be ended as in the 1980s. And it would not mainly affect the owners of monetary assets – who, in a world without capital controls, can jump much more easily from one currency to another – but rather the, today, much larger numbers of pensioners and social assistance claimants. Workers too would suffer, since unlike in the 1970s trade unions are too weak now to ensure that wages keep pace with inflation. As an instrument for the taming of mass democracy, inflation would thus probably be used up much more quickly than in the past.


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The Cost of Inequality: Why Economic Equality Is Essential for Recovery by Stewart Lansley

"World Economic Forum" Davos, Adam Curtis, air traffic controllers' union, Alan Greenspan, AOL-Time Warner, banking crisis, Basel III, Big bang: deregulation of the City of London, Bonfire of the Vanities, borderless world, Branko Milanovic, Bretton Woods, British Empire, business cycle, business process, call centre, capital controls, collective bargaining, corporate governance, corporate raider, correlation does not imply causation, creative destruction, credit crunch, Credit Default Swap, crony capitalism, David Ricardo: comparative advantage, deindustrialization, Edward Glaeser, Everybody Ought to Be Rich, falling living standards, financial deregulation, financial engineering, financial innovation, Financial Instability Hypothesis, floating exchange rates, full employment, Goldman Sachs: Vampire Squid, high net worth, hiring and firing, Hyman Minsky, income inequality, James Dyson, Jeff Bezos, job automation, job polarisation, John Meriwether, Joseph Schumpeter, Kenneth Rogoff, knowledge economy, laissez-faire capitalism, Larry Ellison, light touch regulation, Londongrad, Long Term Capital Management, low interest rates, low skilled workers, manufacturing employment, market bubble, Martin Wolf, Mary Meeker, mittelstand, mobile money, Mont Pelerin Society, Myron Scholes, new economy, Nick Leeson, North Sea oil, Northern Rock, offshore financial centre, oil shock, plutocrats, Plutonomy: Buying Luxury, Explaining Global Imbalances, proprietary trading, Right to Buy, rising living standards, Robert Shiller, Robert Solow, Ronald Reagan, savings glut, shareholder value, The Great Moderation, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, too big to fail, Tyler Cowen, Tyler Cowen: Great Stagnation, Washington Consensus, Winter of Discontent, working-age population

Firms and individuals were heavily limited in depositing funds in overseas banks, purchasing foreign shares or even the setting up of factories overseas. Exchange controls—designed to support currency levels—and other limitations on financial services greatly constrained the role of finance. Capital controls and other regulations ushered in a new era of ‘boring banking’. After the War, with the weakness of sterling and the strength of the dollar, the City ceded its once pre-eminent status as the world’s international finance centre to New York. Globally, commerce took an increasingly back seat, wider controls kept a lid on the international concentration of wealth while the rich—on both sides of the Atlantic—were less concerned with building their wealth than hanging onto it.

Financial flows were much more closely tied to the nation state, indeed much more so than before the First World War. As finance was freed from the constraints of the past, money became nomadic. Surpluses, dividends and profits arising in one country could be recycled across the world, mostly through offshore intermediaries, to any of the world’s burgeoning number of financial ports. Not only have capital controls been abandoned, ‘we have now taken a full step again beyond that, into a world where capital is not only free to flow across borders, but is actively and artificially encouraged to move,’ writes Nicholas Shaxson in his study of the power of the offshore tax industry, ‘lured by any number of offshore attractions: secrecy, evasion of prudential banking regulations, zero taxes.’158 Soon international capitalism—‘financial liberalisation on steroids’, as Shaxson has described it159—was being driven by the demands of a tsunami of global footloose capital looking for the most lucrative home.

These funds generate $860 billion in income a year while the loss of global tax exceeds $255 billion annually.166 The extraordinary rise in the role of the offshore haven—a huge headache for the tax-raising ability of governments across the globe—has been made possible by the globalisation of money flows, the liberalisation of capital markets and the blind eye policies of national governments. Figure 4.2 shows the rapid acceleration in the amount held in bank deposits in Jersey alone following the removal of capital controls from the early 1980s. The explosion of tax havens: the case of Jersey (Figure 4.2) 167 Growth of bank deposits in Jersey , 1980 to 2005. With the opening up of capital markets, the world’s financial centres found themselves in a new global race. Huge profits were to be made from acquiring, managing and investing these footloose funds.


Hopes and Prospects by Noam Chomsky

air traffic controllers' union, Alan Greenspan, Albert Einstein, banking crisis, Bear Stearns, Berlin Wall, Bretton Woods, British Empire, capital controls, colonial rule, corporate personhood, Credit Default Swap, cuban missile crisis, David Ricardo: comparative advantage, deskilling, en.wikipedia.org, energy security, failed state, Fall of the Berlin Wall, financial deregulation, Firefox, Glass-Steagall Act, high-speed rail, Howard Zinn, Hyman Minsky, invisible hand, liberation theology, market fundamentalism, Martin Wolf, Mikhail Gorbachev, Monroe Doctrine, moral hazard, Nelson Mandela, new economy, nuremberg principles, one-state solution, open borders, Plutonomy: Buying Luxury, Explaining Global Imbalances, public intellectual, Ralph Waldo Emerson, RAND corporation, Robert Solow, Ronald Reagan, Savings and loan crisis, Seymour Hersh, structural adjustment programs, The Wealth of Nations by Adam Smith, too big to fail, total factor productivity, trade liberalization, uranium enrichment, Washington Consensus

The first was under the economic regime established by the United States and Britain at Bretton Woods after the war, negotiated by Harry Dexter White for the United States and John Maynard Keynes for England. They shared the belief that economic sovereignty is a crucial factor in growth. The system they designed was based on capital controls and regulated currencies in order to protect economic sovereignty, and to permit state intervention to carry out social democratic measures. The regime lasted for about twenty-five years, and was extremely successful by historical standards. By the mid-1970s, the system was gradually replaced in parts of the world by neoliberal principles.

Furthermore, “the growth of labor, capital, and total factor productivity have all fallen precipitously since the 1960s in the OECD [Organisation for Economic Co-operation and Development] countries.”11 In brief, the twenty-five years of economic sovereignty, state-coordinated economic growth, and capital controls under the Bretton Woods system led to better social and economic results than the following twenty-five years of neoliberalism, by just about every relevant measure, and by significant margins. It is important to stress that the results include social indicators. In the United States, for example, growth during the Bretton Woods period was not only the highest ever over a lengthy period, but was also egalitarian.

Economist Javier Santiso of the OECD Development Center terms it a “paradox” that “able economists committed to laissez-faire showed the world yet another road to a de facto socialized banking system”; no paradox, to those familiar with economic history. Chile did manage to recover, but by a complex mixture of market reliance and state intervention, including a form of capital control (violating the core principle of neoliberalism) and state ownership of the world’s largest copper producer, Codelco, another radical violation of neoliberal principles, and the source of much of Chile’s export earnings and the state’s fiscal revenues. As the Financial Times observes, after the “catastrophic banking crisis of 1982, the product in part of economic policies pursued by the radical free-marketers known as the Chicago boys, [Chile] cooled its ideological fervor” and by the 1990s “controlled its exposure to world financial markets and maintained its efficient copper company in public hands,” somewhat protecting itself from market disasters by these and other measures.23 It remains to look at the central doctrine of neoliberalism: financial liberalization, which began to take off from the early 1970s.


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Wall Street: How It Works And for Whom by Doug Henwood

accounting loophole / creative accounting, activist fund / activist shareholder / activist investor, affirmative action, Alan Greenspan, Andrei Shleifer, asset allocation, asset-backed security, bank run, banking crisis, barriers to entry, bond market vigilante , book value, borderless world, Bretton Woods, British Empire, business cycle, buy the rumour, sell the news, capital asset pricing model, capital controls, Carl Icahn, central bank independence, computerized trading, corporate governance, corporate raider, correlation coefficient, correlation does not imply causation, credit crunch, currency manipulation / currency intervention, currency risk, David Ricardo: comparative advantage, debt deflation, declining real wages, deindustrialization, dematerialisation, disinformation, diversification, diversified portfolio, Donald Trump, equity premium, Eugene Fama: efficient market hypothesis, experimental subject, facts on the ground, financial deregulation, financial engineering, financial innovation, Financial Instability Hypothesis, floating exchange rates, full employment, George Akerlof, George Gilder, Glass-Steagall Act, hiring and firing, Hyman Minsky, implied volatility, index arbitrage, index fund, information asymmetry, interest rate swap, Internet Archive, invisible hand, Irwin Jacobs, Isaac Newton, joint-stock company, Joseph Schumpeter, junk bonds, kremlinology, labor-force participation, late capitalism, law of one price, liberal capitalism, liquidationism / Banker’s doctrine / the Treasury view, London Interbank Offered Rate, long and variable lags, Louis Bachelier, low interest rates, market bubble, Mexican peso crisis / tequila crisis, Michael Milken, microcredit, minimum wage unemployment, money market fund, moral hazard, mortgage debt, mortgage tax deduction, Myron Scholes, oil shock, Paul Samuelson, payday loans, pension reform, planned obsolescence, plutocrats, Post-Keynesian economics, price mechanism, price stability, prisoner's dilemma, profit maximization, proprietary trading, publication bias, Ralph Nader, random walk, reserve currency, Richard Thaler, risk tolerance, Robert Gordon, Robert Shiller, Savings and loan crisis, selection bias, shareholder value, short selling, Slavoj Žižek, South Sea Bubble, stock buybacks, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, The Market for Lemons, The Nature of the Firm, The Predators' Ball, The Wealth of Nations by Adam Smith, transaction costs, transcontinental railway, women in the workforce, yield curve, zero-coupon bond

I'm reminded of Karl Kraus's comment about psychoanalysis — that it's the disease of which it purports to be the cure. If old thinking can be successfully passed off as new, why not revive some better old ideas than the ones now being re-animated? Capital controls, for example, once a cornerstone of social democratic thinking, are now dismissed as hopelessly obsolete. But why? Why not require government approval of inbound and outbound foreign investment? It worked quite well for Japan and South Korea; why can't capital controls be put in service of an agenda more humane than the rapid growth in GDP and exports? To those who say that modern technology makes it easy to evade such restrictions one can easily reply that it also makes it easier to impose them.

., 0.590 and 0.949 (Bank of England data, reported in Goldstein et al. 1994, p. 5).-^'' While it would be an exaggeration to say that there's now a single global credit market, we're definitely moving in that direction. Though all this seems as natural as the sunrise, this incarnation of globalism isn't all that old. Most countries imposed extensive capital controls well into the 1970s. Even now, the IMF Articles of Agreement (Article VI, Section 3) allow members to "exercise such controls as are necessary to regulate international capital movements," as long as they don't unduly WALL STREET interfere with routine payments that go with trade. Though official opinion of the 1950s urged a liberal regime, balance of payments imbalances in the 1960s led to a tightening of controls, with the U.S. trying to restrict capital outflows and several surplus countries trying to limit inflows.

"Liquidity Demand and Investment," Review of Political Economy i, pp. 467-496. Pesaran, M. Hashem (1992). "Natural Rate Hypothesis." in Newman et al. (1992). Pickering, Margaret Hastings (1991). "A Review of Corporate Restructuring Activity, 1980- 90," Staff Study l6l (Washington: Federal Reserve Board, May). Pitelis, Christos (1987). Corporate Capital: Control. Ownership, Saving and Crisis (Cambridge and New York: Cambridge University Press). —, ed. (1993). Transaction Costs, Markets and Hierarchies (Oxford and Cambridge: Blackwell). Plosser, Charles I. (1984). "Money in a Theory of Finance," Carnegie-Rochester Conference WALL STREET Series on Public Policy 21


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The Finance Curse: How Global Finance Is Making Us All Poorer by Nicholas Shaxson

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, activist fund / activist shareholder / activist investor, Airbnb, airline deregulation, Alan Greenspan, anti-communist, bank run, banking crisis, Basel III, Bear Stearns, benefit corporation, Bernie Madoff, Big bang: deregulation of the City of London, Blythe Masters, Boris Johnson, Bretton Woods, British Empire, business climate, business cycle, capital controls, carried interest, Cass Sunstein, Celtic Tiger, central bank independence, centre right, Clayton Christensen, cloud computing, corporate governance, corporate raider, creative destruction, Credit Default Swap, cross-subsidies, David Ricardo: comparative advantage, demographic dividend, Deng Xiaoping, desegregation, Donald Trump, Etonian, export processing zone, failed state, fake news, falling living standards, family office, financial deregulation, financial engineering, financial innovation, forensic accounting, Francis Fukuyama: the end of history, full employment, gig economy, Gini coefficient, Glass-Steagall Act, global supply chain, Global Witness, high net worth, Ida Tarbell, income inequality, index fund, invisible hand, Jeff Bezos, junk bonds, Kickstarter, land value tax, late capitalism, light touch regulation, London Whale, Long Term Capital Management, low skilled workers, manufacturing employment, Mark Zuckerberg, Martin Wolf, megaproject, Michael Milken, Money creation, Mont Pelerin Society, moral hazard, neoliberal agenda, Network effects, new economy, Northern Rock, offshore financial centre, old-boy network, out of africa, Paul Samuelson, plutocrats, Ponzi scheme, price mechanism, proprietary trading, purchasing power parity, pushing on a string, race to the bottom, regulatory arbitrage, rent-seeking, road to serfdom, Robert Bork, Ronald Coase, Ronald Reagan, Savings and loan crisis, seminal paper, shareholder value, sharing economy, Silicon Valley, Skype, smart grid, Social Responsibility of Business Is to Increase Its Profits, South Sea Bubble, sovereign wealth fund, special economic zone, Steve Ballmer, Steve Jobs, stock buybacks, Suez crisis 1956, The Chicago School, Thorstein Veblen, too big to fail, Tragedy of the Commons, transfer pricing, two and twenty, vertical integration, Wayback Machine, wealth creators, white picket fence, women in the workforce, zero-sum game

A land value tax would be, if set up right, unavoidable: even if the land were held under an impenetrable Cook Islands trust, if whoever owns or controls or benefits from it does not cough up the right amount of tax each year, the land (or a portion of it) would be forfeit and you can send the bailiffs in. These kinds of ‘smart capital controls’ would rebalance our housing markets, reduce housing booms and crashes and the number of empty homes, curb inequality, and keep potentially criminal elements out of our markets. Separately, we can find smart ways to discourage flows of money into Britain from the abusive private equity firms. If this inward investment serves as a crowbar for looting and hollowing out our productive economic base, then we are much better off without it. Smart capital controls would remove the tax breaks and incentives for looting, while leaving Britain open to genuine productive job-creating investment.

Smart capital controls would remove the tax breaks and incentives for looting, while leaving Britain open to genuine productive job-creating investment. A policy of smart capital controls may also discourage London from serving as an offshore hub for renminbi trading, not just because of its potential as a vector for CCP influence over British policymaking, but also because such trading tends to increase the size and influence of finance in the British economy, which the finance curse shows us is to our detriment. Smart capital controls would favour dramatically increased capital safety buffers at big banks, reducing City profits but making the banking sector more stable and less prone to gambling at the taxpayers’ expense, delivering overall benefits to our country.

Why do they tolerate all those ‘middleman monopolies’ where powerful interests park themselves on the crucial choke points in global supply chains, extracting wealth from all the players in the network, like Veblen’s smug toads snapping up passing flies? Change here will be immensely hard, of course – but without any organised counterforce, it will be impossible. Here’s another way we can think about tackling the finance curse. This is, in essence, the exact opposite of the Competitiveness Agenda, and you might call it ‘smart capital controls’. The aim here is not so much to try and control flows of capital out of our economy, but to be selective and careful about what flows in. These controls would usually not come in the form of barriers to flows of capital at the border, but instead in the form of policies designed to make the economy work better by protecting us from the more dangerous forms of global money.


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

3D printing, Airbnb, Alan Greenspan, Asian financial crisis, bank run, banking crisis, barriers to entry, Basel III, battle of ideas, Berlin Wall, Big bang: deregulation of the City of London, book value, Boris Johnson, Bretton Woods, BRICs, British Empire, business cycle, business process, capital controls, Capital in the Twenty-First Century by Thomas Piketty, carbon tax, Carmen Reinhart, Celtic Tiger, central bank independence, centre right, clean tech, collaborative consumption, collapse of Lehman Brothers, collective bargaining, corporate governance, creative destruction, credit crunch, Credit Default Swap, crony capitalism, Crossrail, currency manipulation / currency intervention, currency peg, debt deflation, Diane Coyle, disruptive innovation, Downton Abbey, Edward Glaeser, Elon Musk, en.wikipedia.org, energy transition, eurozone crisis, fear of failure, financial deregulation, financial engineering, first-past-the-post, Ford Model T, forward guidance, full employment, Gini coefficient, global supply chain, Great Leap Forward, Growth in a Time of Debt, high-speed rail, hiring and firing, hydraulic fracturing, Hyman Minsky, Hyperloop, immigration reform, income inequality, interest rate derivative, Intergovernmental Panel on Climate Change (IPCC), Irish property bubble, James Dyson, Jane Jacobs, job satisfaction, Joseph Schumpeter, Kenneth Rogoff, Kickstarter, labour market flexibility, labour mobility, land bank, liquidity trap, low interest rates, margin call, Martin Wolf, mittelstand, moral hazard, mortgage debt, mortgage tax deduction, North Sea oil, Northern Rock, offshore financial centre, oil shale / tar sands, oil shock, open economy, peer-to-peer rental, price stability, private sector deleveraging, pushing on a string, quantitative easing, Richard Florida, rising living standards, risk-adjusted returns, Robert Gordon, savings glut, school vouchers, self-driving car, sharing economy, Silicon Valley, Silicon Valley startup, Skype, smart grid, smart meter, software patent, sovereign wealth fund, Steve Jobs, The Death and Life of Great American Cities, The Wealth of Nations by Adam Smith, too big to fail, total factor productivity, Tyler Cowen, Tyler Cowen: Great Stagnation, working-age population, Zipcar

That makes them vulnerable to panic among investors, who may suddenly stop funding them.272 This is a major flaw in the global financial system. As I argued in Open World: the Truth about Globalisation, in the absence of a provider of emergency liquidity with deep enough pockets, economies need to be wary of borrowing too much from foreigners and impose capital controls to protect themselves if necessary.273 But within the eurozone, capital controls are meant to be illegal, while one of the major selling points of the single currency is that it ought to allow poorer countries to borrow freely from richer ones to fund catch-up growth and should promote integrated financial markets more generally. So by refusing to act as a lender of last resort, the ECB was not only threatening to allow eurozone governments to be forced unnecessarily to default, it was undermining the very basis of financial integration within the eurozone.

These had periodically struck Europe since the breakdown of the Bretton Woods system of exchange rates pegged to the US dollar in the early 1970s. Its replacement in Europe, the exchange-rate mechanism (ERM) of the European Monetary System (EMS), involved trying to limit currencies’ fluctuations around pegs to Germany’s Deutsche Mark. But after European governments lifted capital controls in the 1980s, allowing money to flow freely in and out of the economy, the ERM became increasingly vulnerable to destabilising speculation. In 1992 currency after currency was forced to devalue. That September, sterling was forced out of the ERM on Black Wednesday. In 1993 EU governments decided to greatly widen the bands within which currencies could fluctuate.

Thus in Act One of the crisis, the euro acted as a shock absorber for member economies. Contrast Ireland’s initial experience with Iceland’s. When Iceland’s banks collapsed in September 2008, the country was cut off from global markets, saw interest rates skyrocket to 20 per cent, had to seek an IMF rescue loan and imposed capital controls to stop cash draining out of the economy. But when Ireland’s banks collapsed, its membership of the euro provided valuable breathing space: the government was able to continue borrowing from international markets and interest rates fell. Unfortunately, the Irish government squandered this advantage through its disastrous decision to guarantee all the debts of its collapsing banking system – thereby making taxpayers foot the bill for the huge losses of scoundrels such as Sean FitzPatrick at Anglo Irish Bank.


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Big Debt Crises by Ray Dalio

Alan Greenspan, Asian financial crisis, asset-backed security, bank run, banking crisis, basic income, Bear Stearns, Ben Bernanke: helicopter money, break the buck, Bretton Woods, British Empire, business cycle, buy the rumour, sell the news, capital controls, central bank independence, collateralized debt obligation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency manipulation / currency intervention, currency peg, currency risk, declining real wages, equity risk premium, European colonialism, fiat currency, financial engineering, financial innovation, foreign exchange controls, German hyperinflation, global macro, housing crisis, implied volatility, intangible asset, it's over 9,000, junk bonds, Kickstarter, land bank, large denomination, low interest rates, manufacturing employment, margin call, market bubble, market fundamentalism, military-industrial complex, Money creation, money market fund, money: store of value / unit of account / medium of exchange, moral hazard, mortgage debt, Northern Rock, Ponzi scheme, price stability, private sector deleveraging, purchasing power parity, pushing on a string, quantitative easing, refrigerator car, reserve currency, risk free rate, Savings and loan crisis, short selling, short squeeze, sovereign wealth fund, subprime mortgage crisis, too big to fail, transaction costs, universal basic income, uptick rule, value at risk, yield curve

The spot then eventually catches up after the currency is let go, and the fall in the spot exchange rate allows the interest differential to narrow, which mechanically causes the forward to rally relative to the spot. At this point in the cycle, capital controls are a third (often last ditch) lever that seldom works. They can seem attractive to policy makers, since they directly cause fewer people to take their capital out of the country. But history shows that they usually fail because a) investors find ways to get around them and b) because the very act of trying to trap people leads them to want to escape. The inability to get one’s money out of a country is analogous to one’s inability to get one’s money out of a bank: fear of it can lead to a run. Still, capital controls sometimes can be a temporary fix, though in no case are they a sustained fix.

The habit of reckoning in dollars, especially, has established itself, not only in firms’ internal accounting practice, but above all as the method of price quotation in trade, industry and agriculture.”100 In a desperate attempt to calm the inflationary spiral, on October 12 1922, the government stepped in to stop the ever-growing flight into foreign currency. Restrictions were put on German citizens purchasing foreign FX.101 Such capital controls are a classic lever to control inflationary depressions; they are rarely successful. The reasons for this are that a) capital controls have limited effectiveness at best because they are usually pretty easy to get around and b) trying to trap people typically leads them to want to escape even more. Not being able to get one’s money out of the country triggers a psychology that is analogous to the inability to get one’s money out of a bank: it produces fear that produces a run.

Policy makers create incentives for investors to stay in the currency (i.e., higher interest rates that compensate for risk of currency depreciation). POORLY MANAGED Policy makers favor domestic conditions, and monetary policy is too loose, putting off domestic pain and stoking inflation. Policy makers attempt to stop the outflow of capital with capital controls or other restrictive measures. SMOOTHING THE DOWNTURN WELL-MANAGED Use reserves judiciously to smooth the withdrawal of foreign capital while working to close imbalances. POORLY MANAGED Rely on reserve sales to maintain higher levels of spending. MANAGING BAD DEBTS/DEFAULTS WELL-MANAGED Work through debts of entities that are over-indebted, making up the gap with credit elsewhere.


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China's Future by David Shambaugh

Berlin Wall, capital controls, demographic dividend, demographic transition, Deng Xiaoping, facts on the ground, financial intermediation, financial repression, Gini coefficient, Great Leap Forward, guns versus butter model, high net worth, high-speed rail, Kickstarter, knowledge economy, low skilled workers, market bubble, megacity, middle-income trap, Mikhail Gorbachev, military-industrial complex, New Urbanism, offshore financial centre, open economy, Pearl River Delta, rent-seeking, secular stagnation, short selling, South China Sea, special drawing rights, too big to fail, urban planning, Washington Consensus, working-age population, young professional

Yet the potential remains unrealized because Chinese consumers hedge against uncertainties of the future. The main uncertainty remains the necessity of saving for medical emergencies and retirement, which is the main factor accounting for China’s extraordinarily high household savings rate. Another factor is the limited options for investing. Because of capital controls Chinese citizens are severely limited from investing abroad or moving their savings to foreign banks, and the government rightly fears that if these controls were further relaxed the result would be massive capital out-flight. Money moved abroad is not money spent at home. Despite the nonconvertibility of the renminbi on capital account and government regulations on moving money out of the country, private Chinese capital is increasingly flowing overseas.

It is not just individuals investing abroad; Chinese corporations and government entities are also doing so.37 China’s non-financial outbound direct investment (ODI) totaled $121 billion in 2014, while President Xi Jinping has declared that China will invest a whopping $1.25 trillion worldwide by 2025. Despite the exodus of capital and the government’s relaxation of capital controls on a phased basis,38 Chinese consumers still have enormous potential to drive the next wave of economic growth if their anxieties about retirement, healthcare, and old age provision can be ameliorated. People’s Bank of China Governor Zhou Xiaochuan also signaled to the International Monetary Fund recently that China planned the “managed convertibility” of its currency in a step-by-step manner.39 On November 30, 2015 China succeeded in having the renminbi included in the IMF’s basket of currencies that enjoy “special drawing rights” (SDRs).

Index A Abou, Serge Acemoglu, Daron and Robinson, James adaptation authoritarian regimes “J-Curve” concept paradigm advocacy groups Africa aging population Air Force (PLA) air pollution / carbon dioxide emissions Allison, Graham architecture Asian Development Bank asset bubbles Association of Southeast Asian Nations (ASEAN) Australia authoritarian regimes development stages see also Hard Authoritarianism; Neo-Totalitarianism; Soft Authoritarianism B baby boomers Bangladesh bank deposit insurance system banking sector shadow banking state banks biaotai, act of billionaires/millionaires “Black Monday” Bremmer, Ian Brzezinski, Zbigniew Budget Amendment Act (2014) bureaucracies (“Iron Quadrangle”) C Cambodia capital controls carbon dioxide emissions Central Asian states chemical pollution of water resources China 2030 report Chinese Communist Party (CCP) and civil society and collapse of Soviet Union / Eastern Europe Conservatives vs. Political Reformers corruption Eighteenth Party Congress Fifteenth Party Congress Fourteenth Party Congress Fourth Plenums higher education internal and external threats international relations pathways to the future retrenchment and Hard Authoritarianism separation from government SOEs see also Politburo; Third Plenum reforms civil society Clarke, Donald class composition / social stratification Color Revolutions communist party states Leninist system see also Soviet Union / Eastern Europe, collapse of comparative communist theorists Conservatives vs.


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

Affordable Care Act / Obamacare, Air France Flight 447, air freight, airport security, Alan Greenspan, Asian financial crisis, asset-backed security, bank run, banking crisis, Bear Stearns, behavioural economics, Boeing 747, book value, break the buck, Bretton Woods, business cycle, capital controls, central bank independence, cloud computing, collateralized debt obligation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency peg, Daniel Kahneman / Amos Tversky, diversified portfolio, double helix, endowment effect, Exxon Valdez, Eyjafjallajökull, financial deregulation, financial innovation, Financial Instability Hypothesis, floating exchange rates, foreign exchange controls, full employment, global supply chain, hindsight bias, Hyman Minsky, Joseph Schumpeter, junk bonds, Kenneth Rogoff, lateral thinking, Lewis Mumford, London Whale, Long Term Capital Management, market bubble, Michael Milken, money market fund, moral hazard, Myron Scholes, Network effects, new economy, offshore financial centre, paradox of thrift, pets.com, Ponzi scheme, proprietary trading, quantitative easing, Ralph Nader, Richard Thaler, risk tolerance, Ronald Reagan, Sam Peltzman, savings glut, scientific management, subprime mortgage crisis, tail risk, technology bubble, TED Talk, The Great Moderation, too big to fail, transaction costs, union organizing, Unsafe at Any Speed, value at risk, William Langewiesche, zero-sum game

Inflation, deregulation, and financial innovation brought the quiet period to an end. Savers chafed against the limits and economists said they hurt growth. Capital controls force savers to accept inferior returns at home and deprive worthy investment projects of capital from abroad. They are also unfair: people with the right connections can usually find their way around them. And if legal detours aren’t available, illegal ones, such as the black market, are. By the 1970s, in wealthy countries, international capital controls had largely been dismantled and domestic controls on credit were heading the same way. As far back as 1952 bankers were vilifying credit controls as “a long step in the direction of Government planning.”

The decades after 1934 are sometimes called “the quiet period” because they had no financial crises. The quiet period was quiet in part because financial freedom was tightly circumscribed. For years after the Second World War, many countries limited how much money residents could take in or out of the country or invest in another country’s stocks and bonds. The purpose of these capital controls was to tamp down the big flows of money that made it harder to keep currencies pegged to one another, as the postwar monetary system required. They were also intended to force savers to fund investments at home by making it harder to seek better returns abroad. The strategy worked, but it was burdensome: for a while Britons couldn’t take more than £100 when they traveled abroad, and Americans paid a tax when they bought foreign stocks and Treasury bills.

In short, the era of repressed finance came to an end because we concluded that whatever benefits it was delivering in terms of reduced crises were not worth the loss of freedom. We could have that financial system back again. All forms of lending and borrowing outside of regulated banks could be banned or severely restricted. Financial innovations such as money market funds and derivatives could be outlawed or taxed so heavily that no one would use them. Capital controls could be reintroduced. Down-payment requirements could be raised dramatically for anyone interested in buying stocks or a house. Some economists have proposed the radical idea of forbidding banks to make loans at all; depositors’ money would instead be invested in government bonds or cash. Assume for a moment that this would work and that financiers could not find a way around these new rules.


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The Enigma of Capital: And the Crises of Capitalism by David Harvey

accounting loophole / creative accounting, Alan Greenspan, anti-communist, Asian financial crisis, bank run, banking crisis, Bernie Madoff, Big bang: deregulation of the City of London, Bretton Woods, British Empire, business climate, call centre, capital controls, cotton gin, creative destruction, credit crunch, Credit Default Swap, David Ricardo: comparative advantage, deindustrialization, Deng Xiaoping, deskilling, equal pay for equal work, European colonialism, failed state, financial innovation, Frank Gehry, full employment, gentrification, Glass-Steagall Act, global reserve currency, Google Earth, Great Leap Forward, Guggenheim Bilbao, Gunnar Myrdal, guns versus butter model, Herbert Marcuse, illegal immigration, indoor plumbing, interest rate swap, invention of the steam engine, Jane Jacobs, joint-stock company, Joseph Schumpeter, Just-in-time delivery, land reform, liquidity trap, Long Term Capital Management, market bubble, means of production, megacity, microcredit, military-industrial complex, Money creation, moral hazard, mortgage debt, Myron Scholes, new economy, New Urbanism, Northern Rock, oil shale / tar sands, peak oil, Pearl River Delta, place-making, Ponzi scheme, precariat, reserve currency, Ronald Reagan, Savings and loan crisis, sharing economy, Shenzhen special economic zone , Silicon Valley, special drawing rights, special economic zone, statistical arbitrage, structural adjustment programs, subprime mortgage crisis, technological determinism, the built environment, the market place, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thomas L Friedman, Thomas Malthus, Thorstein Veblen, Timothy McVeigh, too big to fail, trickle-down economics, urban renewal, urban sprawl, vertical integration, white flight, women in the workforce

Regulatory barriers of this sort kept most capitalist activity, except for large multinational companies, export-oriented firms and financial institutions, tightly confined within nation state borders during this period. When the fixed exchange rate system broke down at the end of the 1960s, capital controls gradually disappeared. The last time any major state seriously attempted to use them occurred when the socialist François Mitterrand came to power in France in 1981. He nationalised the French banks and sought to stem capital flight by imposing strict controls on the outflows of capital. There was, however, a near revolution when the French found they could not freely use their credit cards abroad.

There was, however, a near revolution when the French found they could not freely use their credit cards abroad. Controls were quickly abandoned. Malaysia, however, did go against conventional wisdom and successfully defended itself against the crash of 1997–8 by resorting to capital controls. The diversity of state responses to the current crisis is indicative of how different interpretations and theoretical frameworks can underpin not only an uneven geographical development in responses but potentially an uneven geographical development of impacts. State managers and politicians are anything but omniscient even at the best of times, and at the worst of times can be refractory in the extreme.

Index Numbers in italics indicate Figures; those in bold indicate a Table. 11 September 2001 attacks 38, 41–2 subject to perpetual renewal and transformation 128 A Abu Dhabi 222 Académie Française 91 accumulation by dispossession 48–9, 244 acid deposition 75, 187 activity spheres 121–4, 128, 130 deindustrialised working-class area 151 and ‘green revolution’ 185–6 institutional and administrative arrangements 123 ‘mental conceptions of the world’ 123 patterns of relations between 196 production and labour processes 123 relations to nature 123 the reproduction of daily life and of the species 123 slums 152 social relations 123 subject to perpetual renewal and transformation 128 suburbs 150 technologies and organisational forms 123 uneven development between and among them 128–9 Adelphia 100 advertising industry 106 affective bonds 194 Afghanistan: US interventionism 210 Africa civil wars 148 land bought up in 220 neocolonialism 208 population growth 146 agribusiness 50 agriculture collectivisation of 250 diminishing returns in 72 ‘green revolution’ 185–6 ‘high farming’ 82 itinerant labourers 147 subsidies 79 AIG 5 alcoholism 151 Allen, Paul 98 Allende, Salvador 203 Amazonia 161, 188 American Bankers Association 8 American Revolution 61 anarchists 253, 254 anti-capitalist revolutionary movement 228 anti-racism 258 anti-Semitism 62 après moi le déluge 64, 71 Argentina Debt Crisis (2000–2002) 6, 243, 246, 261 Arizona, foreclosure wave in 1 Arrighi, Giovanni: The Long Twentieth Century 35, 204 asbestos 74 Asia Asian Currency Crisis (1997–98) 141, 261 collapse of export markets 141 growth 218 population growth 146 asset stripping 49, 50, 245 asset traders 40 asset values 1, 6, 21, 23, 26, 29, 46, 223, 261 Association of South East Asian Nations (ASEAN) 200 Athabaska tar sands, Canada 83 austerity programmes 246, 251 automobile industry 14, 15, 23, 56, 67, 68, 77, 121, 160–61 Detroit 5, 15, 16, 91, 108, 195, 216 autonomista movement 233, 234, 254 B Baader-Meinhof Gang 254 Bakunin, Michael 225 Balzac, Honoré 156 Bangalore, software development in 195 Bangkok 243 Bank of England 53, 54 massive liquidity injections in stock markets 261 Bank of International Settlements, Basel 51, 55, 200 Bank of New England 261 Bankers Trust 25 banking bail-outs 5, 218 bank shares become almost worthless 5 bankers’ pay and bonuses 12, 56, 218 ‘boutique investment banks’ 12 de-leveraging 30 debt-deposit ratio 30 deposit banks 20 French banks nationalised 198 international networks of finance houses 163 investment banks 2, 19, 20, 28, 219 irresponsible behaviour 10–11 lending 51 liquidity injections by central banks vii, 261 mysterious workings of central banks 54 ‘national bail-out’ 30–31 property market-led Nordic and Japanese bank crises 261 regional European banks 4 regular banks stash away cash 12, 220 rising tide of ‘moral hazard’ in international bank lending practices 19 ‘shadow banking’ system 8, 21, 24 sympathy with ‘Bonnie and Clyde’ bank robbers 56 Baran, Paul and Sweezey, Paul: Monopoly Capital 52, 113 Barings Bank 37, 100, 190 Baucus, Max 220 Bavaria, automotive engineering in 195 Beijing declaration (1995) 258 Berlin: cross-border leasing 14 Bernanke, Ben 236 ‘Big Bang’ (1986) 20, 37 Big Bang unification of global stock, options and currency trading markets 262 billionaire class 29, 110, 223 biodiversity 74, 251 biomass 78 biomedical engineering 98 biopiracy 245, 251 Birmingham 27 Bismarck, Prince Otto von 168 Black, Fischer 100 Blackstone 50 Blair, Tony 255 Blair government 197 blockbusting neighbourhoods 248 Bloomberg, Mayor Michael 20, 98, 174 Bolivarian movement 226, 256 bonuses, Wall Street 2, 12 Borlaug, Norman 186 bourgeoisie 48, 89, 95, 167, 176 ‘boutique investment banks’ 12 Brazil automobile industry 16 capital flight crisis (1999) 261 containerisation 16 an export-dominated economy 6 follows Japanese model 92 landless movement 257 lending to 19 the right to the city movement 257 workers’ party 256 Bretton Woods Agreement (1944) 31, 32, 51, 55, 171 British Academy 235 British empire 14 Brown, Gordon 27, 45 Budd, Alan 15 Buenos Aires 243 Buffett, Warren 173 building booms 173–4 Bush, George W. 5, 42, 45 business associations 195 C California, foreclosure wave in 1, 2 Canada, tightly regulated banks in 141 ‘cap and trade’ markets in pollution rights 221 capital bank 30 centralisation of 95, 110, 113 circulation of 90, 93, 108, 114, 116, 122, 124, 128, 158, 159, 182, 183, 191 cultural 21 devalued 46 embedded in the land 191 expansion of 58, 67, 68 exploitations of 102 export 19, 158 fixed 191, 213 industrial 40–41, 56 insufficient initial money capital 47 investment 93, 203 and labour 56, 88, 169–70 liquid money 20 mobility 59, 63, 64, 161–2, 191, 213 and nature 88 as a process 40 reproduction of 58 scarcity 50 surplus 16, 28, 29, 50–51, 84, 88, 100, 158, 166, 167, 172, 173, 174, 206, 215, 216, 217 capital accumulation 107, 108, 123, 182, 183, 191, 211 and the activity spheres 128 barriers to 12, 16, 47, 65–6, 69–70, 159 compound rate 28, 74, 75, 97, 126, 135, 215 continuity of endless 74 at the core of human evolutionary dynamics 121 dynamics of 188, 197 geographic landscape of 185 geographical dynamics of 67, 143 and governance 201 lagging 130 laws of 113, 154, 160 main centres of 192 market-based 180 Mumbai redevelopment 178 ‘nature’ affected by 122 and population growth 144–7 and social struggles 105 start of 159 capital circulation barriers to 45 continuity of 68 industrial/production capital 40–41 inherently risky 52 interruption in the process 41–2, 50 spatial movement 42 speculative 52, 53 capital controls 198 capital flow continuity 41, 47, 67, 117 defined vi global 20 importance of understanding vi, vii-viii interrupted, slowed down or suspended vi systematic misallocation of 70 taxation of vi wealth creation vi capital gains 112 capital strike 60 capital surplus absorption 31–2, 94, 97, 98, 101, 163 capital-labour relation 77 capitalism and communism 224–5 corporate 1691 ‘creative-destructive’ tendencies in 46 crisis of vi, 40, 42, 117, 130 end of 72 evolution of 117, 118, 120 expansion at a compound rate 45 first contradiction of 77 geographical development of 143 geographical mobility 161 global 36, 110 historical geography of 76, 117, 118, 121, 174, 180, 200, 202, 204 industrial 58, 109, 242 internal contradictions 115 irrationality of 11, 215, 246 market-led 203 positive and negative aspects 120 and poverty 72 relies on the beneficence of nature 71 removal of 260 rise of 135, 192, 194, 204, 228, 248–9, 258 ‘second contradiction of’ 77, 78 social relations in 101 and socialism 224 speculative 160 survival of 46, 57, 66, 86, 107, 112, 113, 116, 130, 144, 229, 246 uneven geographical development of 211, 213 volatile 145 Capitalism, Nature, Socialism journal 77 capitalist creed 103 capitalist development considered over time 121–4 ‘eras’ of 97 capitalist exploitation 104 capitalist logic 205 capitalist reinvestment 110–11 capitalists, types of 40 Carnegie, Andrew 98 Carnegie foundation 44 Carnegie Mellon University, Pittsburgh, Pennsylvania 195 Carson, Rachel: Silent Spring 187 Case Shiller Composite Indices SA 3 Catholic Church 194, 254 cell phones 131, 150, 152 Central American Free Trade Association (CAFTA) 200 centralisation 10, 11, 165, 201 Certificates of Deposit 262 chambers of commerce 195, 203 Channel Tunnel 50 Chiapas, Mexico 207, 226 Chicago Board Options Exchange 262 Chicago Currency Futures Market 262 ‘Chicago School’ 246 Chile, lending to 19 China ‘barefoot doctors’ 137 bilateral trade with Latin America 173 capital accumulation issue 70 cheap retail goods 64 collapse of communism 16 collapse of export markets 141 Cultural Revolution 137 Deng’s announcement 159 falling exports 6 follows Japanese model 92 ‘Great Leap Forward’ 137, 138 growth 35, 59, 137, 144–5, 213, 218, 222 health care 137 huge foreign exchange reserves 141, 206 infant mortality 59 infrastructural investment 222 labour income and household consumption (1980–2005) 14 market closed after communists took power (1949) 108 market forcibly opened 108 and oil market 83 one child per family policy 137, 146 one-party rule 199 opening-up of 58 plundering of wealth from 109, 113 proletarianisation 60 protests in 38 and rare earth metals 188 recession (1997) 172 ‘silk road’ 163 trading networks 163 unemployment 6 unrest in 66 urbanisation 172–3 and US consumerism 109 Chinese Central Bank 4, 173 Chinese Communist Party 180, 200, 256 chlorofluoral carbons (CFCs) 74, 76, 187 chronometer 91, 156 Church, the 249 CIA (Central Intelligence Agency) 169 circular and cumulative causation 196 Citibank 19 City Bank 261 city centres, Disneyfication of 131 City of London 20, 35, 45, 162, 219 class consciousness 232, 242, 244 class inequalities 240–41 class organisation 62 class politics 62 class power 10, 11, 12, 61, 130, 180 class relations, radical reconstitution of 98 class struggle 56, 63, 65, 96, 102, 127, 134, 193, 242, 258 Clausewitz, Carl von 213 Cleveland, foreclosure crisis in 2 Cleveland, foreclosures on housing in 1 Clinton, Bill 11, 12, 17, 44, 45 co-evolution 132, 136, 138, 168, 185, 186, 195, 197, 228, 232 in three cases 149–53 coal reserves 79, 188 coercive laws of competition see under competition Cold War 31, 34, 92 Collateralised Bond Obligations (CBOs) 262 Collateralised Debt Obligations (CDOs) 36, 142, 261, 262 Collateralised Mortgage Obligations (CMOs) 262 colonialism 212 communications, innovations in 42, 93 communism 228, 233, 242, 249 collapse of 16, 58, 63 compared with socialism 224 as a loaded term 259–60 orthodox communists 253 revolutionary 136 traditional institutionalised 259 companies joint stock 49 limited 49 comparative advantage 92 competition 15, 26, 43, 70 between financial centres 20 coercive laws of 43, 71, 90, 95, 158, 159, 161 and expansion of production 113 and falling prices 29, 116 fostering 52 global economic 92, 131 and innovation 90, 91 inter-capitalist 31 inter-state 209, 256 internalised 210 interterritorial 202 spatial 164 and the workforce 61 competitive advantage 109 computerised trading 262 computers 41, 99, 158–9 consortia 50, 220 consumerism 95, 109, 168, 175, 240 consumerist excess 176 credit-fuelled 118 niche 131 suburban 171 containerisation 16 Continental Illinois Bank 261 cooperatives 234, 242 corporate fraud 245 corruption 43, 69 cotton industry 67, 144, 162 credit cards fees vii, 245 rise of the industry 17 credit crunch 140 Credit Default swaps 262 Crédit Immobilièr 54 Crédit Mobilier 54 Crédit Mobilier and Immobilier 168 credit swaps 21 credit system and austerity programmes 246 crisis within 52 and the current crisis 118 and effective demand problem 112 an inadequate configuration of 52 predatory practices 245 role of 115 social and economic power in 115 crises crises of disproportionality 70 crisis of underconsumption 107, 111 east Asia (1997–8) 6, 8, 35, 49, 246 financial crisis of 1997–8 198, 206 financial crisis of 2008 34, 108, 114, 115 general 45–6 inevitable 71 language of crisis 27 legitimation 217 necessary 71 property market 8 role of 246–7 savings and loan crisis (US, 1984–92) 8 short sharp 8, 10 south-east Asia (1997–8) 6, 8, 35, 49, 246 cross-border leasing 142–3 cultural choice 238 ‘cultural industries’ 21 cultural preferences 73–4 Cultural Revolution 137 currency currency swaps 262 futures market 24, 32 global 32–3, 34 options markets on 262 customs barriers 42, 43 cyberspace 190 D Darwin, Charles 120 DDT 74, 187 de-leveraging 30 debt-financing 17, 131, 141, 169 decentralisation 165, 201 decolonisation 31, 208, 212 deficit financing 35, 111 deforestation 74, 143 deindustrialisation 33, 43, 88, 131, 150, 157, 243 Deleuze, Gilles 128 demand consumer 107, 109 effective 107, 110–14, 116, 118, 221, 222 lack of 47 worker 108 Democratic Party (US) 11 Deng Xiaoping 159 deregulation 11, 16, 54, 131 derivatives 8 currency 21 heavy losses in (US) 261 derivatives markets creation of 29, 85 unregulated 99, 100, 219 Descartes, René 156 desertification 74 Detroit auto industry 5, 15, 16, 91, 108, 195, 216 foreclosures on housing in 1 Deutsches Bank 20 devaluation 32, 47, 116 of bank capital 30 of prior investments 93 developing countries: transformation of daily lives 94–5 Developing Countries Debt Crisis 19, 261 development path building alliances 230 common objectives 230–31 development not the same as growth 229–30 impacts and feedbacks from other spaces in the global economy 230 Diamond, Jared: Guns, Germs and Steel 132–3, 154 diasporas 147, 155, 163 Dickens, Charles: Bleak House 90 disease 75, 85 dispossession anti-communist insurgent movements against 250–51 of arbitrary feudal institutions 249 of the capital class 260 China 179–80 first category 242–4 India 178–9, 180 movements against 247–52 second category 242, 244–5 Seoul 179 types of 247 under socialism and communism 250 Domar, Evsey 71 Dongguan, China 36 dot-com bubble 29, 261 Dow 35,000 prediction 21 drug trade 45, 49 Dubai: over-investment 10 Dubai World 174, 222 Durban conference on anti-racism (2009) 258 E ‘earth days’ 72, 171 east Asia crash of 1997–8 6, 8, 35, 49, 246 labour reserves 64 movement of production to 43 proletarianisation 62 state-centric economies 226 wage rates 62 eastern European countries 37 eBay 190 economic crisis (1848) 167 economists, and the current financial crisis 235–6 ecosystems 74, 75, 76 Ecuador, and remittances 38 education 59, 63, 127, 128, 221, 224, 257 electronics industry 68 Elizabeth II, Queen vi-vii, 235, 236, 238–9 employment casual part-time low-paid female 150 chronic job insecurity 93 culture of the workplace 104 deskilling 93 reskilling 93 services 149 Engels, Friedrich 89, 98, 115, 157, 237 The Housing Question 176–7, 178 Enron 8, 24, 52, 53, 100, 261 entertainment industries 41 environment: modified by human action 84–5 environmental movement 78 environmental sciences 186–7 equipment 58, 66–7 equity futures 262 equity index swaps 262 equity values 262 ethanol plants 80 ethnic cleansings 247 ethnicity issues 104 Eurodollars 262 Europe negative population growth in western Europe 146 reconstruction of economy after Second World War 202 rsouevolutions of 1848 243 European Union 200, 226 eastern European countries 37 elections (June 2009) 143 unemployment 140 evolution punctuated equilibrium theory of natural evolution 130 social 133 theory of 120, 129 exchange rates 24, 32, 198 exports, falling 141 external economies 162 F Factory Act (1848) 127 factory inspectors 127 ‘failed states’ 69 Fannie Mae (US government-chartered mortgage institution) 4, 17, 173, 223 fascism 169, 203, 233 Federal Deposit Insurance Corporation (FDIC) 8 rescue of Continental Illinois Bank 261 Federal Reserve System (the Fed) 2, 17, 54, 116, 219, 236, 248 and asset values 6 cuts interest rates 5, 261 massive liquidity injections in stock markets 261 rescue of Continental Illinois Bank 261 feminists, and colonisation of urban neighbourhoods 248 fertilisers 186 feudalism 135, 138, 228 finance capitalists 40 financial institutions awash with credit 17 bankruptcies 261 control of supply and demand for housing 17 nationalisations 261 financial services 99 Financial Times 12 financialisation 30, 35, 98, 245 Finland: Nordic cris (1992) 8 Flint strike, Michigan (1936–7) 243 Florida, foreclosure wave in 1, 2 Forbes magazine 29, 223 Ford, Henry 64, 98, 160, 161, 188, 189 Ford foundation 44, 186 Fordism 136 Fordlandia 188, 189 foreclosed businesses 245 foreclosed properties 220 fossil fuels 78 Foucault, Michel 134 Fourierists 168 France acceptance of state interventions 200 financial crisis (1868) 168 French banks nationalised 198 immigration 14 Paris Commune 168 pro-natal policies 59 strikes in 38 train network 28 Franco-Prussian War (1870) 168 fraud 43, 49 Freddie Mac (US government-chartered mortgage institution) 4, 17, 173, 223 free trade 10, 33, 90, 131 agreements 42 French Communist Party 52 French Revolution 61 Friedman, Thomas L.: The World is Flat 132 futures, energy 24 futures markets 21 Certificates of Deposit 262 currency 24 Eurodollars 262 Treasury instruments 262 G G7/G8/G20 51, 200 Galileo Galilei 89 Gates, Bill 98, 173, 221 Gates foundation 44 gays, and colonisation of urban neighbourhoods 247, 248 GDP growth (1950–2030) 27 Gehry, Frank 203 Geithner, Tim 11 gender issues 104, 151 General Motors 5 General Motors Acceptance Corporation 23 genetic engineering 84, 98 genetic modification 186 genetically modified organisms (GMOs) 186 gentrification 131, 256, 257 geographical determinism 210 geopolitics 209, 210, 213, 256 Germany acceptance of state interventions 199–200 cross-border leasing 142–3 an export-dominated economy 6 falling exports 141 invasion of US auto market 15 Nazi expansionism 209 neoliberal orthodoxies 141 Turkish immigrants 14 Weimar inflation 141 Glass-Steagall act (1933) 20 Global Crossing 100 global warming 73, 77, 121, 122, 187 globalisation 157 Glyn, Andrew et al: ‘British Capitalism, Workers and the Profits Squeeze’ 65 Goethe, Johann Wolfgang von 156 gold reserves 108, 112, 116 Goldman Sachs 5, 11, 20, 163, 173, 219 Google Earth 156 Gould, Stephen Jay 98, 130 governance 151, 197, 198, 199, 201, 208, 220 governmentality 134 GPS systems 156 Gramsci, Antonio 257 Grandin, Greg: Fordlandia 188, 189 grassroots organisations (GROS) 254 Great Depression (1920s) 46, 170 ‘Great Leap Forward’ 137, 138, 250 ‘Great Society’ anti-poverty programmes 32 Greater London Council 197 Greece sovereign debt 222 student unrest in 38 ‘green communes’ 130 Green Party (Germany) 256 ‘green revolution’ 185–6 Greenspan, Alan 44 Greider, William: Secrets of the Temple 54 growth balanced 71 compound 27, 28, 48, 50, 54, 70, 75, 78, 86 economic 70–71, 83, 138 negative 6 stop in 45 Guggenheim Museu, Bilbao 203 Gulf States collapse of oil-revenue based building boom 38 oil production 6 surplus petrodollars 19, 28 Gulf wars 210 gun trade 44 H habitat loss 74, 251 Haiti, and remittances 38 Hanseatic League 163 Harrison, John 91 Harrod, Roy 70–71 Harvey, David: A Brief History of Neoliberalism 130 Harvey, William vii Haushofer, Karl 209 Haussmann, Baron 49, 167–8, 169, 171, 176 Hawken, Paul: Blessed Unrest 133 Hayek, Friedrich 233 health care 28–9, 59, 63, 220, 221, 224 reneging on obligations 49 Health Care Bill 220 hedge funds 8, 21, 49, 261 managers 44 hedging 24, 36 Hegel, Georg Wilhelm Friedrich 133 hegemony 35–6, 212, 213, 216 Heidegger, Martin 234 Helú, Carlos Slim 29 heterogeneity 214 Hitler, Adolf 141 HIV/AIDS pandemic 1 Holloway, John: Change the World without Taking Power 133 homogeneity 214 Hong Kong excessive urban development 8 rise of (1970s) 35 sweatshops 16 horizontal networking 254 household debt 17 housing 146–7, 149, 150, 221, 224 asset value crisis 1, 174 foreclosure crises 1–2, 166 mortgage finance 170 values 1–2 HSBC 20, 163 Hubbert, M.


pages: 550 words: 124,073

Democracy and Prosperity: Reinventing Capitalism Through a Turbulent Century by Torben Iversen, David Soskice

Andrei Shleifer, assortative mating, augmented reality, barriers to entry, Big Tech, Bretton Woods, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, central bank independence, centre right, clean tech, cloud computing, collateralized debt obligation, collective bargaining, colonial rule, confounding variable, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, deindustrialization, deskilling, Donald Trump, first-past-the-post, full employment, general purpose technology, gentrification, Gini coefficient, hiring and firing, implied volatility, income inequality, industrial cluster, inflation targeting, invisible hand, knowledge economy, labor-force participation, liberal capitalism, low skilled workers, low-wage service sector, means of production, middle-income trap, mirror neurons, mittelstand, Network effects, New Economic Geography, new economy, New Urbanism, non-tariff barriers, Occupy movement, offshore financial centre, open borders, open economy, passive investing, precariat, race to the bottom, radical decentralization, rent-seeking, RFID, road to serfdom, Robert Bork, Robert Gordon, Silicon Valley, smart cities, speech recognition, tacit knowledge, The Future of Employment, The Great Moderation, The Rise and Fall of American Growth, the strength of weak ties, too big to fail, trade liberalization, union organizing, urban decay, vertical integration, Washington Consensus, winner-take-all economy, working-age population, World Values Survey, young professional, zero-sum game

For some it has been seen as a way of introducing the chill winds of competition and intensifying the pressure to deregulate and eliminate the excesses of the welfare state, while for others it has been seen as a way of halting the race to the bottom. What is important here is that integration supported labor market decentralization. By eliminating capital controls and making realignments more difficult, the EMS solidified the exchange-rate commitment and the credibility of the non-accommodating monetary policies needed to restrain wage demands in more decentralized labor markets. By making central-bank independence and fiscal retrenchment conditions for qualifying for monetary union, the Maastricht Treaty reinforced the credibility of that macropolicy stance.

Compared to the highly centralized, vertically integrated, and hierarchically organized companies of the Fordist era, the organization of companies in the knowledge economy are rooted in clusters of highly skilled workers working with complementary and often very specialized technologies in geographically confined spaces. The opening-up of these skill clusters across the advanced world or triad to foreign direct investment (FDI) by knowledge-intensive companies has both been responding to and aiding this radical geographical specialization of knowledge competences. Capital controls and restrictions on FDI access have been eased, as captured in figure 4.2, and this has led to an exponential increase in the stock of FDI as percent of GDP, from about twenty percent in 1990 to about 120 percent in 2013, which has intensified national and regional specialization. Only the most knowledge-intensive firms can set up foreign subsidiaries (Helpman et al. 2004), and while MNCs benefit from local knowledge clusters they also contribute knowledge to these (Coe et al. 2009; Greenaway and Kneller 2007).

Second, given the requirement of open financial markets, and hence the absence of controls on capital movements, fixed exchange rates are problematic since markets can bet against them with little risk: the two effective options are therefore flexible rates or membership of a common currency. With floating rates, an independent central bank must provide the monetary policy anchor to stabilize exchange rates and prevent the build-up of inflationary pressures. The need for credible commitments to a low-inflation environment is itself an additional motivation to give up capital controls. In a currency union like the Eurozone, the common central bank sets policies for all, and it cannot be beholden to any government. Third, in an advanced world in which product market competition is through variety and innovation, and in which knowledge-based companies are frequently networks of international subsidiaries, inflation and exchange rate movements are particularly costly and low inflation targeting (or at last equal inflation across advanced economies) offers some guarantee of exchange stability (as well as by definition low inflation).


pages: 471 words: 124,585

The Ascent of Money: A Financial History of the World by Niall Ferguson

Admiral Zheng, Alan Greenspan, An Inconvenient Truth, Andrei Shleifer, Asian financial crisis, asset allocation, asset-backed security, Atahualpa, bank run, banking crisis, banks create money, Bear Stearns, Black Monday: stock market crash in 1987, Black Swan, Black-Scholes formula, Bonfire of the Vanities, Bretton Woods, BRICs, British Empire, business cycle, capital asset pricing model, capital controls, Carmen Reinhart, Cass Sunstein, central bank independence, classic study, collateralized debt obligation, colonial exploitation, commoditize, Corn Laws, corporate governance, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency manipulation / currency intervention, currency peg, Daniel Kahneman / Amos Tversky, deglobalization, diversification, diversified portfolio, double entry bookkeeping, Edmond Halley, Edward Glaeser, Edward Lloyd's coffeehouse, equity risk premium, financial engineering, financial innovation, financial intermediation, fixed income, floating exchange rates, Fractional reserve banking, Francisco Pizarro, full employment, Future Shock, German hyperinflation, Greenspan put, Herman Kahn, Hernando de Soto, high net worth, hindsight bias, Home mortgage interest deduction, Hyman Minsky, income inequality, information asymmetry, interest rate swap, Intergovernmental Panel on Climate Change (IPCC), Isaac Newton, iterative process, James Carville said: "I would like to be reincarnated as the bond market. You can intimidate everybody.", John Meriwether, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, junk bonds, Kenneth Arrow, Kenneth Rogoff, knowledge economy, labour mobility, Landlord’s Game, liberal capitalism, London Interbank Offered Rate, Long Term Capital Management, low interest rates, market bubble, market fundamentalism, means of production, Mikhail Gorbachev, Modern Monetary Theory, Money creation, money market fund, money: store of value / unit of account / medium of exchange, moral hazard, mortgage debt, mortgage tax deduction, Myron Scholes, Naomi Klein, National Debt Clock, negative equity, Nelson Mandela, Nick Bostrom, Nick Leeson, Northern Rock, Parag Khanna, pension reform, price anchoring, price stability, principal–agent problem, probability theory / Blaise Pascal / Pierre de Fermat, profit motive, quantitative hedge fund, RAND corporation, random walk, rent control, rent-seeking, reserve currency, Richard Thaler, risk free rate, Robert Shiller, rolling blackouts, Ronald Reagan, Savings and loan crisis, savings glut, seigniorage, short selling, Silicon Valley, South Sea Bubble, sovereign wealth fund, spice trade, stocks for the long run, structural adjustment programs, subprime mortgage crisis, tail risk, technology bubble, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Bayes, Thomas Malthus, Thorstein Veblen, tontine, too big to fail, transaction costs, two and twenty, undersea cable, value at risk, W. E. B. Du Bois, Washington Consensus, Yom Kippur War

It was a global catastrophe that saw prices and output decline in nearly every economy in the world, though only the German slump was as severe as the American. World trade shrank by two thirds as countries sought vainly to hide behind tariff barriers and import quotas. The international financial system fell to pieces in a welter of debt defaults, capital controls and currency depreciations. Only the Soviet Union, with its autarkic, planned economy, was unaffected. Why did it happen? Some financial disasters have obvious causes. Arguably a much worse stock market crash had occurred at the end of July 1914, when the outbreak of the First World War precipitated such a total meltdown that the world’s principal stock markets - including New York’s - simply had to close their doors.

By the 1930s they were all but worthless.52 Despite the best efforts of the bankers, who indefatigably floated loans for such unpromising purposes as the payment of German reparations, it proved impossible to restore the old order of free capital mobility between the wars. Currency crises, defaults, arguments about reparations and war debts and then the onset of the Depression led more and more countries to impose exchange and capital controls as well as protectionist tariffs and other trade restrictions, in a vain bid to preserve national wealth at the expense of international exchange. On 19 October 1921, for example, the Chinese government declared bankruptcy, and proceeded to default on nearly all China’s external debts. It was a story repeated all over the world, from Shanghai to Santiago, from Moscow to Mexico City.

Thus, for the next quarter century, did governments resolve the so-called ‘trilemma’, according to which a country can choose any two out of three policy options:1. full freedom of cross-border capital movements; 2. a fixed exchange rate; 3. an independent monetary policy oriented towards domestic objectives.57 Under Bretton Woods, the countries of the Western world opted for 2 and 3. Indeed, the trend was for capital controls to be tightened rather than loosened as time went on. A good example is the Interest Equalization Act passed by the United States in 1963, which was expressly designed to discourage Americans from investing in foreign securities. Yet there was always an unsustainable quality to the Bretton Woods system.


pages: 329 words: 99,504

Easy Money: Cryptocurrency, Casino Capitalism, and the Golden Age of Fraud by Ben McKenzie, Jacob Silverman

algorithmic trading, asset allocation, bank run, barriers to entry, Ben McKenzie, Bernie Madoff, Big Tech, bitcoin, Bitcoin "FTX", blockchain, capital controls, citizen journalism, cognitive dissonance, collateralized debt obligation, COVID-19, Credit Default Swap, credit default swaps / collateralized debt obligations, cross-border payments, cryptocurrency, data science, distributed ledger, Dogecoin, Donald Trump, effective altruism, Elon Musk, en.wikipedia.org, Ethereum, ethereum blockchain, experimental economics, financial deregulation, financial engineering, financial innovation, Flash crash, Glass-Steagall Act, high net worth, housing crisis, information asymmetry, initial coin offering, Jacob Silverman, Jane Street, low interest rates, Lyft, margin call, meme stock, money market fund, money: store of value / unit of account / medium of exchange, Network effects, offshore financial centre, operational security, payday loans, Peter Thiel, Ponzi scheme, Potemkin village, prediction markets, proprietary trading, pushing on a string, QR code, quantitative easing, race to the bottom, ransomware, regulatory arbitrage, reserve currency, risk tolerance, Robert Shiller, Robinhood: mobile stock trading app, Ross Ulbricht, Sam Bankman-Fried, Satoshi Nakamoto, Saturday Night Live, short selling, short squeeze, Silicon Valley, Skype, smart contracts, Steve Bannon, systems thinking, TikTok, too big to fail, transaction costs, tulip mania, uber lyft, underbanked, vertical integration, zero-sum game

The first is that while gambling is technically illegal under Chinese law, ever since the Communist Party took power in 1949, it is an immensely popular pastime in the country. Gambling centers in Hong Kong and Macau provide citizens outlets for their interest, but crypto offered a more accessible alternative. The second, and perhaps more important, reason crypto took off in China was to avoid capital controls. The official limit of $50,000 in overseas foreign exchange per year is an attempt by the state to restrict wealthy Chinese from moving their money out of the country. If you are a Chinese billionaire, there are numerous ways to get around this, but one of the less expensive ones is crypto. Either buy crypto with yuan and cash out into dollars or other currencies overseas, or perhaps better yet, invest in Bitcoin mines (often using electricity stolen from the grid) and then move the mined Bitcoin via crypto trading elsewhere.

In the mid 2010s, the crypto market was much smaller and even more dysfunctional than its current manifestation (yes, this is possible). At the time, there was what was called the kimchi premium: The price of Bitcoin in South Korea was higher than in the United States and other Asian markets, sometimes by a difference of as much as 50 percent. There were various reasons for this, including capital controls and anti–money laundering laws set up by the South Korean government that limited the ability of its citizens to turn their local currency, the won, into US dollars. Sam quickly realized there was a lot of money to be made exploiting the difference—buy Bitcoin in the United States, sell it in South Korea, pocket the difference.

Eventually the kimchi premium dried up, but there were still massive inefficiencies to be exploited in the nascent crypto market. In 2019, Sam moved Alameda Research to Hong Kong in search of a more favorable regulatory environment. Hong Kong benefited from being close to mainland China, where cryptocurrency had exploded in popularity, due in no small part to the desire of wealthy Chinese to avoid state capital controls. In Hong Kong, everyone seemed to be getting into crypto. Sam decided to gamble bigger. Why not start an exchange? In 2019, FTX was born. Six months after its launch, Changpeng Zhao, the CEO of Binance, reportedly purchased 20 percent of FTX for $100 million. In late 2020 and early 2021, as the market for cryptocurrencies exploded, FTX emerged as an industry leader.


pages: 571 words: 106,255

The Bitcoin Standard: The Decentralized Alternative to Central Banking by Saifedean Ammous

"World Economic Forum" Davos, Airbnb, Alan Greenspan, altcoin, bank run, banks create money, bitcoin, Black Swan, blockchain, Bretton Woods, British Empire, business cycle, capital controls, central bank independence, Charles Babbage, conceptual framework, creative destruction, cryptocurrency, currency manipulation / currency intervention, currency peg, delayed gratification, disintermediation, distributed ledger, Elisha Otis, Ethereum, ethereum blockchain, fiat currency, fixed income, floating exchange rates, Fractional reserve banking, full employment, George Gilder, Glass-Steagall Act, global reserve currency, high net worth, initial coin offering, invention of the telegraph, Isaac Newton, iterative process, jimmy wales, Joseph Schumpeter, low interest rates, market bubble, market clearing, means of production, military-industrial complex, Money creation, money: store of value / unit of account / medium of exchange, moral hazard, Network effects, Paul Samuelson, peer-to-peer, Peter Thiel, price mechanism, price stability, profit motive, QR code, quantum cryptography, ransomware, reserve currency, Richard Feynman, risk tolerance, Satoshi Nakamoto, scientific management, secular stagnation, smart contracts, special drawing rights, Stanford marshmallow experiment, The Nature of the Firm, the payments system, too big to fail, transaction costs, Walter Mischel, We are all Keynesians now, zero-sum game

In the blink of an eye, what was highly salable money lost its value and had to be exchanged at banks with very long lines. And as more of the world heads toward reducing its reliance on cash, more of people's money is being placed in government‐supervised banks, making it vulnerable to confiscation or capital controls. The fact that these procedures generally happen during times of economic crisis, when individuals need that money most, is a major impediment to the salability of government‐issued money. Government control of money has turned money from being the reward for producing value to the reward for obedience to government officials.

Saving in Bitcoin by its very nature will not require many transactions, and so a high transaction fee is worth paying for it. And for transactions that cannot be carried out through the regular banking system, such as people trying to get their money out of a country suffering inflation and capital controls, Bitcoin's high transaction fees will be a price well worth paying. Even at current low levels of adoption, the demand for digital cash and digital sound money has already raised transaction fees to the point where they cannot compete with centralized solutions like PayPal and credit cards for small payments.

The most important use cases of Bitcoin, as a store of value and uncensorable payments, are well worth the transaction fees. When people buy Bitcoin to hold it for the long‐term, a one‐off small transaction fee is to be expected and is usually dwarfed by the commission and the premium placed by the sellers. For people looking to escape capital controls or send money to countries facing economic difficulties, the transaction fee is well worth paying considering Bitcoin is the only alternative. As Bitcoin adoption spreads, and transaction fees rise high enough that they will matter to the people paying them, there will be economic pressure to utilize more of the above scaling solutions which can increase transaction capacity without making changes that compromise the rules of the network and force a chain split.


pages: 297 words: 108,353

Boom and Bust: A Global History of Financial Bubbles by William Quinn, John D. Turner

accounting loophole / creative accounting, Alan Greenspan, algorithmic trading, AOL-Time Warner, bank run, banking crisis, barriers to entry, Bear Stearns, behavioural economics, Big bang: deregulation of the City of London, bitcoin, blockchain, book value, Bretton Woods, business cycle, buy and hold, capital controls, Celtic Tiger, collapse of Lehman Brothers, Corn Laws, corporate governance, creative destruction, credit crunch, Credit Default Swap, cryptocurrency, debt deflation, deglobalization, Deng Xiaoping, different worldview, discounted cash flows, Donald Trump, equity risk premium, Ethereum, ethereum blockchain, eurozone crisis, fake news, financial deregulation, financial intermediation, Flash crash, Francis Fukuyama: the end of history, George Akerlof, government statistician, Greenspan put, high-speed rail, information asymmetry, initial coin offering, intangible asset, Irish property bubble, Isaac Newton, Japanese asset price bubble, joint-stock company, Joseph Schumpeter, junk bonds, land bank, light touch regulation, low interest rates, margin call, market bubble, market fundamentalism, Martin Wolf, money: store of value / unit of account / medium of exchange, moral hazard, mortgage debt, negative equity, Network effects, new economy, Northern Rock, oil shock, Ponzi scheme, quantitative easing, quantitative trading / quantitative finance, railway mania, Right to Buy, Robert Shiller, Shenzhen special economic zone , short selling, short squeeze, Silicon Valley, smart contracts, South Sea Bubble, special economic zone, subprime mortgage crisis, technology bubble, the built environment, total factor productivity, transaction costs, tulip mania, urban planning

The oil shock of 1973 had forced the Japanese government to run large deficits, leading the Bank of Japan to worry that it could no longer underwrite the full quantity of outstanding government bonds. The government’s response was to establish secondary government bond markets, thereby relinquishing control over interest rates for the first time in the post-war era. The Foreign Exchange Law of 1980 removed most capital controls, allowing Japanese residents to invest internationally without government authorisation. The potential for investors to benefit from foreign interest rates created arbitrage opportunities, which further shifted control of interest rates from the government to the market. Restrictions on the size and term of deposits that could earn market-determined interest rates were gradually removed.10 The difference after the Plaza Accord, however, was that financial deregulation was now accompanied by extremely loose monetary policy.

Alan Greenspan, 19961 T h e d i s m a nt l i n g of p os t - w a r fi na n c i a l r e g ul a ti on that led to the Japanese Bubble ushered in an era of abundant marketability, money and credit. Securities became much more marketable as a result of the removal of restrictions on foreign ownership of firms and an accompanying boom in the use of derivatives, especially in the United States.2 The 1970s and 1980s saw a global decline in the use of capital controls and fixed exchange rates, making it easier than ever for money to cross borders. Restrictions on banking were gradually removed, giving banks, many of which were now operating internationally, unprecedented control over the level of credit. The global economy effectively became a giant tinderbox waiting for a spark and, as a result, the post1980 period has seen major financial bubbles become remarkably common.

They thus set about attracting money to the stock market to push up prices, a task which turned out to be quite straightforward. The absence of a developed social security system meant that people had to make 197 BOOM AND BUST provision for their own old age, but Chinese citizens had few outlets for their savings. Capital controls prevented money from moving overseas, and the government’s complete control of the banking system meant that real deposit rates were very low and frequently negative. At the start of 2006, bank deposit rates and the discount rate on short-term government debt were at a post-1991 low. This left the stock market as the only viable alternative.


pages: 338 words: 104,684

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

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, Affordable Care Act / Obamacare, Alan Greenspan, American Society of Civil Engineers: Report Card, Apollo 11, Asian financial crisis, bank run, Bernie Madoff, Bernie Sanders, blockchain, bond market vigilante , book value, Bretton Woods, business cycle, capital controls, carbon tax, central bank independence, collective bargaining, COVID-19, currency manipulation / currency intervention, currency peg, David Graeber, David Ricardo: comparative advantage, decarbonisation, deindustrialization, discrete time, Donald Trump, eurozone crisis, fiat currency, floating exchange rates, Food sovereignty, full employment, gentrification, Gini coefficient, global reserve currency, global supply chain, green new deal, high-speed rail, Hyman Minsky, income inequality, inflation targeting, Intergovernmental Panel on Climate Change (IPCC), investor state dispute settlement, Isaac Newton, Jeff Bezos, liquidity trap, low interest rates, Mahatma Gandhi, manufacturing employment, market bubble, Mason jar, Modern Monetary Theory, mortgage debt, Naomi Klein, National Debt Clock, new economy, New Urbanism, Nixon shock, Nixon triggered the end of the Bretton Woods system, obamacare, open economy, Paul Samuelson, Phillips curve, Ponzi scheme, Post-Keynesian economics, price anchoring, price stability, pushing on a string, quantitative easing, race to the bottom, reserve currency, Richard Florida, Ronald Reagan, San Francisco homelessness, shareholder value, Silicon Valley, Tax Reform Act of 1986, trade liberalization, urban planning, working-age population, Works Progress Administration, yield curve, zero-sum game

Within the Bretton Woods system, these organizations focused on actively governing the conditions of trade among countries. This involved a variety of tools, like tariffs and capital controls, aimed at keeping trade flows stable and national economies at least somewhat insulated from one another. When Bretton Woods ended, the global institutions it created remained. But over time, their governing philosophy shifted: the religion of free trade took over, and the tariffs and capital controls were relaxed in the name of trade liberalization. Western elites decided that fully exposing developing countries to global trade and to the in- and out-rushes of investor money would discipline their economies into becoming better.

Left unchecked, the situation is an open invitation for demagogues like Trump to come along, blaming “foreigners” and exacerbating tensions among the world’s people. In addition to South-South trade agreements, developing countries need to return to regulating financial transactions across borders. They may not be able to implement the classical form of capital controls that ruled during Bretton Woods and relied on global cooperation but they can certainly do better than they are now. Foreign investors should be limited in the ways they can invest in domestic assets and in their ability to sell out and create downward pressure on the exchange rate market. This will reduce the need to accumulate dollar reserves and help developing countries realize the benefits that a flexible exchange rate system can provide.

Randall Wray, “Twin Deficits and Sustainability,” Policy Note, Levy Economics Institute of Bard College, March 2006, www.levyinstitute.org/pubs/pn_3_06.pdf. 22. The 1997 Asian financial crisis, in particular, taught the world that pegging exchange rates is unwise if countries cannot maintain a stockpile of reserves, especially without capital controls. See Wray, “Twin Deficits and Sustainability.” 23. Scott Ferguson, Maxximilian Seijo, and William Saas, “The New Postcolonial Economics with Fadhel Kaboub,” MR Online, July 7, 2018, mronline.org/2018/07/07/the-new-postcolonial-economics-with-fadhel-kaboub/. 24. Noureddine Taboubi, “Strikes Overturn Wage Cuts, but IMF Blindness Risks Ruining Tunisia,” Bretton Woods Project, April 4, 2019, www.brettonwoodsproject.org/2019/04/strikes-overturn-wage-bill-but-imf-blindness-risks-ruining-tunisia/. 25.


pages: 253 words: 79,214

The Money Machine: How the City Works by Philip Coggan

activist fund / activist shareholder / activist investor, algorithmic trading, asset-backed security, Bear Stearns, Bernie Madoff, Big bang: deregulation of the City of London, Black Monday: stock market crash in 1987, bond market vigilante , bonus culture, Bretton Woods, call centre, capital controls, carried interest, central bank independence, collateralized debt obligation, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency risk, disintermediation, diversification, diversified portfolio, Edward Lloyd's coffeehouse, endowment effect, financial deregulation, financial independence, floating exchange rates, foreign exchange controls, Glass-Steagall Act, guns versus butter model, Hyman Minsky, index fund, intangible asset, interest rate swap, inverted yield curve, Isaac Newton, James Carville said: "I would like to be reincarnated as the bond market. You can intimidate everybody.", joint-stock company, junk bonds, labour market flexibility, large denomination, London Interbank Offered Rate, Long Term Capital Management, low interest rates, merger arbitrage, Michael Milken, money market fund, moral hazard, mortgage debt, negative equity, Nick Leeson, Northern Rock, pattern recognition, proprietary trading, purchasing power parity, quantitative easing, reserve currency, Right to Buy, Ronald Reagan, shareholder value, South Sea Bubble, sovereign wealth fund, technology bubble, time value of money, too big to fail, tulip mania, Washington Consensus, yield curve, zero-coupon bond

They could make money speculating on the markets and they could make money helping companies protect themselves from foreign-exchange risk. Both opportunities were taken. Floating exchange rates also had significant implications for governments. Think of three key elements of monetary policy: exchange rates, interest rates and capital controls. Under the Bretton Woods system, countries controlled their exchange rates and capital flows. However, if countries ran a substantial trade deficit, capital would still flow out of the country. Take the UK, a country which habitually runs a trade deficit. When a foreign company sells goods to the UK, it receives sterling in return.

Inflation was eventually brought to heel with the help of very high interest rates, which also prompted massive job losses in those sunset industries. This process caused much distress and protest at the time and would have been politically impossible without the economic chaos of the 1970s. At the same time (and to rather less fanfare), governments in the US and the UK relaxed the regulations on the financial sector and abolished capital controls. The idea was that the economy would function best when the markets, rather than bureaucrats, decided where to allocate capital. Suddenly, investors were free to invest anywhere in the globe. Instead of concentrating on old UK stalwarts such as Imperial Chemical Industries or Marks & Spencer, they were free to invest in the likes of Bayer of Germany or Wal-Mart of the US.

Many south-east Asian economies plunged into recession; the IMF was called in to provide rescue financing packages. The whole issue cast doubt on the ‘Asian economic miracle’ and prompted a lot of debate about free-market regimes. Some countries and commentators argued that the system showed the instability of global capitalism, and the need for controls; Malaysia duly imposed capital controls in 1998. Free-market enthusiasts argued that it was the attempts of governments to track the dollar and their interference in the free running of their economies which caused the problem. The reaction of the Asian countries to this debacle set up a new phase in the currency markets. They decided that they must cease being dependent on foreign capital.


pages: 700 words: 201,953

The Social Life of Money by Nigel Dodd

"hyperreality Baudrillard"~20 OR "Baudrillard hyperreality", accounting loophole / creative accounting, bank run, banking crisis, banks create money, behavioural economics, Bernie Madoff, bitcoin, Bitcoin Ponzi scheme, blockchain, borderless world, Bretton Woods, BRICs, business cycle, capital controls, capitalist realism, cashless society, central bank independence, collapse of Lehman Brothers, collateralized debt obligation, commoditize, computer age, conceptual framework, credit crunch, cross-subsidies, currency risk, David Graeber, debt deflation, dematerialisation, disintermediation, Dogecoin, emotional labour, eurozone crisis, fiat currency, financial engineering, financial exclusion, financial innovation, Financial Instability Hypothesis, financial repression, floating exchange rates, Fractional reserve banking, gentrification, German hyperinflation, Goldman Sachs: Vampire Squid, Herbert Marcuse, Hyman Minsky, illegal immigration, informal economy, interest rate swap, Isaac Newton, John Maynard Keynes: Economic Possibilities for our Grandchildren, joint-stock company, Joseph Schumpeter, Kickstarter, Kula ring, laissez-faire capitalism, land reform, late capitalism, liberal capitalism, liquidity trap, litecoin, London Interbank Offered Rate, M-Pesa, Marshall McLuhan, means of production, mental accounting, microcredit, Minsky moment, mobile money, Modern Monetary Theory, Money creation, money market fund, money: store of value / unit of account / medium of exchange, mortgage debt, National Debt Clock, Neal Stephenson, negative equity, new economy, Nixon shock, Nixon triggered the end of the Bretton Woods system, Occupy movement, offshore financial centre, paradox of thrift, payday loans, Peace of Westphalia, peer-to-peer, peer-to-peer lending, Ponzi scheme, post scarcity, post-Fordism, Post-Keynesian economics, postnationalism / post nation state, predatory finance, price mechanism, price stability, quantitative easing, quantitative trading / quantitative finance, remote working, rent-seeking, reserve currency, Richard Thaler, risk free rate, Robert Shiller, Satoshi Nakamoto, scientific management, Scientific racism, seigniorage, Skype, Slavoj Žižek, South Sea Bubble, sovereign wealth fund, special drawing rights, The Wealth of Nations by Adam Smith, too big to fail, trade liberalization, transaction costs, Veblen good, Wave and Pay, Westphalian system, WikiLeaks, Wolfgang Streeck, yield curve, zero-coupon bond

Terms that describe important components (but not equivalents) of total currency include the monetary base, the adjusted monetary base, base money, money base, high-powered money, reserve money, and narrow money. Then there are the distinct measures of money, such as M0, M1, M2, M3, and MZM. 9 The recent signal from the International Monetary Fund (IMF) of a softening of its position on capital controls suggests that this factor is changing after two decades of liberalization (“IMF drops opposition to capital controls,” Financial Times (London), December 3, 2012). 10 As Polillo writes in his recent study of the financial history of nineteenth century Italy and America: “Just as the political sociology of the state has moved beyond rigid characterizations of states and society to a more historically nuanced and locally focused understanding of the interaction between the two, the sociology of money should move beyond institutionalized typologies of the forms of monetary authority toward a similarly nuanced frame of analysis, attentive to variation.

The European recipients had to repay the monies in local currency, which was then deposited by the local government in a counterpart fund. The Marshall Plan was significant for the development of the international monetary system. It was instrumental in the establishment of the European Payments Union (EPU) in 1950, lifting the majority of capital controls in Europe while encouraging a system of fixed exchange rates and a degree of trade liberalization. Moreover, drawing rights connected to the EPU were supported by ECA funds and facilitated the process of establishing full convertibility under the Bretton Woods Agreement. Describing it as “an investment in the world’s interest,” Bataille saw the Marshall Plan as an answer to the fundamental problem of general economy, namely, excess.

And third, Balibar’s “Keynesian” interpretation of popular sovereignty involves (in the economic field) the principle of generating “fiscal” institutions that can mediate the relationship between state and civil society. These are institutions he describes as, first, protecting society internally from the savagery of capitalism from the outside, and second, mediating society’s class antagonisms. After the Cypriot banking crisis in March 2013, capital controls were introduced in Cyprus to circumvent the outflow of euros from local bank accounts (including what would be left of the larger accounts once the “bail-in” levy had been applied).46 From the end of March 2013, every bank account in Cyprus was subject to a monthly transfer limit of €5,000. To all intents and purposes, then, Cypriot euros are now a parallel currency.


pages: 491 words: 131,769

Crisis Economics: A Crash Course in the Future of Finance by Nouriel Roubini, Stephen Mihm

Alan Greenspan, Asian financial crisis, asset-backed security, balance sheet recession, bank run, banking crisis, barriers to entry, Bear Stearns, behavioural economics, Berlin Wall, Bernie Madoff, Big bang: deregulation of the City of London, Black Swan, bond market vigilante , bonus culture, Bretton Woods, BRICs, British Empire, business cycle, call centre, capital controls, Carmen Reinhart, central bank independence, centralized clearinghouse, collapse of Lehman Brothers, collateralized debt obligation, corporate governance, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency risk, dark matter, David Ricardo: comparative advantage, debt deflation, Eugene Fama: efficient market hypothesis, Fall of the Berlin Wall, fiat currency, financial deregulation, financial engineering, financial innovation, Financial Instability Hypothesis, financial intermediation, full employment, George Akerlof, Glass-Steagall Act, global pandemic, global reserve currency, Gordon Gekko, Greenspan put, Growth in a Time of Debt, housing crisis, Hyman Minsky, information asymmetry, interest rate swap, invisible hand, Joseph Schumpeter, junk bonds, Kenneth Rogoff, laissez-faire capitalism, liquidity trap, London Interbank Offered Rate, Long Term Capital Management, Louis Bachelier, low interest rates, margin call, market bubble, market fundamentalism, Martin Wolf, means of production, Minsky moment, money market fund, moral hazard, mortgage debt, mortgage tax deduction, new economy, Northern Rock, offshore financial centre, oil shock, Paradox of Choice, paradox of thrift, Paul Samuelson, Ponzi scheme, price stability, principal–agent problem, private sector deleveraging, proprietary trading, pushing on a string, quantitative easing, quantitative trading / quantitative finance, race to the bottom, random walk, regulatory arbitrage, reserve currency, risk tolerance, Robert Shiller, Satyajit Das, Savings and loan crisis, savings glut, short selling, South Sea Bubble, sovereign wealth fund, special drawing rights, subprime mortgage crisis, Suez crisis 1956, The Great Moderation, The Myth of the Rational Market, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, too big to fail, tulip mania, Tyler Cowen, unorthodox policies, value at risk, We are all Keynesians now, Works Progress Administration, yield curve, Yom Kippur War

Thus began a remarkable—and extraordinarily anomalous, given the previous centuries’ crises—era of financial stability, a pax moneta that depended on the dollar and on the military and economic power of the newly ascendant United States. That stability rested as well on the widespread provision of deposit insurance to stop bank runs; strict regulation of the financial system, including the separation of American commercial banking from investment banking; and extensive capital controls that reduced currency volatility. All these domestic and international restrictions kept financial excesses and bubbles under control for over a quarter of a century. All good things come to an end, and the postwar era was no exception: the Bretton Woods system fell apart in 1971, when the United States finally went off the last vestiges of the gold standard.

Those caveats aside, removing traders’ incentives for taking on short-term risk (and creating disincentives, in the form of clawbacks) will probably cause compensation to decline. Is this a bad thing? No. In recent years, the financial services industry—and compensation within it—has undergone exorbitant and utterly unwarranted growth, driven by financial liberalization, financial innovation, elimination of capital controls, and the globalization of finance. In the process, finance’s “contribution”—if that’s the word—to the U.S. gross domestic product has soared from 2.5 percent in 1947 to 4.4 percent in 1977 to 7.7 percent in 2005. By that time financial firms accounted for upwards of 40 percent of the earnings of the companies listed in the S&P 500, and these firms’ share of the total S&P 500 market capitalization doubled to approximately 25 percent.

While it might not prevent the kind of regulatory arbitrage that helped create the recent crisis, it would certainly make it far more difficult. Unfortunately, financial firms have another way to circumvent regulations. In this kind of “jurisdictional arbitrage,” financial firms pick up and relocate to places that have fewer regulations and restrictions. In an era of financial globalization, mobile capital, and a lack of capital controls, firms can pull this off relatively easily. While some regulators may find it tempting to say good riddance and let some of the reckless firms responsible for the recent crisis depart for other, more hospitable climes, this will do little to prevent future disasters. For that reason, regulators must coordinate any reforms with those under consideration in other countries.


pages: 354 words: 92,470

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

"World Economic Forum" Davos, 9 dash line, Admiral Zheng, air freight, Alan Greenspan, Albert Einstein, Asian financial crisis, bank run, banking crisis, barriers to entry, Berlin Wall, Bernie Sanders, bilateral investment treaty, bitcoin, blockchain, Bonfire of the Vanities, borderless world, Bretton Woods, Brexit referendum, British Empire, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, central bank independence, collateralized debt obligation, colonial rule, corporate governance, credit crunch, currency manipulation / currency intervention, currency peg, currency risk, David Ricardo: comparative advantage, debt deflation, deindustrialization, Deng Xiaoping, Doha Development Round, Donald Trump, Edward Snowden, eurozone crisis, facts on the ground, failed state, Fall of the Berlin Wall, falling living standards, floating exchange rates, Francis Fukuyama: the end of history, full employment, George Akerlof, global supply chain, global value chain, Global Witness, Great Leap Forward, hydraulic fracturing, Hyman Minsky, imperial preference, income inequality, income per capita, incomplete markets, inflation targeting, information asymmetry, Internet of things, invisible hand, Jeremy Corbyn, joint-stock company, Kickstarter, Long Term Capital Management, low interest rates, Martin Wolf, mass immigration, Mexican peso crisis / tequila crisis, middle-income trap, moral hazard, Nixon shock, offshore financial centre, oil shock, old age dependency ratio, paradox of thrift, Peace of Westphalia, plutocrats, post-truth, price stability, profit maximization, quantitative easing, race to the bottom, rent-seeking, reserve currency, reshoring, rising living standards, Ronald Reagan, Savings and loan crisis, Scramble for Africa, Second Machine Age, Skype, South China Sea, special drawing rights, technology bubble, The Great Moderation, The Market for Lemons, the market place, The Rise and Fall of American Growth, trade liberalization, trade route, Washington Consensus, WikiLeaks, Yom Kippur War, zero-sum game

The collapse of the Soviet Empire and its satellites allowed a large number of Eastern European countries to join the European Union: their citizens headed west, while capital from Western European countries headed east. Deng Xiaoping’s decision to open China for business was, in economic terms, even more momentous. Economic reforms also did their bit: as we saw in Chapter 4, the gradual abolition of capital controls in the 1980s and beyond meant that capital previously ‘trapped’ within national boundaries was suddenly free to go in search of the best combination of low wages, long hours and high productivity. The emerging-market revolution owes a great deal to this new-found cross-border movement of capital.

The US dollar, in turn, was supposedly fixed in value against gold: it wasn’t quite the gold standard, but it meant there was at least one paper currency in circulation that, until the Nixon Shock, had the attributes commonly associated with currencies in the gold standard era. For a while, the US dollar was ‘as good as gold’. Following the Nixon Shock, and thereafter the gradual abolition of exchange and capital controls, there was a danger that currency markets would become a ‘free for all’. European nations, however, had no enthusiasm for such an outcome: from the ‘currency snake’ of the European Exchange Rate Arrangement in the 1970s to the Exchange Rate Mechanism of the European Monetary System in the 1980s and 1990s and then, of course, the single currency, the majority of European nations have rejected the idea of currency chaos, preferring instead to limit their currency options to a greater or lesser extent.

Yanis Varoufakis, the former Greek finance minister and scourge of ‘conventional’ European politics, advocates what he calls a new, technologically advanced, green Bretton Woods.3 In a bid to kill off financial speculation and limit cross-border capital flows, he proposes the creation of an international clearing system based loosely on Keynes’ 1944 bancor. Unlike Keynes, however, he thinks currencies should be able to float against one another and that capital controls should be kept to a minimum. Nevertheless, the Varoufakis system is closely modelled on the Keynes plan. A new global currency – Kosmos – would be issued by the IMF, its volume linked to the size of world trade. Individual central banks would have Kosmos accounts in addition to their foreign exchange reserves.


pages: 327 words: 90,542

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

"there is no alternative" (TINA), "World Economic Forum" Davos, 9 dash line, accounting loophole / creative accounting, additive manufacturing, Airbnb, Alan Greenspan, Albert Einstein, Alfred Russel Wallace, Anthropocene, Anton Chekhov, Asian financial crisis, banking crisis, Bear Stearns, Berlin Wall, bitcoin, bond market vigilante , Bretton Woods, BRICs, British Empire, business cycle, business process, business process outsourcing, call centre, capital controls, Capital in the Twenty-First Century by Thomas Piketty, carbon tax, Carmen Reinhart, Clayton Christensen, cloud computing, collaborative economy, colonial exploitation, computer age, creative destruction, cryptocurrency, currency manipulation / currency intervention, David Ricardo: comparative advantage, declining real wages, Deng Xiaoping, deskilling, digital divide, disintermediation, disruptive innovation, Downton Abbey, Emanuel Derman, energy security, energy transition, eurozone crisis, financial engineering, financial innovation, financial repression, forward guidance, Francis Fukuyama: the end of history, full employment, geopolitical risk, gig economy, Gini coefficient, global reserve currency, global supply chain, Goldman Sachs: Vampire Squid, Great Leap Forward, Greenspan put, happiness index / gross national happiness, high-speed rail, Honoré de Balzac, hydraulic fracturing, Hyman Minsky, illegal immigration, income inequality, income per capita, indoor plumbing, informal economy, Innovator's Dilemma, intangible asset, Intergovernmental Panel on Climate Change (IPCC), it is difficult to get a man to understand something, when his salary depends on his not understanding it, It's morning again in America, Jane Jacobs, John Maynard Keynes: technological unemployment, junk bonds, Kenneth Rogoff, Kevin Roose, knowledge economy, knowledge worker, Les Trente Glorieuses, light touch regulation, liquidity trap, Long Term Capital Management, low interest rates, low skilled workers, Lyft, Mahatma Gandhi, margin call, market design, Marshall McLuhan, Martin Wolf, middle-income trap, Mikhail Gorbachev, military-industrial complex, Minsky moment, mortgage debt, mortgage tax deduction, new economy, New Urbanism, offshore financial centre, oil shale / tar sands, oil shock, old age dependency ratio, open economy, PalmPilot, passive income, peak oil, peer-to-peer lending, pension reform, planned obsolescence, plutocrats, Ponzi scheme, Potemkin village, precariat, price stability, profit maximization, pushing on a string, quantitative easing, race to the bottom, Ralph Nader, Rana Plaza, rent control, rent-seeking, reserve currency, ride hailing / ride sharing, rising living standards, risk/return, Robert Gordon, Robert Solow, Ronald Reagan, Russell Brand, Satyajit Das, savings glut, secular stagnation, seigniorage, sharing economy, Silicon Valley, Simon Kuznets, Slavoj Žižek, South China Sea, sovereign wealth fund, Stephen Fry, systems thinking, TaskRabbit, The Chicago School, The Great Moderation, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, the market place, the payments system, The Spirit Level, Thorstein Veblen, Tim Cook: Apple, too big to fail, total factor productivity, trade route, transaction costs, uber lyft, unpaid internship, Unsafe at Any Speed, Upton Sinclair, Washington Consensus, We are the 99%, WikiLeaks, Y2K, Yom Kippur War, zero-coupon bond, zero-sum game

Irrespective of its policy choices, Europe faces a very long period of economic stagnation as it works off its debt burden and undertakes major structural changes to correct imbalances. During this transition it will be forced to focus internally, husbanding savings and wealth to absorb the required large debt write-offs. Explicit or implicit capital controls and trade restrictions are natural policy measures to assist in this adjustment, marking a shift to a more closed economy. Weaknesses in China's recent mercantilist model are emerging as a result of the economic problems of its major trading partners. Given their lower level of growth, net exports can no longer drive Chinese activity.

Decreased availability of finance and higher funding costs will increase pressure on overextended borrowers, triggering banking problems that feed back into the real economy. Credit-rating and investment downgrades will extend the cycle through repeated iterations. Fundamental domestic weaknesses and a slow external environment limit policy options. Responses may compound the problems. Central bank currency purchases, money market intervention, or capital controls will reduce reserves or accelerate capital outflow. Higher interest rates, if used to support the currency and counter imported inflation, will reduce growth, exacerbating the problems of high debt. In 2013, India, Indonesia, Thailand, Brazil, Peru, and Turkey were forced to implement some of these measures.

When in 2013 the Bank of Japan and the European Central Bank began trying to weaken the yen and the euro in response to intensifying domestic economic difficulties, the US Fed expressed concern that the rapid rise of the US dollar was jeopardizing an uneven US economic recovery. Switzerland, Denmark, and Sweden imposed negative official interest rates to avoid large inflows of money seeking to escape weak currencies. Capital controls restricting movements of money were contemplated. It was similar to the 1930s, but instead of tariff barriers and trade wars, it was aggravated currency wars, low interest rates, QE, and competitive devaluations. German philosopher Immanuel Kant argued that the morality of an action can be judged by what would happen if it became a universal law; that is, if everybody acted in the same way.


pages: 312 words: 93,836

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

Alan Greenspan, Asian financial crisis, asset-backed security, bank run, banking crisis, Bear Stearns, Big bang: deregulation of the City of London, bonus culture, capital controls, collapse of Lehman Brothers, credit crunch, Credit Default Swap, Eugene Fama: efficient market hypothesis, eurozone crisis, financial deregulation, financial innovation, fixed income, foreign exchange controls, game design, Gordon Gekko, inflation targeting, information asymmetry, interest rate derivative, interest rate swap, London Interbank Offered Rate, loss aversion, mental accounting, millennium bug, Nick Leeson, Northern Rock, oil shock, Post-Keynesian economics, price stability, profit maximization, proprietary trading, regulatory arbitrage, reserve currency, Rubik’s Cube, Snapchat, Suez crisis 1956, the market place, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, work culture , Y2K

Despite the fact that the Eurodollar market was still growing, these changes led to a reduction in its relative importance as a funding source or investment outlet for the banks. Instead, Eurodollars gradually turned into the prime tool with which to speculate on short-term interest rates in an increasing range of currencies. This was an area where banks had a superior competitive, informational and economic advantage. Further, the abolishment of capital controls made it possible for any bank to become involved in the Eurodollar market by constructing ‘synthetic’ Eurodollars. According to the so-called ‘covered interest parity’, an FX swap could theoretically be seen as the difference in interest rates in two currencies. By entering into an FX swap, you effectively borrowed in one currency and lent in another.

When I was having the previously mentioned conversation with the managing director about the possible ramifications of uncovering the truth of the FX market, he continued by saying: ‘On the other hand, the biggest manipulators of all are the central banks. They bully the market all the time.’ The fact that central banks, which are ultimately responsible for printing a country’s money, could use their foreign exchange reserves to intervene in the market, argue in favour of capital controls to prevent FX trading from taking place, or influence exchange rates by changing the interest rates or issuing biased press releases, he saw as evidence that the market would never be subject to a thorough investigation. If the banks were to be found guilty of putting grains of sand into the machinery of the free markets, surely the central banks should take some blame?

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


pages: 382 words: 100,127

The Road to Somewhere: The Populist Revolt and the Future of Politics by David Goodhart

Affordable Care Act / Obamacare, agricultural Revolution, assortative mating, Big bang: deregulation of the City of London, borderless world, Boris Johnson, Branko Milanovic, Bretton Woods, Brexit referendum, British Empire, call centre, capital controls, carbon footprint, central bank independence, centre right, coherent worldview, corporate governance, credit crunch, Crossrail, deglobalization, deindustrialization, Donald Trump, Downton Abbey, Edward Glaeser, en.wikipedia.org, Etonian, European colonialism, eurozone crisis, falling living standards, first-past-the-post, gender pay gap, gig economy, glass ceiling, global supply chain, global village, Great Leap Forward, illegal immigration, income inequality, informal economy, Jeremy Corbyn, job satisfaction, knowledge economy, labour market flexibility, low skilled workers, market friction, mass immigration, meritocracy, mittelstand, Neil Kinnock, New Urbanism, non-tariff barriers, North Sea oil, obamacare, old-boy network, open borders, open immigration, Peter Singer: altruism, post-industrial society, post-materialism, postnationalism / post nation state, race to the bottom, Richard Florida, Ronald Reagan, selection bias, shareholder value, Skype, Sloane Ranger, stem cell, the long tail, Thomas L Friedman, transaction costs, trickle-down economics, ultimatum game, upwardly mobile, wages for housework, white flight, women in the workforce, working poor, working-age population, World Values Survey

(By 2013 China had captured 20 per cent of all global manufacturing exports, compared with just 2 per cent in 1991.)13 This second phase of post-war globalisation starting in the 1980s, and put on pause by the financial crisis, has been very different to the first Bretton Woods/GATT regime which governed the world economy from the 1950s to the 1970s. In the first phase trade liberalisation remained limited to manufactured goods, mainly between industrialised nations. Tariffs fell sharply and trade and investment flows grew rapidly. But capital controls remained in place and it was assumed that national preferences and national social contracts would remain undisturbed. Indeed, when imports of textiles and clothing from low-cost countries threatened jobs in rich countries special controls were introduced. This regime came to be seen as inadequate in the 1980s and a big push was made for what Dani Rodrik has called ‘hyperglobalisation’—the attempt to eliminate all transaction costs that hinder trade and capital flows.

A single currency linking economies at a similar level of development provides the obvious advantages of reduced transaction costs and greater predictability, especially in cross-border trade. Delors also believed Europe faced a particular problem that he thought a single currency would solve: he feared that the liberalisation of capital controls introduced by the single market would destabilise the ERM mechanism, which had since 1979 loosely linked EU currencies, which would in turn unravel the single market. (The ERM did, indeed, nearly fall apart in 1993.) Another worry was that Germany had become too dominant in the ERM system—whenever the Bundesbank shifted interest rates other countries had to follow suit whether it suited their economic conditions or not.

The benefit of having employees represented at the highest level in large German companies—something that the May government has been thinking about for Britain too—can also be seen in the more gradual pace of de-industrialisation in the heavy industrial Ruhr region of Germany in the 1980s and 1990s compared with most of Britain’s industrial regions. The pace of de-industrialisation in Britain picked up sharply in the early 1980s as the effect of North Sea oil sent the pound rocketing and Mrs Thatcher’s new free market government removed all capital controls, and in some cases sharply cut financial support to nationalised industries. (The closure of uneconomic coal mines led to the year long 1984/5 strike and the rapid subsequent rundown of the whole industry). Hundreds of thousands of industrial workers lost their jobs in the space of a few years as factory after factory closed permanently.


pages: 361 words: 97,787

The Curse of Cash by Kenneth S Rogoff

Alan Greenspan, Andrei Shleifer, Asian financial crisis, bank run, Ben Bernanke: helicopter money, Berlin Wall, bitcoin, blockchain, Boris Johnson, Bretton Woods, business cycle, capital controls, Carmen Reinhart, cashless society, central bank independence, cryptocurrency, debt deflation, disruptive innovation, distributed ledger, Dr. Strangelove, Edward Snowden, Ethereum, ethereum blockchain, eurozone crisis, Fall of the Berlin Wall, fiat currency, financial exclusion, financial intermediation, financial repression, forward guidance, frictionless, full employment, George Akerlof, German hyperinflation, government statistician, illegal immigration, inflation targeting, informal economy, interest rate swap, Isaac Newton, Johann Wolfgang von Goethe, Johannes Kepler, Kenneth Rogoff, labor-force participation, large denomination, liquidity trap, low interest rates, Modern Monetary Theory, Money creation, money market fund, money: store of value / unit of account / medium of exchange, moral hazard, moveable type in China, New Economic Geography, offshore financial centre, oil shock, open economy, payday loans, price stability, purchasing power parity, quantitative easing, RAND corporation, RFID, savings glut, secular stagnation, seigniorage, The Great Moderation, the payments system, The Rise and Fall of American Growth, transaction costs, unbanked and underbanked, unconventional monetary instruments, underbanked, unorthodox policies, Y2K, yield curve

As someone who has studied the history of under-invoicing and over-invoicing in international trade, I am keenly aware that there are many vehicles for moving money around, for example, by misreporting amounts on otherwise legal transactions. In the years after World War II, when all of Europe was locked down by intense capital controls, people would routinely get money out of the continent by, for example, striking deals that underreported the payments received for exports and overreported payments made for imports, with capital flight through this channel amounting to roughly 10% of reported trade for many countries and significantly more for a few of them.22 Even today, money moves in and out of countries like China and India through misreporting of trade.

One benefit of coordinated action is that it might simply be easier to sell politically. It would also be the most effective means of addressing global crime. Global criminals could and would use alternative currencies, for example, yuan and rubles, but these are vastly less liquid (consider China’s capital controls) and are hardly a perfect substitute for the world’s key currencies. Moreover, China’s largest note, the 100 yuan, is equal to only $16 (although larger notes are reportedly being considered).5 Admittedly, some would argue that large US notes are a powerful force for good in countries like Russia, where paper dollars give ordinary citizens refuge from corrupt government officials.

., 246n26 Canada: corruption in, 71; currency/GDP ratio, 1995, 46; currency/GDP ratio, 2015, 36–37, 41; currency held by consumers in, 52; discount rate cuts in response to recent crises, 132; foreign holdings of currency, 42; interest rates near the zero bound, 131; large-denomination notes, 37; large-denomination notes, phaseout of, 95; paper currency phaseout, costs and benefits of, 89; revenue as a percentage of GDP, 2006–2015, 83–84; tax evasion in, 65–66; United States and, estimating foreign holdings of US currency by comparing, 41–43 Canzoneri, Matthew, 245n14 capital controls, 27, 202 Capone, Al, 61 Cebula, Richard J., 238n6 cell phones/smartphones: emergencies and, 110–11; free or subsidized for low-income individuals, 3, 48, 93–94; government monitoring of, 101; laundry, survival in, 112; transactions on, 5, 98 central bank independence, 90–91, 106, 190–91, 194–95, 231 Chakravorti, Sujit, 238n22 Chavez, Cesar, 75 Chicago plan, 86, 214 China: birth of paper currency in, 21–25; Marco Polo in, 15; origin of coinage in, 21; paper money printing and rice price in the Yuan dynasty, 24; transition from coinage to paper currency, 97, 100 China, People’s Republic of: Chinese currency, imagining supplanting US $100 bills with, 16; corruption in, 71; counterfeiting in, 78; cryptocurrencies in, 210; demand for gold jewelry in, 215; global criminals, unsuitability of yuan for, 202; paper currency phaseout, difficulties of, 204; revenue as a percentage of GDP, 2006–2015, 83 Christiano, Lawrence J., 255n10 Chung, Hess, 245n16, 247n28 Churchill, Winston, 29 coinage: debasement of, 19–20; gold-to-silver value, Alexander’s declaration of, 18–19; origin of, 21; technology in, 19 Colacelli, Mariana, 253n6 Colombia, 17, 69, 202–4 Comaneci, Nadia (gymnast), 162 commodity currencies, 17, 20–21 Congo, Democratic Republic of, 183–84 consumer cash holdings, 49–50 consumption taxes, 156–57 Correia, Isabelle, 250n18 corruption of public officials, 70–73, 205 cost in GDP of buying back all US paper currency, 217 counterfeiting/counterfeiters, 19, 77–78 criminal activities, 2, 67, 217–18; corruption of public officials, 70–73, 205; counterfeiting, 19, 77–78; human trafficking, human smuggling, and exploitation of migrants, 73–74; illegal immigration, 74–76; large-denomination euro notes and, 200–201; money laundering, 68–69, 76–77; tax evasion (see tax evasion); terrorism, 76–77 Croesus (king of Lydia), 18 cryptocurrencies: Bitcoin (see Bitcoin); European Commission rules regarding, 77; government and the future of, 16, 101; governments and, 208–14; less-cash world, not required for, 98; privacy and, 214; regulated after paper currency phaseout, 100; security and, 113, 210 currency: digital (see Bitcoin; cryptocurrencies); dual currency system, 167–76; entering or leaving the country, requirement to report large amounts of, 41; history of (see history of currency); paper (see paper currency, advantages of; paper currency, phasing out); private, government supplanting of, 16, 208–10; in the underground economy, issue of turning in, 87–89 Danmarks Nationalbank, 162 Davies, Stephen, 167–68, 171 Deaton, Angus, 76 Denmark: benefits paid electronically in, 99; cashless society, movement to, 107, 109; currency/GDP ratio, 1995, 36–37; currency/GDP ratio, 2015, 36–37; interest rates near the zero bound, 131; low-income individuals, accommodations for, 3; negative interest rates, computer software unprepared for, 162; negative interest rates, financial stability and, 178; negative interest rates in, 5, 123; prepaid card not requiring a PIN, option of, 111; restrictions on the use of cash, 64; unauthorized immigrants in, 75 developing countries.


pages: 334 words: 98,950

Bad Samaritans: The Myth of Free Trade and the Secret History of Capitalism by Ha-Joon Chang

"there is no alternative" (TINA), "World Economic Forum" Davos, affirmative action, Albert Einstein, Big bang: deregulation of the City of London, bilateral investment treaty, borderless world, Bretton Woods, British Empire, Brownian motion, business cycle, call centre, capital controls, central bank independence, colonial rule, Corn Laws, corporate governance, David Ricardo: comparative advantage, Deng Xiaoping, Doha Development Round, en.wikipedia.org, export processing zone, falling living standards, Fellow of the Royal Society, financial deregulation, financial engineering, fixed income, foreign exchange controls, Francis Fukuyama: the end of history, income inequality, income per capita, industrial robot, Isaac Newton, joint-stock company, Joseph Schumpeter, Kenneth Rogoff, Kickstarter, land reform, liberal world order, liberation theology, low skilled workers, market bubble, market fundamentalism, Martin Wolf, means of production, mega-rich, moral hazard, Nelson Mandela, offshore financial centre, oil shock, price stability, principal–agent problem, Ronald Reagan, South Sea Bubble, structural adjustment programs, The Wealth of Nations by Adam Smith, trade liberalization, transfer pricing, urban sprawl, World Values Survey

These countries did significantly lower their tariff barriers between the 1950s and the 1970s. But during this period, they also used many other nationalistic policies to promote their own economic development – subsidies (especially for research and development, or R&D), state-owned enterprises, government direction of banking credits, capital controls and so on. When they started implementing neo-liberal programmes, their growth decelerated. In the 1960s and the 1970s, per capita income in the rich countries grew by 3.2% a year, but its growth rate fell substantially to 2.1% in the next two decades.15 But more misleading is the portrayal of the experiences of developing countries.

Thanks to this crash, the country recovered the pre-Pinochet level of income only in the late 1980s.25 It was only when Chile’s neo-liberalism got more pragmatic after the crash that the country started doing well. For example, the government provided exporters with a lot of help in overseas marketing and R&D.26 It also used capital controls in the 1990s to successfully reduce the inflow of short-term speculative funds, although its recent free trade agreement with the US has forced it to promise never to use them again.More importantly, there is a lot of doubt about the sustainability of Chile’s development. Over the past three decades, the country has lost a lot of manufacturing industries and become excessively dependent on natural-resources-based exports.

That currency revaluation was an important cause of Japan’s huge asset bubble, whose bursting in the early 1990s (and the incompetent management of its aftermath) resulted in economic stagnation for a decade.As for my saying that China would join the OECD to celebrate the 100th birthday of its Communist Party, that was certainly said tongue-in-cheek. But countries can become over-confident when they are very successful, as the case of Korea shows. Until the late 1980s, Korea had skilfully used capital controls to great economic benefit. But, in the mid-1990s, it opened its capital market wide, and without careful planning. This was partly due to American pressure, but also because, after three decades of its economic ‘miracle’, the country had become too full of itself. It decided to join the OECD in 1996 and act like a rich country when it really wasn’t one.


pages: 347 words: 99,317

Bad Samaritans: The Guilty Secrets of Rich Nations and the Threat to Global Prosperity by Ha-Joon Chang

"there is no alternative" (TINA), "World Economic Forum" Davos, affirmative action, Albert Einstein, banking crisis, Big bang: deregulation of the City of London, bilateral investment treaty, borderless world, Bretton Woods, British Empire, Brownian motion, business cycle, call centre, capital controls, central bank independence, colonial rule, Corn Laws, corporate governance, David Ricardo: comparative advantage, Deng Xiaoping, Doha Development Round, en.wikipedia.org, export processing zone, falling living standards, Fellow of the Royal Society, financial deregulation, financial engineering, fixed income, foreign exchange controls, Francis Fukuyama: the end of history, income inequality, income per capita, industrial robot, Isaac Newton, joint-stock company, Joseph Schumpeter, Kenneth Rogoff, Kickstarter, land reform, liberal world order, liberation theology, low skilled workers, market bubble, market fundamentalism, Martin Wolf, means of production, mega-rich, moral hazard, Nelson Mandela, offshore financial centre, oil shock, price stability, principal–agent problem, Ronald Reagan, South Sea Bubble, structural adjustment programs, The Wealth of Nations by Adam Smith, trade liberalization, transfer pricing, urban sprawl, World Values Survey

These countries did significantly lower their tariff barriers between the 1950s and the 1970s. But during this period, they also used many other nationalistic policies to promote their own economic development – subsidies (especially for research and development, or R&D), state-owned enterprises, government direction of banking credits, capital controls and so on. When they started implementing neo-liberal programmes, their growth decelerated. In the 1960s and the 1970s, per capita income in the rich countries grew by 3.2% a year, but its growth rate fell substantially to 2.1% in the next two decades.15 But more misleading is the portrayal of the experiences of developing countries.

Thanks to this crash, the country recovered the pre-Pinochet level of income only in the late 1980s.25 It was only when Chile’s neo-liberalism got more pragmatic after the crash that the country started doing well. For example, the government provided exporters with a lot of help in overseas marketing and R&D.26 It also used capital controls in the 1990s to successfully reduce the inflow of short-term speculative funds, although its recent free trade agreement with the US has forced it to promise never to use them again. More importantly, there is a lot of doubt about the sustainability of Chile’s development. Over the past three decades, the country has lost a lot of manufacturing industries and become excessively dependent on natural-resources-based exports.

That currency revaluation was an important cause of Japan’s huge asset bubble, whose bursting in the early 1990s (and the incompetent management of its aftermath) resulted in economic stagnation for a decade. As for my saying that China would join the OECD to celebrate the 100th birthday of its Communist Party, that was certainly said tongue-in-cheek. But countries can become over-confident when they are very successful, as the case of Korea shows. Until the late 1980s, Korea had skilfully used capital controls to great economic benefit. But, in the mid-1990s, it opened its capital market wide, and without careful planning. This was partly due to American pressure, but also because, after three decades of its economic ‘miracle’, the country had become too full of itself. It decided to join the OECD in 1996 and act like a rich country when it really wasn’t one.


Corbyn by Richard Seymour

anti-communist, banking crisis, battle of ideas, Bernie Sanders, Boris Johnson, Brexit referendum, British Empire, call centre, capital controls, capitalist realism, centre right, collective bargaining, credit crunch, Donald Trump, eurozone crisis, fake news, first-past-the-post, full employment, gender pay gap, gentrification, housing crisis, income inequality, Jeremy Corbyn, knowledge economy, land value tax, liberal world order, mass immigration, means of production, moral panic, Naomi Klein, negative equity, Neil Kinnock, new economy, non-tariff barriers, Northern Rock, Occupy movement, offshore financial centre, pension reform, Philip Mirowski, post-war consensus, precariat, quantitative easing, race to the bottom, rent control, Snapchat, stakhanovite, systematic bias, Washington Consensus, wealth creators, Winter of Discontent, Wolfgang Streeck, working-age population, éminence grise

In the past few decades, it has been taken for granted among the majority of journalists and politicians that something miraculous was taking place: globalisation. The world was converging, under the relatively benign tutelage of Washington, toward a liberal world order. With the vast global expansion of trade availed by the global rollback of capital controls and tariffs, a series of institutions of global governance sprang up, as well as a patchwork of regional trading alliances rolling out property rights, and rolling back barriers to trade such as public ownership, and environmental or labour protections. It was, to coin a phrase, capitalism en marche: investor rights sans frontières.

According to the World Trade Organization, the ratio of trade growth to GDP growth fell to 0.6:1 in 2016. Financial internationalism, wherein banks extend their reach increasingly globally, is slowing down. Protectionism is on the rise across the G20, and various governments – notably the Chinese – have imposed capital controls.2 This is a crisis of globalisation, and, with that, a crisis of all the taken-for-granted wisdom about globalisation. Economists have been changing their minds, and so have voters. The crisis has exposed layers of people who never particularly cared for ‘globalisation’, but who were submerged in the rising tide.

, Guardian, 28 September 2015; Shawn Doonan, ‘WTO warns on rise of protectionist measures by G20 economies’, Financial Times, 21 June 2016; ‘Press release 793: trade statistics and outlook’, World Trade Organization, 2017, at wto.org; Kevin Yao, ‘China capital outflows stabilized in first-quarter as capital controls bite’, Reuters, 20 April 2017. 3Gaby Hinsliff, ‘Labour still has to work out how it can speak for England’, Guardian, 4 February 2016; Vernon Bogdanor, ‘As a political force Englishness is on the rise – and Labour mustn’t forget it’, Guardian, 8 July 2013; John Harris, ‘Don’t let England be rebranded as a nation of bigots’, Guardian, 10 October 2016; Polly Toynbee, ‘Dismal, lifeless, spineless – Jeremy Corbyn let us down again’, Guardian, 25 June 2016; Andy Burnham, ‘Labour needs to take back control of the immigration debate’, Guardian, 16 December 2016. 4Anthony Bond and Steve Robson, ‘Revenge of the youth!


pages: 271 words: 52,814

Blockchain: Blueprint for a New Economy by Melanie Swan

23andMe, Airbnb, altcoin, Amazon Web Services, asset allocation, banking crisis, basic income, bioinformatics, bitcoin, blockchain, capital controls, cellular automata, central bank independence, clean water, cloud computing, collaborative editing, Conway's Game of Life, crowdsourcing, cryptocurrency, data science, digital divide, disintermediation, Dogecoin, Edward Snowden, en.wikipedia.org, Ethereum, ethereum blockchain, fault tolerance, fiat currency, financial innovation, Firefox, friendly AI, Hernando de Soto, information security, intangible asset, Internet Archive, Internet of things, Khan Academy, Kickstarter, Large Hadron Collider, lifelogging, litecoin, Lyft, M-Pesa, microbiome, Neal Stephenson, Network effects, new economy, operational security, peer-to-peer, peer-to-peer lending, peer-to-peer model, personalized medicine, post scarcity, power law, prediction markets, QR code, ride hailing / ride sharing, Satoshi Nakamoto, Search for Extraterrestrial Intelligence, SETI@home, sharing economy, Skype, smart cities, smart contracts, smart grid, Snow Crash, software as a service, synthetic biology, technological singularity, the long tail, Turing complete, uber lyft, unbanked and underbanked, underbanked, Vitalik Buterin, Wayback Machine, web application, WikiLeaks

Distributed Censorship-Resistant Organizational Models The primary argument for Blockchain 1.0 and 2.0 transactions is the economic efficiency and cost savings afforded by trustless interaction in decentralized network models, but freedom and empowerment are also important dimensions of the blockchain. Decentralized models can be especially effective at promoting freedom and economic transfer in countries with restrictive political regimes and capital controls. Freedom is available in the sense of pseudonymous transactions outside of the visibility, tracking, and regulatory purview of local governments. This can be a significant issue for citizens in emerging markets where local capital controls, government regulations, and overly restrictive economic environments make it much harder to engage in a variety of standard activities, including starting new businesses. State economic controls, together with a lack of trust in fiat currency, have been driving a lot of interest in cryptocurrencies.


pages: 554 words: 158,687

Profiting Without Producing: How Finance Exploits Us All by Costas Lapavitsas

Alan Greenspan, Andrei Shleifer, asset-backed security, bank run, banking crisis, Basel III, Bear Stearns, borderless world, Branko Milanovic, Bretton Woods, business cycle, capital controls, Carmen Reinhart, central bank independence, collapse of Lehman Brothers, computer age, conceptual framework, corporate governance, credit crunch, Credit Default Swap, David Graeber, David Ricardo: comparative advantage, disintermediation, diversified portfolio, Erik Brynjolfsson, eurozone crisis, everywhere but in the productivity statistics, false flag, financial deregulation, financial independence, financial innovation, financial intermediation, financial repression, Flash crash, full employment, general purpose technology, Glass-Steagall Act, global value chain, global village, High speed trading, Hyman Minsky, income inequality, inflation targeting, informal economy, information asymmetry, intangible asset, job satisfaction, joint-stock company, Joseph Schumpeter, Kenneth Rogoff, liberal capitalism, London Interbank Offered Rate, low interest rates, low skilled workers, M-Pesa, market bubble, means of production, Minsky moment, Modern Monetary Theory, Money creation, money market fund, moral hazard, mortgage debt, Network effects, new economy, oil shock, open economy, pensions crisis, post-Fordism, Post-Keynesian economics, price stability, Productivity paradox, profit maximization, purchasing power parity, quantitative easing, quantitative trading / quantitative finance, race to the bottom, regulatory arbitrage, reserve currency, Robert Shiller, Robert Solow, savings glut, Scramble for Africa, secular stagnation, shareholder value, Simon Kuznets, special drawing rights, Thales of Miletus, The Chicago School, The Great Moderation, the payments system, The Wealth of Nations by Adam Smith, Tobin tax, too big to fail, total factor productivity, trade liberalization, transaction costs, union organizing, value at risk, Washington Consensus, zero-sum game

The post-Keynesian literature has long established the beneficial impact that controls would have on growth, particularly with regard to capital flight (Grabel 2003, 2006). It is remarkable that even the IMF has recently begun to realize that a degree of capital controls might be desirable (Ostry et al., 2010). Nonetheless, the feasibility of generalized capital control in the absence of reliable world money remains a moot point. 39 A point that Kregel notes in connection with the difficulty of returning to Glass-Steagall. Jan Kregel, ‘No Going Back: Why We Cannot Restore Glass-Steagall’s Segregation of Banking and Finance’, Public Policy Brief 107, Levy Economics Institute of Bard College, 2010 40 See, for instance, Adam S.

It has also been sharply different from regulation during the three decades after the Second World War, which was also market-negating but had the specific aim of controlling finance as a system. To this purpose systemic market-negating regulation included an array of mutually interacting measures, such as price and quantity controls, functional specialization of institutions, and capital controls. The underlying assumption was that the untrammelled operation of financial markets could potentially destabilize capitalist accumulation, and hence finance had to be controlled as a system. With the rise of financialization, systemic market-negating regulation has gone into retreat to be replaced by market-conforming regulation; during the same period, however, generic market-negating regulation has also become stronger, buttressing the private returns of finance.

For financial institutions active in the world market it became important to remove controls on international capital flows precisely to confront the risks generated by the new volatilities.10 Rising volatility of exchange rates and interest rates as well as the gradual lifting of financial controls encouraged financial innovation, a process that has transformed the conduct of banks in the period of financialization. Removing international capital controls and abolishing domestic regulations laid the ground for financial liberalization. An important step was the partial abolition of regulation Q in the US in the 1960s, thus freeing some interest rates on bank liabilities. Equally important was the introduction of Competition and Credit Control legislation in the UK in 1970s which began to dismantle international regulations constraining British banks.


pages: 767 words: 208,933

Liberalism at Large: The World According to the Economist by Alex Zevin

"there is no alternative" (TINA), activist fund / activist shareholder / activist investor, affirmative action, Alan Greenspan, anti-communist, Asian financial crisis, bank run, Berlin Wall, Big bang: deregulation of the City of London, Bretton Woods, British Empire, business climate, business cycle, capital controls, carbon tax, centre right, Chelsea Manning, collective bargaining, Columbine, Corn Laws, corporate governance, corporate social responsibility, creative destruction, credit crunch, David Ricardo: comparative advantage, debt deflation, desegregation, disinformation, disruptive innovation, do well by doing good, Donald Trump, driverless car, Edward Snowden, failed state, Fall of the Berlin Wall, financial deregulation, financial innovation, Francis Fukuyama: the end of history, full employment, Gini coefficient, Glass-Steagall Act, global supply chain, guns versus butter model, hiring and firing, imperial preference, income inequality, interest rate derivative, invisible hand, It's morning again in America, Jeremy Corbyn, John von Neumann, Joseph Schumpeter, Julian Assange, junk bonds, Khartoum Gordon, land reform, liberal capitalism, liberal world order, light touch regulation, Long Term Capital Management, low interest rates, market bubble, Martin Wolf, means of production, Michael Milken, Mikhail Gorbachev, Monroe Doctrine, Mont Pelerin Society, moral hazard, Naomi Klein, new economy, New Journalism, Nixon triggered the end of the Bretton Woods system, no-fly zone, Norman Macrae, Northern Rock, Occupy movement, Philip Mirowski, plutocrats, post-war consensus, price stability, quantitative easing, race to the bottom, railway mania, rent control, rent-seeking, road to serfdom, Ronald Reagan, Rosa Parks, Seymour Hersh, Snapchat, Socratic dialogue, Steve Bannon, subprime mortgage crisis, Suez canal 1869, Suez crisis 1956, The Wealth of Nations by Adam Smith, Thomas Malthus, too big to fail, trade liberalization, trade route, unbanked and underbanked, underbanked, unorthodox policies, upwardly mobile, War on Poverty, WikiLeaks, Winter of Discontent, Yom Kippur War, young professional

Starting in the late 1950s, some of the City’s leading merchant bankers joined Treasury and Bank regulators to encourage American, Asian and other multinational banks and corporations to come to London to tap these liquid markets in ‘offshore’ dollars – whose chief attraction was their unregulated status, operating outside Federal Reserve and Treasury oversight and capital controls established under Bretton Woods.54 Since Macrae was neither uncritical of the banks nor a conventional neoliberal, it is all the more striking that he too looked for a partial solution to British difficulties in the speculative innovations of London’s financial hub. Indeed, as Macrae contemplated the advantages of British membership of the European Economic Community (EEC), it was the prospects for the City that stood out: the end of fixed exchange rates and sterling area capital controls – which EEC entry demanded – meant that as ‘northern Europe starts exporting its manufacturing industries to the poor south and communist east’, British banks would boom, organizing the flexible holding, licensing and other investment and ownership strategies and structures of the post-industrial world.55 Britain into Europe, a collection of writings from the Economist staff, made the case for entry from this perspective in 1971 – arguing that it was high time for the City to abandon sterling’s reserve status (with the ‘awful record’ of ‘two devaluations, ten grisly postwar sterling crises, ten occasions on which Britain suffered a sharp drain on its gold and foreign exchange reserves’) and most commonwealth preferences in goods.56 The City should instead look to the ‘dollar and Eurocurrency markets’ of the future, becoming ‘the banking centre of the community, where the working dollar balances of Europe are kept – a new, more desired, very much more fruitful European version of the sterling balances used by Britain to finance its profitable investment abroad’.

The notion that ‘socialistic finance’ was ‘driving’ capital abroad furnished another rationale for tariffs, originating in the City but with a potent appeal extending up to the industrial North. Instead of allowing the unrestricted outflow of British savings, which funded – critics argued – the industrial and imperial expansion of rival powers, tariffs and capital controls could direct those savings to the home market, which was starved for investment and in need of modernization. The proof? German, American and even Japanese firms were now outcompeting their British counterparts on everything from pottery to steel, iron to chemicals.68 Here the Economist played its best card on behalf of a liberal empire – for no better authority on the ebb and flow of capital within it existed.

Keynes had gleefully laid traps for the Economist here and in the Nation and Athenaeum, in which he tried to show that industry and finance could be at odds, and that the management of the gold standard had needlessly deepened their divergence.64 It must be stressed again, however, that Keynes criticized the ‘mandarins’ in the Economist as much for the harm they had done to the City as to Britain’s industrial north: his support for ‘tied lending’ was meant to renew the virtuous mid-nineteenth century circle of foreign investment and exports – and to allow the City to compete with New York and Paris, which already engaged in similar breaches of free trade.65 And while Keynes may have outwitted the Economist, it was the latter that prevailed on the level of policy. A glance at the memoranda of Treasury officials makes clear how closely they relied on the Economist to combat not just capital controls but – going back to James Wilson’s writings on the 1840s railway mania, which still figured in the civil service exams – to loan-financed public works schemes in general, as ‘crowding out’ private investment.66 1929: Keynes, the Crash and Its Aftermath It was the anvil of events, not superior cleverness, which eventually decided many of these issues in favour of Keynes, as the Wall Street bubble finally burst in 1929, precipitating the Great Depression.


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The Currency Cold War: Cash and Cryptography, Hash Rates and Hegemony by David G. W. Birch

"World Economic Forum" Davos, Alan Greenspan, algorithmic management, AlphaGo, bank run, Big Tech, bitcoin, blockchain, Bretton Woods, BRICs, British Empire, business cycle, capital controls, cashless society, central bank independence, COVID-19, cross-border payments, cryptocurrency, Diane Coyle, disintermediation, distributed ledger, Donald Trump, driverless car, Elon Musk, Ethereum, ethereum blockchain, facts on the ground, fault tolerance, fiat currency, financial exclusion, financial innovation, financial intermediation, floating exchange rates, forward guidance, Fractional reserve banking, global reserve currency, global supply chain, global village, Hyman Minsky, information security, initial coin offering, Internet of things, Jaron Lanier, Kenneth Rogoff, knowledge economy, M-Pesa, Mark Zuckerberg, market clearing, market design, Marshall McLuhan, mobile money, Money creation, money: store of value / unit of account / medium of exchange, moral hazard, Network effects, new economy, Northern Rock, one-China policy, Overton Window, PalmPilot, pattern recognition, Pingit, QR code, quantum cryptography, race to the bottom, railway mania, ransomware, Real Time Gross Settlement, reserve currency, Satoshi Nakamoto, seigniorage, Silicon Valley, smart contracts, social distancing, sovereign wealth fund, special drawing rights, subscription business, the payments system, too big to fail, transaction costs, Vitalik Buterin, Washington Consensus

Last year, some two-thirds of Russia’s goods and services exports were settled in dollars, down from four-fifths six years ago (Russia’s president Vladimir Putin has said ‘we are not leaving the dollar, the dollar is leaving us’). China had the yuan added to the SDR basket after the global financial crisis (but there are capital controls that limit its usefulness as a Patrician, so the yuan still only makes up a mere 2% of global transaction value). As former American Treasury secretary Jack Lew explained to an audience in Washington (US Department of the Treasury 2016): The risk that sanctions overreach will ultimately drive business activity from the US financial system could become more acute if alternatives to the United States as a center of financial activity, and to the US dollar as the world’s preeminent reserve currency, assume a larger role in the global financial system.

Iran The recent economic sanctions imposed by America on Iran have had the effect of shrinking the Iranian economy by some 10–20%, which, naturally, has stimulated the country’s interest in cryptocurrencies. Bitcoin is apparently used by both the government and the public there to evade legal barriers. Iran has a complicated position with regard to cryptocurrency. The government encourages Bitcoin mining, but Bitcoin and all other cryptocurrencies are illegal (and are seen as a threat to capital controls). This means that miners have to sell their cryptocurrency on overseas exchanges. Hence, it is interesting to note that, according to the Iranian news service the Financial Tribune (2019), the government is preparing to offer tax breaks to miners. Miners who repatriate their foreign earnings will be eligible for tax exemptions.


pages: 364 words: 112,681

Moneyland: Why Thieves and Crooks Now Rule the World and How to Take It Back by Oliver Bullough

Alan Greenspan, banking crisis, Bernie Madoff, bitcoin, blood diamond, Bretton Woods, Brexit referendum, BRICs, British Empire, capital controls, central bank independence, corporate governance, cryptocurrency, cuban missile crisis, dark matter, diversification, Donald Trump, energy security, failed state, financial engineering, Flash crash, Francis Fukuyama: the end of history, full employment, Global Witness, high net worth, if you see hoof prints, think horses—not zebras, income inequality, joint-stock company, land bank, liberal capitalism, liberal world order, mass immigration, medical malpractice, Navinder Sarao, offshore financial centre, plutocrats, Plutonomy: Buying Luxury, Explaining Global Imbalances, rent-seeking, Richard Feynman, risk tolerance, Sloane Ranger, sovereign wealth fund, Suez crisis 1956, WikiLeaks

Don Mitchell is a veteran Anguillan lawyer who knew Herbert well, having worked alongside him for decades. In the 1970s and 1980s, he said, Anguilla had a strange and perhaps unique status as a free port, created by the fact it had revoked many of the St Kitts laws without bothering to replace them with anything else. This meant that, while much of the rest of the world had capital controls stopping the free movement of cash between jurisdictions, Anguilla had total freedom. ‘The banks in Anguilla prospered because of the number of Britons, Americans, Swiss people, not to mention innumerable West Indian businessmen, who flew into Anguilla with suitcases full of currency to deposit,’ he remembered.

There’s also money that has flowed out of economies like Russia, China or Venezuela which isn’t the fruit of a misdeed of any kind, but is instead owned by people who fear that the government might take it away from them if they kept it at home. And this ‘flight capital’ adds a whole new dimension to the amount of cash we’re talking about. According to one estimate, some $2.5 trillion fled China in the decade to 2017, despite the increasingly onerous capital controls erected by the government. Often this flight capital is hidden, visible only in what are called the ‘errors & omissions’ (E&O) in government figures, the entry that statisticians add to the columns of numbers to make them add up. Analysts from Deutsche Bank made the discovery when they looked at British investment figures, and realised that the E&O number was consistently positive over time.

Russian money appeared to make up around half of this total, with the rest sourced from elsewhere in the world, although even this was a guess, since the analysts were relying on discrepancies that could be masked by the far higher legal flows of capital. Sweden, meanwhile, has the opposite problem, and has leaked 1.5 trillion Swedish krona (around $180 billion) since the late 1980s, when the country abandoned capital controls and wealthy Swedes tried to reduce their exposure to their homeland’s high taxes. (‘This means that Sweden’s national statisticians underestimate Swedish foreign wealth by 100 percent,’ the report said.) If it is so hard to find accurate figures for the flows of money into and out of advanced economies, then it will be harder still to estimate global totals, since that would require relying on figures produced by less well resourced statistics agencies, as well as somehow circumventing the reticence of tax havens, which don’t like to reveal the inner workings of their financial systems even to their own statisticians.


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Breakout Nations: In Pursuit of the Next Economic Miracles by Ruchir Sharma

"World Economic Forum" Davos, 3D printing, affirmative action, Alan Greenspan, Albert Einstein, American energy revolution, anti-communist, Asian financial crisis, banking crisis, Berlin Wall, book value, BRICs, British Empire, business climate, business cycle, business process, business process outsourcing, call centre, capital controls, Carmen Reinhart, central bank independence, centre right, cloud computing, collective bargaining, colonial rule, commodity super cycle, corporate governance, creative destruction, crony capitalism, deindustrialization, demographic dividend, Deng Xiaoping, eurozone crisis, financial engineering, Gini coefficient, global macro, global supply chain, Goodhart's law, high-speed rail, housing crisis, income inequality, indoor plumbing, inflation targeting, informal economy, junk bonds, Kenneth Rogoff, knowledge economy, labor-force participation, land reform, low interest rates, M-Pesa, Mahatma Gandhi, Marc Andreessen, market bubble, Masayoshi Son, mass immigration, megacity, Mexican peso crisis / tequila crisis, middle-income trap, Nelson Mandela, new economy, no-fly zone, oil shale / tar sands, oil shock, open economy, Peter Thiel, planetary scale, public intellectual, quantitative easing, reserve currency, Robert Gordon, rolling blackouts, Shenzhen was a fishing village, Silicon Valley, software is eating the world, sovereign wealth fund, The Great Moderation, Thomas L Friedman, trade liberalization, Tyler Cowen, Watson beat the top human players on Jeopardy!, working-age population, zero-sum game

These private-sector companies are heavily protected yet extremely well run (again much like Mexico), and they are the source of whatever global economic success South Africa enjoys. Though South Africa has the most sophisticated financial market in the emerging nations—the World Economic Forum ranks it the fifth most sophisticated in the world—much of the money is trapped at home, a legacy of capital controls imposed by the apartheid regime to prevent money from fleeing the country. Even though those rules have been gradually relaxed since the 1990s, the pool of domestic financial savings is still huge, with $750 billion in assets under management in the insurance, pension, and mutual-fund industry, which is a sum roughly two times the GDP of South Africa, suggesting there is a lot of accumulated wealth in the economy.

Economist Andy Xie, a well-known expert on Asia, has created an interesting taxonomy of winners and losers after the crisis, citing South Korea for pushing perhaps the most aggressive reforms. Xie argues that if South Korea had not suffered a hard landing in 1998, it probably would not be a member of the Organisation for Economic Co-operation and Development—a club of leading industrial powers—today. On the other hand Malaysia imposed capital controls to avoid the brunt of the hit in 1998, never reformed its system, and is falling behind its neighbors. Xie is most critical of Japan, where, he says, “the greatest bubble in human history” burst in 1990 with no pain at all, like falling off Everest without breaking a bone. At its peak Japan accounted for 40 percent of all the property value on the planet, but instead of collapsing, the price of real estate slowly declined at a 7 percent annual rate for two decades, ultimately falling by a total of about 80 percent.

., 177 Bradford, 212 brand management, 53–54, 90, 159, 162, 165, 167 Brazil, 59–72 agriculture in, 64, 66, 232 assets of, 59 banking in, 62, 69–70 billionaires in, 71, 78 budget limits in, 66, 70–71 capital markets in, 69, 70–71 China compared with, 61, 62, 63–64, 65, 66, 68–70, 71 constitution of, 64 consumer prices in, 12, 42, 59–61, 62, 66, 67–68, 71, 138, 232 currency of (real), 12, 13–14, 59–61, 62, 66, 67, 68–69, 232, 233 economic reforms in, 62–63, 66–67, 71–72 economy of, 12–13, 28, 61–72, 226 education in, 63, 65 as emerging market, 3–4, 7, 59–61, 63, 65–66, 67, 69–71, 85, 106, 113, 176, 253 factories in, 67, 68 financial crises in, 61–62 foreign investment in, 59, 63, 64, 66, 68–72 foreign trade of, 59, 61, 62, 67–68, 72, 159, 220, 223, 226, 232, 233–34 GDP of, 3–4, 63, 65, 66, 67, 72 in global economy, 68–71 government of, 42, 59, 63, 65, 66–67, 70–71, 72, 210, 248 government spending in, 42, 63, 65, 66–67, 70–71, 72 growth rate of, 3–4, 7, 11, 12–13, 14, 15, 61–64, 66, 67, 68–71, 88, 207, 235, 244, 246 health care in, 63 high-context society in, 39–40 hotels and restaurants in, 12, 59–61, 65 housing prices in, 61 immigration to, 95 income levels of, 8, 61, 63, 72, 75, 113 India compared with, 10, 39–43, 61, 70 inflation rate in, 42, 62, 66, 68–69, 248, 249 infrastructure of, 61, 64, 65, 69 interest rates in, 62, 67, 68–70 labor market in, 64–65 leadership of, 59, 61, 63, 66–67, 70–72, 210 loan defaults by, 61–62, 66 media coverage in, 70–71 Mexico compared with, 71, 75 “momento magico” of, 59 national debt of, 61–62, 66 natural resources of, 10, 59, 61, 63, 67–68, 69, 133, 159, 220, 226, 232, 233–34, 235 oil industry of, 63, 67–68 political situation in, 66–69 poverty in, 41, 66 productivity of, 63–64, 68 social stability in, 61–64, 66, 67, 71, 72 stock market of, 10, 59, 69–71, 233 taxation in, 63 transportation in, 64, 69, 85, 212–13 “trilemma” of, 68–69 unemployment in, 64–65 U.S. compared with, 12–13, 61, 66, 72 wage levels in, 42, 62, 65 wealth in, 12–13, 71 welfare programs of, 41, 42, 61, 63, 72 breakout nations, vii–x, 2, 10–16, 38–39, 49, 61, 89–90, 113, 244–46 see also specific nations bribes, 93, 137 BRICS, 253 bridges, 51, 195 bubbles, investment, 2–6, 107, 223–39 Budapest, 97 Buddhism, 199 budgets, x, 66, 70–71, 139–40 Buffett, Warren, 163 Bulgaria, 100, 109, 187 “bulldozer leadership,” 161 Bumiputeras people, 148–49 Burj Al Arab, 219 Burma, 10 Burundi, 209 Busan, 136 Bush, George W., 4–5 business cycles, 2, 5–6, 11, 223 Cairo, 128 Calderón, Felipe, 78, 79–80, 82 California, 24 Çalik, Ahmet, 123 call centers, 141 Cambodia, 188 cameras, 237 Cameroon, 89 Canada, 26, 180, 215, 223 Canal Istanbul, 116 Cape Town, 171, 175 Cap Ferrat, 94 capital controls, 178, 189–90, 252 Capital Economics, 21 capital flows, viii, x, 4, 69, 70–71, 93–94, 107, 131, 178, 189–90, 201, 228–30, 236, 238, 252 capitalism, 8–9, 10, 17–18, 25, 26–30, 38–39, 42, 46–47, 49, 50–51, 58, 62, 69–70, 71, 77, 106, 117, 118–19, 136, 141, 174, 197, 200–202, 218, 228–30, 252 “cappuccino economy,” 182 Cardoso, Fernando Henrique, 66 cargo ships, 200–201 cartels, 74, 75–76, 79–80, 208 Carter, Jimmy, 248 casinos, 201 Cayman Islands, 160 cement, 75, 135, 137, 139, 213 CEMEX, 75 , 81 Central Asia, 95, 113, 123, 166 Central Intelligence Agency (CIA), 30 Chaayu Blu resort, 196 chain stores, 53 change agents, 2–3 Chaser, The, 167 Chávez, Hugo, 190, 215 Chechnya, 85, 89, 96 checking accounts, 62 Chery, 161 Chhattisgarh, 46 Chiang Kai-shek, 165 chief executive officers (CEOs), 2, 60, 64, 72, 224 children, x, 21–22, 169 Chile, 41, 75 China, 15–34 agriculture in, 9, 17–18, 21, 22, 27, 41–42 auto industry of, 161 baby-boom generations in, 21–22, 37–38 banking in, 24, 25, 26, 92, 252 billionaires in, 25, 45, 91 Brazil compared with, 61, 62, 63–64, 65, 66, 68–70, 71 capitalist reforms in, 8–9, 17–18, 25, 26–30, 62, 69–70, 71, 106, 117, 118–19, 197, 200–202, 252 Communist regime of, 21–22, 25, 26–30, 117, 202–3, 247 consumer prices in, 16, 18, 22–23, 24, 25, 31–32, 53 credit market in, 32 currency of (yuan), 32–33, 68, 131, 132, 246–47, 254 demographics of, 17–18, 21–22, 37–38, 53 economic slowdown in, 17, 18–21, 32–34, 233–35, 241–42 economy of, 15–34, 197, 204, 227, 236, 241–42 as emerging market, 3–4, 7, 10, 87, 153, 164, 231, 253 emigration from, 82, 95 export-manufacturing zones in, 28 factories in, 17–18, 22–23, 28, 132, 230 five-year plans of, 20, 27 forecasts on, 2, 17, 18, 31–32 foreign currency reserves of, 26, 32–33 foreign investment in, 9, 18, 20, 32, 68–70, 183, 225 foreign trade of, 18, 20–21, 23, 26, 28, 29, 31, 32–33, 120, 148 GDP of, 1, 3–4, 17, 18, 20, 26, 32, 65, 85, 139, 236, 243, 252 “ghost cities” in, 16, 24–25 as global economy, 1, 2, 18–19, 230, 233–36, 241–42 growth rate of, 3–4, 7, 8–9, 11, 12, 16–21, 26, 29–34, 51, 58, 61, 62, 63–64, 68–69, 87, 118–19, 132, 133, 136, 187, 201–2, 204, 223, 224, 233–35, 241–42, 245, 254 Han population of, 53 as high-context society, 41 highways in, 17, 20, 21, 65, 231 housing market in, 16, 18, 24–25, 28–29, 31, 32 income levels of, 8, 11, 16–21, 24–25, 58, 86 India compared with, 1, 10, 19, 25, 36, 37–38, 41, 45, 47, 52, 53, 56, 57, 58 Indonesia compared with, 132–33, 135, 136 inflation rates in, 17, 22, 23, 24, 25, 31, 33, 248 infrastructure of, 20–21, 62, 65, 236 Japan compared with, 18, 20, 22, 24, 31, 32–33 labor market in, 17, 21–23, 27, 32, 47, 164, 170, 246–47 labor unrest in, 17, 22–23, 32, 47 leadership of, 8–9, 17, 26–28, 32, 33, 47, 71, 132, 200–203, 248 manufacturing sector of, 17–18, 22–23, 28, 132, 230, 235 media coverage of, 21, 22–23 Middle Kingdom of, 199 migrant workers in, 22–23, 27 national debt of, 17, 18, 252 natural resources imported by, 19, 61, 229, 230, 231, 233–36 one-child policy of, 21–22 population of, 17–18, 19, 21–22, 37–38, 53, 56, 57, 82 ports of, 20–21, 62, 65, 200–201 privatization in, 24–25, 252 productivity of, 63–64, 68, 80 public transportation in, 15–16, 20, 21, 22–23, 65, 231 residency permits (hukou) in, 27, 29 rural areas of, 17–18, 21, 22–23, 27, 41–42, 57 Russia compared with, 19, 25, 85, 86, 87, 88, 91, 92 savings rate in, 31, 62, 119 social unrest in, 24–26, 27, 28, 31–32, 47 South Korea compared with, 158–59, 161 state-owned enterprises in, 69, 88, 252 stock market of, 26, 69–70, 88, 189 Taiwan compared with, 155, 164, 169–70 telecommunications in, 207, 237, 238, 239 Thailand compared with, 39 Turkey compared with, 117, 118–20, 122 unemployment in, 32, 62 urban areas of, 21, 22–25, 31, 33, 57 U.S. compared with, 17, 18, 24, 237, 238, 239, 241–42, 246–47 Vietnam compared with, 30, 199, 200–203, 204 wage levels in, 21, 22, 23, 24, 25, 29, 45, 80, 91, 132 wealth in, 25, 31–32, 236 women in, 21, 24, 31 Chinese language, 53 Chinese Nationalists, 165 Chissano, Joaquim, 195, 206 Christianity, 123, 211 Chrysler, 75 Chung Ju Young, 161 Chung Mong Koo, 162 Churchill, Winston S., 49 Cinnamon Lodge resort, 196 Citibank, 91 Ciudad Juárez, 79 Clinton, Bill, 225–26 CLSA, 238 CNBC, 70–71 coal, 133, 135, 170, 180, 225 Coca-Cola, 75 coffee, 67, 69, 232 Cold War, 86, 87, 134 Coleman, 247 college endowments, viii Collor de Mello, Fernando, 66 Colombo, 191, 192 Commission on Growth and Development, 235 “commodity.com” illusion, 223–39 “commodity supercycle,” 223 Commonwealth Games, 42 Communism, 4, 21–22, 25, 26–30, 83, 84, 85, 86, 89, 97, 102, 103, 104, 111, 117, 170, 175, 199–200, 202–3, 247 computers, 158, 164, 203–4, 236–39 Confucianism, 199 conglomerates, 125–26, 134, 138, 161–63, 167–69, 178 Congo, Democratic Republic of, 205, 209 Congo, Republic of, 4 Congress of South African Trade Unions (COSATU), 175, 181 Congress Party, 39, 41–42, 47–49, 55–56, 174, 176 conspicuous consumption, 6 construction industry, 123, 166, 213 consumer electronics, 147–48 consumer prices, 6, 12, 16, 18, 22–23, 24, 25, 31–32, 38, 39, 42, 49, 52–54, 57, 59–61, 62, 66, 67–68, 71, 75–76, 83–84, 86, 87, 94, 121, 126, 137–38, 157, 179, 232, 235 container vessels, 200–201 contracts, labor, 17 Coolidge, Calvin, 39 copper, 19, 120, 141, 223, 224, 229, 231 Cornerstone Analytics, 227 corporate governance, 134 corporate taxes, 63, 76, 126–27, 214–15, 254 corruption, 25, 76–77, 89, 91, 93, 107, 117–18, 134–35, 137, 151, 204–5, 206, 209, 210, 217 see also graft counterrevolution, 111, 118, 125–26 creative destruction, 46 credit, 8, 32, 38, 42, 43–44, 45, 46–47, 49–51, 58, 150, 157, 202 credit cards, 8, 157 Credit Suisse, 50 crime rate, 71, 78, 181, 211 “crony capitalism,” 10, 25, 38, 42, 46–47, 49, 50–51, 58, 131, 139 Cuba, 191 cuisine, 52–53 currencies, 4–5, 9, 12, 13–14, 26, 28, 32–33, 59–61, 62, 66, 67, 68–69, 73, 80, 92–93, 100–108, 115, 120, 131, 132, 146–47, 149, 159–60, 178, 179, 196, 209, 232, 233, 243, 246–47, 254 “czarist mentality,” 96 Czech Republic: auto industry of, 103 banking in, 103, 105–7 as breakout nation, 99–100 currency of (koruna), 108 as emerging market, 106, 110 as Eurozone candidate, 11, 99–100, 106–8, 109, 254 GDP of, 100 growth rate of, 97, 99–104, 244–45 inflation rate of, 249 national debt of, 105–6 population of, 106 post-Communist era of, 97, 102, 104, 111 Dae Jang Geum, 167 Daewoo, 160, 162 day traders, 220, 224 debt, national, 4, 5–6, 8, 17, 18, 24, 57, 61–62, 66, 76, 80–81, 85, 86, 92–93, 100, 105–6, 119–22, 134–35, 170, 176, 177, 231, 252 debt, personal, 8, 57–58, 157, 182–83 defaults, 61–62, 66, 252–53 deficits, x, 109–10, 147, 254 Delhi, vii–viii, 43 Dell, 158 democracy, 29–30, 48–49, 50, 55–56, 58, 77, 89, 96, 114, 118, 119, 123, 127, 143, 156, 173–76, 194, 205 Democratic Alliance Party, 175–76 Democratic Republic of Congo, see Congo, Democratic Republic of “demographic dividend,” 37–38, 55–56, 58, 126 demographics, 17–18, 21–22, 37–38, 55–56, 58, 126, 225, 231–32 Deng Xiaoping, 8–9, 17, 25, 26–28, 199, 200–201 dependency ratio, 37–38 Detroit, 162 devaluations, currency, 62, 108, 132 developing countries, vii–x, 2, 7, 10–16, 20, 28, 38–39, 42, 44, 49, 61, 65, 68, 89–90, 113, 123, 158, 184–91, 204–8, 233–39, 242–4 commodity exports of, 204, 223–39 see also breakout nations diamonds, 176, 205 dictatorships, 29–30, 127, 173, 246 Disney, 3 DMK, 48 Dogus family, 125 dollar, 7, 13–14, 18, 32–33, 59, 67, 70, 73, 103, 131, 132, 232, 233, 234, 243 “domestic content” rules, 213 Domino’s Pizza, 53 dotcom bubble, 3, 6, 157, 164, 189, 223–24, 225, 227, 230 Dow Jones Industrial Average, 9, 47 dowries, 145 “Dr.


pages: 234 words: 63,149

Every Nation for Itself: Winners and Losers in a G-Zero World by Ian Bremmer

airport security, banking crisis, barriers to entry, Berlin Wall, blood diamond, Bretton Woods, BRICs, capital controls, clean water, creative destruction, Deng Xiaoping, Doha Development Round, energy security, European colonialism, failed state, global rebalancing, global supply chain, Global Witness, income inequality, informal economy, information security, Intergovernmental Panel on Climate Change (IPCC), Julian Assange, Kickstarter, Martin Wolf, mass immigration, Mikhail Gorbachev, military-industrial complex, mutually assured destruction, Nelson Mandela, Nixon shock, Nixon triggered the end of the Bretton Woods system, no-fly zone, nuclear winter, Parag Khanna, purchasing power parity, reserve currency, Ronald Reagan, smart grid, South China Sea, sovereign wealth fund, special economic zone, Stuxnet, trade route, uranium enrichment, Washington Consensus, WikiLeaks, Yom Kippur War

Governments will rely increasingly on state-backed companies to extend their geopolitical and economic power. Some multinational corporations will be unprepared to face state-backed competitors, and they will be slow to react when governments of both established and emerging powers use market access, currency policy, capital controls, and more subtle tools to shape the commercial landscape within their borders and across their regions. Despite the advantages provided by governments, not all state-owned companies are well designed for competition. Some of them will miss market signals, because they’re weighed down by political bureaucracy or by the operational limits that sometimes come with government backing.

., China’s Growth and Integration into the World Economy: Prospects and Challenges, Occasional Paper 232 (Washington, DC: International Monetary Fund, 2004), http://prasad.dyson.cornell.edu/doc/books/ChinasGrowthAndIntegrationWithTheWorldEconomy-ProspectsAndChallenges_IMFOP232_2004.pdf. 43. When Deng Xiaoping died in 1997, China’s foreign-exchange reserves stood just below $140 billion. By 2004, they were estimated above $650 billion. Eswar Prasad and Shang-Jin Wei, “The Chinese Approach to Capital Inflows: Patterns and Possible Explanations,” in Capital Controls and Capital Flows in Emerging Economies: Policies, Practices, Consequences, ed. Sebastian Edwards (Chicago: University of Chicago Press, 2007), http://prasad.dyson.cornell.edu/doc/PrasadWeiChinaKFLowsNBERFinal.pdf. 44. Ian Bremmer, The End of the Free Market: Who Wins the War between States and Corporations?


pages: 233 words: 64,702

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

3D printing, Airbnb, Airbus A320, Asian financial crisis, barriers to entry, bilateral investment treaty, business process, capital controls, commoditize, conceptual framework, corporate governance, creative destruction, crowdsourcing, currency manipulation / currency intervention, David Graeber, Deng Xiaoping, disruptive innovation, experimental economics, global supply chain, global value chain, Great Leap Forward, high net worth, high-speed rail, household responsibility system, industrial robot, Joseph Schumpeter, Lyft, Masayoshi Son, middle-income trap, money market fund, offshore financial centre, Pearl River Delta, reshoring, rising living standards, risk tolerance, Silicon Valley, Skype, Snapchat, SoftBank, sovereign wealth fund, special economic zone, speech recognition, Steve Jobs, thinkpad, trade route, wealth creators, working-age population

Through the 1990s and 2000s, it supported development by funding China’s build-out of essential infrastructure. Today, urbanization has taken over as the key driver of growth. The state also has no intention of surrendering control over a range of key economic levers. Although the Chinese government plans ultimately to liberalize financial markets, for now it will continue to maintain capital controls that prevent money from flowing into or out of the country in destabilizing volumes, a managed exchange rate that allows it to support export industries, and officially set interest rates that give banks the cheap money they need to make policy loans. And, as I explore further in the next chapter, it will continue to pour enormous resources into scientific and technological research.

These start-ups, while gently forcing the government’s hand, are almost certain to be allowed to continue. Thanks to its control over China’s main macroeconomic levers, the government retains the power to act whenever necessary. It can support exporters by manipulating the value of the yuan; through its capital controls, it can prevent money entering or leaving the country in destabilizing volumes; and, if necessary, it can stimulate short-term growth by making funding freely available through the state-owned banking system. Beyond this, it willingly allows private companies a largely free hand. Doing so promotes goals that the government wants to realize in the long run.


pages: 490 words: 117,629

Unconventional Success: A Fundamental Approach to Personal Investment by David F. Swensen

asset allocation, asset-backed security, Benchmark Capital, book value, buy and hold, capital controls, classic study, cognitive dissonance, corporate governance, deal flow, diversification, diversified portfolio, equity risk premium, financial engineering, fixed income, index fund, junk bonds, law of one price, Long Term Capital Management, low interest rates, market bubble, market clearing, market fundamentalism, money market fund, passive investing, Paul Samuelson, pez dispenser, price mechanism, profit maximization, profit motive, risk tolerance, risk-adjusted returns, Robert Shiller, Savings and loan crisis, shareholder value, Silicon Valley, Steve Ballmer, stocks for the long run, survivorship bias, technology bubble, the market place, transaction costs, Vanguard fund, yield curve, zero-sum game

Government policies sometimes interfere with investor interests, occasionally in dramatic fashion. In 1998, during the Asian crisis, Malaysia restricted the convertibility of the ringgit, effectively prohibiting foreign investors from repatriating funds. Because of bad behavior regarding capital controls, MSCI removed Malaysia from one of the firm’s emerging-market indices. Not until Malaysia removed capital controls in late 1999 did the country reestablish its credentials as a full-fledged member of the MSCI world. In emerging markets corporate actions resemble, at times, the Wild West. One market observer suggested that equity investors put money in Russian enterprises where management attempts grand theft and avoid commitments to companies where management engages in petty larceny.

Governments of emerging markets occasionally drive wedges between the interests of shareholders and managements. Controls on the ownership and voting rights of local shares sometimes lead to the creation of two classes of share owners, with attendant problems for the second-class foreign investor. Capital controls, although infrequently imposed, interfere with the ability of foreign investors to transfer funds freely. Government regulation in the emerging markets contains the potential to harm the interests of foreign investors. In other instances, corporate managements fail to act in shareholder interests.


pages: 708 words: 176,708

The WikiLeaks Files: The World According to US Empire by Wikileaks

affirmative action, anti-communist, banking crisis, battle of ideas, Boycotts of Israel, Bretton Woods, British Empire, capital controls, central bank independence, Chelsea Manning, colonial exploitation, colonial rule, corporate social responsibility, credit crunch, cuban missile crisis, Deng Xiaoping, drone strike, Edward Snowden, energy security, energy transition, European colonialism, eurozone crisis, experimental subject, F. W. de Klerk, facts on the ground, failed state, financial innovation, Food sovereignty, Francis Fukuyama: the end of history, full employment, future of journalism, high net worth, invisible hand, Julian Assange, Kickstarter, liberal world order, Mikhail Gorbachev, millennium bug, Mohammed Bouazizi, Monroe Doctrine, Nelson Mandela, no-fly zone, Northern Rock, nuclear ambiguity, Philip Mirowski, post-war consensus, RAND corporation, Ronald Reagan, Seymour Hersh, Silicon Valley, South China Sea, statistical model, Strategic Defense Initiative, structural adjustment programs, too big to fail, trade liberalization, trade route, UNCLOS, UNCLOS, uranium enrichment, vertical integration, Washington Consensus, WikiLeaks, zero-sum game, éminence grise

The third phase was signaled by the collapse of the Bretton Woods system amid a global economic crisis, and the American adaptation to defeat in Vietnam and a series of related crises in its rule. The outcome, following a protracted and violent process of reorganization, was a form of rule predicated on the liberalization of markets, capital controls, and regulations on finance and labor. Rather than encouraging the state-coordinated development of industry, the IMF pursued “structural adjustment,” using debt as a mechanism to incorporate Latin American states into the global economy. Market dependency would exert its own disciplinary mechanisms, as unfriendly policies could be “punished” by capital flight, or ruled out of bounds by global institutions.

It was nonetheless highly convenient, inasmuch as it allowed the Politburo to follow the Gorbachev administration in embracing privatization and pro-market policies. And in short order, since Vietnam owed over $1 billion in debt, the IMF offered its services and, of course, recommended the same policy mix as it recommends to all would-be debtors: cut subsidies, remove price controls, remove exchange and capital controls, privatize and let the market rip. The classic debt trap was initiated. The more Vietnam borrowed from the IMF, the more it needed to borrow, and its rate of indebtedness soared. The more it adopted “free market” policies, the more dependent it was on markets and the less able it was to apply controls.

This was partly because US policy-makers recognized the major lesson of the interwar period, which was that a monetary system where currencies were pegged to a single value could actually exacerbate international instability. It also constituted a recognition that, in order for these countries to develop a solid industrial base, they would need to make use of capital controls and deploy monetary policy to encourage economic growth. The millennial turn to aggressive “full dollarization”—in which the dollar replaced the local currency entirely, at the high point of neoliberal transformation—was a significant moment. It meant national governments giving up control of monetary and exchange policy—important instruments for democratic intervention in market economies—in the interests of countering inflation, which had ravaged the Ecuadoran economy in the 1990s, and maintaining stable investment conditions for finance.


pages: 457 words: 128,838

The Age of Cryptocurrency: How Bitcoin and Digital Money Are Challenging the Global Economic Order by Paul Vigna, Michael J. Casey

Airbnb, Alan Greenspan, altcoin, Apple Newton, bank run, banking crisis, bitcoin, Bitcoin Ponzi scheme, blockchain, Bretton Woods, buy and hold, California gold rush, capital controls, carbon footprint, clean water, Cody Wilson, collaborative economy, collapse of Lehman Brothers, Columbine, Credit Default Swap, cross-border payments, cryptocurrency, David Graeber, decentralized internet, disinformation, disintermediation, Dogecoin, driverless car, Edward Snowden, Elon Musk, Ethereum, ethereum blockchain, fiat currency, financial engineering, financial innovation, Firefox, Flash crash, Ford Model T, Fractional reserve banking, Glass-Steagall Act, hacker house, Hacker News, Hernando de Soto, high net worth, informal economy, intangible asset, Internet of things, inventory management, Joi Ito, Julian Assange, Kickstarter, Kuwabatake Sanjuro: assassination market, litecoin, Long Term Capital Management, Lyft, M-Pesa, Marc Andreessen, Mark Zuckerberg, McMansion, means of production, Menlo Park, mobile money, Money creation, money: store of value / unit of account / medium of exchange, Nelson Mandela, Network effects, new economy, new new economy, Nixon shock, Nixon triggered the end of the Bretton Woods system, off-the-grid, offshore financial centre, payday loans, Pearl River Delta, peer-to-peer, peer-to-peer lending, pets.com, Ponzi scheme, prediction markets, price stability, printed gun, profit motive, QR code, RAND corporation, regulatory arbitrage, rent-seeking, reserve currency, Robert Shiller, Ross Ulbricht, Satoshi Nakamoto, seigniorage, shareholder value, sharing economy, short selling, Silicon Valley, Silicon Valley startup, Skype, smart contracts, special drawing rights, Spread Networks laid a new fibre optics cable between New York and Chicago, Steve Jobs, supply-chain management, Ted Nelson, The Great Moderation, the market place, the payments system, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, tulip mania, Turing complete, Tyler Cowen, Tyler Cowen: Great Stagnation, Uber and Lyft, uber lyft, underbanked, Vitalik Buterin, WikiLeaks, Y Combinator, Y2K, zero-sum game, Zimmermann PGP

Because of this, shifting money around the region’s island nations requires constant and costly currency exchanges, which further undermines trade relationships that are already constrained because their tourism-, finance-, and commodity-heavy economies compete with rather than complement each other. To make matters worse, a number of central banks impose capital controls on their citizens. Barbadians such as Ifill, for instance, are limited in the amount of foreign currency they can buy. That Barbados, the Cayman Islands, the Bahamas, and other Caribbean nations serve as tax havens for hedge funds and other foreign financial institutions is an irony not lost on the region’s tightly controlled residents.

In almost every speech bitcoiners make about the potential for cryptocurrencies in the developing world, Argentina receives top billing. The hope is not only that bitcoin succeeds there; it’s that the South American country demonstrates how cryptocurrencies can provide an escape route for people who are trapped by capital controls into using untrusted and unwanted national currencies. BitPagos’s service is so attractive to many businessmen in Argentina because it gets them a much more favorable exchange rate. In mid-June 2014, every dollar received from credit-card purchases had to be processed through the Argentine banking system, where it would pay out 8.15 pesos, an official rate that values the Argentine currency at roughly twelve cents.

The most profound of these is what it means for the nation-state, that ultimate arbiter of power that defines the global economic and political order. Without a doubt, if a digital dollar or any other cryptocurrency were to rise to such global dominance that it poured across borders and challenged national currencies, states would see it as a threat. The greater the extent of capital controls already in existence, the greater the perceived danger to the government, which means China, India, South Korea, Taiwan, Argentina, Venezuela, and various other emerging-market countries would be among those to react most aggressively. But all nations, even those in the West with internationalized currency markets, would to some degree be unsettled by such a fluid monetary situation.


pages: 459 words: 138,689

Slowdown: The End of the Great Acceleration―and Why It’s Good for the Planet, the Economy, and Our Lives by Danny Dorling, Kirsten McClure

"World Economic Forum" Davos, Affordable Care Act / Obamacare, Anthropocene, Berlin Wall, Bernie Sanders, Boeing 747, Boris Johnson, British Empire, business cycle, capital controls, carbon tax, clean water, creative destruction, credit crunch, Donald Trump, drone strike, Elon Musk, en.wikipedia.org, Extinction Rebellion, fake news, Flynn Effect, Ford Model T, full employment, future of work, gender pay gap, global supply chain, Google Glasses, Great Leap Forward, Greta Thunberg, Henri Poincaré, illegal immigration, immigration reform, income inequality, Intergovernmental Panel on Climate Change (IPCC), Internet of things, Isaac Newton, It's morning again in America, James Dyson, Jeremy Corbyn, jimmy wales, John Harrison: Longitude, Kickstarter, low earth orbit, Mark Zuckerberg, market clearing, Martin Wolf, mass immigration, means of production, megacity, meta-analysis, military-industrial complex, mortgage debt, negative emissions, nuclear winter, ocean acidification, Overton Window, pattern recognition, Ponzi scheme, price stability, profit maximization, purchasing power parity, QWERTY keyboard, random walk, rent control, rising living standards, Robert Gordon, Robert Shiller, Ronald Reagan, School Strike for Climate, Scramble for Africa, sexual politics, Skype, Stephen Hawking, Steven Pinker, structural adjustment programs, Suez crisis 1956, the built environment, Tim Cook: Apple, time dilation, transatlantic slave trade, trickle-down economics, very high income, wealth creators, wikimedia commons, working poor

They want to see their fortune grow by at least 10 percent a year, in real terms. And they can afford “the best advice,” which is supposed to be you. In 2018, as the futility of the ever-more-desperate search for ever-greater profits became more obvious in an era of slowdown, some economists were calling for the judicious application of capital controls, limiting the money to enter or leave the country.37 Capital controls are a heresy for those who worship Profit. But knowing any of this would have been of little use to you in 1996. So there you are, sitting at your desk in America almost a quarter of a century ago. To imagine this you have to forget what we have learned most recently.

See also fertility Black Death, 147, 174 Blade Runner, 214 Blaiklock, Katherine, 281 Boltzmann, Ludwig, 32 books, 72–85; European explosion in book publishing, 72–74; importance of, 80–81; increasing literacy and production of, 77; Netherlands production and consumption, 73, 74–77, 75, 81–85, 83; and obsolescence, 77–80, 81; oldest, 65 Booth, Charles, 186 boredom, 17–18, 322–23 Brazil: car production, 115, 118; fertility rates, 225, 228; slavery, 8 Bread, 287 Brexit, 279–80 Brexit Party, 281 Bricker, Darrell, 140, 141, 296 British Empire, 145, 279–80 British Isles: emigration from, 162; population, 161–65, 164. See also England; United Kingdom Brunner, John, 314, 324 Buchanan, Emily, 163 Bush, George W., 61, 278, 279, 356n18 Canada, 177–79, 178 capital controls, 256 capitalism: Haque on, 319; as transitional/temporary, 10–11, 188, 230–32, 235–37, 283, 284, 317–18; trickle-down effect, 259, 358n44 carbon emissions, 90–119; acceleration of (1884–World War I), 94–96, 100; automobiles and, 101–2, 112–16, 118; China and, 98, 98–99; and global warming, 110, 112, 119 (see also temperature rise); Industrial Revolution and, 90–94, 100; population growth and, 102–3, 106–9, 107; postwar consumption and, 104–5; recessions and depressions and, 93–94, 99, 101, 101, 104; reduction of, 116–19, 136–37; timelines, 100, 108, 111; war and, 102–4 carbon taxes, 304 Caribbean Islands, 177–79, 178 cars.


pages: 318 words: 85,824

A Brief History of Neoliberalism by David Harvey

"World Economic Forum" Davos, affirmative action, air traffic controllers' union, Asian financial crisis, Berlin Wall, Bretton Woods, business climate, business cycle, California energy crisis, capital controls, centre right, collective bargaining, creative destruction, crony capitalism, debt deflation, declining real wages, deglobalization, deindustrialization, Deng Xiaoping, Fall of the Berlin Wall, financial deregulation, financial intermediation, financial repression, full employment, gentrification, George Gilder, Gini coefficient, global reserve currency, Great Leap Forward, illegal immigration, income inequality, informal economy, labour market flexibility, land tenure, late capitalism, Long Term Capital Management, low interest rates, low-wage service sector, manufacturing employment, market fundamentalism, mass immigration, means of production, megaproject, Mexican peso crisis / tequila crisis, military-industrial complex, Mont Pelerin Society, mortgage tax deduction, neoliberal agenda, new economy, Pearl River Delta, phenotype, Ponzi scheme, price mechanism, race to the bottom, rent-seeking, reserve currency, Ronald Reagan, Savings and loan crisis, Silicon Valley, special economic zone, structural adjustment programs, Suez crisis 1956, the built environment, The Chicago School, Tragedy of the Commons, transaction costs, union organizing, urban renewal, urban sprawl, Washington Consensus, We are all Keynesians now, Winter of Discontent

The subsequent drive towards neoliberalization after 1980 entailed little material change in their impoverished condition. In the advanced capitalist countries, redistributive politics (including some degree of political integration of working-class trade union power and support for collective bargaining), controls over the free mobility of capital (some degree of financial repression through capital controls in particular), expanded public expenditures and welfare state-building, active state interventions in the economy, and some degree of planning of development went hand in hand with relatively high rates of growth. The business cycle was successfully controlled through the application of Keynesian fiscal and monetary policies.

The evidence for this latter view is substantial: those countries that had not liberated their capital markets—Singapore, Taiwan, and China—were far less affected than those countries, such as Thailand, Indonesia, Malaysia, and the Philippines, that had. Furthermore, the one country that ignored the IMF and imposed capital controls— Malaysia—recovered faster.10 After South Korea likewise rejected IMF advice on industrial and financial restructuring it also staged a faster recovery. Why the IMF and the US Treasury continues to insist on neoliberalization is an apparent mystery. The victims increasingly propose a conspiratorial answer: The IMF first told countries in Asia to open up their markets to hot short-term capital.


Crisis and Dollarization in Ecuador: Stability, Growth, and Social Equity by Paul Ely Beckerman, Andrés Solimano

banking crisis, banks create money, barriers to entry, business cycle, capital controls, Carmen Reinhart, carried interest, central bank independence, centre right, clean water, currency peg, declining real wages, disintermediation, financial intermediation, fixed income, floating exchange rates, Future Shock, Gini coefficient, income inequality, income per capita, labor-force participation, land reform, London Interbank Offered Rate, Mexican peso crisis / tequila crisis, microcredit, Money creation, money: store of value / unit of account / medium of exchange, offshore financial centre, old-boy network, open economy, pension reform, price stability, rent-seeking, school vouchers, seigniorage, trade liberalization, women in the workforce

For three years, his government struggled in the face of inadequate legislative support and low banana export receipts to maintain a populist spending program. In June 1970 he assumed dictatorial powers, dissolving the Congress and dismissing the Supreme Court. Two months later he devalued the sucre from 18 to 25 per dollar (the rate of 18 had stood for nearly a decade), instituted capital controls, and decreed tax and tariff increases. In February 1972, however, largely to head off the election of a populist candidate for president they disliked, the military removed Velasco and assumed power. Earlier, in 1964, the government had granted prospecting and development concessions for the Amazon basin to several foreign oil companies, several of which made significant discoveries within several years.

The adoption of the dollar enabled Panama to develop a valuable and stabilizing service activity. In 1970, a new banking law established Panama as an international financial center. More than 120 banks now operate within the country. The liberalized legal structure, free entry, and the absence of capital controls enabled the banking sector to operate at a ECUADOR UNDER DOLLARIZATION: OPPORTUNITIES AND RISKS 87 Table 3.1. Panama: Selected Macroeconomic Indicators, 1970–99 Period averages 1970– 74 1975– 79 1980– 84 1985– 89 1990– 94 1995– 99 Growth rates (percent) Gross domestic product (GDP) at market prices 5.8 6.9 2.6 –1.0 6.8 3.3 Per-capita GDP 2.6 4.1 –0.3 –2.9 4.8 1.5 Consumer prices (year-average) 6.7 5.3 5.8 0.5 0.9 1.3 Per-capita U.S. dollars at prices and exchange rate of 1998 Gross domestic product (GDP) $2,382.9 $2,511.2 $2,922.0 $2,771.9 $2,916.4 $3,230.3 Nongovernment consumption $1,359.0 $1,462.2 $1,566.6 $1,546.1 $1,644.1 $1,769.0 National accounts (percentage of GDP) Gross fixed-capital formation 28.1 25.9 21.7 13.4 17.8 27.2 National saving 34.9 34.8 32.4 6.3 18.3 35.0 Domestic saving 33.2 32.2 25.7 2.9 12.8 29.2 Net imports of goods and nonfactor services (resource gap) –5.1 –6.3 –4.0 10.5 5.0 –1.9 External accounts (percentage of GDP) (1977–79) Current-account surplus –9.0 –5.0 5.3 –1.1 –8.5 Merchandise trade –20.2 –7.8 –2.8 –4.7 –10.6 Merchandise exports 17.0 51.8 47.7 72.9 69.8 Merchandise imports –37.2 –59.7 –50.5 –77.5 –80.4 Other current account 11.2 2.8 8.1 3.6 2.1 Capital-acct., net err. and omissions 9.7 3.9 –15.2 –2.9 7.8 Gross foreign-exchange reserves (mos. of imports of goods, nonfactor services) 1.1 0.6 0.4 1.0 1.3 (1975–79) Bilateral real-effective exchange rate vis à vis the U.S.


pages: 278 words: 82,069

Meltdown: How Greed and Corruption Shattered Our Financial System and How We Can Recover by Katrina Vanden Heuvel, William Greider

Alan Greenspan, Asian financial crisis, banking crisis, Bear Stearns, Bretton Woods, business cycle, buy and hold, capital controls, carried interest, central bank independence, centre right, collateralized debt obligation, conceptual framework, corporate governance, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, declining real wages, deindustrialization, Exxon Valdez, falling living standards, financial deregulation, financial innovation, Financial Instability Hypothesis, fixed income, floating exchange rates, full employment, Glass-Steagall Act, green new deal, guns versus butter model, housing crisis, Howard Zinn, Hyman Minsky, income inequality, information asymmetry, It's morning again in America, John Meriwether, junk bonds, kremlinology, Long Term Capital Management, low interest rates, margin call, market bubble, market fundamentalism, McMansion, Michael Milken, Minsky moment, money market fund, mortgage debt, Naomi Klein, new economy, Nixon triggered the end of the Bretton Woods system, offshore financial centre, payday loans, pets.com, plutocrats, Ponzi scheme, price stability, pushing on a string, race to the bottom, Ralph Nader, rent control, Robert Shiller, Ronald Reagan, Savings and loan crisis, savings glut, sovereign wealth fund, structural adjustment programs, subprime mortgage crisis, The Great Moderation, too big to fail, trade liberalization, transcontinental railway, trickle-down economics, union organizing, wage slave, Washington Consensus, women in the workforce, working poor, Y2K

View from Asia WA L D E N B E L L O September 24, 2008 Manila Many Asians absorb what is happening in Wall Street with a combination of déjà vu, skepticism and “I-told-you-so.” For many, the Wall Street crisis is a replay, though on a much larger scale, of the 1997 Asian financial crisis, which brought down the red-hot “tiger economies” of the East. The shocking absence of Wall Street regulation brings back awful memories of the elimination of capital controls by East Asian governments, which were under pressure from the International Monetary Fund and the U.S. Treasury Department. That move triggered a tsunami of speculative capital onto Asian markets that sharply receded after sky-high land and stock prices came tumbling down. Treasury Secretary Paulson’s proposed massive bailout of Wall Street’s tarnished titans reminds people here of the billions the I.M.F. hustled up after ’97 in the name of assisting them—money that was used instead to rescue foreign investors.

At home, however, there are growing worries, and consumer advocates, NGOs and academics are demanding more transparency about how much the local banking system is exposed to Wall Street’s toxic assets. In the Philippines, there are calls from civil society groups for the banning of derivatives trading, the return of capital controls and the renegotiation of the country’s massive foreign debt now that the international banks are in a weak position. There is, moreover, resignation throughout Asia about the in evitability of a deep U.S. recession and its likely massive impact on the East: the United States is China’s top export destination, while China imports raw materials and intermediate goods from Japan, Korea and Southeast Asia to shape into the products it sends to the United States.


pages: 296 words: 86,610

The Bitcoin Guidebook: How to Obtain, Invest, and Spend the World's First Decentralized Cryptocurrency by Ian Demartino

3D printing, AltaVista, altcoin, bitcoin, Bitcoin Ponzi scheme, blockchain, buy low sell high, capital controls, cloud computing, Cody Wilson, corporate governance, crowdsourcing, cryptocurrency, decentralized internet, distributed ledger, Dogecoin, Edward Snowden, Elon Musk, Ethereum, ethereum blockchain, fiat currency, Firefox, forensic accounting, global village, GnuPG, Google Earth, Haight Ashbury, initial coin offering, Jacob Appelbaum, Kevin Kelly, Kickstarter, litecoin, M-Pesa, Marc Andreessen, Marshall McLuhan, Oculus Rift, peer-to-peer, peer-to-peer lending, Ponzi scheme, prediction markets, printed gun, QR code, ransomware, Ross Ulbricht, Salesforce, Satoshi Nakamoto, self-driving car, selling pickaxes during a gold rush, Skype, smart contracts, Steven Levy, the medium is the message, underbanked, WikiLeaks, Zimmermann PGP

And this could be accomplished without having to reach the minimum purchase levels, which are typically extremely high, or, as was the case in Greece, be beholden to laws limiting what you can do with the money. It wasn’t simply that the Greek government was unconcerned about what Bitcoin would do to their capital controls; it was also that it couldn’t do much if it wanted to. With bitcoins easily transferable on cell phones, it would have taken a physical and digital embargo to prevent tech-friendly Greeks from moving their euros outside of the country in the form of bitcoins. As recently as a few years ago, precious metal investment was overwhelmingly limited to the wealthy and connected.

“Halsey Minor’s Bitreserve Is Designed To Fix Bitcoin Volatility, But It Is Doing Much More.” CoinTelegraph. November 21, 2014. Accessed June 22, 2015. http://cointelegraph.com/news/112966/halsey-minors-bitreserve-is-designed-to-fix-bitcoin-volatility-but-it-is-doing-much-more. 6 Kelly, Jemima. “Fearing Return to Drachma, Some Greeks Use Bitcoin to Dodge Capital Controls.” Reuters. July 3, 2015. Accessed January 14, 2016. http://www.reuters.com/article/us-eurozone-greece-bitcoin-idUSKCN0PD1B420150703. Section III: What Can Bitcoin Do for Me? Chapter 18: Remittance More than 215 million people around the world live outside of the countries they call home.


pages: 322 words: 84,580

The Economics of Belonging: A Radical Plan to Win Back the Left Behind and Achieve Prosperity for All by Martin Sandbu

air traffic controllers' union, Airbnb, Alan Greenspan, autonomous vehicles, balance sheet recession, bank run, banking crisis, basic income, Berlin Wall, Bernie Sanders, Big Tech, Boris Johnson, Branko Milanovic, Bretton Woods, business cycle, call centre, capital controls, carbon footprint, carbon tax, Carmen Reinhart, centre right, collective bargaining, company town, debt deflation, deindustrialization, deskilling, Diane Coyle, Donald Trump, Edward Glaeser, eurozone crisis, Fall of the Berlin Wall, financial engineering, financial intermediation, full employment, future of work, gig economy, Gini coefficient, green new deal, hiring and firing, income inequality, income per capita, industrial robot, intangible asset, job automation, John Maynard Keynes: technological unemployment, Kenneth Rogoff, knowledge economy, knowledge worker, labour market flexibility, liquidity trap, longitudinal study, low interest rates, low skilled workers, manufacturing employment, Martin Wolf, meta-analysis, mini-job, Money creation, mortgage debt, new economy, offshore financial centre, oil shock, open economy, pattern recognition, pink-collar, precariat, public intellectual, quantitative easing, race to the bottom, Richard Florida, Robert Shiller, Robert Solow, Ronald Reagan, secular stagnation, social intelligence, TaskRabbit, total factor productivity, universal basic income, very high income, winner-take-all economy, working poor

This research shows that good financial regulations improve growth, but that they do so less when the financial systems are more open. The authors suggest this is because of “greater opportunities to borrow abroad or increased scope for cross-border leakages in regulation.” 22. Eric Monnet, “Macroprudential Tools, Capital Controls, and the Trilemma: Insights from the Bretton Woods Era,” VoxEU, 13 June 2018, https://voxeu.org/article/macroprudential-tools-capital-controls-and-trilemma. 23. Hélène Rey, “International Channels of Transmission of Monetary Policy and the Mundellian Trilemma” (Mundell-Fleming Lecture, Fifteenth Jacques Polak Annual Research Conference, International Monetary Fund, Washington, DC, 13–14 November 2014), https://www.imf.org/external/np/res/seminars/2014/arc/pdf/Rey.pdf. 24.


pages: 286 words: 87,168

Less Is More: How Degrowth Will Save the World by Jason Hickel

air freight, Airbnb, Anthropocene, basic income, Bernie Sanders, Big bang: deregulation of the City of London, biodiversity loss, Boris Johnson, Bretton Woods, British Empire, capital controls, circular economy, cognitive dissonance, coronavirus, corporate governance, corporate personhood, cotton gin, COVID-19, David Graeber, decarbonisation, declining real wages, degrowth, deindustrialization, dematerialisation, disinformation, Elon Musk, energy transition, Extinction Rebellion, extractivism, Fairphone, Fellow of the Royal Society, flying shuttle, Fractional reserve banking, Francis Fukuyama: the end of history, full employment, gender pay gap, green new deal, Greta Thunberg, income inequality, Intergovernmental Panel on Climate Change (IPCC), invention of the steam engine, James Watt: steam engine, Jeff Bezos, Jevons paradox, John Maynard Keynes: Economic Possibilities for our Grandchildren, land reform, liberal capitalism, lockdown, longitudinal study, low interest rates, Mahatma Gandhi, Mark Zuckerberg, McMansion, means of production, meta-analysis, microbiome, Money creation, moral hazard, mortgage debt, Murray Bookchin, Naomi Klein, negative emissions, new economy, ocean acidification, offshore financial centre, oil shale / tar sands, opioid epidemic / opioid crisis, out of africa, passive income, planetary scale, planned obsolescence, plutocrats, Post-Keynesian economics, quantitative easing, rent control, rent-seeking, retail therapy, Ronald Reagan, Rupert Read, Scramble for Africa, secular stagnation, shareholder value, sharing economy, Simon Kuznets, structural adjustment programs, the scientific method, The Spirit Level, transatlantic slave trade, trickle-down economics, universal basic income

During the debt crisis of the 1980s, they leveraged their power as creditors and used their control over the World Bank and the International Monetary Fund (IMF) to impose ‘structural adjustment programmes’ across Latin America, Africa and parts of Asia (with the exception of China and a few others). Structural adjustment forcibly liberalised the economies of the global South, tearing down protective tariffs and capital controls, cutting wages and environmental laws, slashing social spending and privatising public goods – all to break open profitable new investments for foreign capital and multinational companies.7 Neoliberal globalisation fundamentally reshaped the economies of the South. Governments were forced to abandon their focus on human welfare and economic independence and focus instead on creating the best possible conditions for capital accumulation.

When economies slow down, governments can’t pay their debts, triggering a crisis that can quickly spiral out of control: bonds lose their value, and in order to sell them governments have to promise higher interest rates, putting them yet further into debt. The only way to get out of such a crisis is to start slashing any ‘barriers’ to growth – labour laws, environmental protections, capital controls, anything to give investors the ‘confidence’ they need to keep buying bonds. Just like companies, governments face a stark choice: grow the economy or collapse. On top of all this, governments pursue growth because GDP is the currency of international political power. This is clearest in military terms: the bigger your GDP, the more tanks, missiles, aircraft carriers and nuclear weapons you can buy.


pages: 257 words: 80,698

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

Alan Greenspan, Bellingcat, Big bang: deregulation of the City of London, Big Tech, bitcoin, Black Lives Matter, blockchain, Boris Johnson, Bretton Woods, Brexit referendum, British Empire, capital controls, coronavirus, COVID-19, crowdsourcing, cryptocurrency, cuban missile crisis, Downton Abbey, Etonian, financial deregulation, financial innovation, full employment, Global Witness, John Bercow, Julian Assange, light touch regulation, lockdown, Nixon triggered the end of the Bretton Woods system, offshore financial centre, race to the bottom, rent-seeking, Ronald Reagan, Shoshana Zuboff, Silicon Valley, Suez canal 1869, Suez crisis 1956, surveillance capitalism, the High Line, WikiLeaks

Yes, if you stepped back it was theoretically good, and the democratic argument for it was solid, but what if one of your companies wanted to operate in more than one country? All those regulations stopped a multinational corporation moving money around, and that was expensive, which limited its profits. British officials approved of the democratic case for capital controls, but they wanted Shell Oil to do well too, and juggling those two priorities was hard. The same went for American officials. They might have wanted all dollar transactions to stay in New York, but it was also quite useful for US corporations to have a place to raise funds when operating overseas that was not as restrictive as the domestic market.

And the second, which interlocks elegantly with the first, is that there is no point refraining from bad behaviour until everyone else agrees to do so, because that would achieve nothing. If I don’t steal your money, somebody else will; and there’s no point in me stopping until everyone else does too. Together these two arguments spelled doom for the Bretton Woods system of capital controls. Five months later, President Richard Nixon, infuriated by his inability to control inflation by limiting the amount of currency in circulation, abandoned the US dollar’s peg to gold. From then on, the dollar would be worth whatever someone would pay for it. All dollars became Eurodollars, and the bankers got their solution to the trilemma.


pages: 82 words: 24,150

The Corona Crash: How the Pandemic Will Change Capitalism by Grace Blakeley

Anthropocene, asset-backed security, basic income, Big Tech, bond market vigilante , Bretton Woods, business cycle, capital controls, carbon tax, central bank independence, coronavirus, corporate governance, COVID-19, creative destruction, credit crunch, crony capitalism, debt deflation, decarbonisation, degrowth, deindustrialization, don't be evil, financial deregulation, Francis Fukuyama: the end of history, full employment, gig economy, global pandemic, global value chain, green new deal, Greenspan put, income inequality, informal economy, inverted yield curve, invisible hand, Jeff Bezos, liberal capitalism, light touch regulation, lockdown, low interest rates, Martin Wolf, Modern Monetary Theory, moral hazard, move fast and break things, Network effects, North Sea oil, Northern Rock, offshore financial centre, pensions crisis, Philip Mirowski, post-war consensus, price mechanism, quantitative easing, regulatory arbitrage, rent control, reshoring, Rishi Sunak, savings glut, secular stagnation, shareholder value, social distancing, structural adjustment programs, too big to fail, universal basic income, unorthodox policies, Washington Consensus, yield curve

The one it replaced has variously been called the post-war, social democratic, or Keynesian consensus.23 Under this growth model – underpinned by an increase in the power of labour relative to capital that emerged from the Second World War and the institutionalisation of this political settlement both domestically through the rise of state planning and internationally with the creation of the Bretton Woods institutions – the state committed itself to promoting full employment through public spending. This commitment bolstered the power of organised labour, which developed a corporatist relationship with the nation-state. The system of capital controls and exchange rate pegging agreed upon at the 1944 Bretton Woods conference supported the development of social democracy in the West and facilitated the emergence of a unique period of high growth, low unemployment and falling inequality. Yet almost as soon as it had been implemented, the contradictions of the post-war consensus began to emerge.


pages: 353 words: 148,895

Triumph of the Optimists: 101 Years of Global Investment Returns by Elroy Dimson, Paul Marsh, Mike Staunton

asset allocation, banking crisis, Berlin Wall, Black Monday: stock market crash in 1987, book value, Bretton Woods, British Empire, buy and hold, capital asset pricing model, capital controls, central bank independence, classic study, colonial rule, corporate governance, correlation coefficient, cuban missile crisis, currency risk, discounted cash flows, diversification, diversified portfolio, dividend-yielding stocks, equity premium, equity risk premium, Eugene Fama: efficient market hypothesis, European colonialism, fixed income, floating exchange rates, German hyperinflation, index fund, information asymmetry, joint-stock company, junk bonds, negative equity, new economy, oil shock, passive investing, purchasing power parity, random walk, risk free rate, risk tolerance, risk/return, selection bias, shareholder value, Sharpe ratio, stocks for the long run, survivorship bias, Tax Reform Act of 1986, technology bubble, transaction costs, yield curve

The First World War had a major dampening effect on international investment. Capital controls proliferated, and then in the 1920s, German hyperinflation and the Wall Street Crash crushed confidence. Foreign investment collapsed after 1929, and capital controls and protectionism characterized the period until the Second World War. After the war, the tide turned again, but restrictions continued for many years. The United States imposed interest equalization tax from 1963–74; the Japanese financial markets were effectively closed to foreigners until the 1980s, and the United Kingdom, Germany, and France all had periods of capital control, some continuing until the 1980s.


pages: 632 words: 159,454

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

accounting loophole / creative accounting, Alan Greenspan, anti-communist, Asian financial crisis, asset-backed security, Atahualpa, balance sheet recession, bank run, banking crisis, Bear Stearns, Big bang: deregulation of the City of London, Bretton Woods, British Empire, business cycle, California gold rush, capital controls, Carmen Reinhart, central bank independence, centre right, collapse of Lehman Brothers, collateralized debt obligation, credit crunch, currency manipulation / currency intervention, Deng Xiaoping, discovery of the americas, Etonian, eurozone crisis, fiat currency, financial engineering, financial innovation, fixed income, floating exchange rates, foreign exchange controls, Francisco Pizarro, full employment, German hyperinflation, Glass-Steagall Act, guns versus butter model, hiring and firing, income inequality, invisible hand, Isaac Newton, it's over 9,000, John Maynard Keynes: Economic Possibilities for our Grandchildren, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, Kenneth Rogoff, labour market flexibility, land bank, liberal capitalism, low interest rates, market bubble, money: store of value / unit of account / medium of exchange, moral hazard, new economy, Nixon triggered the end of the Bretton Woods system, oil shock, plutocrats, Ponzi scheme, price mechanism, quantitative easing, rolodex, Ronald Reagan, South Sea Bubble, subprime mortgage crisis, Suez canal 1869, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, the market place, The Wealth of Nations by Adam Smith, too big to fail, War on Poverty, Yom Kippur War

Firstly, instead of each currency being directly convertible to gold, currencies would be pegged to the dollar, which remained convertible to gold, at the rate established by President Roosevelt in 1934 of $35 an ounce. This meant that the exchange rates of each currency were pegged indirectly to gold. The peg to the dollar was adjustable when what the negotiators at Bretton Woods called ‘fundamental disequilibrium’ took place. Secondly, capital controls were allowed to limit movements of international capital. The third new element was a new institution, the International Monetary Fund, which was designed, in the first instance, to stabilize the exchange rates set up by Bretton Woods.7 The World Bank would be the other institution associated with Bretton Woods and it would be largely a development bank.

By contrast, he had noticed that the ‘atmosphere in the House of Lords yesterday [when he made his speech in support of the Bretton Woods proposals] was quite free’ from the rather antagonistic mood of the House of Commons.19 To modern analysts, however, Bretton Woods was a lot more similar to the pre-1914 gold standard than it would be to the world of freely floating exchange rates of the late twentieth century. Like the gold standard, the Bretton Woods system proposed a regime of fixed exchange rates, though it did allow for some devaluation, if ‘fundamental disequilibrium’ occurred. In many ways, Bretton Woods was even more rigid than the old gold standard, as it required capital controls, whereas the old system had not. Even more restrictive was the prohibition on exchanging currencies directly for gold. Under the gold standard anyone with a banknote could go to the central bank and exchange it for gold. This facility was precisely what was referred to when the Bank of England suspended ‘gold convertibility’ in 1797 and again in 1914.

As late as December 2009, the Nobel Prize-winning economist Paul Krugman, a leftist commentator, asserted in his New York Times blog that ‘we know that China’s pursuing a mercantilist policy’. Having made his accusation, Krugman then explained what this policy entailed. The Chinese, he maintained, were ‘keeping the renminbi [the Chinese currency] weak through a combination of capital controls and intervention leading to trade surpluses’.6 He presented as accurately as Heckscher had done, almost eighty years previously, the essential logic of mercantilism, spelling out the link between keeping a currency weak and promoting exports. By keeping your currency undervalued against, for example, the US dollar, you would make your exports cheaper for Americans to buy.


pages: 543 words: 147,357

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

Abraham Maslow, Alan Greenspan, Andrei Shleifer, asset-backed security, bank run, banking crisis, Bear Stearns, behavioural economics, Benoit Mandelbrot, Berlin Wall, Bernie Madoff, Big bang: deregulation of the City of London, Blythe Masters, Boris Johnson, bread and circuses, Bretton Woods, business cycle, capital controls, carbon footprint, Carmen Reinhart, Cass Sunstein, centre right, choice architecture, cloud computing, collective bargaining, conceptual framework, Corn Laws, Cornelius Vanderbilt, corporate governance, creative destruction, credit crunch, Credit Default Swap, debt deflation, decarbonisation, Deng Xiaoping, discovery of DNA, discovery of the americas, discrete time, disinformation, diversification, double helix, Edward Glaeser, financial deregulation, financial engineering, financial innovation, financial intermediation, first-past-the-post, floating exchange rates, Francis Fukuyama: the end of history, Frank Levy and Richard Murnane: The New Division of Labor, full employment, general purpose technology, George Akerlof, Gini coefficient, Glass-Steagall Act, global supply chain, Growth in a Time of Debt, Hyman Minsky, I think there is a world market for maybe five computers, income inequality, inflation targeting, interest rate swap, invisible hand, Isaac Newton, James Dyson, James Watt: steam engine, Japanese asset price bubble, joint-stock company, Joseph Schumpeter, Kenneth Rogoff, knowledge economy, knowledge worker, labour market flexibility, language acquisition, Large Hadron Collider, liberal capitalism, light touch regulation, Long Term Capital Management, long term incentive plan, Louis Pasteur, low cost airline, low interest rates, low-wage service sector, mandelbrot fractal, margin call, market fundamentalism, Martin Wolf, mass immigration, means of production, meritocracy, Mikhail Gorbachev, millennium bug, Money creation, money market fund, moral hazard, moral panic, mortgage debt, Myron Scholes, Neil Kinnock, new economy, Northern Rock, offshore financial centre, open economy, plutocrats, power law, price discrimination, private sector deleveraging, proprietary trading, purchasing power parity, quantitative easing, race to the bottom, railway mania, random walk, rent-seeking, reserve currency, Richard Thaler, Right to Buy, rising living standards, Robert Shiller, Ronald Reagan, Rory Sutherland, Satyajit Das, Savings and loan crisis, shareholder value, short selling, Silicon Valley, Skype, South Sea Bubble, Steve Jobs, systems thinking, tail risk, The Market for Lemons, the market place, The Myth of the Rational Market, the payments system, the scientific method, The Wealth of Nations by Adam Smith, three-masted sailing ship, too big to fail, unpaid internship, value at risk, Vilfredo Pareto, Washington Consensus, wealth creators, work culture , working poor, world market for maybe five computers, zero-sum game, éminence grise

Margaret Thatcher successfully attacked the unions’ privileged position, but then allowed the financiers to take their place – although the latter’s colonisation of the state was more subtle. When Thatcher took office in 1979, bank assets were one and a half times Britain’s annual output; over the subsequent thirty years that proportion more than trebled. British bankers took the opportunity afforded by the abolition of exchange and capital controls, globalisation, Britain’s historic strength in financial services and the prevailing free-market ideology to build a position of influence in the British state that was much more formidable than any that had been enjoyed by the trade unions. 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.

The consensus was that the OPEC-inspired quadrupling of oil prices and the aggressive trade unions were to blame; the crash had little to do with those nice middle-class professionals in the City. When the Tories were re-elected in 1979, they immediately initiated more deregulation – lifting exchange and capital controls, and scrapping the requirement that banks should hold a proportion of their liabilities in cash at the Bank of England (so-called reserve requirements). The deep 1979–81 recession mitigated the consequences, so it would be later in the decade before a first-class property boom would develop for the same reasons as the previous one.

., 29–30, 65–6, 71, 253 apprenticeships, 10, 295 Arculus, Sir David, 180 Argentina, 368 Aristotle, 39, 274 ‘arms race’ effects, 105 Arup Group, 66, 67, 93 Asda, 93 Ashcroft, Lord, 344 Ashdown, Paddy, 141 Asian Tiger exports, 149, 208, 355 AT & T, 133–4 Atari, 30 BAA, 8, 257–8 baby boomer generation, 34, 372–3 ‘Baby P’ case, 10, 325–6 Bagehot, Walter, 156–7 Bailey, Bob, 16, 25 Baker, Kenneth, 276 Baldacci, Emanuele, 367 Baldwin, Stanley, 315 Balls, Ed, 138, 147, 338 Bank of America, 152, 158, 175, 192 Bank of England, 4, 7–8, 129, 148, 180, 208, 250, 339, 359; lender-of-last-resort function, 157, 158, 160; Monetary Policy Committee, 185, 186, 264; reserve requirements scrapped (1979), 161, 208 Bank of International Settlements (BIS), 169, 182 Bank of Scotland, 186, 251 bankers, 4–5, 25–6, 62, 63–4, 180, 188; errors that caused the crash, 188–96, 197–204; gambling culture, 7, 8; pay see pay of executives and bankers Bankers Trust (New York), 140, 167 banking and banks: see also under entries for individual organisations; bail-out of, 3, 7–8, 19, 24, 138, 152–3, 172, 175, 176, 181, 204–5, 210, 389, 392; balance sheets, 7, 160, 164, 165, 191, 208, 210; bank runs, 9, 156–7, 158, 175–6, 202; borrow short and lend long principle, 154, 155–6, 157, 158–9; capital ratios, 151, 158, 162–3, 169, 170, 207, 208; credit-rating agencies and, 151, 196, 207; deposit insurance and, 158, 160; diversification, 154–5, 157, 165, 199, 354; fairness/desert and, 64, 206–7; interbank money markets, 164, 170, 176, 187–8, 202, 204; investment banks, 6, 28, 42, 101, 103, 150–1, 158, 165, 166, 170, 172–6, 195–6, 207; maturity transformation, 155–6, 157, 158–9; need for network of specialist banks, 251–2, 265, 371; nineteenth-century collapses, 156–7; post-crunch deleverage pressures, 359; principles and strategies, 154–6, 157; regulation of see regulation; relationship finance, 244, 251–2, 256–7; remoteness of management, 173–4; required reforms of, 205–10, 251–2, 371; short-term structure of lending, 33; banking and banks – continued socially vital role of, 155, 157; subsidiaries and special purpose vehicles, 181; unproductive entrepreneurship and, 28, 101, 103; vast assets/loans/profits, 32, 138, 147, 170, 172, 201; zero loyalty of front-line staff, 174 Barclay brothers, 327 Barclays, 24, 176, 177–8, 181, 215, 296, 363 Barker, Kate, 185 Basel system, 158, 160, 163, 169, 170–1, 196, 385 Baumol, William, 101, 111, 116, 253, 256 Bayerische Landesbank, 196 Bear Stearns, 150, 152, 158–9, 166, 173–4, 187 Bebchuk, Lucian, 198 Becht, Bart, 82–3 Beckwith, John Lionel, 179 behavioural psychology, 44, 47–50, 59–61 Bekar, Clifford, 108, 263 Bell, Alexander Graham, 221 Ben & Jerry’s, 266 Benz, Matthias, 86 Berlusconi, Silvio, 317, 328 Bettelheim, Bruno, 86 Better Government Initiative, 313, 336–7 Better Regulation Task Force, 180 Bhagwati, Jagwad, 163 Big Bang (1986), 90, 162 bin Mahfouz, Khalid Salim, 333 biotechnology, 109, 229, 240, 263, 268 Birt, John, 324 Bischoff Inquiry, 178 BISTRO (broad index secured trust offering), 169, 170, 196 Black, Fisher, 191 Blair, Tony, 5, 17, 138, 141–3, 144, 148–9, 276–7, 313, 328, 342; centralisation of power, 14–15, 313, 334, 337, 341; Iraq War and, 14, 36, 144; Rupert Murdoch and, 318; neo-conservative economics and, 388; ‘third-way’ as enthronement of resignation, 389–90; welfare reforms, 81 Blanchflower, Danny, 264–5 Blanden, Jo, 283–4 Blankfein, Lloyd, 42, 63, 168 BMW, 91 Boeing, 136, 256 Bologna University, 261 Born, Brooksley, 182–3 Bowen, Jeremy, 323 Boyle, Susan, 314 BP, 216–17, 392 Branson, Richard, 30 Brazil, 354–5, 385 Bretton Woods system, 159 Brinkley, Ian, 233 Briscoe, Simon, 294 Bristol University, 263 British Airways (BA), 30, 91 British Broadcasting Company (BBC), 321, 322, 323, 329, 330–1, 350, 389 British National Party (BNP), 16, 24–5, 82 Britishness, 15–16, 124, 392–3, 395 Brompton folding bicycle, 103, 105 Brooks, Clem, 281, 282 Brown, Gordon, 5, 12, 141, 178, 302, 314, 328; centralisation of power, 14, 334, 337, 341; as Chancellor, 138, 143, 145–8, 215, 245; deal with Blair (1994), 148; Gillian Duffy blunder by, 394; general election (2010) and, 20, 378, 394; neo-conservative economics and, 144–8, 388; as visionless, 391; Where There is Greed: Margaret Thatcher and the Betrayal of Britain’s Future (1989), 144 Browne, John, 216 Brunel, Isambard Kingdom, 126 Buffett, Warren, 116, 173, 222 Building Schools for the Future programme, 371 building societies, demutualisation of, 156, 186 Buiter, Wilhelm, 172 Burrows, Paul, 59 Buscombe, Baroness, 332 Bush, George W., 17, 36, 135, 177 Cabinet Office, 218–19, 336, 337 Cable, Vincent, 220 Cambridge University, 9, 363 Cameron, David, 20, 179, 233–4, 235, 318, 338, 342; ‘Big Society’ policy, 19–20, 234, 271, 280 Campbell, Alastair, 141, 142, 224, 312 Canada, 121, 354, 358–9, 383 capital controls, abolition of, 32, 161 capitalism: see also entrepreneurs; innovation; amorality of, 16–19; ‘arms race’ effects, 105; boom and bust cycle, 181–7, 392; deregulation (from 1970s), 159–63, 388; fairness and, ix, x, 23–7, 41, 106, 122–3, 206–7, 210, 249, 385, 386, 394; as immutable force of nature, ix, 23, 40–2; incumbent firms, 29–30, 31, 105, 106, 110, 111–12, 253–5, 257, 297; interconnectedness of markets, 200–2, 204; knowledge-entrepreneurship dynamic, 27–8, 31, 103, 110–11, 112–13; liquidity as totemic, 199, 200, 202, 240, 243; need for ‘circuit breakers’, 197, 199, 202, 203; network theory and, 199–204, 206; required reforms of, 205–9, 215–16; stakeholder, x, 148–9; undue influence of, 32–3 Carlaw, Kenneth, 108, 263 Carnegie, Andrew, 195, 303 cars, motor, 91, 108, 109, 134, 269 Castells, Manuel, 317 Cayne, Jimmy, 173–4 CCTV cameras, 10 celebrity culture, 282, 314 central banks, 154, 157, 158, 160, 182, 185, 187, 208; see also Bank of England; Federal Reserve, 169–70, 176, 177, 183 Cerberus Capital Management, 177 Cervantes, Miguel de, 274 Channel 4, 330, 350 Charles I, King of England, 124–5 Charter One Financial, 150 chavs, mockery of, 25, 83, 272, 286–8 child poverty, 12, 21, 74–5, 83, 278, 279, 288–90, 291 China, x, 101, 112, 140, 144, 160, 226, 230, 354–5, 385; consumption levels, 375–6, 379, 380, 381; economic conflict with USA, 376–7, 378–80, 381, 382, 383; export led growth, 36, 169, 208, 226, 355–6, 375–7, 379–81, 382–3; rigged exchange rates, 36, 169, 355, 377, 378–9; surpluses of capital and, 149, 154, 169, 171, 208, 226, 375; unfairness of world system and, 383, 385 Christianity, 53, 54, 352, 353 Church of England, 128 Churchill, Winston, 138, 273, 313 Churchill Insurance, 150 Cisco, 253 Citigroup, 152, 158, 172, 177, 184, 202, 203, 242, 247 city academies, 278, 307 City of London, 34, 137, 138, 178–9, 252, 359; as incumbent elite, 14, 26, 31, 32–3, 210, 249, 355; in late nineteenth-century, 128–30; light-touch regulation of, 5, 32, 138, 145, 146–7, 151, 162, 187, 198–9; New Labour and, x–xi, 5, 19, 22, 142, 144–5, 355; remuneration levels see pay of executives and bankers civic engagement, 86, 313 civil service, 13, 221, 273, 312, 343 Clasper, Mike, 178 Clayton Act (USA, 1914), 133 Clegg, Nick, 22, 218, 318, 327–8, 342, 391 Clifton, Pete, 321 Clinton, Bill, 140, 177, 183 coalition government (from May 2010), 14, 20, 22, 37, 307, 311, 343, 346, 390–2; abolition of child trust fund, 302; capital spending cuts, 370–1; deficit reduction programme, xi, 19, 34, 214, 227, 357, 360–1, 364, 369–71, 373, 390–2; emergency budget (June 2010), 369–70; market fundamentalism and, 370; political reform commitment, 35, 341, 343–4, 346, 350, 390, 391; proposed financial reforms, 208, 209, 245, 252, 371; repudiation of Keynesian economics, xi, 390–1 Cohan, William, 158–9 Cohen, Ronald, 12, 245 collapse/crash of financial system, x, xi, 4, 9, 41, 144, 146, 152–4, 158–9, 168; costs of, 7, 19, 138, 152–3, 172, 214–15; errors responsible for, 136, 187–96, 197–204; global interconnectedness, 375, 382–3; lessening of internationalism following, 376–83; need to learn from/understand, 36–7; predictions/warnings of, 148, 153, 180, 182–5; recommended policy responses, 215–16; results of previous credit crunches, 358, 359–60, 361–2 collateralised debt obligations (CDOs), 155, 167–8, 174 colonialism, 109, 124 Commodity Future Trading Commission, 182–3 communism, collapse of in Eastern Europe, 16, 19, 135, 140, 163 competition, 29, 30, 33, 51, 156, 185, 186, 207–8, 251; see also ‘open-access societies’; City of London and, 160, 178, 179, 198–9; deregulated banking and, 160, 161, 163, 164, 178, 179, 181; European Union and, 251, 258, 259; fairness and, 89–90, 99, 272; incumbent elites/oligarchs and, 104, 114, 129–30, 131–4, 257; innovation and, 40, 114, 257–60; national authorities/regimes, 201–2, 257–60, 316, 318; state facilitation of, 31 Competition Commission, 257–8 computer games, 233 Confederation of British Industry (CBI), 4, 6–7 Conservative Party, xi, 5, 11, 14, 97–8, 220, 343, 378; broken Britain claims, 16, 227, 271; budget deficit and, 19, 224, 357, 360–1, 368, 379; City/private sector funding of, 179, 257, 344; decline of class-based politics, 341; deregulation and, 32, 160, 161; fairness and, 83, 302, 374, 390; general election (1992) and, 140–1; general election (2010) and, 20, 97, 227, 234, 271, 357, 374, 379, 390; Conservative Party – continued government policies (1979-97), 32, 81, 275–6, 290; inheritance/wealth taxes and, 74, 302–3; market fundamentalism and, 5, 17, 138, 147, 160, 161; poverty and, 21, 279; reduced/small state policy, 20, 22, 233–4, 235 construction industry, 5, 33, 268 consumer goods, types of, 266–7 Continental Illinois collapse, 152, 162 Convention on Modern Liberty, 340 Cook, Robin, 142 Cootner, Paul, 194–5 Copenhagen climate change talks (2009), 226, 231, 385 Corporate Leadership Council, US, 93 Corzine, Jon, 177 county markets, pre-twentieth-century, 90 Coutts, Ken, 363 Cowell, Simon, 314, 315 ‘creative destruction’ process, 111, 112, 134 creative industries, 11, 71, 355 credit cards, 64, 354 credit crunch: see collapse/crash of financial system credit default swaps, 151, 152, 166–8, 170, 171, 175, 176, 191, 203, 207 Crédit Lyonnais collapse, 152 credit-rating agencies, 151, 165, 175, 196, 197, 248, 269, 362, 388; funding of, 151, 196, 207 criminal activity/allegations, 7, 101, 103, 104–5, 138, 167–8 Crosby, James, 178 Cuba, 61 culture, British, 12, 187, 282, 314 Dacre, Paul, 324, 326, 329 Daily Mail, 218, 286, 288, 315, 324, 325–7, 339, 342 Daily Telegraph, 288, 317, 319, 327 Darling, Alistair, 149, 204, 252 Darwin, Charles, 31 Data Monitor, 186 Davies, Howard, 198 Davies, Nick, Flat Earth News, 319, 321, 323–4, 326, 331–2 de Gaulle, Charles, 65 debt, 33, 155, 209, 351–63; corporate/commercial, 8, 29, 181, 245, 248, 352, 354, 359, 363, 374; moral attitudes towards, 351–4, 357, 360–1; necessity of, 155, 351, 353, 354; private, 5, 186, 187, 210, 226, 279–80, 354–7, 359, 363, 373; public, 9, 34, 164, 166, 167, 182, 203, 214, 224–6, 356–7, 362–3, 375, 388, 393; sustainable level of, 356–7, 368–9 Defence Advanced Research Projects Agency (DARPA), 265 defence and armed forces, 34, 372 deficit, public, 4, 34, 213, 224–6, 335, 364–74; coalition’s reduction programme, xi, 19, 34, 214, 227, 357, 360–1, 364, 369–71, 373, 390–2, 393; need for fiscal policy, 224–5, 226, 357–8, 364, 365–9, 370, 374; speed of reduction of, 213, 224–5, 360–1, 368, 371 Delingpole, James, 287 Delong, Brad, 27, 106 democracy, 13–15, 235, 310–16, 333–48; centralisation of power and, 14–15, 35, 217, 313, 334, 337, 342; fair process and, 86, 89, 96–9; incumbent elites and, 35, 99; industrial revolution and, 128; media undermining of, 315–16, 317–18, 321–9, 333, 350; ‘open-access societies’ and, 136, 314 Democratic Party, US, 18, 140, 183, 379 Demos, 289 Deng Xiao Ping, 140 Denham, John, 21 deprivation and disadvantage, 10, 34, 288–93, 307–8, 393; low-earning households, 11–12, 13, 291, 361; weight of babies and, 13; young children and, 74–5, 83, 288–90 derivatives, 140, 145, 150–1, 164–8, 171, 175, 188, 207, 209; City of London and, 32, 137, 150–1, 157, 199; mathematical models (‘quants’) and, 188, 191; regulation and, 183, 197–8, 199 desert, due, concept of, 4, 24, 38–43, 45–7, 50–63, 64–8, 73–7, 80–2, 223, 395; see also effort, discretionary; proportionality; big finance and, 40–2, 82, 167, 174, 176, 210; debt and, 351–2; diplomacy/international relations and, 385–6; Enlightenment notions of, 53–6, 58–9, 112; luck and, 70, 73–7, 273; poverty relief systems and, 80–2, 277–8; productive entrepreneurship and, 102–3, 105–6, 112, 222, 392–3; taxation and, 40, 220, 266 Deutsche Bank, 170 developing countries, 71–2, 160, 354–5, 375, 376, 385 Diamond, Bob, 24 Dickens, Charles, 353 digitalisation, 34, 231, 320, 349, 350 Doepke, Matthias, 115–16 dot.com bubble, 9, 193 Drugs Advisory Panel, 11 Duffy, Gillian, 394 Durham University, 263 Dworkin, Ronald, 70 Dyson, James, 28, 33 East India Company, 130 Easyjet, 28, 233 eBay, 136 economic theory, 43–4, 188–9, 366; see also Keynesian economics; market fundamentalism economies of scale, 130–1, 254–5, 258 The Economist, 326, 330, 349 economy, British: see also capitalism; financial system, British; annual consumption levels, 375; balance of payments, 363–4; as ‘big firm’ economy, 254; change in landscape of trading partners, 230–1; coalition capital spending cuts, 370–1; collapse of tax base, 224, 368; cumulative loss of output caused by crash, 138, 153, 172, 214–15; desired level of state involvement, 234–5; domination of market fundamentalism, 16–17; economic boom, 3–4, 5–6, 12, 143, 173, 181–7, 244–5; fall in volatility, 365; fiscal deficit, 368; fiscal policy, 208, 224–5, 226, 357–8, 364–9, 370, 374; growth and, 9–10, 214–15, 218–19, 224, 359, 363; inefficient public spending, 335; investment in ‘intangibles’, 232–3; in late nineteenth-century, 128–30; ‘leading-edge’ sectors, 218–19; need for engaged long term ownership, 240–4, 249–51; as non-saver, 36, 354; potential new markets/opportunities, 231–3; public-private sector interdependence and, 219–22, 229–30, 261, 265–6, 391, 392; required reforms of, 20, 239–44, 249–52, 264–6, 371–4 see also national ecosystem of innovation; ‘specialising sectors’, 219; urgent need for reform, 36–7; volatility of, 297–8; vulnerability of after credit crunch, 358–64 economy, world: acute shortfall of demand, 375–6; Asian and/or OPEC capital surpluses and, 149, 153–4, 169, 171, 208, 226, 354, 375; conflicts of interest and, 137, 138; deregulation (from 1970s), 159–63; emerging powers’ attitudes to, 226; entrenched elites and, 137–8, 210; fall in volatility, 365; international institutions as unfair, 383, 385; London/New York axis, 149, 150–1, 157–8, 160, 187, 202; need for international cooperation, 357–8, 379–80, 381–3, 384, 385–6; post-crunch deleverage pressures, 359–60, 374–5; protectionism dangers, 36, 358, 376–7, 378, 379, 382, 386; savers/non-savers imbalance, 36, 169, 208, 222, 355, 356, 375–6, 378–83; shift of wealth from West to East, 36, 383–4; sovereign debt crises, 167, 203, 214; unheeded warnings, 182–5; wrecking of European ERM, 140, 144 Edinburgh University, 145 education, 10, 20–1, 128, 131, 272–4, 276, 278, 292–5, 304–8, 343; Building Schools for the Future programme, 371; cognitive and mental skills, 288–90, 304–6; private, 13, 114, 264–5, 272–3, 276, 283–4, 293–5, 304, 306 effort, discretionary, 50, 53, 54–5, 58–60, 80, 90–1, 114, 134; see also desert, due, concept of; fair process and, 91–4; indispensability and, 65–7; innovation and invention, 62, 65, 102–3, 105–6, 112, 117, 131, 223, 262–3, 392–3; luck and, 26–7, 65, 67, 70, 71, 73–4, 75–7; productive/unproductive, 43, 46–7, 51–2, 62, 64–5, 102–3, 392–3; proportionate reward for, 26, 39–40, 44, 47, 61, 74, 76–7, 84, 122, 272, 273, 2 84 egalitarianism, 27, 53–4, 55–6, 61, 75, 78–80, 144, 341, 343; Enlightenment equal worth concept, 53, 55, 59–60 Ehrenfeld, Rachel, 333 Eisman, Steve, 207 electoral politics: see also general election (6 May 2010); general elections, 97, 138, 277, 315; fair process and, 96–9; franchise, 128; general election (1992), x, 138, 140–1, 144, 148, 277; general election (1997), x, 138, 141 electricity, 134, 228, 256 electronic trading, 105 elites, incumbent, 23, 31–3, 99, 131; City of London, 14, 26, 31, 32–3, 210, 249, 355; competition and, 104, 113, 114, 129–30, 131–4, 257; democracy and, 35, 99; Enlightenment and, 122; history of (from 1880s), 131–4; history of in Britain (to 1900), 124–30; innovation and, 29–30, 110, 111–12, 113, 114, 115, 116; modern big finance and, 135, 137–8, 180, 210, 387–9; in ‘natural states’, 111, 113, 114–15, 116, 123–4, 127; New Labour’s failure to challenge, x–xi, 14, 22, 388, 389–90; world economy and, 137–8, 210 EMI, 28, 247, 248 employment and unemployment, 6, 75, 291–3, 295, 300, 373, 393; employment insurance concept, 298–9, 301, 374; lifelong learning schemes, 300, 301; lifelong savings plans, 300; unemployment benefit, 81, 281 Engels, Friedrich, 121–2 English language as lingua franca, 124 Enlightenment, European, 22, 30–1, 146, 261, 314–15; economics and, 104, 108–9, 116–17, 121–3; notions of fairness/desert, 53–6, 58–9, 112, 122–3, 394; science and technology and, 31, 108–9, 112–13, 116–17, 121, 126–7 Enron affair, 147 entrepreneurs: see also innovation; productive entrepreneurship; capitalist knowledge dynamic, 27–8, 31, 110–11, 112–13; challenges of the status quo, 29–30; Conservative reforms (1979-97) and, 275; private capital and, 241; public-private sector interdependence and, 219–22, 229–30, 261, 265–6, 391, 392; rent-seeking and, 61–2, 63, 78, 84, 101, 105, 112, 113–14, 116, 129, 135, 180; unproductive, 28–9, 33, 61–2, 63, 78, 84, 101–2, 103–5, 180 environmental issues, 35–6, 71–2, 102, 226, 228, 231, 236, 385, 390, 394; due desert and, 68; German Greens and, 269 Erie Railroad Company, 133 Essex County Council, 325, 332 European Commission, 298 European Exchange Rate Mechanism (ERM), 140, 144, 166 European Union (EU), 11, 82, 179, 379–80, 383–4, 385; British media and, 15, 328, 378; Competition Commissioner, 251, 258, 259; scepticism towards, 15, 36, 328, 377, 378, 386 eurozone, 377 Fabian Society, 302–3 factory system, 126 fairness: see also desert, due, concept of; proportionality; abuse/playing of system and, 24–5, 27; asset fairness proposals, 301–3, 304; behavioural psychology and, 44, 47–50, 59–61; Blair’s conservative view of, 143; Britishness and, 15–16, 392–3, 395; capitalism and, ix, x, 23–7, 41, 106, 122–3, 206–7, 210, 249, 385, 386, 394; challenges to political left, 78–83; coalition government (from May 2010) and, 22, 37; commonly held attitudes, 44, 45–7; deficit reduction and, 226, 227, 374; economic and social determinism and, 56–8; Enlightenment notions of, 53–6, 58–9, 112, 122–3, 394; fair process, 84–94, 96, 98–9, 272; as foundation of morality, 24, 26, 45, 50; individual responsibility and, 39, 78–9; inequality in Britain, 78, 80, 275–6, 277–8, 342; international relations and, 226, 385–6; ‘Just World Delusion’, 83; luck and, 72–7; management-employee relationships, 90–2; models/frameworks of, 43–58; need for shared understanding of, 25, 37, 43; partisanship about, 42–3; politicians/political parties and, 22, 83, 271–2, 302–3, 374, 391–2; popular support for NHS and, 75, 77, 283; pre-Enlightenment notions, 52–3; shared capitalism and, 66, 92–3; state facilitation of, ix–x, 391–2, 394–5; welfare benefits to migrants and, 81–2, 282, 283, 284 Farnborough Sixth Form College, 294 Federal Reserve, 169–70, 176, 177, 183 Fees Act (1891), 128 Fertile Crescent, 106 feudalism, European, 53–4, 74, 104, 105 financial instruments, 103, 148, 157, 167–8 Financial Services and Markets Act (2001), 198 Financial Services Authority (FSA), 24, 147, 162, 178, 198–9, 208 financial system, British: see also capitalism; economy, British; Asian and/or OPEC capital surpluses and, 149, 154, 354; big finance as entrenched elite, 136, 137–8, 176, 178–80, 210, 387–9; declining support for entrepreneurship, 241; deregulation (1971), 161; fees and commissions, 33; importance of liquidity, 240, 243; lack of data on, 241; London/New York axis, 149, 150–1, 157–8, 160, 187, 202; massive growth of, 137, 138, 209, 219; need for tax reform, 209–10; regulation and see regulation; required reforms to companies, 249–50; savings institutions’ share holdings, 240–1; short termism of markets, 241, 242–3; unfairness of, 138, 210 Financial Times, 12, 149, 294, 330, 349, 361 Fink, Stanley, 179 fiscal policy, 208, 224–5, 226, 357–8, 364–9, 374; coalition rejection of, 370 fish stocks, conservation of, 394 Fitch (credit-rating agencies), 248 flexicurity social system, 299–301, 304, 374 Forbes’ annual list, 30 Ford, Henry, 195, 302 foreign exchange markets, 32, 161, 164, 165, 168, 363, 367; China’s rigged exchange rate, 36, 169, 355, 377, 378–9; currency options, 166, 191; eurozone, 377 foreign takeovers of British firms, 8, 388 Fortune magazine, 94 Foster, Sir Christopher, 313 foundation schools, 307 France, 51–2, 123–4, 163, 372, 375, 377 free trade, 163, 334, 379 Frey, Bruno, 60, 86 Friedman, Benjamin, 282–3 Fukuyama, Francis, 140 Fuld, Dick, 192 Future Jobs Fund, 373 G20 countries, 209, 358, 368, 374 Galliano, John, 143 Gardner, Howard, 274, 305–6 gated communities, 13 Gates, Bill, 71 Gates, Bill (Senior), 222 Gaussian distribution, 190–1, 194 ‘gearing’, 6 general election (6 May 2010), 97, 142, 179, 214, 217, 227, 234, 271, 314, 318, 327–8, 334, 378; Gillian Duffy incident, 394; result of, xi, 20, 345–6, 390 ‘generalised autoregressive conditional heteroskedasicity’ (GARCH), 194 genetically modified crops, 232 Germany, 36, 63, 244, 262, 269, 375–6, 379, 380; export led growth, 355–6, 375, 381–2; Fraunhofer Institutes, 252, 264; Greek bail-out and, 377; pre-1945 period, 128, 129, 134, 382, 383 Gieve, Sir John, 339–40 Gilligan, Andrew, 329 Gladwell, Malcolm, 76–7 Glasgow University, 323 Glass-Steagall Act, 162, 170, 202–3 Glastonbury festival, 143 globalisation, 32, 98, 140, 143, 144, 153–4, 163, 182, 297, 363, 366, 380 Goldman Sachs, 42, 63, 103, 150, 167–8, 174, 176, 177, 205 Goodwin, Sir Fred, 7, 150, 176, 340 Google, 131, 136, 253, 255, 258, 262 Goolsbee, Austin, 52 Gorbachev, Mikhail, 140 Gough, Ian, 79 Gould, Jay, 133 Gould, Philip, 142 government: see also democracy; political system, British; cabinet government, 312, 334, 337; centralisation of power, 14–15, 35, 217, 313, 334, 337, 341, 342; control of news agenda, 14, 224, 313; disregard of House of Commons, 14–15, 223, 339, 345; Number 10 Downing Street as new royal court, 14, 337, 338, 346, 347; press officers/secretaries, 14, 180, 224, 312; Prime Ministerial power, 337, 344, 345, 346 GPS navigation systems, 233, 265 Gray, Elisha, 221 Great Depression, 159, 162, 205, 362 Greece: classical, 25, 26, 38, 39, 44–5, 52–3, 59, 96, 107, 108; crisis and bail-out (2010), 167, 371, 377, 378 Green, Sir Philip, 12, 29, 33 Green Investment Bank, proposed, 252, 371 Greenhead College, Huddersfield, 294 Greenspan, Alan, 145–6, 165, 177, 183, 184, 197–8 Gregory, James, 277 growth, economic: Britain and, 9–10, 214–15, 219, 221, 359, 364; education and, 305–6; export led growth, 36, 169, 208, 226, 355–6, 375–7, 378–83; social investment and, 280–1 GSK, 219, 254 the Guardian, 319, 330, 349 Gupta, Sanjeev, 367 Gutenberg, Johannes, 110–11 Habsburg Empire, 127 Haines, Joe, 312 Haji-Ioannous, Stelios, 28 Haldane, Andrew, 8, 151, 153, 193, 214, 215 the Halifax, 186, 251 Hamilton, Lewis, 64, 65 Hammersmith and Fulham, Borough of, 167 Hampton, Sir Philip, 173 Hands, Guy, 28, 178, 246–8 Hanley, Lynsey, 291, 293, 302 Hanushek, Eric, 305–6 Hart, Betty, 289 Harvard University, 47, 62, 198 Hashimoto administration in Japan, 362 Hastings, Max, 217–18 Hauser, Marc, 47–50 Hawley, Michael, 65–6 Hayward, Tony, 216–17 HBOS, 157, 158, 178, 251 health and well-being, 9, 75, 77, 106, 232, 233, 290–1; see also National Health Service (NHS) Heckman, James, 290 hedge funds, 6, 21, 103, 157–8, 167–8, 172, 203, 205, 206, 240; collapses of, 152, 173–4, 187, 202; as destabilisers, 166–7, 168; destruction of ERM, 140, 144, 166; near collapse of LTCM, 169–70, 183, 193, 200–1 hedging, 164, 165–6 Heinz, Henry John, 302 Hermes fund management company, 242 Herrman, Edwina, 179 Herstatt Bank collapse, 152 Hetherington, Mark, 84 Hewitt, Patricia, 180 Hewlett-Packard, 30 Hills Report on social housing, 290 Hilton, Paris, 304 Himmelfarb, Gertrude, 146 Hirst, Damien, 12 history, economic, 121–36, 166, 285–6, 353–4 Hobhouse, Leonard, 220, 222, 234, 235, 261, 266 Hobsbawm, Eric, 100 Hoffman, Elizabeth, 60 Holland, 113, 124, 230 Honda, 91, 269 Hong Kong, 168 Hopkins, Harry, 300 Horton, Tim, 277 House of Commons, 14–15, 223, 312–13, 337–9, 345 House of Lords, 15, 128, 129, 312, 334, 344, 346–7 housing, social, 10, 289, 290–1, 292, 308–9 housing cost credits, 308–9 HSBC, 181, 251 Huhne, Chris, 346 Hunt family, sale of cattle herds, 201 Hurka, Thomas, 45–6 Hutton, Will, works of, x; The State We’re In, x, 148–9 IBM, 29, 164, 254 Iceland, 7, 138 ICT industry, 9, 29–30, 109, 134, 135–6, 182, 229 immigration, 11, 143, 326, 328, 342, 343, 386, 394; from Eastern Europe, 82, 281–2, 283; welfare state and, 81–2, 281–2, 283, 284 incapacity benefit, 27 the Independent, 93, 330 Independent Safeguarding Authority, 339 India, 144, 226, 230, 254, 354–5 individual responsibility, 17, 38, 39, 78–9 individualism, 54, 57, 66, 111, 221, 281, 341, 366; capitalism/free market theories and, ix, 17, 19, 27, 40, 145, 221, 234–5 Indonesia, 168 Industrial and Commercial Finance Corporation (now 3i), 250 industrial revolution, 28, 112, 115, 121–3, 124, 126–8, 130, 315 inflation, 6, 32, 355, 364, 365; targets, 163, 165, 208, 359 Ingham, Bernard, 312 innovation: see also entrepreneurs; national ecosystem of innovation; as collective and social, 40, 131, 219–22, 261, 265–6, 388; comparisons between countries, 67; competition and, 40, 114, 257–60; development times, 240, 243; discretionary effort and, 62, 65, 102–3, 105–6, 131, 222, 392–3; dissemination of knowledge and, 110–11, 112–13, 219–22, 265–6; due desert and, 40, 62, 67, 112, 117; ‘financial innovation’, 63–4, 138, 147, 149, 153–4, 182; general-purpose technologies (GPTs), 107–11, 112, 117, 126–7, 134, 228–9, 256, 261, 384; high taxation as deterrent, 104, 105; history of, 107–17, 121–7, 131–4, 221; increased pace of advance, 228–9, 230, 266–7; incremental, 108, 254, 256; incumbent elites and, 29–30, 104, 106, 109, 111–12, 113, 114, 115, 116, 257; large firms and, 251–2, 254–5; as natural to humans, 106–7, 274; need for network of specialist banks, 251–2, 265, 371; in ‘open-access societies’, 109–13, 114, 116–17, 122–3, 126–7, 131, 136, 315; patents and copyright, 102, 103, 105, 110, 260–1, 263; private enterprise and, 100–1; regulation and, 268–70; risk-taking and, 6, 103, 111, 189; short term investment culture and, 33, 242–3, 244; small firms and, 252, 253–4, 255–6; universities and, 261–5 Innovation Fund, 21, 251, 252 Institute of Fiscal Studies, 275–6, 363, 368–9, 372 Institute of Government, 334, 335, 337, 343 insurance, 165–6, 187, 240, 242 Intel, 255, 256 intellectual property, 260–1 interest rates, 164, 191, 352–3, 354, 357, 359, 360, 361, 362, 367, 380 internal combustion engine, 28, 109, 134 International Monetary Fund (IMF), 9, 152–3, 177–8, 187, 207, 226, 383, 384; Asian currency crisis (1997) and, 168–9; proposed bank levy and financial activities tax, 209; support for fiscal policy, 367 internet, 11, 28, 52, 109, 134, 227, 256, 265; news and politics on, 316–17, 321, 349; pay-walls, 316, 349; as threat to print media, 324, 331, 349 iPods, 105, 143 Iraq War, 14–15, 18, 36, 144, 329 Ireland, 138 iron steamships, 126 Islam, 352, 353 Islamic fundamentalism, 283, 384 Israel, 251, 322–3 Italy, 101, 103, 317, 328 ITN, 330, 331 James, Howell, 180 Japan, 36, 67, 140, 163, 168, 244, 369, 375, 376, 385, 386; credit crunch (1989-92), 359–60, 361–2, 382; debt levels, 356, 362, 363; incumbent elites in early twentieth-century, 134; Tokyo Bay, 254; Top Runner programme, 269 Jenkins, Roger, 296 Jobcentre Plus, 300 Jobs, Steve, 29–30, 65–6, 71 John Lewis Group, 66, 67, 93, 246 Johnson, Boris, 179 Johnson, Simon, 177 Jones, Tom, 242 Joseph Rowntree Foundation, 21, 278–9 journalism, 318–21, 323–4, 326–7 Jovanovic, Boyan, 256 JP Morgan, 169, 191–2, 195–6 judges, 15 justice systems, 30–1, 44–5, 49; symbolised by pair of scales, 4, 40 Kahneman, Daniel, 94–5 Kant, Immanuel, 73, 112, 274 Kay, John, 175 Kennedy, Helena, 340 Keynesian economics, x, xi, 184, 190, 196–7, 354, 362, 390–1 Kindleberger, Charles, 184 King, Mervyn, 213 Kinnock, Neil, 142 kitemarking, need for, 267 Klenow, Peter, 52 Knetsch, Jack, 94–5 Knight, Frank, Risk, Uncertainty and Profit (1921), 189, 191, 196–7 knowledge: capitalist advance of, 27–8, 31, 110–11, 112–13; public investment in learning, 28, 31, 40, 131, 220, 235, 261, 265 knowledge economy, 8, 11–12, 34, 135–6, 229–33, 258, 273–4, 341, 366; credit growth and, 355; graduate entry to, 295; large firms and, 251–2, 254–5; small firms and, 252, 253–4, 255–6, 261; state facilitation of, 219–22, 229–30 Koizumi administration in Japan, 362 Koo, Richard, 360, 361–2 Kuper, Simon, 352 Kwak, James, 64, 177 labour market, 52, 62, 83, 95; flexibility, 5, 275, 276, 299, 364–5, 387 laissez-faire ideology, 153, 198–9, 259 Laker, Freddie, 30 Lambert, Richard, 6–7 language acquisition and cognitive development, 288, 289 Large Hadron Collider, 263 Latin American debt crisis, 164 Lavoisier, Antoine, 31 Lazarus, Edmund, 179 Leahy, Sir Terry, 295 Learning and Skills Council, 282, 300 left wing politics, modern, 17, 38, 78–83 Lehman Brothers, 150, 152, 165, 170, 181, 192, 204 lender-of-last-resort function, 155, 158, 160, 187 Lerner, Melvin, 83 leverage, 6, 29, 154–6, 157, 158, 172, 179, 180, 198, 204, 209–10, 254, 363; disguised on balance sheet, 181, 195; effect on of credit crunches, 358, 359, 360, 361, 374–5; excess/massive levels, 7, 147–8, 149, 150–1, 158, 168, 170, 187, 192, 197, 203; need for reform of, 206, 207, 208; private equity and, 245–6, 247 Lewis, Jemima, 282, 287 Lewis, Joe, 12 libel laws, 332–3, 348–9 Liberal Democrats, xi, 11, 98, 141, 343, 360–1, 368; general election (2010) and, 97, 142, 179, 271, 390 libertarianism, 234 Likierman, Sir Andrew, 180 limited liability (introduced 1855), 353–4, 363 Lind, Allan, 85 Lindert, Peter, 280–1 Lipsey, Richard, 108, 263 Lisbon earthquake (1755), 54 Lisbon Treaty Constitution, 328 literacy and numeracy, 20–1 livestock fairs, pre-twentieth-century, 90 Lloyds Bank, 176, 178, 186, 202, 204, 251, 259 Lo, Andrew, 195 loan sharks, illegal, 291 local government, 307, 347–8 Locke, John, 54–5, 59 London School of Economics (LSE), 246 London Stock Exchange, 90, 162 London Underground, financing of, 336, 389 lone parent families, 292 Long Term Capital Management (LTCM), 169–70, 183, 193, 194, 200–1 long-term incentive plans (LTIPs), 6 Loomes, Graham, 59 luck, 23, 26–7, 38, 39, 40, 41, 67, 68, 69–77, 222, 273, 393–4; diplomacy/international relations and, 385–6; disadvantaged children and, 74–5, 83, 288–90; executive pay and, 138; taxation and, 73–4, 75, 78, 303 Luxembourg, 138 MacDonald, Ramsey, 315 Machiavelli, Niccolo, 62 Machin, Steve, 283–4 Macmillan Committee into City (1931), 179 Madoff, Bernie, 7 mafia, Italian, 101, 104–5 Major, John, 138, 180, 279, 334 Malaysia, 168 malls, out-of-town, 143 Mandelbrot, Benoit, 194, 195 Mandelson, Peter, 21, 24, 142, 148, 220 manufacturing sector, decline of, 5, 8, 219, 272, 292, 341, 363 Manza, Jeff, 281, 282 Marconi, 142–3 market fundamentalism, 9–19, 32–3, 40–2, 366; belief in efficiency of markets, 188–9, 190, 193, 194, 235–9, 366; coalition government (from May 2010) and, 370; collapse of, 3–4, 7–9, 19, 20, 219–20, 235, 392; Conservative Party and, 5, 17, 138, 147, 160, 161; domination of, 5–6, 14, 16–17, 163, 364–5, 387–90; likely resurgence of, 5, 8; New Labour and, x–xi, 5, 19, 144–9, 388, 389–90; post-communist fiasco in Russia, 135; rejection of fiscal policy, 224–5, 364–5, 367 mark-to-market accounting convention, 175 Marland, Lord Jonathan, 179 Marquand, David, 328 Marsh, Jodie, 64, 65 Marx, Karl, 56–8, 121–2 Maslow’s hierarchy of needs, 232, 274–5 mass production, 109, 134, 182 Masters, Blythe, 196 mathematical models (‘quants’), 105, 149, 151, 152, 165, 169, 188, 190–6, 203; extensions and elaborations, 194; Gaussian distribution, 190–1, 194; JP Morgan and, 195–6 Matthewson, Sir George (former chair of RBS), 25 Maude, Francis, 180 Mayhew, Henry, 285–6 McCartney, Paul, 247 McGoldrick, Mark, 174 McKinsey Global Institute, 253, 358–9, 360, 363 McQueen, Alexander, 143 media, mainstream, 6, 35, 312, 315–20, 321–32, 348–50; commoditisation of information, 318–20, 321; communications technology and, 316, 320, 349; domination of state by, 14, 16, 223–4, 338, 339, 343; fanatical anti-Europeanism, 15, 328, 378; foreign/tax exile ownership of, 218; hysterical tabloid campaigns, 10–11, 298, 319–20; ‘info-capitalism’, 317–18, 327, 328, 342; lauding of celebrity, 281, 314; modern 24/7 news agenda, 13, 224, 321, 343; regional newspapers, 331; as setter of agenda/narrative, 327–31, 342; television news, 330–1; undermining of democracy, 315–16, 317–18, 321–9, 333, 350; urgent need for reform, 35, 218, 344, 348–50, 391; view of poverty as deserved, 25, 53, 83, 281, 286; weakness of foreign coverage, 322, 323, 330 Mencken, H.L., 311 mergers and takeovers, 8, 21, 33, 92, 245, 251, 258, 259, 388 Merkel, Angela, 381–2 Merrill Lynch, 150, 170, 175, 192 Merton, Robert, 169, 191 Meucci, Antonnio, 221 Mexico, 30, 385 Meyer, Christopher, 332 Michalek, Richard, 175 Microsoft, 71, 114, 136, 253, 254, 258–9 Milburn, Alan, 273 Miles, David, 186–7 Milgram, Stanley, 200 millennium bug, 319 Miller, David, 70, 76, 77 minimum wage, 142, 278 Minsky, Hyman, 183, 185 Mirror newspapers, 319, 329 Mlodinow, Leonard, 72–3 MMR vaccine, 327 mobile phones, 30, 134, 143, 229, 349 modernity, 54–5, 104 Mokyr, Joel, 112 monarchy, 15, 312, 336 Mondragon, 94 monetary policy, 154, 182, 184, 185, 208, 362, 367 monopolies, 74, 102, 103, 160, 314; history of, 104, 113, 124, 125–6, 130–4; in the media, 30, 317, 318, 331, 350; modern new wave of, 35, 135–6, 137–8, 201–2, 258–9; ‘oligarchs’, 30, 65, 104 Monopolies and Mergers Commission, 258, 318 Moody’s (credit-ratings agency), 151, 175 morality, 16–27, 37, 44–54, 70, 73; see also desert, due, concept of; fairness; proportionality; debt and, 351–4, 357, 360–1 Morgan, JP, 67 Morgan, Piers, 329 Morgan Stanley, 150 Mulas-Granados, Carlos, 367 Murdoch, James, 389 Murdoch, Rupert, 317–18, 320, 327 Murphy, Kevin, 62, 63 Murray, Jim ‘Mad Dog’, 321 Myners, Paul, 340 Nash bargaining solution, 60 National Audit Office, 340 National Child Development Study, 289–90 national ecosystem of innovation, 33–4, 65, 103, 206, 218, 221, 239–44, 255–9, 374; state facilitation of, 102, 219–22, 229–30, 233, 251–2, 258–66, 269–70, 392 National Health Service (NHS), 21, 27, 34, 92, 265, 277, 336, 371–2; popular support for, 75, 77, 283 national insurance system, 81, 277, 302 national strategy for neighbourhood renewal, 278 Navigation Acts, abolition of, 126 Neiman, Susan, 18–19 neo-conservatism, 17–18, 144–9, 387–90 network theory, 199–201, 202–4, 206; Pareto curve and, 201–2 New Economics Foundation, 62 New Industry New Jobs strategy, 21 New Labour: budget deficit and, 224, 335, 360, 368, 369; business friendly/promarket policies, x–xi, 139–40, 142, 145, 146–7, 162, 198–9, 382; City of London and, x–xi, 5, 19, 22, 142–3, 144–5, 355; decline of class-based politics, 341; failure to challenge elites, x–xi, 14, 22, 388, 389–90; general election (1992) and, 138, 140–1, 144, 148, 277; general election (2005) and, 97; general election (2010) and, 20, 271, 334, 374, 378; light-touch regulation and, 138, 145, 146–7, 162, 198–9; New Industry New Jobs strategy, 21; one-off tax on bank bonuses, 26, 179, 249; record in government, 10–11, 19, 20–2, 220, 276–80, 302, 306, 334–6, 366–7, 389–90; reforms to by ‘modernisers’, 141; responses to newspaper campaigns, 11 New York markets, 140, 152, 162; Asian and/or OPEC capital surpluses and, 169, 171, 354; London/New York axis, 149, 150–1, 157–8, 160, 188, 202 Newsweek, 174 Newton, Isaac, 31, 127, 190 NHS Direct, 372 Nicoli, Eric, 13 non-executive directors (NEDs), 249–50 Nordhaus, William, 260 Nordic countries, 262; Iceland, 7, 138; Norway, 281; Sweden, 264, 281 North, Douglas, 113, 116, 129–30 Northern Rock, 9, 156, 157, 158, 186, 187–8, 202, 204, 251, 340–1 Norton Publishing, 93 Nozick, Robert, 234, 235 nuclear non-proliferation, 226, 384, 394 Nussbaum, Martha, 79 Obama, Barack, 18, 183, 380, 382–3, 394–5 the Observer, 141, 294, 327 Office for Budget Responsibility, 360 Office of Fair Trading (OFT), 257, 258 OFSTED, 276 oil production, 322; BP Gulf of Mexico disaster (2010), 216–17, 392; finite stocks and, 230, 384; OPEC, 149, 161, 171; price increase (early 1970s), 161; in USA, 130, 131, 132 Olsen, Ken, 29 Olympics (2012), 114 open markets, 29, 30, 31, 40, 89, 92, 100–1, 366, 377, 379, 382, 384; see also ‘open-access societies’; as determinants of value, 51–2, 62; fairness and, 60–1, 89–91, 94–6; ‘reference prices’ and, 94–6 ‘open-access societies’, 134, 135, 258, 272, 273, 275, 276, 280–1, 394; Britain as ‘open-access society’ (to 1850), 124, 126–7; democracy and, 136, 314; Enlightenment and, 30–1, 314–15, 394; innovation and invention in, 109–13, 114, 116–17, 122–3, 126–7, 131, 136, 315; partial political opening in, 129–30; US New Freedom programme, 132–3 opium production, 102 options, 166, 188, 191 Orange County derivatives losses, 167 Organisation for Economic Co-operation and Development (OECD), 180, 337, 373 Orwell, George, 37 Osborne, George, 147, 208, 224, 245, 302, 338 Overend, Gurney and Co., 156–7 Oxbridge/top university entry, 293–4, 306 Oxford University, 261 Page, Scott, 204 Paine, Tom, 347 Pareto, Vilfredo, 201–2 Paribas, 152, 187 Parkinson, Lance-Bombardier Ben, 13 participation, political, 35, 86, 96, 99 Paulson, Henry, 177 Paulson, John, 103, 167–8 pay of executives and bankers, 3–4, 5, 6–7, 22, 66–7, 138, 387; bonuses, 6, 25–6, 41, 174–5, 176, 179, 208, 242, 249, 388; high levels/rises of, 6–7, 13, 25, 82–3, 94, 172–6, 216, 296, 387, 393; Peter Mandelson on, 24; post-crash/bail-outs, 176, 216; in private equity houses, 248; remuneration committees, 6, 82, 83, 176; shared capitalism and, 66, 93; spurious justifications for, 42, 78, 82–3, 94, 176, 216 pension, state, 81, 372, 373 pension funds, 240, 242 Pettis, Michael, 379–80 pharmaceutical industry, 219, 255, 263, 265, 267–8 Phelps, Edmund, 275 philanthropy and charitable giving, 13, 25, 280 Philippines, 168 Philippon, Thomas, 172–3 Philips Electronics, Royal, 256 Pimco, 177 piracy, 101–2 Plato, 39, 44 Player, Gary, 76 pluralist state/society, x, 35, 99, 113, 233, 331, 350, 394 Poland, 67, 254 political parties, 13–14, 340, 341, 345, 390; see also under entries for individual parties political system, British: see also democracy; centralised constitution, 14–15, 35, 217, 334; coalitions as a good thing, 345–6; decline of class-based politics, 341; devolving of power to Cardiff and Edinburgh, 15, 334; expenses scandal, 3, 14, 217, 313, 341; history of (to late nineteenth-century), 124–30; lack of departmental coordination, 335, 336, 337; long-term policy making and, 217; monarchy and, 15, 312, 336; politicians’ lack of experience outside politics, 338; required reforms of, 344–8; select committee system, 339–40; settlement (of 1689), 125; sovereignty and, 223, 346, 347, 378; urgent need for reform, 35, 36–7, 218, 344; voter-politician disengagement, 217–18, 310, 311, 313–14, 340 Pommerehne, Werner, 60 population levels, world, 36 Portsmouth Football Club, 352 Portugal, 108, 109, 121, 377 poverty, 278–9; child development and, 288–90; circumstantial causes of, 26, 283–4; Conservative Party and, 279; ‘deserving’/’undeserving’ poor, 276, 277–8, 280, 284, 297, 301; Enlightenment views on, 53, 55–6; need for asset ownership, 301–3, 304; political left and, 78–83; the poor viewed as a race apart, 285–7; as relative not absolute, 55, 84; Adam Smith on, 55, 84; structure of market economy and, 78–9, 83; view that the poor deserve to be poor, 25, 52–3, 80, 83, 281, 285–8, 297, 301, 387; worldwide, 383, 384 Power2010 website, 340–1 PR companies and media, 322, 323 Press Complaints Commission (PCC), 325, 327, 331–2, 348 preventative medicine, 371 Price, Lance, 328, 340 Price, Mark, 93 Prince, Chuck, 184 printing press, 109, 110–11 prisoners, early release of, 11 private-equity firms, 6, 28–9, 158, 172, 177, 179, 205, 244–9, 374 Procter & Gamble, 167, 255 productive entrepreneurship, 6, 22–3, 28, 29–30, 33, 61–2, 63, 78, 84, 136, 298; in British history (to 1850), 28, 124, 126–7, 129; due desert/fairness and, 102–3, 105–6, 112, 223, 272, 393; general-purpose technologies (GPTs) and, 107–11, 112, 117, 126–7, 134, 228–9, 256, 261, 384 property market: baby boomer generation and, 372–3; Barker Review, 185; boom in, 5, 143, 161, 183–4, 185–7, 221; bust (1989-91), 161, 163; buy-to-let market, 186; commercial property, 7, 356, 359, 363; demutualisation of building societies, 156, 186; deregulation (1971) and, 161; Japanese crunch (1989-92) and, 361–2; need for tax on profits from home ownership, 308–9, 373–4; property as national obsession, 187; residential mortgages, 7, 183–4, 186, 356, 359, 363; securitised loans based mortgages, 171, 186, 188; shadow banking system and, 171, 172; ‘subprime’ mortgages, 64, 152, 161, 186, 203 proportionality, 4, 24, 26, 35, 38, 39–40, 44–6, 51, 84, 218; see also desert, due, concept of; contributory/discretionary benefits and, 63; diplomacy/ international relations and, 385–6; job seeker’s allowance as transgression of, 81; left wing politics and, 80; luck and, 73–7, 273; policy responses to crash and, 215–16; poverty relief systems and, 80–1; profit and, 40, 388; types of entrepreneurship and, 61–2, 63 protectionism, 36, 358, 376–7, 378, 379, 382, 386 Prussia, 128 Public Accounts Committee, 340 Purnell, James, 338 quantitative easing, 176 Quayle, Dan, 177 race, disadvantage and, 290 railways, 9, 28, 105, 109–10, 126 Rand, Ayn, 145, 234 Rawls, John, 57, 58, 63, 73, 78 Reagan, Ronald, 135, 163 recession, xi, 3, 8, 9, 138, 153, 210, 223, 335; of 1979-81 period, 161; efficacy of fiscal policy, 367–8; VAT decrease (2009) and, 366–7 reciprocity, 43, 45, 82, 86, 90, 143, 271, 304, 382; see also desert, due, concept of; proportionality Reckitt Benckiser, 82–3 Regional Development Agencies, 21 regulation: see also Bank of England; Financial Services Authority (FSA); Bank of International Settlements (BIS), 169, 182; Basel system, 158, 160, 163, 169, 170–1, 196, 385; big as beautiful in global banking, 201–2; Big Bang (1986), 90, 162; by-passing of, 137, 187; capital requirements/ratios, 162–3, 170–1, 208; dismantling of post-war system, 149, 158, 159–63; economists’ doubts over deregulation, 163; example of China, 160; failure to prevent crash, 154, 197, 198–9; Glass-Steagall abolition (1999), 170, 202–3; light-touch, 5, 32, 138, 151, 162, 198–9; New Deal rules (1930s), 159, 162; in pharmaceutical industry, 267–8; as pro-business tool, 268–70; proposed Financial Policy Committee, 208; required reforms of, 267, 269–70, 376, 377, 384, 392; reserve requirements scrapped (1979), 208; task of banking authorities, 157; Top Runner programme in Japan, 269 Reinhart, Carmen, 214, 356 Repo 105 technique, 181 Reshef, Ariell, 172–3 Reuters, 322, 331 riches and wealth, 11–13, 272–3, 283–4, 387–8; see also pay of executives and bankers; the rich as deserving of their wealth, 25–6, 52, 278, 296–7 Rickards, James, 194 risk, 149, 158, 165, 298–302, 352–3; credit default swaps and, 151, 152, 166–8, 170, 171, 175, 176, 191, 203, 207; derivatives and see derivatives; distinction between uncertainty and, 189–90, 191, 192–3, 196–7; employment insurance concept, 298–9, 301, 374; management, 165, 170, 171, 189, 191–2, 193–4, 195–6, 202, 203, 210, 354; securitisation and, 32, 147, 165, 169, 171, 186, 188, 196; structured investment vehicles and, 151, 165, 169, 171, 188; value at risk (VaR), 171, 192, 195, 196 Risley, Todd, 289 Ritchie, Andrew, 103 Ritter, Scott, 329 Robinson, Sir Gerry, 295 Rogoff, Ken, 214, 356 rogue states, 36 Rolling Stones, 247 Rolls-Royce, 219, 231 Rome, classical, 45, 74, 108, 116 Roosevelt, Franklin D., 133, 300 Rothermere, Viscount, 327 Rousseau, Jean-Jacques, 56, 58, 112 Rousseau, Peter, 256 Rowling, J.K., 64, 65 Rowthorn, Robert, 292, 363 Royal Bank of Scotland (RBS), 25, 150, 152, 157, 173, 181, 199, 251, 259; collapse of, 7, 137, 150, 158, 175–6, 202, 203, 204; Sir Fred Goodwin and, 7, 150, 176, 340 Rubin, Robert, 174, 177, 183 rule of law, x, 4, 220, 235 Russell, Bertrand, 189 Russia, 127, 134–5, 169, 201, 354–5, 385; fall of communism, 135, 140; oligarchs, 30, 65, 135 Rwandan genocide, 71 Ryanair, 233 sailing ships, three-masted, 108 Sandbrook, Dominic, 22 Sands, Peter (CEO of Standard Chartered Bank), 26 Sarkozy, Nicolas, 51, 377 Sassoon, Sir James, 178 Scholes, Myron, 169, 191, 193 Schumpeter, Joseph, 62, 67, 111 science and technology: capitalist dynamism and, 27–8, 31, 112–13; digitalisation, 34, 231, 320, 349, 350; the Enlightenment and, 31, 108–9, 112–13, 116–17, 121, 126–7; general-purpose technologies (GPTs), 107–11, 112, 117, 126–7, 134, 228–9, 256, 261, 384; increased pace of advance, 228–9, 253, 297; nanotechnology, 232; New Labour improvements, 21; new opportunities and, 33–4, 228–9, 231–3; new technologies, 232, 233, 240; universities and, 261–5 Scotland, devolving of power to, 15, 334 Scott, James, 114–15 Scott Bader, 93 Scott Trust, 327 Second World War, 134, 313 Securities and Exchanges Commission, 151, 167–8 securitisation, 32, 147, 165, 169, 171, 186, 187, 196 self-determination, 85–6 self-employment, 86 self-interest, 59, 60, 78 Sen, Amartya, 51, 232, 275 service sector, 8, 291, 341, 355 shadow banking system, 148, 153, 157–8, 170, 171, 172, 187 Shakespeare, William, 39, 274, 351 shareholders, 156, 197, 216–17, 240–4, 250 Sher, George, 46, 50, 51 Sherman Act (USA, 1890), 133 Sherraden, Michael, 301 Shiller, Robert, 43, 298, 299 Shimer, Robert, 299 Shleifer, Andrei, 62, 63, 92 short selling, 103 Sicilian mafia, 101, 105 Simon, Herbert, 222 Simpson, George, 142–3 single mothers, 17, 53, 287 sixth form education, 306 Sky (broadcasting company), 30, 318, 330, 389 Skype, 253 Slim, Carlos, 30 Sloan School of Management, 195 Slumdog Millionaire, 283 Smith, Adam, 55, 84, 104, 112, 121, 122, 126, 145–6 Smith, John, 148 Snoddy, Ray, 322 Snow, John, 177 social capital, 88–9, 92 social class, 78, 130, 230, 304, 343, 388; childcare and, 278, 288–90; continued importance of, 271, 283–96; decline of class-based politics, 341; education and, 13, 17, 223, 264–5, 272–3, 274, 276, 292–5, 304, 308; historical development of, 56–8, 109, 115–16, 122, 123–5, 127–8, 199; New Labour and, 271, 277–9; working-class opinion, 16, 143 social investment, 10, 19, 20–1, 279, 280–1 social polarisation, 9–16, 34–5, 223, 271–4, 282–5, 286–97, 342; Conservative reforms (1979-97) and, 275–6; New Labour and, 277–9; private education and, 13, 223, 264–5, 272–3, 276, 283–4, 293–5, 304; required reforms for reduction of, 297–309 social security benefits, 277, 278, 299–301, 328; contributory, 63, 81, 283; flexicurity social system, 299–301, 304, 374; to immigrants, 81–2, 282, 283, 284; job seeker’s allowance, 81, 281, 298, 301; New Labour and ‘undeserving’ claimants, 143, 277–8; non-contributory, 63, 79, 81, 82; targeting of/two-tier system, 277, 281 socialism, 22, 32, 38, 75, 138, 144, 145, 394 Soham murder case, 10, 339 Solomon Brothers, 173 Sony, 254–5 Soros, George, 166 Sorrell, Martin, 349 Soskice, David, 342–3 South Korea, 168, 358–9 South Sea Bubble, 125–6 Spain, 123–4, 207, 358–9, 371, 377 Spamann, Holger, 198 special purpose vehicles, 181 Spitzer, Matthew, 60 sport, cheating in, 23 stakeholder capitalism, x, 148–9 Standard Oil, 130–1, 132 state, British: anti-statism, 20, 22, 233–4, 235, 311; big finance’s penetration of, 176, 178–80; ‘choice architecture’ and, 238, 252; desired level of involvement, 234–5; domination of by media, 14, 16, 221, 338, 339, 343; facilitation of fairness, ix–x, 391–2, 394–5; investment in knowledge, 28, 31, 40, 220, 235, 261, 265; need for government as employer of last resort, 300; need for hybrid financial system, 244, 249–52; need for intervention in markets, 219–22, 229–30, 235–9, 252, 392; need for reshaping of, 34; pluralism, x, 35, 99, 113, 233, 331, 350, 394; public ownership, 32, 240; target-setting in, 91–2; threats to civil liberty and, 340 steam engine, 110, 126 Steinmueller, W.


pages: 135 words: 26,407

How to DeFi by Coingecko, Darren Lau, Sze Jin Teh, Kristian Kho, Erina Azmi, Tm Lee, Bobby Ong

algorithmic trading, asset allocation, Bernie Madoff, bitcoin, blockchain, buy and hold, capital controls, collapse of Lehman Brothers, cryptocurrency, distributed ledger, diversification, Ethereum, ethereum blockchain, fiat currency, Firefox, information retrieval, litecoin, margin call, new economy, passive income, payday loans, peer-to-peer, prediction markets, QR code, reserve currency, robo advisor, smart contracts, tulip mania, two-sided market

According to Mariano, Argentinians value the USD a lot. Despite the USD having problems like it being inflationary as well, compared to the Argentine Peso, it is nothing. If the USD is attractive to most Argentinians, it is natural then that most Argentinians would prefer to keep their money in USD. However, the government in Argentina places capital control on this, making it hard to get access to the USD. There is a limit on the purchase of USD and Argentinians can only purchase a maximum of $200 per month. As a result of this, the black market demand for the USD has risen, causing the exchange rate to be approximately 30% higher than the officially declared rate by the government.18 Besides placing a limit on purchases, the Central Bank of Argentina also exposed 800 citizens’ names, ID number and tax identification because they exceeded the previous purchase limit of $10,000.19 Furthermore, Argentinians who work for foreign companies and are invoiced in USD must liquidate their USD to Argentine Peso within 5 days.


pages: 1,088 words: 228,743

Expected Returns: An Investor's Guide to Harvesting Market Rewards by Antti Ilmanen

Alan Greenspan, Andrei Shleifer, asset allocation, asset-backed security, availability heuristic, backtesting, balance sheet recession, bank run, banking crisis, barriers to entry, behavioural economics, Bernie Madoff, Black Swan, Bob Litterman, bond market vigilante , book value, Bretton Woods, business cycle, buy and hold, buy low sell high, capital asset pricing model, capital controls, carbon credits, Carmen Reinhart, central bank independence, classic study, collateralized debt obligation, commoditize, commodity trading advisor, corporate governance, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency risk, deal flow, debt deflation, deglobalization, delta neutral, demand response, discounted cash flows, disintermediation, diversification, diversified portfolio, dividend-yielding stocks, equity premium, equity risk premium, Eugene Fama: efficient market hypothesis, fiat currency, financial deregulation, financial innovation, financial intermediation, fixed income, Flash crash, framing effect, frictionless, frictionless market, G4S, George Akerlof, global macro, global reserve currency, Google Earth, high net worth, hindsight bias, Hyman Minsky, implied volatility, income inequality, incomplete markets, index fund, inflation targeting, information asymmetry, interest rate swap, inverted yield curve, invisible hand, John Bogle, junk bonds, Kenneth Rogoff, laissez-faire capitalism, law of one price, London Interbank Offered Rate, Long Term Capital Management, loss aversion, low interest rates, managed futures, margin call, market bubble, market clearing, market friction, market fundamentalism, market microstructure, mental accounting, merger arbitrage, mittelstand, moral hazard, Myron Scholes, negative equity, New Journalism, oil shock, p-value, passive investing, Paul Samuelson, pension time bomb, performance metric, Phillips curve, Ponzi scheme, prediction markets, price anchoring, price stability, principal–agent problem, private sector deleveraging, proprietary trading, purchasing power parity, quantitative easing, quantitative trading / quantitative finance, random walk, reserve currency, Richard Thaler, risk free rate, risk tolerance, risk-adjusted returns, risk/return, riskless arbitrage, Robert Shiller, savings glut, search costs, selection bias, seminal paper, Sharpe ratio, short selling, sovereign wealth fund, statistical arbitrage, statistical model, stochastic volatility, stock buybacks, stocks for the long run, survivorship bias, systematic trading, tail risk, The Great Moderation, The Myth of the Rational Market, too big to fail, transaction costs, tulip mania, value at risk, volatility arbitrage, volatility smile, working-age population, Y2K, yield curve, zero-coupon bond, zero-sum game

A mechanical carry strategy would always go long the highest yielding currency and would quietly follow a hyperinflation country to its demise. Holding just one Zimbabwe (the country with the worst recent hyperinflation) in your portfolio would mean losing virtually the whole investment in that country and missing any subsequent wealth recovery. Zimbabwe is not a very realistic example given its capital controls, but Argentina is a country without capital controls that has had hyperinflation, albeit not quite on the Zimbabwean scale. Argentina’s devaluation in early 2002 is thus a more plausible example, where international carry traders might have gotten their hands burned (although even here the impending troubles were very visible many months earlier).

Comments on my baseline variant Selection biases. Note the hindsight in picking the currently active “G10” universe: USD–CAD–AUD–NZD–JPY–EUR–GBP–CHF–SEK–NOK. As in most other studies, I exclude currencies that were fixed or pegged to another currency, along with currencies that have or had significant capital controls. Due to this selection bias, I might overstate returns by excluding hyperinflated and/or defaulted markets that fell out of my universe. In practice, this has not been a major issue because the past two decades have been characterized by global disinflation and improving policy discipline. More likely, I may understate returns by excluding many emerging currencies (that performed especially well) as well as former EMU currencies.

Indeed, the period since 1994 is so benign that the only indicator that works even better than carry is inflation: high-inflation currencies consistently outperformed low-inflation currencies, because inflation rates fell in countries with high initial inflation. Among reasonably liquid currencies without capital controls, there were no cases of countries drifting into sharp devaluation via hyperinflation. The 1997–1998 Asian devaluations, for example, occurred after a period of low inflation, were followed by a spike in inflation, and subsequently benefited from disinflation and real exchange rate appreciation.


pages: 710 words: 164,527

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

activist fund / activist shareholder / activist investor, Alan Greenspan, Albert Einstein, Asian financial crisis, banks create money, Bretton Woods, British Empire, business cycle, capital controls, Charles Lindbergh, currency manipulation / currency intervention, currency peg, deindustrialization, European colonialism, facts on the ground, fiat currency, financial independence, floating exchange rates, full employment, global reserve currency, imperial preference, invisible hand, Isaac Newton, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Kenneth Rogoff, lateral thinking, low interest rates, margin call, means of production, Michael Milken, money: store of value / unit of account / medium of exchange, Monroe Doctrine, New Journalism, Nixon triggered the end of the Bretton Woods system, open economy, Paul Samuelson, Potemkin village, price mechanism, price stability, psychological pricing, public intellectual, reserve currency, road to serfdom, seigniorage, South China Sea, special drawing rights, Suez canal 1869, Suez crisis 1956, The Great Moderation, the market place, trade liberalization, Works Progress Administration

Creditor nations like the United States should not leave gold and other monetary resources idle: if they did not wish to spend them on imports, they should make them available to others that “find a difficulty in paying for their imports, and will need time and resources before they can establish a re-adjustment.”49 The net result, he believed, would be more trade and more economic growth for all nations. Capital controls, Keynes argued, would also have to be made “a permanent feature of the post-war system,—at least so far as we [the British] are concerned.”50 His conceptual logic was that “the whole management of the domestic economy depends upon being free to have the appropriate rate of interest without reference to the rates prevailing elsewhere in the world. Capital control is a corollary to this.” This thinking has today become orthodox Keynesianism, advocated by globalization critics such as Joseph Stiglitz and opposed by global currency union advocates such as Robert Mundell.

In January 1973, two months after his thumping defeat of Democratic challenger George McGovern, Nixon ended wage and price controls; dollar outflows resumed. Volcker secretly flew to Tokyo and Bonn to negotiate new parities, but Shultz opposed the administration undertaking any obligation to defend them, which would have interfered with his priority of eliminating capital controls. In tense multilateral discussions, the United States now took up the battle stance that Keynes and the British had adopted, and Harry White resolutely opposed, at Bretton Woods: surplus countries should be forced to reduce their surplus positions. Congressmen even demanded that the formerly hated scarce-currency clause be invoked against countries such as Germany and Japan.


pages: 605 words: 169,366

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

"World Economic Forum" Davos, Alan Greenspan, Alvin Toffler, Asian financial crisis, bank run, battle of ideas, Big bang: deregulation of the City of London, Bretton Woods, capital controls, clean water, Dr. Strangelove, Dutch auction, export processing zone, failed state, financial independence, Francis Fukuyama: the end of history, gentleman farmer, guns versus butter model, Hernando de Soto, Kenneth Rogoff, Kickstarter, land reform, land tenure, lateral thinking, low interest rates, market bubble, Martin Wolf, microcredit, oil shock, Oklahoma City bombing, old-boy network, Paul Samuelson, plutocrats, purchasing power parity, radical decentralization, rolodex, Ronald Reagan, Silicon Valley, special economic zone, structural adjustment programs, the new new thing, trade liberalization, traveling salesman, War on Poverty, Westphalian system, Yom Kippur War

And the threat from right-wing critics seemed newly menacing, thanks to the recent victory of Newt Gingrich’s troops in the 1994 congressional elections. Like the left-wingers, who could point to real instances of Bank lending that had damaged the environment or harmed indigenous peoples, the right-wingers had a serious case. The World Bank had been created for a world of capital controls and infant financial markets in borrowing countries, a world in which there was a clear role for an institution that borrowed money on Wall Street and passed it along to developing nations. But now that role had ended, or so the conservatives maintained: private capital flows were exploding, and there was no need for public-sector lenders.

The IMF had indeed pressed too much austerity on Thailand and then later reversed course, but it was slanderous to suggest that the IMF’s policy makers didn’t know that raising interest rates could lead to bankruptcies. The point was that not raising interest rates could accelerate capital flight and deepen a currency’s collapse—and therefore trigger even more bankruptcies. Stiglitz’s second target was the removal of capital controls, which he presented as an IMF-prescribed free-market doctrine that laid countries open to speculative attack and made financial crisis possible. Again, Stiglitz was mixing a reasonable point with unreasonable hyperbole. It was true that currency speculators could be a destabilizing force, and that the IMF had advocated the liberalization of the capital account with the backing of the U.S.

And if 30 percent of IDA resources were delivered as grants, the percentage could be raised again in future. These threats to the Bank’s soft-loan window were reinforced by simultaneous attacks on its commercial lending. The old argument that the Bank was obsolete in middle income countries had never gone away. The Bank was designed for a world of capital controls and infant financial markets in borrowing countries, this argument went—a world in which there was a clear role for an institution that borrowed money on Wall Street and passed it along to developing nations. But now the stronger developing countries that borrow commercially from the Bank—China, Mexico, Brazil, and so on—could access private capital on their own; if one of these governments wanted to build hospitals, it could sell bonds in the United States or Europe.


pages: 388 words: 99,023

The Emperor's New Road: How China's New Silk Road Is Remaking the World by Jonathan Hillman

"World Economic Forum" Davos, British Empire, cable laying ship, capital controls, colonial rule, coronavirus, COVID-19, Deng Xiaoping, Donald Trump, drone strike, energy security, facts on the ground, high-speed rail, intermodal, joint-stock company, Just-in-time delivery, land reform, low interest rates, M-Pesa, Malacca Straits, megaproject, moral hazard, offshore financial centre, rent-seeking, Scramble for Africa, Silicon Valley, smart cities, South China Sea, special economic zone, Suez canal 1869, Suez crisis 1956, supply-chain management, trade route, transcontinental railway, undersea cable, union organizing, Washington Consensus

Both visions aim to enhance a single state’s influence. The EAEU puts Moscow at the center, while the BRI puts Beijing at the center. Both visions also maintain a defensive posture domestically. The EAEU protects Russian industries, while for all the talk about BRI promoting connectivity, China uses capital controls that limit financial flows, internet restrictions that limit information flows, and security policies that limit the movement of people and goods. Both governments favor domestic stability and self-preservation above all else. Greater connectivity could bring more growth but also more disruption and less control.

Local laws require citizens to participate in “antiterror” drills as often as three times a day, weekly flag-raising ceremonies, impromptu identification and appearance inspections (beards and hijabs are prohibited), and other intrusions that distract from running a business. The BRI is designed to enable trade, but Beijing’s paranoia constrains commerce at every turn. This is not a flaw limited to Xinjiang but one that runs to the very core of Xi’s vision. He promises that the BRI will increase international financial flows, but its capital controls stand in the way. Hardest to reconcile may be Xi’s promise to speed the flow of information and ideas. As he said at the first Belt and Road Forum, “The ancient silk routes were not for trade only, they boosted flow of knowledge as well.”24 But Chinese censorship and cybersecurity laws have become more intrusive.


pages: 337 words: 96,666

Practical Doomsday: A User's Guide to the End of the World by Michal Zalewski

accounting loophole / creative accounting, AI winter, anti-communist, artificial general intelligence, bank run, big-box store, bitcoin, blockchain, book value, Buy land – they’re not making it any more, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carrington event, clean water, coronavirus, corporate governance, COVID-19, cryptocurrency, David Graeber, decentralized internet, deep learning, distributed ledger, diversification, diversified portfolio, Dogecoin, dumpster diving, failed state, fiat currency, financial independence, financial innovation, fixed income, Fractional reserve banking, Francis Fukuyama: the end of history, Haber-Bosch Process, housing crisis, index fund, indoor plumbing, information security, inventory management, Iridium satellite, Joan Didion, John Bogle, large denomination, lifestyle creep, mass immigration, McDonald's hot coffee lawsuit, McMansion, medical bankruptcy, Modern Monetary Theory, money: store of value / unit of account / medium of exchange, moral panic, non-fungible token, nuclear winter, off-the-grid, Oklahoma City bombing, opioid epidemic / opioid crisis, paperclip maximiser, passive investing, peak oil, planetary scale, ransomware, restrictive zoning, ride hailing / ride sharing, risk tolerance, Ronald Reagan, Satoshi Nakamoto, Savings and loan crisis, self-driving car, shareholder value, Silicon Valley, supervolcano, systems thinking, tech worker, Ted Kaczynski, TED Talk, Tunguska event, underbanked, urban sprawl, Wall-E, zero-sum game, zoonotic diseases

Annie Lowrey, “Could Index Funds Be ‘Worse Than Marxism’?,” The Atlantic, April 5, 2021, https://www.theatlantic.com/ideas/archive/2021/04/the-autopilot-economy/618497/. 21. “Greeks Cannot Tap Cash in Safe Deposit Boxes Under Capital Controls,” Reuters, July 5, 2015, https://www.reuters.com/article/eurozone-greece-cash/greeks-cannot-tap-cash-in-safe-deposit-boxes-under-capital-controls-idUSA8N0XO00920150705. 22. Michael Finnegan, “After FBI Seizure of Safe Deposit Boxes in Beverly Hills, Legal Challenges Mount,” Los Angeles Times, April 8, 2021, https://www.latimes.com/california/story/2021-04-08/seizure-beverly-hills-safe-deposit-boxes-lawsuits/.


Capitalism, Alone: The Future of the System That Rules the World by Branko Milanovic

affirmative action, Asian financial crisis, assortative mating, barriers to entry, basic income, Berlin Wall, bilateral investment treaty, Black Swan, Branko Milanovic, capital controls, Capital in the Twenty-First Century by Thomas Piketty, carried interest, colonial rule, corporate governance, creative destruction, crony capitalism, deindustrialization, dematerialisation, Deng Xiaoping, discovery of the americas, European colonialism, Fall of the Berlin Wall, financial deregulation, Francis Fukuyama: the end of history, full employment, ghettoisation, gig economy, Gini coefficient, global supply chain, global value chain, Great Leap Forward, high net worth, household responsibility system, income inequality, income per capita, invention of the wheel, invisible hand, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, labor-force participation, laissez-faire capitalism, land reform, liberal capitalism, low skilled workers, Lyft, means of production, new economy, offshore financial centre, Paul Samuelson, plutocrats, post-materialism, purchasing power parity, remote working, rent-seeking, ride hailing / ride sharing, Robert Solow, Silicon Valley, single-payer health, special economic zone, Tax Reform Act of 1986, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen, uber lyft, universal basic income, Vilfredo Pareto, Washington Consensus, women in the workforce, working-age population, Xiaogang Anhui farmers

Opening a foreign account later, when he was in a position of high authority, would have been equally dangerous and difficult. When visiting foreign countries, officials at such high levels were never left alone. It was inconceivable that the prime minister would have been able to just walk into a Parisian bank office and open an account. (Leaving aside for the moment that, in those years when capital controls existed in leading market economies as well, it would have been hard for him to do so, since he would not have been able to provide a local address and an ID.) Asking someone else to do it for him would have been dangerous, too, opening him up to the possibility of blackmail but also of political downfall if such activity were revealed to the “competent organs.”

This kind of corruption, limited to a few top leaders, is not something that can be considered as generalized corruption. Moreover, these advantages were not transferrable to the next generation. 28. In a book on corruption in Nigeria, Ngozi Okonjo-Iweala (2018) gives the example of electronic transactions between different ministries as one of the measures introduced to combat corruption. 29. British capital controls in the 1960s and 1970s are held responsible for the creation of financial offshore areas like the Channel Islands, where currency controls could be evaded. 30. José Piñera, “President Clinton and the Chilean Model,” Cato Policy Report, January / February 2016, https://www.cato.org/policy-report/januaryfebruary-2016/president-clinton-chilean-model. 31.


pages: 662 words: 180,546

Never Let a Serious Crisis Go to Waste: How Neoliberalism Survived the Financial Meltdown by Philip Mirowski

"there is no alternative" (TINA), Adam Curtis, Alan Greenspan, Alvin Roth, An Inconvenient Truth, Andrei Shleifer, asset-backed security, bank run, barriers to entry, Basel III, Bear Stearns, behavioural economics, Berlin Wall, Bernie Madoff, Bernie Sanders, Black Swan, blue-collar work, bond market vigilante , bread and circuses, Bretton Woods, Brownian motion, business cycle, capital controls, carbon credits, Carmen Reinhart, Cass Sunstein, central bank independence, cognitive dissonance, collapse of Lehman Brothers, collateralized debt obligation, complexity theory, constrained optimization, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, dark matter, David Brooks, David Graeber, debt deflation, deindustrialization, democratizing finance, disinformation, do-ocracy, Edward Glaeser, Eugene Fama: efficient market hypothesis, experimental economics, facts on the ground, Fall of the Berlin Wall, financial deregulation, financial engineering, financial innovation, Flash crash, full employment, George Akerlof, Glass-Steagall Act, Goldman Sachs: Vampire Squid, Greenspan put, Hernando de Soto, housing crisis, Hyman Minsky, illegal immigration, income inequality, incomplete markets, information asymmetry, invisible hand, Jean Tirole, joint-stock company, junk bonds, Kenneth Arrow, Kenneth Rogoff, Kickstarter, knowledge economy, l'esprit de l'escalier, labor-force participation, liberal capitalism, liquidity trap, loose coupling, manufacturing employment, market clearing, market design, market fundamentalism, Martin Wolf, money market fund, Mont Pelerin Society, moral hazard, mortgage debt, Naomi Klein, Nash equilibrium, night-watchman state, Northern Rock, Occupy movement, offshore financial centre, oil shock, Pareto efficiency, Paul Samuelson, payday loans, Philip Mirowski, Phillips curve, Ponzi scheme, Post-Keynesian economics, precariat, prediction markets, price mechanism, profit motive, public intellectual, quantitative easing, race to the bottom, random walk, rent-seeking, Richard Thaler, road to serfdom, Robert Shiller, Robert Solow, Ronald Coase, Ronald Reagan, Savings and loan crisis, savings glut, school choice, sealed-bid auction, search costs, Silicon Valley, South Sea Bubble, Steven Levy, subprime mortgage crisis, tail risk, technoutopianism, The Chicago School, The Great Moderation, the map is not the territory, The Myth of the Rational Market, the scientific method, The Theory of the Leisure Class by Thorstein Veblen, The Wisdom of Crowds, theory of mind, Thomas Kuhn: the structure of scientific revolutions, Thorstein Veblen, Tobin tax, tontine, too big to fail, transaction costs, Tyler Cowen, vertical integration, Vilfredo Pareto, War on Poverty, Washington Consensus, We are the 99%, working poor

(The free flow of labor enjoys no similar right.97) Since that entails persistent balance-of-payments problems in a nonautarkic world, neoliberals took the lead in inventing all manner of transnational devices for the economic and political discipline of nation-states.98 They began by attempting to reintroduce what they considered to be pure market discipline (flexible exchange rates, dismantling capital controls) during the destruction of the Bretton Woods system, but over the longer term learned to appreciate that suitably staffed international institutions such as the WTO, the World Bank, the IMF, and other units are better situated to impose neoliberal policies upon recalcitrant nation-states. Initially strident demands to abolish global financial (and other) institutions on the part of early neoliberals such as Friedman and some denizens of the Cato Institute were subsequently tempered by others—such as Anne Krueger, Stanley Fischer, and Kenneth Rogoff—and as these neoliberals came to occupy these institutions, they used them primarily to influence staffing and policy decisions, and thus to displace other internationalist agendas.

Because there was no obvious watershed linking policy to theory comparable to Bretton Woods, and the post-1980 infrastructure of international finance grew up piecemeal, the relationship between neoliberalism and the growth of shadow and offshore banking is only beginning to be a subject of interest. Evidence, by construction, is often inaccessible. However, the drive to offshore outsource manufacturing in the advanced economies, which was mutually symbiotic with the frustration of capital controls, was clearly a function of neoliberal doctrines concerning the unbounded benefits of freedom of international trade, combined with neoliberal projects to reengineer the corporation as an arbitrary nexus of contractual obligations, rather than as a repository of production expertise. The MPS member Anne Krueger was brought into dialogue with her fellow member Ronald Coase, and the offspring was the flight of capital to countries such as China, India, and the Cayman Islands.

The role of China as beneficiary, but simultaneously as part-time repudiator of the neoliberal globalized financial system, is a question that bedevils all concerned. While freedom of capital flows have not generally been stressed by neoliberals as salient causes of the crisis, they do manage to unite in opposition to capital controls as one reaction to the crisis. [9] Neoliberals regard inequality of economic resources and political rights not as an unfortunate by-product of capitalism, but a necessary functional characteristic of their ideal market system. Inequality is not only the natural state of market economies from a neoliberal perspective, but it is actually one of its strongest motor forces for progress.


pages: 584 words: 187,436

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

Alan Greenspan, Andrei Shleifer, Asian financial crisis, asset-backed security, automated trading system, bank run, barriers to entry, Bear Stearns, Benoit Mandelbrot, Berlin Wall, Bernie Madoff, Big bang: deregulation of the City of London, Bonfire of the Vanities, book value, Bretton Woods, business cycle, buy and hold, capital controls, Carmen Reinhart, collapse of Lehman Brothers, collateralized debt obligation, computerized trading, corporate raider, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, currency manipulation / currency intervention, currency peg, deal flow, do well by doing good, Elliott wave, Eugene Fama: efficient market hypothesis, failed state, Fall of the Berlin Wall, financial deregulation, financial engineering, financial innovation, financial intermediation, fixed income, full employment, German hyperinflation, High speed trading, index fund, Jim Simons, John Bogle, John Meriwether, junk bonds, Kenneth Rogoff, Kickstarter, Long Term Capital Management, low interest rates, machine translation, margin call, market bubble, market clearing, market fundamentalism, Market Wizards by Jack D. Schwager, Mary Meeker, merger arbitrage, Michael Milken, money market fund, moral hazard, Myron Scholes, natural language processing, Network effects, new economy, Nikolai Kondratiev, operational security, pattern recognition, Paul Samuelson, pre–internet, proprietary trading, public intellectual, quantitative hedge fund, quantitative trading / quantitative finance, random walk, Renaissance Technologies, Richard Thaler, risk-adjusted returns, risk/return, Robert Mercer, rolodex, Savings and loan crisis, Sharpe ratio, short selling, short squeeze, Silicon Valley, South Sea Bubble, sovereign wealth fund, statistical arbitrage, statistical model, survivorship bias, tail risk, technology bubble, The Great Moderation, The Myth of the Rational Market, the new new thing, too big to fail, transaction costs, two and twenty, uptick rule

Clamping down on speculators—guillotining them, as the French finance minister had urged—would have involved taming the waves of cross-border money on which the speculators surfed: It would have involved a return to Bretton Woods and the reimposition of capital controls. Most policy makers viewed this option with horror. If free trade in goods and services was beneficial, surely free flows of capital were good for the same reason; just as trade allowed car manufacturing to be concentrated in the countries that did it best, so cross-border capital flows funneled scarce savings to places that would invest them most productively. Moreover, capital controls might be impractical as well as intellectually suspect. In the week after the sterling crisis, Spain and Ireland tried to dampen speculative attacks on their currencies by restricting banks’ freedom to trade them.

In the week after the sterling crisis, Spain and Ireland tried to dampen speculative attacks on their currencies by restricting banks’ freedom to trade them. The controls were quickly circumvented. If capital controls were off the table, there was one remaining way to prevent speculative attacks on national currencies—abolish them. “Speculation can be very harmful,” Soros told an interviewer in the wake of sterling’s bust; a single European currency “would put speculators like me out of business, but I would be delighted to make that sacrifice.”57 Europe eventually unified its currencies in 1999, but not everybody learned. Emerging economies in Asia and Latin America stuck with the policy of pegging, creating immense opportunities for hedge funds later in the decade. 8 HURRICANE GREENSPAN In December 1993, Michael Steinhardt escaped to his vacation home in Anguilla.


Money and Government: The Past and Future of Economics by Robert Skidelsky

"Friedman doctrine" OR "shareholder theory", Alan Greenspan, anti-globalists, Asian financial crisis, asset-backed security, bank run, banking crisis, banks create money, barriers to entry, Basel III, basic income, Bear Stearns, behavioural economics, Ben Bernanke: helicopter money, Big bang: deregulation of the City of London, book value, Bretton Woods, British Empire, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, cognitive dissonance, collapse of Lehman Brothers, collateralized debt obligation, collective bargaining, constrained optimization, Corn Laws, correlation does not imply causation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, David Graeber, David Ricardo: comparative advantage, debt deflation, Deng Xiaoping, Donald Trump, Eugene Fama: efficient market hypothesis, eurozone crisis, fake news, financial deregulation, financial engineering, financial innovation, Financial Instability Hypothesis, forward guidance, Fractional reserve banking, full employment, Gini coefficient, Glass-Steagall Act, Goodhart's law, Growth in a Time of Debt, guns versus butter model, Hyman Minsky, income inequality, incomplete markets, inflation targeting, invisible hand, Isaac Newton, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Joseph Schumpeter, Kenneth Rogoff, Kondratiev cycle, labour market flexibility, labour mobility, land bank, law of one price, liberal capitalism, light touch regulation, liquidationism / Banker’s doctrine / the Treasury view, liquidity trap, long and variable lags, low interest rates, market clearing, market friction, Martin Wolf, means of production, Meghnad Desai, Mexican peso crisis / tequila crisis, mobile money, Modern Monetary Theory, Money creation, Mont Pelerin Society, moral hazard, mortgage debt, new economy, Nick Leeson, North Sea oil, Northern Rock, nudge theory, offshore financial centre, oil shock, open economy, paradox of thrift, Pareto efficiency, Paul Samuelson, Phillips curve, placebo effect, post-war consensus, price stability, profit maximization, proprietary trading, public intellectual, quantitative easing, random walk, regulatory arbitrage, rent-seeking, reserve currency, Richard Thaler, rising living standards, risk/return, road to serfdom, Robert Shiller, Ronald Reagan, savings glut, secular stagnation, shareholder value, short selling, Simon Kuznets, structural adjustment programs, technological determinism, The Chicago School, The Great Moderation, the payments system, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, tontine, too big to fail, trade liberalization, value at risk, Washington Consensus, yield curve, zero-sum game

For example, exchange rates were fixed, so speculation in foreign currencies was small; the financial system was barnacled with capital controls. With tame banking, financial crises were rare, and system-threatening ones non-existent. From the 1960s the trend was towards freeing finance from the straitjacket which the Great Depression and Second World War had placed it in. The development of the offshore euro-dollar market was an important breach in the wall of capital controls; in the 1970s banks were given the leading role in recycling OPEC surpluses. There was a relentless rundown in both capital and reserve ratios as the appetite for borrowing and lending grew, and the perceived risks fell.

As we shall see in Section V, it was the massive increase in embedded leverage that brought the financial system to grief. I V. L oose n i ng t h e R e gu l atory Noose By deregulation we mean a weakening of controls over the lending and borrowing activities of the banking system. Three important signposts on this ‘deregulatory’ road were: 1. The gradual dismantling of the capital controls that had limited the flow of money between countries, i.e. to whom it was possible in the world to lend money. The idea was to free up world savings so that they could be channelled to ‘their most productive uses across the globe’.23 Capital account liberalization was part of a broader project of financial globalization, managed by a number of international organizations with increasing power.


pages: 424 words: 115,035

How Will Capitalism End? by Wolfgang Streeck

"there is no alternative" (TINA), accounting loophole / creative accounting, air traffic controllers' union, Airbnb, Alan Greenspan, basic income, behavioural economics, Ben Bernanke: helicopter money, billion-dollar mistake, Bretton Woods, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, centre right, Clayton Christensen, collective bargaining, conceptual framework, corporate governance, creative destruction, credit crunch, David Brooks, David Graeber, debt deflation, deglobalization, deindustrialization, disruptive innovation, en.wikipedia.org, eurozone crisis, failed state, financial deregulation, financial innovation, first-past-the-post, fixed income, full employment, Gini coefficient, global reserve currency, Google Glasses, haute cuisine, income inequality, information asymmetry, invisible hand, John Maynard Keynes: Economic Possibilities for our Grandchildren, junk bonds, Kenneth Rogoff, labour market flexibility, labour mobility, late capitalism, liberal capitalism, low interest rates, market bubble, means of production, military-industrial complex, moral hazard, North Sea oil, offshore financial centre, open borders, pension reform, plutocrats, Plutonomy: Buying Luxury, Explaining Global Imbalances, post-industrial society, private sector deleveraging, profit maximization, profit motive, quantitative easing, reserve currency, rising living standards, Robert Gordon, savings glut, secular stagnation, shareholder value, sharing economy, sovereign wealth fund, tacit knowledge, technological determinism, The Future of Employment, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, transaction costs, Uber for X, upwardly mobile, Vilfredo Pareto, winner-take-all economy, Wolfgang Streeck

Yet since 2013, an astonishing number of voices have been heard in favour of a flexible currency regime, one that could enable democratic politics to even out imbalances through less destructive means than internal devaluations. The suggestions made range from a return to national currencies, via the temporary or permanent introduction of parallel currencies, together with capital controls, right through to a Keynesian two-tier currency system.37 No ‘nostalgia for the Deutschmark’ is required to see the urgent need for joint reflection on the reconstruction of the European single currency, in a way that might be beneficial for Europe, democracy and society. In principle, this theme might also emerge from the no less urgent search for a better global monetary system than exists at present – one that has become increasingly dysfunctional since the definitive dismantling of the Bretton Woods regime in the early 1970s, and almost brought the world economy to the point of collapse in 2008.

Subtle distinctions of the ‘varieties of capitalism’ sort do not apply here: post-war Japan had a trade union membership density of 80 to 90 per cent and a socialist government until it was removed by the American occupation; in Germany the country’s leading capitalists were in prison until they were freed by the Americans to be of help in the Korean War, and in the 1947 party manifesto of the Christian Democratic Union (CDU) capitalism was declared a threat to the ‘vital political and social interests of the German people’;8 in the United Kingdom a Labour government was voted in, which nationalized some 40 per cent of the country’s industrial capacity; and the United States was still the land of the New Deal, with extensive capital controls, a highly regulated financial sector, strong industrial trade unions, and ambitious social programmes to compensate its soldier-citizens for the sacrifices they had made for their country on the global battlefield.9 I cannot possibly discuss here in detail how this settlement – Wolfgang Merkel’s twice-embedded capitalist-democratic compound – broke up after it had held together, by and large, for roughly three decades.


pages: 489 words: 111,305

How the World Works by Noam Chomsky, Arthur Naiman, David Barsamian

"World Economic Forum" Davos, affirmative action, anti-communist, Ayatollah Khomeini, Berlin Wall, Bernie Sanders, Bretton Woods, British Empire, business climate, capital controls, clean water, corporate governance, deindustrialization, disinformation, Fall of the Berlin Wall, feminist movement, glass ceiling, heat death of the universe, Howard Zinn, income inequality, interchangeable parts, Isaac Newton, joint-stock company, land reform, liberation theology, military-industrial complex, Monroe Doctrine, Nixon triggered the end of the Bretton Woods system, offshore financial centre, plutocrats, race to the bottom, Ralph Nader, Ronald Reagan, Rosa Parks, single-payer health, strikebreaker, Telecommunications Act of 1996, transfer pricing, union organizing, War on Poverty, working poor

Japan, South Korea and Taiwan not only controlled labor and the poor, but also capital and the rich. Their debt went for internal investment, not export of capital. Japan didn’t allow export of capital until its economy had already reconstructed. South Korea didn’t either, until forced to remove capital controls and regulation of private borrowing, largely under US pressure, in very recent years. (It’s widely recognized that this forced liberalization was a significant factor in South Korea’s 1997 liquidity crisis.) Latin America has the worst income inequality in the world, and East Asia has perhaps the least.

See also Noriega, Manuel Canal changeover drug trafficking in economic sanctions on US aid to US invasion of US investment in Panama Deception, The Pannekoek, Anton “paradox of grace,” Paraguay Parks, Rosa Parry, Robert participatory democracy patents PBS (Public Broadcasting System) PC (political correctness) Peace Now (Israel) “peace process” doctrinal meaning of Israel and in Middle East Pechman, Joseph Penn Central Pentagon as conduit for high-tech investment increasing budget of media control by people’s views on public relations efforts of right-wing support of as subsidy for the rich Pentagon Papers Pentagon system capital controlled by end of Cold War and industrial policy masked by mask dropping from in Somalia Peretz, Martin Perot, Ross Perry, William “personal is political,” Personal Responsibility and Work Opportunity Act Peru petroleum. See oil pharmaceutical industry in India Philadelphia (PA) Philip Morris Philippines “philosophy of new nationalism,” Phnom Penh Pinkerton, Julie PKI PLO (Palestinian Liberation Organization).


pages: 409 words: 125,611

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

"World Economic Forum" Davos, accelerated depreciation, accounting loophole / creative accounting, affirmative action, Affordable Care Act / Obamacare, agricultural Revolution, Alan Greenspan, Asian financial crisis, banking crisis, Bear Stearns, Berlin Wall, Bernie Madoff, Branko Milanovic, Bretton Woods, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, carbon tax, Carmen Reinhart, carried interest, classic study, clean water, collapse of Lehman Brothers, collective bargaining, company town, computer age, corporate governance, credit crunch, Credit Default Swap, deindustrialization, Detroit bankruptcy, discovery of DNA, Doha Development Round, everywhere but in the productivity statistics, Fall of the Berlin Wall, financial deregulation, financial innovation, full employment, gentrification, George Akerlof, ghettoisation, Gini coefficient, glass ceiling, Glass-Steagall Act, global macro, global supply chain, Home mortgage interest deduction, housing crisis, income inequality, income per capita, information asymmetry, job automation, Kenneth Rogoff, Kickstarter, labor-force participation, light touch regulation, Long Term Capital Management, low interest rates, manufacturing employment, market fundamentalism, mass incarceration, moral hazard, mortgage debt, mortgage tax deduction, new economy, obamacare, offshore financial centre, oil shale / tar sands, Paul Samuelson, plutocrats, purchasing power parity, quantitative easing, race to the bottom, rent-seeking, rising living standards, Robert Solow, Ronald Reagan, Savings and loan crisis, school vouchers, secular stagnation, Silicon Valley, Simon Kuznets, subprime mortgage crisis, The Chicago School, the payments system, Tim Cook: Apple, too big to fail, trade liberalization, transaction costs, transfer pricing, trickle-down economics, Turing machine, unpaid internship, upwardly mobile, urban renewal, urban sprawl, very high income, War on Poverty, Washington Consensus, We are the 99%, white flight, winner-take-all economy, working poor, working-age population

Second, no trade agreement should put commercial interests ahead of broader national interests, especially when non-traderelated issues like financial regulation and intellectual property are at stake. America’s trade agreement with Chile, for example, impedes Chile’s use of capital controls—even though the International Monetary Fund now recognizes that capital controls can be an important instrument of macro-prudential policy. Other trade agreements have insisted on financial liberalization and deregulation as well, even though the 2008 crisis should have taught us that the absence of good regulation can jeopardize economic prosperity.


pages: 386 words: 122,595

Naked Economics: Undressing the Dismal Science (Fully Revised and Updated) by Charles Wheelan

affirmative action, Alan Greenspan, Albert Einstein, Andrei Shleifer, barriers to entry, Bear Stearns, behavioural economics, Berlin Wall, Bernie Madoff, Boeing 747, Bretton Woods, business cycle, buy and hold, capital controls, carbon tax, Cass Sunstein, central bank independence, classic study, clean water, collapse of Lehman Brothers, congestion charging, creative destruction, Credit Default Swap, crony capitalism, currency manipulation / currency intervention, currency risk, Daniel Kahneman / Amos Tversky, David Brooks, demographic transition, diversified portfolio, Doha Development Round, Exxon Valdez, financial innovation, fixed income, floating exchange rates, George Akerlof, Gini coefficient, Gordon Gekko, Great Leap Forward, greed is good, happiness index / gross national happiness, Hernando de Soto, income inequality, index fund, interest rate swap, invisible hand, job automation, John Markoff, Joseph Schumpeter, junk bonds, Kenneth Rogoff, libertarian paternalism, low interest rates, low skilled workers, Malacca Straits, managed futures, market bubble, microcredit, money market fund, money: store of value / unit of account / medium of exchange, Network effects, new economy, open economy, presumed consent, price discrimination, price stability, principal–agent problem, profit maximization, profit motive, purchasing power parity, race to the bottom, RAND corporation, random walk, rent control, Richard Thaler, rising living standards, Robert Gordon, Robert Shiller, Robert Solow, Ronald Coase, Ronald Reagan, Sam Peltzman, school vouchers, seminal paper, Silicon Valley, Silicon Valley startup, South China Sea, Steve Jobs, tech worker, The Market for Lemons, the rule of 72, The Wealth of Nations by Adam Smith, Thomas L Friedman, Thomas Malthus, transaction costs, transcontinental railway, trickle-down economics, urban sprawl, Washington Consensus, Yogi Berra, young professional, zero-sum game

The owner of the Iceland franchises said that to make a “decent profit,” a Big Mac would have had to sell for the equivalent of more than six dollars—higher than anywhere else in the world and an untenable price for a country in the midst of a deep recession. McDonald’s closed its doors in Iceland instead.11 The economic wreckage that results time after time as investors flee a country suggests an obvious fix: Maybe it should be harder to flee. Some countries have experimented with capital controls, which place various kinds of limits on the free flow of capital. Like many obvious fixes, this one has less obvious problems. If foreign investors can’t leave a country with their capital, they are less likely to show up in the first place. It’s a bit like trying to improve revenues at a department store by banning all returns.

It’s a bit like trying to improve revenues at a department store by banning all returns. A group of economists studied fifty-two poor countries between 1980 and 2001 to examine the relationship between financial liberalization (making it easier to move capital in and out of the country) and economic performance. There is a tradeoff: Countries that impose some kind of capital controls also grow more slowly. The Economist summarized the study’s findings: “An occasional crisis may be a price worth paying for faster growth.”12 Okay, what if we all had the same currency? Wouldn’t that help avoid currency-related headaches? After all, Iowa has never had a financial meltdown because Illinois investors took their capital back across the Mississippi River.


pages: 497 words: 123,718

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

"RICO laws" OR "Racketeer Influenced and Corrupt Organizations", "World Economic Forum" Davos, accelerated depreciation, addicted to oil, airline deregulation, Andrei Shleifer, Asian financial crisis, Berlin Wall, big-box store, Bob Geldof, book value, Bretton Woods, British Empire, capital controls, centre right, clean water, colonial rule, corporate governance, corporate personhood, deglobalization, deindustrialization, disinformation, Doha Development Round, energy security, European colonialism, export processing zone, financial deregulation, financial independence, full employment, global village, high net worth, land bank, land reform, large denomination, liberal capitalism, Long Term Capital Management, Mexican peso crisis / tequila crisis, Mikhail Gorbachev, military-industrial complex, moral hazard, Naomi Klein, new economy, North Sea oil, offshore financial centre, oil shock, Ponzi scheme, race to the bottom, reserve currency, Ronald Reagan, Scramble for Africa, Seymour Hersh, statistical model, structural adjustment programs, Suez crisis 1956, Tax Reform Act of 1986, too big to fail, trade liberalization, transatlantic slave trade, transfer pricing, union organizing, Washington Consensus, working-age population, Yom Kippur War

These officials have then brought resistance into the institutions of corporate globalization. Walden Bello of Thailand’s Focus on the Global South describes how, in the midst of the East Asian financial crisis, public pressure led Prime Minister Mohamad Mahathir of Malaysia to break with the IMF and impose capital controls, saving the country from the worst effects of the crisis. According to Bello, Mahathir’s defiance of the IMF was not lost on Thaksin Shinawatra, who ran for prime minister of Thailand on an anti-IMF platform and won. He went on to push for large government expenditures, which stimulated the consumer demand that brought Thailand out of recession.

Lobbies decision makers to change policies, and researches and promotes positive alternatives. Networks with people’s movements in the developing world. Dirty Money and Offshore Banking Baker, Raymond. Capitalism’s Achilles Heel: Dirty Money and How to Renew the Free Market System. New York: John Wiley & Sons, 2005. Epstein, Gerald. Capital Flight and Capital Controls in Developing Countries. Northampton, Mass.: Edward Elgar, 2005. Epstein, Gerald, ed. Financialization and the World Economy. Northampton, Mass.: Edward Elgar, 2006. Hampton, Mark, and Jason Abbott. Offshore Finance Centres and Tax Havens: The Rise of Global Capital. London: Macmillan, 1999.


pages: 843 words: 223,858

The Rise of the Network Society by Manuel Castells

air traffic controllers' union, Alan Greenspan, Apple II, Asian financial crisis, barriers to entry, Big bang: deregulation of the City of London, Bob Noyce, borderless world, British Empire, business cycle, capital controls, classic study, complexity theory, computer age, Computer Lib, computerized trading, content marketing, creative destruction, Credit Default Swap, declining real wages, deindustrialization, delayed gratification, dematerialisation, deskilling, digital capitalism, digital divide, disintermediation, double helix, Douglas Engelbart, Douglas Engelbart, edge city, experimental subject, export processing zone, Fairchild Semiconductor, financial deregulation, financial independence, floating exchange rates, future of work, gentrification, global village, Gunnar Myrdal, Hacker Ethic, hiring and firing, Howard Rheingold, illegal immigration, income inequality, independent contractor, Induced demand, industrial robot, informal economy, information retrieval, intermodal, invention of the steam engine, invention of the telephone, inventory management, Ivan Sutherland, James Watt: steam engine, job automation, job-hopping, John Markoff, John Perry Barlow, Kanban, knowledge economy, knowledge worker, labor-force participation, laissez-faire capitalism, Leonard Kleinrock, longitudinal study, low skilled workers, manufacturing employment, Marc Andreessen, Marshall McLuhan, means of production, megacity, Menlo Park, military-industrial complex, moral panic, new economy, New Urbanism, offshore financial centre, oil shock, open economy, packet switching, Pearl River Delta, peer-to-peer, planetary scale, popular capitalism, popular electronics, post-Fordism, post-industrial society, Post-Keynesian economics, postindustrial economy, prediction markets, Productivity paradox, profit maximization, purchasing power parity, RAND corporation, Recombinant DNA, Robert Gordon, Robert Metcalfe, Robert Solow, seminal paper, Shenzhen special economic zone , Shoshana Zuboff, Silicon Valley, Silicon Valley startup, social software, South China Sea, South of Market, San Francisco, special economic zone, spinning jenny, statistical model, Steve Jobs, Steve Wozniak, Strategic Defense Initiative, tacit knowledge, technological determinism, Ted Nelson, the built environment, the medium is the message, the new new thing, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, total factor productivity, trade liberalization, transaction costs, urban renewal, urban sprawl, vertical integration, work culture , zero-sum game

These policies began in the United States in the mid-1970s, and in Britain in the early 1980s, spread throughout the European Union in the 1980s, and became the dominant policy in most countries in the world, and the common standard in the international economic system, in the 1990s.111 How and why it happened is a matter for historians. Yet, a few remarks on the genesis of the global economy could help to understand its contours in the twenty-first century. Although some important measures were adopted in the 1970s (for example, in the US cross-border capital controls were abolished, for all practical purposes, in 1974), there were two distinctive periods of government-led globalization. To simplify, I will differentiate between the 1980s and the 1990s. In the 1980s, the simultaneous arrival to power of staunch conservative, ideological free-marketeers in the United States (Reagan, elected in 1980) and in the UK (Thatcher, elected in 1979) signaled a turning point.

Britain abolished exchange controls in 1980, and the second financial futures exchange market, after Chicago, was established in London in 1982. France followed, setting up its own futures exchange, MATIF, in 1986. Germany remained more cautious about financial deregulation, although cross-border capital controls were eliminated in 1981. The Asian financial markets, particularly Hong Kong and Singapore, took advantage of their loosely regulated environment to attract financial transactions, winning market shares over a more regulated Tokyo stock-exchange market. The full deregulation of financial markets in the City of London in October 1987 opened a new era of financial globalization, in spite (or because?)

Garreau, Joel Gates, Bill GATT GDP: exports; home/global markets; information technologies; investment; world trade Gelb, Joyce Gelernter, David gender: employment; Internet use Genentech genetic engineering; centers for; computing power; ethics; gene-cloning reproduction genetic therapy Gereffi, Gary Gerlach, Michael L. Germany: cross-border capital controls; employment; Eurex; GDP/exports; industry classifications; labor relations; Meta Study; occupational structure; producer services; productivity; R&D; Schroeder; self-employment; skill levels Geroski, P. Gershuny, J. I. ghettos Ghosh, Alo Ghoshal, Sumantra Gibson, David G. Giddens, Anthony Gille, Bertrand Gitlin, Todd Glasgall, William Gleick, James global city global economy; capitalism; China; control centers; currency trading; developing countries; employment; exclusion; financial markets; G-countries; institutions; Internet; investment/GDP; Latin America; mega-cities; multinational corporations; politics; volatility globalization; capitalism; deregulation; European Union; FDI; financial markets; firms; information technologies; labor; liberalization; media; misery; national governments; politics; production productivity; regionalization; socialism; state GM–Saturn Complex Godard, Francis Gold, Thomas Goldsmith, William W.


Lonely Planet Iceland by Lonely Planet

Airbnb, banking crisis, capital controls, car-free, carbon footprint, cashless society, centre right, DeepMind, European colonialism, Eyjafjallajökull, food miles, Kickstarter, low cost airline, Lyft, megaproject, Mikhail Gorbachev, New Urbanism, presumed consent, ride hailing / ride sharing, Ronald Reagan, Uber and Lyft, uber lyft

Iceland Today Tourism Boom Tourism Repercussions Protecting Iceland Political Hi-jinks Iceland Today Iceland's tourism has boomed in recent years. Thirty per cent growth each year since 2010 has helped the country stabilise its economy following the 2008 banking crash. Tourism has also brought a host of changes, and infrastructure and logistical planning are rushing to keep up. Meanwhile, the country is easing the capital controls put in place during the crash, and the populace is pressuring the government to respond to high-profile scandals. Tourism Boom Curious travellers started to arrive following the 2010 Eyjafjallajökull eruption and a smart publicity campaign led by the Iceland tourism board, which helped spread word of Iceland's charms.

Sigurður Ingi Jóhannsson (also of the Progressive Party) became acting prime minister. On a wave of ensuing anti-establishment sentiment, in June 2016 Iceland elected its first new president in 20 years: historian and author Guðni Thorlacius Jóhannesson, a political outsider. In the same year, capital controls put in place during the economic meltdown began to be eased (made possible partially by the tourism boom). Early parliamentary elections were held in October 2016, with the centre-right Independence Party (which shared power with the Progressive Party in the outgoing government) winning 29% of the vote, the Left-Green Movement 15.9% and the Pirate Party 14.5%.

Though bank creditors (many of them hedge funds) are still trying to recoup their money, Iceland’s approach won praise from the IMF and from numerous economists. This unique decision appears to be paying off. While other nations are floundering in the financial mire and dealing with record unemployment rates, Iceland is on the rise again. As of 2016, unemployment is back down to around 2.9% and capital controls put in place during the recovery are beginning to be eased. Timeline AD 600–700 Irish monks voyage to uninhabited Iceland, becoming the first (temporary) settlers. There is little archaeological evidence, although the element ‘papar’ (fathers) crops up in certain place names. 850–930 Norse settlers from Norway and Sweden arrive, call the island Snæland (Snow Land), then Garðarshólmi (Garðar’s Island), and finally Ísland (Iceland).


pages: 142 words: 45,733

Utopia or Bust: A Guide to the Present Crisis by Benjamin Kunkel

Alan Greenspan, Anthropocene, anti-communist, Bear Stearns, Bretton Woods, business cycle, capital controls, Carmen Reinhart, creative destruction, David Graeber, declining real wages, full employment, Hyman Minsky, income inequality, late capitalism, Lewis Mumford, liberal capitalism, liquidity trap, means of production, money: store of value / unit of account / medium of exchange, mortgage debt, Occupy movement, peak oil, price stability, profit motive, public intellectual, savings glut, Slavoj Žižek, The Wealth of Nations by Adam Smith, transatlantic slave trade, vertical integration, War on Poverty, We are the 99%, women in the workforce, Works Progress Administration, zero-sum game

In economics departments outside the US, he is usually given credit for this. But Kalecki’s politics were Marxist. * Keynes: “The whole management of the domestic economy depends upon being free to have the appropriate rate of interest without reference to the rates prevailing elsewhere in the world. Capital control is a corollary of this.” * The terror inspired by the notion of a “public option” attached to health care reform always indicated the bad faith behind familiar eulogies to the marvelous competitiveness of capital by comparison with the lumbering state. If the self-description of business were accurate, it would have nothing to fear from public competition. 4 David Graeber: In the Midst of Life We Are in Debt Most analysts divide postwar capitalism into two periods.


pages: 221 words: 46,396

The Left Case Against the EU by Costas Lapavitsas

anti-work, antiwork, banking crisis, Bretton Woods, capital controls, central bank independence, collective bargaining, declining real wages, eurozone crisis, financial engineering, Francis Fukuyama: the end of history, global reserve currency, hiring and firing, low interest rates, machine translation, neoliberal agenda, offshore financial centre, post-work, price stability, quantitative easing, reserve currency, Ronald Reagan, Washington Consensus, Wolfgang Streeck

In such an economy it is certainly feasible to stabilize exchange rates and produce far better economic results than the euro has done over the two decades of its existence. For that it would be necessary to have a proper anchor country as well as to apply controls on the movement of capital across Europe. Flexibility could then return to rebalancing the external relations of EU economies. With capital controls in place it would even be plausible to devise a new joint means of payment based on principles of solidarity that would be used among European states only to facilitate international transactions and not as domestic currency. Dismantling the EMU would create room for broader radical change in the EU.


pages: 385 words: 128,358

Inside the House of Money: Top Hedge Fund Traders on Profiting in a Global Market by Steven Drobny

Abraham Maslow, Alan Greenspan, Albert Einstein, asset allocation, Berlin Wall, Bonfire of the Vanities, Bretton Woods, business cycle, buy and hold, buy low sell high, capital controls, central bank independence, commoditize, commodity trading advisor, corporate governance, correlation coefficient, Credit Default Swap, currency risk, diversification, diversified portfolio, family office, financial engineering, fixed income, glass ceiling, Glass-Steagall Act, global macro, Greenspan put, high batting average, implied volatility, index fund, inflation targeting, interest rate derivative, inventory management, inverted yield curve, John Meriwether, junk bonds, land bank, Long Term Capital Management, low interest rates, managed futures, margin call, market bubble, Market Wizards by Jack D. Schwager, Maui Hawaii, Mexican peso crisis / tequila crisis, moral hazard, Myron Scholes, new economy, Nick Leeson, Nixon triggered the end of the Bretton Woods system, oil shale / tar sands, oil shock, out of africa, panic early, paper trading, Paul Samuelson, Peter Thiel, price anchoring, proprietary trading, purchasing power parity, Reminiscences of a Stock Operator, reserve currency, risk free rate, risk tolerance, risk-adjusted returns, risk/return, rolodex, Sharpe ratio, short selling, Silicon Valley, tail risk, The Wisdom of Crowds, too big to fail, transaction costs, value at risk, Vision Fund, yield curve, zero-coupon bond, zero-sum game

Many economists and institutions at the time blamed the Asia crisis on the openness of the global capital markets and the herd mentality of speculators. Malaysia’s prime minister, Dr. Mahathir Mohamad, publicly blamed George Soros for the economic ills that Malaysia suffered following the crisis and even considered currency speculation a crime. He shut down his country’s economy to so-called hot money by instituting draconian capital controls and fixing the Malaysian ringgit to the USD at 3.80. (See Figure 2.10.) As Scott Bessent recalls, it “was slightly worrying [because] it was the first time that someone had actually stopped paying lip service and actually shut down an economic system.” While Soros Fund Management returned 11.4 percent for the month 21 THE HISTORY OF GLOBAL MACRO HEDGE FUNDS 5 Ringgit per Dollar 4.5 4 3.5 Start of the Asia Crisis 3 Malaysia Pegs Ringgit to 3.80 per U.S.

Today, the global macro arena is populated with alumni of Soros,Tiger, and other big players from the early days of the strategy, as well as those T 31 32 INSIDE THE HOUSE OF MONEY from the global macro–oriented proprietary trading desks at Bankers Trust, Goldman Sachs, and Credit Suisse First Boston, who compete with a varied and diverse field.While there are no longer global macro hedge funds managing over $20 billion in assets, the capital controlled by macro fund managers today, in aggregate, is several times what it was 15 years ago (estimated by HFR at $116 billion in 2005 versus $39 billion in 1990). At the same time, the size and choice in global macro markets has expanded significantly with the growth in central bank assets and the development of various derivative instruments and emerging markets.


pages: 466 words: 127,728

The Death of Money: The Coming Collapse of the International Monetary System by James Rickards

"World Economic Forum" Davos, Affordable Care Act / Obamacare, Alan Greenspan, Asian financial crisis, asset allocation, Ayatollah Khomeini, bank run, banking crisis, Bear Stearns, Ben Bernanke: helicopter money, bitcoin, Black Monday: stock market crash in 1987, Black Swan, Boeing 747, Bretton Woods, BRICs, business climate, business cycle, buy and hold, capital controls, Carmen Reinhart, central bank independence, centre right, collateralized debt obligation, collective bargaining, complexity theory, computer age, credit crunch, currency peg, David Graeber, debt deflation, Deng Xiaoping, diversification, Dr. Strangelove, Edward Snowden, eurozone crisis, fiat currency, financial engineering, financial innovation, financial intermediation, financial repression, fixed income, Flash crash, floating exchange rates, forward guidance, G4S, George Akerlof, global macro, global reserve currency, global supply chain, Goodhart's law, Growth in a Time of Debt, guns versus butter model, Herman Kahn, high-speed rail, income inequality, inflation targeting, information asymmetry, invisible hand, jitney, John Meriwether, junk bonds, Kenneth Rogoff, labor-force participation, Lao Tzu, liquidationism / Banker’s doctrine / the Treasury view, liquidity trap, Long Term Capital Management, low interest rates, mandelbrot fractal, margin call, market bubble, market clearing, market design, megaproject, Modern Monetary Theory, Money creation, money market fund, money: store of value / unit of account / medium of exchange, mutually assured destruction, Nixon triggered the end of the Bretton Woods system, obamacare, offshore financial centre, oil shale / tar sands, open economy, operational security, plutocrats, Ponzi scheme, power law, price stability, public intellectual, quantitative easing, RAND corporation, reserve currency, risk-adjusted returns, Rod Stewart played at Stephen Schwarzman birthday party, Ronald Reagan, Satoshi Nakamoto, Silicon Valley, Silicon Valley startup, Skype, Solyndra, sovereign wealth fund, special drawing rights, Stuxnet, The Market for Lemons, Thomas Kuhn: the structure of scientific revolutions, Thomas L Friedman, too big to fail, trade route, undersea cable, uranium enrichment, Washington Consensus, working-age population, yield curve

A high savings rate is a sensible response. But like savers in the West, the Chinese are starved for yield. The low interest rates offered by the banks, a type of financial repression also practiced in the United States, make Chinese savers susceptible to higher-yielding investments. Foreign markets are mostly off-limits because of capital controls, and China’s own stock markets have proved highly volatile, performing poorly in recent years. China’s bond markets remain immature. Instead, Chinese savers have been attracted by two asset classes—real estate and structured products. The bubble in Chinese property markets, especially apartments and condos, is well known, but not every Chinese saver is positioned to participate in that market.

President Franklin Roosevelt used the Trading with the Enemy Act to confiscate gold from American citizens in 1933. He did not specify who the “enemy” was; presumably it was those who owned gold. Every president since Jimmy Carter has used IEEPA to freeze and seize assets in U.S. banks. In more dire future circumstances, gold could be confiscated, bank accounts frozen, capital controls imposed, and exchanges closed. Wage and price controls could be used to suppress inflation, and modern digital surveillance could be used to disrupt black markets and incarcerate black marketeers. The money riots would be squashed quickly. In the ontology of state power, order comes before liberty or justice


pages: 448 words: 142,946

Sacred Economics: Money, Gift, and Society in the Age of Transition by Charles Eisenstein

Albert Einstein, back-to-the-land, bank run, Bernie Madoff, big-box store, bread and circuses, Bretton Woods, capital controls, carbon credits, carbon tax, clean water, collateralized debt obligation, commoditize, corporate raider, credit crunch, David Ricardo: comparative advantage, debt deflation, degrowth, deindustrialization, delayed gratification, disintermediation, diversification, do well by doing good, fiat currency, financial independence, financial intermediation, fixed income, floating exchange rates, Fractional reserve banking, full employment, global supply chain, God and Mammon, happiness index / gross national happiness, hydraulic fracturing, informal economy, intentional community, invisible hand, Jane Jacobs, land tenure, land value tax, Lao Tzu, Lewis Mumford, liquidity trap, low interest rates, McMansion, means of production, megaproject, Money creation, money: store of value / unit of account / medium of exchange, moral hazard, mortgage debt, multilevel marketing, new economy, off grid, oil shale / tar sands, Own Your Own Home, Paul Samuelson, peak oil, phenotype, planned obsolescence, Ponzi scheme, profit motive, quantitative easing, race to the bottom, Scramble for Africa, special drawing rights, spinning jenny, technoutopianism, the built environment, Thomas Malthus, too big to fail, Tragedy of the Commons

Indeed, local currencies will never be able to expand beyond marginal status unless they have a credit mechanism that protects them from the speculative runs that numerous national currencies have suffered in the last twenty years. Local and regional credit-clearing organizations can exercise capital control functions similar to those that wiser nations imposed when developing their economies through import substitution. The most famous mutual-credit system, Switzerland’s WIR, provides a rather extreme model for this principle: once you buy into it, you are not permitted to cash out. On a local level, this would force foreign investors to source components locally.

It happened in Argentina in 2002; it almost happened in California in 2009; and with the likely breakup of the Economic and Monetary Union (EMU), a significant devolution of monetary sovereignty back to smaller nations may be happening in Europe. As the present crisis deepens, regional governments and smaller nations will have a chance to reclaim economic sovereignty by issuing currency and protecting it from global financial markets through capital controls, foreign-exchange transaction taxes, and so forth. Governments can also give preferential treatment to local businesses in allocating contracts. Finally, local and regional governments can reclaim their credit sovereignty from international finance by establishing public banks and other credit-generating institutions.


pages: 464 words: 139,088

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

Alan Greenspan, Andrei Shleifer, Asian financial crisis, asset-backed security, balance sheet recession, bank run, banking crisis, banks create money, behavioural economics, Berlin Wall, Bernie Madoff, Big bang: deregulation of the City of London, bitcoin, Black Monday: stock market crash in 1987, Black Swan, Boeing 747, Bretton Woods, British Empire, business cycle, capital controls, Carmen Reinhart, Cass Sunstein, central bank independence, centre right, classic study, collapse of Lehman Brothers, creative destruction, Credit Default Swap, crowdsourcing, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, distributed generation, Doha Development Round, Edmond Halley, Fall of the Berlin Wall, falling living standards, fiat currency, financial engineering, financial innovation, financial intermediation, floating exchange rates, foreign exchange controls, forward guidance, Fractional reserve banking, Francis Fukuyama: the end of history, full employment, German hyperinflation, Glass-Steagall Act, Great Leap Forward, Hyman Minsky, inflation targeting, invisible hand, Japanese asset price bubble, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Meriwether, joint-stock company, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, labour market flexibility, large denomination, lateral thinking, liquidity trap, Long Term Capital Management, low interest rates, manufacturing employment, market clearing, Martin Wolf, Mexican peso crisis / tequila crisis, Money creation, money market fund, money: store of value / unit of account / medium of exchange, moral hazard, Myron Scholes, Nick Leeson, no-fly zone, North Sea oil, Northern Rock, oil shale / tar sands, oil shock, open economy, paradox of thrift, Paul Samuelson, Ponzi scheme, price mechanism, price stability, proprietary trading, purchasing power parity, quantitative easing, rent-seeking, reserve currency, Richard Thaler, rising living standards, Robert Shiller, Robert Solow, Satoshi Nakamoto, savings glut, secular stagnation, seigniorage, stem cell, Steve Jobs, The Great Moderation, the payments system, The Rise and Fall of American Growth, Thomas Malthus, too big to fail, transaction costs, Tyler Cowen: Great Stagnation, yield curve, Yom Kippur War, zero-sum game

Monetary union, far from leading to greater political integration, was proving the most divisive development in post-war Europe. By the end of July 2012, exit from the euro for Greece and perhaps others was becoming accepted as likely. The ECB, the European Commission and the German government had plans for how to handle a Greek exit. It was widely assumed that exit would imply the imposition of capital controls in Greece, and probably a bank holiday to allow the government to nationalise many, if not most, of the local banks. Then came the démarche that transformed market sentiment. At a Global Investment Conference on 26 July to mark the start of the London Olympic Games, I chaired a panel of central bank governors.

Locked into a fixed-rate regime, the real exchange rate had become too high, and the only way to improve competitiveness was through a depression that reduced domestic wages and prices. Argentina’s debt position was akin to that of Greece, and it had a similarly high unemployment rate. So in the face of a deep depression, the exchange rate regime was abandoned and capital controls were introduced. Bank accounts were redenominated in new pesos, imposing substantial losses on account holders. Initially, the chaos led to a 10 per cent drop in GDP during 2002. But after the initial turmoil, Argentina was able to return to a period of economic growth. Commodity prices rose steadily for a decade and Argentina was able to enjoy rapid growth of GDP – almost 10 per cent a year for five years.


Super Continent: The Logic of Eurasian Integration by Kent E. Calder

"World Economic Forum" Davos, 3D printing, air freight, Asian financial crisis, Bear Stearns, Berlin Wall, blockchain, Bretton Woods, business intelligence, capital controls, Capital in the Twenty-First Century by Thomas Piketty, classic study, cloud computing, colonial rule, Credit Default Swap, cuban missile crisis, deindustrialization, demographic transition, Deng Xiaoping, disruptive innovation, Doha Development Round, Donald Trump, energy transition, European colonialism, export processing zone, failed state, Fall of the Berlin Wall, foreign exchange controls, geopolitical risk, Gini coefficient, high-speed rail, housing crisis, income inequality, industrial cluster, industrial robot, interest rate swap, intermodal, Internet of things, invention of movable type, inventory management, John Markoff, liberal world order, Malacca Straits, Mikhail Gorbachev, mittelstand, money market fund, moral hazard, new economy, oil shale / tar sands, oil shock, purchasing power parity, quantitative easing, reserve currency, Ronald Reagan, seigniorage, Shenzhen special economic zone , smart cities, smart grid, SoftBank, South China Sea, sovereign wealth fund, special drawing rights, special economic zone, Suez canal 1869, Suez crisis 1956, supply-chain management, Thomas L Friedman, trade liberalization, trade route, transcontinental railway, UNCLOS, UNCLOS, union organizing, Washington Consensus, working-age population, zero-sum game

Although these junctures set the basic trajectory, through the historic transformations in continental political-economic structure that they provoked, the fateful long-term global implications remained muted for more than a decade. China, which emerged only minimally affected by the Asian financial crisis of the 1990s due to its extensive capital controls, continued to rise gradually in economic terms following the crisis, powered by heavy and rising exports to the United States. The pace of China’s ascent, however, was slower than during the 1980s and early 1990s. Meanwhile, the US and Europe also grew steadily, powered first by the dot-com boom of the late 1990s, and later by the steady housing construction of the early 2000s, as well as the expansion of government spending entailed by the Afghanistan and Iraq conflicts.

The rising scale of RMB reliance, however, could well increase further still in future years, both within Asia and beyond, and especially as Chinese financial instruments grow more sophisticated and the People’s Republic’s markets grow deeper. A critical uncertainty, to be sure, is the future of Chinese capital controls—their removal or relaxation would no doubt increase confidence in the RMB still further. It is also possible, however, that China could further develop its hybrid system of continued domestic controls, coupled with expanded off-shore transactions through congenial markets like Hong Kong or London, to finance the extensive requirements of the BRI.


pages: 1,202 words: 424,886

Stigum's Money Market, 4E by Marcia Stigum, Anthony Crescenzi

accounting loophole / creative accounting, Alan Greenspan, Asian financial crisis, asset allocation, asset-backed security, bank run, banking crisis, banks create money, Bear Stearns, Black-Scholes formula, book value, Brownian motion, business climate, buy and hold, capital controls, central bank independence, centralized clearinghouse, corporate governance, credit crunch, Credit Default Swap, cross-border payments, currency manipulation / currency intervention, currency risk, David Ricardo: comparative advantage, disintermediation, distributed generation, diversification, diversified portfolio, Dutch auction, financial innovation, financial intermediation, fixed income, flag carrier, foreign exchange controls, full employment, Glass-Steagall Act, Goodhart's law, Greenspan put, guns versus butter model, high net worth, implied volatility, income per capita, intangible asset, interest rate derivative, interest rate swap, inverted yield curve, junk bonds, land bank, large denomination, locking in a profit, London Interbank Offered Rate, low interest rates, margin call, market bubble, market clearing, market fundamentalism, Money creation, money market fund, mortgage debt, Myron Scholes, offshore financial centre, paper trading, pension reform, Phillips curve, Ponzi scheme, price mechanism, price stability, profit motive, proprietary trading, prudent man rule, Real Time Gross Settlement, reserve currency, risk free rate, risk tolerance, risk/return, Savings and loan crisis, seigniorage, shareholder value, short selling, short squeeze, tail risk, technology bubble, the payments system, too big to fail, transaction costs, two-sided market, value at risk, volatility smile, yield curve, zero-coupon bond, zero-sum game

The worry was that in the absence of reserve requirements, a very large pool of money would fall outside the control of monetary authorities as well as the auspices of regulators. This led the G-10 central banks to agree to reduce the amount of money that they would place offshore. These measures became unnecessary when the segmentation that had developed in the onshore and offshore money markets as a result of capital controls evaporated when the capital controls were lifted (McCauley, 2005). Choosing between Eurodollar and U.S. Bonds Since foreign central banks hold only about a third of their official dollar holdings in the form of bank deposits, it is important to maintain a focus on the factors that influence the decision to invest in either Eurodollar bonds or U.S. bonds.

The operation of Regulation Q also encouraged foreign holders of dollars who would have deposited them in New York to put their dollars in London. Thus, for example, surplus German dollars borrowed by Italians ended up passing through London instead of New York. Another important stimulus to the Eurodollar market was the various capital controls that the United States instituted during the 1960s to improve its balance of payments, which was in deficit. The first of these, the Interest Equalization Tax passed in 1964, was designed to discourage the issuance by foreign borrowers of debt obligations in the U.S. market. This measure was followed in 1965 by the Foreign Credit Restraint Program, which limited the amount of credit U.S. banks could extend to foreign borrowers.

This was the case particularly in the early days of the Eurodollar market because the yield pickup on Eurodollars was fairly large, especially in comparison to today (see Figure 18.3). The wide yield spreads created a strong incentive for central banks to shift their deposits offshore into the Eurodollar market. Capital controls put in place by the United States in 1965 that were subsequently abolished in 1974 had an important influence on the yield spread, with lending by U.S. banks to foreigners supervised by U.S. regulators. This inhibited arbitrage opportunities, which sustained the wide yield spread. Central banks hence were compelled to hold their dollar deposits offshore where yields were substantially higher.


pages: 177 words: 50,167

The Populist Explosion: How the Great Recession Transformed American and European Politics by John B. Judis

affirmative action, Affordable Care Act / Obamacare, Albert Einstein, anti-communist, back-to-the-land, Bernie Sanders, Boris Johnson, Bretton Woods, capital controls, carbon tax, centre right, Charlie Hebdo massacre, collapse of Lehman Brothers, deindustrialization, desegregation, Donald Trump, eurozone crisis, financial deregulation, first-past-the-post, fixed income, full employment, ghettoisation, glass ceiling, Glass-Steagall Act, hiring and firing, illegal immigration, immigration reform, income inequality, invisible hand, Jeremy Corbyn, laissez-faire capitalism, Les Trente Glorieuses, mass immigration, means of production, neoliberal agenda, obamacare, Occupy movement, open borders, plutocrats, Post-Keynesian economics, post-materialism, rolodex, Ronald Reagan, Silicon Valley, War on Poverty, We are the 99%, white flight, Winter of Discontent

But Europe began to suffer a downturn in the early ’70s. The principal cause, as in the United States, was a combination of a profit squeeze from a militant labor movement and the development of global overcapacity in key postwar industries like textiles and steel. But in Western Europe, the slowdown was aggravated by the abandonment of capital controls and America’s abandonment of a fixed and overvalued currency that had given Europeans a price advantage. The energy price hike that began in 1973 also hit oil-dependent Europe particularly hard. Growth slowed and unemployment rose. Comparing the period 1950 to 1973 with the period from 1973 to 1995, France’s average rate of growth fell from 5.1 to 2.7 percent; Germany’s from 6.0 to 2.7 percent; and Sweden’s from 4.1 to 1.5 percent.


pages: 209 words: 53,236

The Scandal of Money by George Gilder

Affordable Care Act / Obamacare, Alan Greenspan, bank run, behavioural economics, Bernie Sanders, bitcoin, blockchain, borderless world, Bretton Woods, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, Claude Shannon: information theory, Clayton Christensen, cloud computing, corporate governance, cryptocurrency, currency manipulation / currency intervention, currency risk, Daniel Kahneman / Amos Tversky, decentralized internet, Deng Xiaoping, disintermediation, Donald Trump, fiat currency, financial innovation, Fractional reserve banking, full employment, George Gilder, glass ceiling, guns versus butter model, Home mortgage interest deduction, impact investing, index fund, indoor plumbing, industrial robot, inflation targeting, informal economy, Innovator's Dilemma, Internet of things, invisible hand, Isaac Newton, James Carville said: "I would like to be reincarnated as the bond market. You can intimidate everybody.", Jeff Bezos, John Bogle, John von Neumann, Joseph Schumpeter, Kenneth Rogoff, knowledge economy, Law of Accelerating Returns, low interest rates, Marc Andreessen, Mark Spitznagel, Mark Zuckerberg, Menlo Park, Metcalfe’s law, Money creation, money: store of value / unit of account / medium of exchange, mortgage tax deduction, Nixon triggered the end of the Bretton Woods system, obamacare, OSI model, Paul Samuelson, Peter Thiel, Ponzi scheme, price stability, Productivity paradox, proprietary trading, purchasing power parity, quantitative easing, quantitative trading / quantitative finance, Ray Kurzweil, reality distortion field, reserve currency, road to serfdom, Robert Gordon, Robert Metcalfe, Ronald Reagan, Sand Hill Road, Satoshi Nakamoto, Search for Extraterrestrial Intelligence, secular stagnation, seigniorage, Silicon Valley, Skinner box, smart grid, Solyndra, South China Sea, special drawing rights, The Great Moderation, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Tim Cook: Apple, time value of money, too big to fail, transaction costs, trickle-down economics, Turing machine, winner-take-all economy, yield curve, zero-sum game

But by putting capital into the hands of the least productive users of it—politicians—he would aggravate the very stagnation he warns against. Turner and Piketty both urge an array of global wealth taxes as high as 10 percent and new marginal income-tax rates as high as 80 percent. They also call for new regulatory regimes for alternative energy and new capital controls. Turner advocates 30 to 40 percent reserve requirements for banks, regulations on “shadow banking” derivatives and securities, restrictions on international capital movements, and a global regime of trade rules. Since they believe the Great Recession had many causes, they marshal many regulatory tools to combat it and prevent its recurrence.


The New Class War: Saving Democracy From the Metropolitan Elite by Michael Lind

"World Economic Forum" Davos, affirmative action, anti-communist, basic income, Bernie Sanders, Boris Johnson, Bretton Woods, Brexit referendum, business cycle, Cambridge Analytica, capital controls, Cass Sunstein, central bank independence, centre right, collective bargaining, commoditize, corporate governance, cotton gin, crony capitalism, deindustrialization, disinformation, Doha Development Round, Donald Trump, Edward Snowden, export processing zone, fake news, future of work, gentrification, global supply chain, guest worker program, Haight Ashbury, illegal immigration, immigration reform, independent contractor, invisible hand, Jeremy Corbyn, knowledge economy, Les Trente Glorieuses, liberal world order, low skilled workers, low-wage service sector, manufacturing employment, Mark Zuckerberg, mass immigration, means of production, Michael Milken, moral panic, Nate Silver, new economy, offshore financial centre, oil shock, open borders, plutocrats, Ponzi scheme, purchasing power parity, Ralph Nader, regulatory arbitrage, rent-seeking, Richard Florida, Ronald Reagan, scientific management, Silicon Valley, SoftBank, The Wealth of Nations by Adam Smith, Thorstein Veblen, Timothy McVeigh, trade liberalization, union organizing, universal basic income, upwardly mobile, WikiLeaks, Wolfgang Streeck, working poor

Even the most business-friendly postwar democracies like the US and Britain and West Germany had mixed economies characterized by forms of labor-business bargaining and economic regulation and public spending that would have been politically impossible before the Great Depression and World War II. Under the postwar Bretton Woods system, exchange rates were controlled and capital controls in Western Europe were not relaxed until the late 1950s. The first class war in the industrial West between the managerial overclass and the working class ended after 1945 with national class compromises like the New Deal in the US, designed to buy social peace first during wartime mobilization and then in postwar economic recovery by incorporating formerly marginalized workers and family farmers into the national power structure.


pages: 537 words: 158,544

Second World: Empires and Influence in the New Global Order by Parag Khanna

Abraham Maslow, Admiral Zheng, affirmative action, anti-communist, Asian financial crisis, Bartolomé de las Casas, Branko Milanovic, British Empire, call centre, capital controls, central bank independence, cognitive dissonance, colonial rule, complexity theory, continuation of politics by other means, crony capitalism, death from overwork, Deng Xiaoping, different worldview, Dissolution of the Soviet Union, Donald Trump, dual-use technology, Edward Glaeser, energy security, European colonialism, export processing zone, facts on the ground, failed state, flex fuel, Francis Fukuyama: the end of history, friendly fire, gentrification, Gini coefficient, global reserve currency, global supply chain, Great Leap Forward, guns versus butter model, haute couture, Hernando de Soto, illegal immigration, income inequality, informal economy, invisible hand, Islamic Golden Age, karōshi / gwarosa / guolaosi, Khyber Pass, Kickstarter, knowledge economy, land reform, Londongrad, low cost airline, low skilled workers, mass immigration, means of production, megacity, meritocracy, military-industrial complex, Monroe Doctrine, Nelson Mandela, no-fly zone, oil shale / tar sands, oil shock, oil-for-food scandal, open borders, open economy, Parag Khanna, Pax Mongolica, Pearl River Delta, pirate software, Plutonomy: Buying Luxury, Explaining Global Imbalances, Potemkin village, price stability, race to the bottom, RAND corporation, reserve currency, restrictive zoning, rising living standards, Robert Solow, Ronald Reagan, Silicon Valley, Skype, South China Sea, special economic zone, stem cell, Stephen Hawking, Suez crisis 1956, Thomas L Friedman, trade route, trickle-down economics, uranium enrichment, urban renewal, Washington Consensus, women in the workforce

Leadership can make much of the difference anywhere in the world, and while Venezuelans are stuck with Hugo Chávez, Malaysians had Mahathir bin Mohamad. Mahathir and his advisers were convinced that globalization was dangerous unless it was steered. During the Asian financial crisis, they bucked the international strictures that ravaged the Thai and Indonesian economies, instead imposing capital controls to keep the Malay ringgit afloat. As second-world leaders increasingly realize that globalization requires strong management to avoid uncontrollably exacerbating existing disparities, they are more likely to emulate Malaysia than Argentina. “Dr. M,” as Mahathir’s supporters call him, is a Muslim Lee Kuan Yew, second only to Lee as a defender of Asian values, who argues that there are common virtues between Islam and Confucianism, such as reciprocity and loyalty.

But even then, the second-world anti-imperial belt of Venezuela, Iran, Kazakhstan, Libya, Malaysia and others will continue to focus as much on building ties among themselves as with Washington, Brussels, or Beijing. Not only will these countries syncretize the best of what each superpower offers to achieve their own vision of success, they will also partner directly with one another to extract oil reserves, share intelligence, combat terrorism, reduce poverty, implement capital controls, and build modern infrastructure. They will use their sovereign wealth to buy Western banks, ports, and other strategic assests. Their regional groups will continue to construct their own economic zones, development banks, peacekeeping forces, and criminal courts. Airline connections have sprouted to connect Arabs, South Americans, and East Asians directly to one another.


pages: 497 words: 144,283

Connectography: Mapping the Future of Global Civilization by Parag Khanna

"World Economic Forum" Davos, 1919 Motor Transport Corps convoy, 2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, 9 dash line, additive manufacturing, Admiral Zheng, affirmative action, agricultural Revolution, Airbnb, Albert Einstein, amateurs talk tactics, professionals talk logistics, Amazon Mechanical Turk, Anthropocene, Asian financial crisis, asset allocation, autonomous vehicles, banking crisis, Basel III, Berlin Wall, bitcoin, Black Swan, blockchain, borderless world, Boycotts of Israel, Branko Milanovic, BRICs, British Empire, business intelligence, call centre, capital controls, Carl Icahn, charter city, circular economy, clean water, cloud computing, collateralized debt obligation, commoditize, complexity theory, continuation of politics by other means, corporate governance, corporate social responsibility, credit crunch, crony capitalism, crowdsourcing, cryptocurrency, cuban missile crisis, data is the new oil, David Ricardo: comparative advantage, deglobalization, deindustrialization, dematerialisation, Deng Xiaoping, Detroit bankruptcy, digital capitalism, digital divide, digital map, disruptive innovation, diversification, Doha Development Round, driverless car, Easter island, edge city, Edward Snowden, Elon Musk, energy security, Ethereum, ethereum blockchain, European colonialism, eurozone crisis, export processing zone, failed state, Fairphone, Fall of the Berlin Wall, family office, Ferguson, Missouri, financial innovation, financial repression, fixed income, forward guidance, gentrification, geopolitical risk, global supply chain, global value chain, global village, Google Earth, Great Leap Forward, Hernando de Soto, high net worth, high-speed rail, Hyperloop, ice-free Arctic, if you build it, they will come, illegal immigration, income inequality, income per capita, industrial cluster, industrial robot, informal economy, Infrastructure as a Service, interest rate swap, Intergovernmental Panel on Climate Change (IPCC), Internet of things, Isaac Newton, Jane Jacobs, Jaron Lanier, John von Neumann, Julian Assange, Just-in-time delivery, Kevin Kelly, Khyber Pass, Kibera, Kickstarter, LNG terminal, low cost airline, low earth orbit, low interest rates, manufacturing employment, mass affluent, mass immigration, megacity, Mercator projection, Metcalfe’s law, microcredit, middle-income trap, mittelstand, Monroe Doctrine, Multics, mutually assured destruction, Neal Stephenson, New Economic Geography, new economy, New Urbanism, off grid, offshore financial centre, oil rush, oil shale / tar sands, oil shock, openstreetmap, out of africa, Panamax, Parag Khanna, Peace of Westphalia, peak oil, Pearl River Delta, Peter Thiel, Philip Mirowski, Planet Labs, plutocrats, post-oil, post-Panamax, precautionary principle, private military company, purchasing power parity, quantum entanglement, Quicken Loans, QWERTY keyboard, race to the bottom, Rana Plaza, rent-seeking, reserve currency, Robert Gordon, Robert Shiller, Robert Solow, rolling blackouts, Ronald Coase, Scramble for Africa, Second Machine Age, sharing economy, Shenzhen special economic zone , Shenzhen was a fishing village, Silicon Valley, Silicon Valley startup, six sigma, Skype, smart cities, Smart Cities: Big Data, Civic Hackers, and the Quest for a New Utopia, South China Sea, South Sea Bubble, sovereign wealth fund, special economic zone, spice trade, Stuxnet, supply-chain management, sustainable-tourism, systems thinking, TaskRabbit, tech worker, TED Talk, telepresence, the built environment, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, Tim Cook: Apple, trade route, Tragedy of the Commons, transaction costs, Tyler Cowen, UNCLOS, uranium enrichment, urban planning, urban sprawl, vertical integration, WikiLeaks, Yochai Benkler, young professional, zero day

Similarly, when Mexico in 2013 decided to raise corporate taxes on mining profits, several global companies declared they would no longer make major investments there, undermining the country’s mining boom by depriving it of essential foreign capital and technology. Countries will fail unless they are open to flows, but they need sensible frictions to gain the upside while minimizing the downside: capital controls on speculative investment, limited liberalization to ensure domestic industrial competitiveness, radiation scanners at ports, immigration quotas to avoid overburdening public services, passport scanners cross-checked with Interpol databases, Internet Service Providers (ISPs) scanning for computer viruses, and other measures.

That is why all countries practice some form of “state capitalism” today, whether subsidizing strategic industries, restricting investments in key sectors, or mandating financial institutions to invest more at home. Such industrial policies are part of a cautious search for balance between local needs and global connectedness. Brazil, for example, now requires foreign car manufacturers to invest in local renewable energy research and has implemented capital controls to stem “hot money.” Countries such as Indonesia have stood their ground in raising corporate taxes and fees yet remain investment magnets because they ultimately control their geographic resources. India welcomes free trade in software services because it has a cost-effective and talented IT workforce but is more cautious about liberalizing agricultural imports that might undermine its farmers.


pages: 524 words: 155,947

More: The 10,000-Year Rise of the World Economy by Philip Coggan

accounting loophole / creative accounting, Ada Lovelace, agricultural Revolution, Airbnb, airline deregulation, Alan Greenspan, Andrei Shleifer, anti-communist, Apollo 11, assortative mating, autonomous vehicles, bank run, banking crisis, banks create money, basic income, Bear Stearns, Berlin Wall, Black Monday: stock market crash in 1987, Bletchley Park, Bob Noyce, Boeing 747, bond market vigilante , Branko Milanovic, Bretton Woods, Brexit referendum, British Empire, business cycle, call centre, capital controls, carbon footprint, carbon tax, Carl Icahn, Carmen Reinhart, Celtic Tiger, central bank independence, Charles Babbage, Charles Lindbergh, clean water, collective bargaining, Columbian Exchange, Columbine, Corn Laws, cotton gin, credit crunch, Credit Default Swap, crony capitalism, cross-border payments, currency peg, currency risk, debt deflation, DeepMind, Deng Xiaoping, discovery of the americas, Donald Trump, driverless car, Easter island, Erik Brynjolfsson, European colonialism, eurozone crisis, Fairchild Semiconductor, falling living standards, financial engineering, financial innovation, financial intermediation, floating exchange rates, flying shuttle, Ford Model T, Fractional reserve banking, Frederick Winslow Taylor, full employment, general purpose technology, germ theory of disease, German hyperinflation, gig economy, Gini coefficient, Glass-Steagall Act, global supply chain, global value chain, Gordon Gekko, Great Leap Forward, greed is good, Greenspan put, guns versus butter model, Haber-Bosch Process, Hans Rosling, Hernando de Soto, hydraulic fracturing, hydroponic farming, Ignaz Semmelweis: hand washing, income inequality, income per capita, independent contractor, indoor plumbing, industrial robot, inflation targeting, Isaac Newton, James Watt: steam engine, job automation, John Snow's cholera map, joint-stock company, joint-stock limited liability company, Jon Ronson, Kenneth Arrow, Kula ring, labour market flexibility, land reform, land tenure, Lao Tzu, large denomination, Les Trente Glorieuses, liquidity trap, Long Term Capital Management, Louis Blériot, low cost airline, low interest rates, low skilled workers, lump of labour, M-Pesa, Malcom McLean invented shipping containers, manufacturing employment, Marc Andreessen, Mark Zuckerberg, Martin Wolf, McJob, means of production, Mikhail Gorbachev, mittelstand, Modern Monetary Theory, moral hazard, Murano, Venice glass, Myron Scholes, Nelson Mandela, Network effects, Northern Rock, oil shale / tar sands, oil shock, Paul Samuelson, Paul Volcker talking about ATMs, Phillips curve, popular capitalism, popular electronics, price stability, principal–agent problem, profit maximization, purchasing power parity, quantitative easing, railway mania, Ralph Nader, regulatory arbitrage, road to serfdom, Robert Gordon, Robert Shiller, Robert Solow, Ronald Coase, Ronald Reagan, savings glut, scientific management, Scramble for Africa, Second Machine Age, secular stagnation, Silicon Valley, Simon Kuznets, South China Sea, South Sea Bubble, special drawing rights, spice trade, spinning jenny, Steven Pinker, Suez canal 1869, TaskRabbit, techlash, Thales and the olive presses, Thales of Miletus, The Great Moderation, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, The Rise and Fall of American Growth, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Malthus, Thorstein Veblen, trade route, Tragedy of the Commons, transaction costs, transatlantic slave trade, transcontinental railway, Triangle Shirtwaist Factory, universal basic income, Unsafe at Any Speed, Upton Sinclair, V2 rocket, Veblen good, War on Poverty, Washington Consensus, Watson beat the top human players on Jeopardy!, women in the workforce, world market for maybe five computers, Yom Kippur War, you are the product, zero-sum game

So there were 11 currency realignments in the period between 1979 and 1987.38 In 1990, three things happened. First, Germany reunified and West Germany allowed conversion of the East German mark on a 1:1 basis. The Bundesbank worried about the inflationary implications of this, and pushed up interest rates in response. Second, remaining capital controls within the EU were eased as part of the single market process, aimed at integrating economies more closely, and the lack of controls made it easier to mount speculative attacks against a weak currency. Third, Britain joined the system in the hope that ERM membership would deliver the discipline needed to control inflation.

For a time, it seemed possible that Greece would have to quit the euro zone and readopt the drachma. But this was not a very appealing prospect. Switching to the drachma would have involved a substantial devaluation; 30% or more. So Greek bank depositors would have seen their savings decline sharply in value. Many would have tried to switch their money to foreign banks; capital controls would thus have been needed to prevent a run on the Greek banking system. Meanwhile the debt that Greece owed internationally would still be denominated in euros, and thus would be even more expensive to repay after a devaluation. Default on its debts would be inevitable. In the immediate aftermath of default, it would be very expensive for the Greek government to borrow.


pages: 226 words: 59,080

Economics Rules: The Rights and Wrongs of the Dismal Science by Dani Rodrik

airline deregulation, Alan Greenspan, Albert Einstein, bank run, barriers to entry, behavioural economics, Bretton Woods, business cycle, butterfly effect, capital controls, carbon tax, Carmen Reinhart, central bank independence, collective bargaining, congestion pricing, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, distributed generation, Donald Davies, Edward Glaeser, endogenous growth, Eugene Fama: efficient market hypothesis, Everything should be made as simple as possible, Fellow of the Royal Society, financial deregulation, financial innovation, floating exchange rates, fudge factor, full employment, George Akerlof, Gini coefficient, Growth in a Time of Debt, income inequality, inflation targeting, informal economy, information asymmetry, invisible hand, Jean Tirole, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, labor-force participation, liquidity trap, loss aversion, low skilled workers, market design, market fundamentalism, minimum wage unemployment, oil shock, open economy, Pareto efficiency, Paul Samuelson, price elasticity of demand, price stability, prisoner's dilemma, profit maximization, public intellectual, quantitative easing, randomized controlled trial, rent control, rent-seeking, Richard Thaler, risk/return, Robert Shiller, school vouchers, South Sea Bubble, spectrum auction, The Market for Lemons, the scientific method, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, Thomas Malthus, trade liberalization, trade route, ultimatum game, University of East Anglia, unorthodox policies, Vilfredo Pareto, Washington Consensus, white flight

The financial excesses under a previous era of financial globalization during the interwar period—the recurring financial panics and crashes, the painful economic adjustments that flowed from sudden movements in market sentiment, and the tight constraints placed on managing the ups and downs of the macroeconomy—had been foremost on Keynes’s mind when he argued for capital controls at the end of the Second World War. Fischer did not overlook these risks, but he thought they were worth taking. Free capital movement would enable greater efficiency in the global allocation of savings. Capital would flow from where it was plentiful to where it was scarce, thus increasing economic growth.


Global Financial Crisis by Noah Berlatsky

"World Economic Forum" Davos, accounting loophole / creative accounting, Alan Greenspan, asset-backed security, banking crisis, Bear Stearns, Bretton Woods, capital controls, Celtic Tiger, centre right, circulation of elites, collapse of Lehman Brothers, collateralized debt obligation, corporate raider, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, deindustrialization, Doha Development Round, energy security, eurozone crisis, financial innovation, Food sovereignty, George Akerlof, Glass-Steagall Act, God and Mammon, Gordon Gekko, housing crisis, illegal immigration, income inequality, low interest rates, market bubble, market fundamentalism, mass immigration, Money creation, moral hazard, new economy, Northern Rock, purchasing power parity, quantitative easing, race to the bottom, regulatory arbitrage, reserve currency, Robert Shiller, Ronald Reagan, Savings and loan crisis, shareholder value, social contagion, South China Sea, structural adjustment programs, subprime mortgage crisis, too big to fail, trade liberalization, transfer pricing, working poor

In Asia and Latin America, they are taking monetary, fiscal and other measures to mitigate the impact of the financial turmoil on their economies. African countries should also heed this call and take any measures deemed necessary to protect their economies from external shocks. In this regard, African countries should move to restore capital controls and reverse liberalisation of the capital account [government should not allow the free flow of funds into and out of the country]. These policies opened the door to speculative capital flows, tax evasion and increased capital flight, thus contributing to lowering Africa’s domestic savings while increasing its dependence on external financing.


pages: 197 words: 60,477

So Good They Can't Ignore You: Why Skills Trump Passion in the Quest for Work You Love by Cal Newport

adjacent possible, Apple II, bounce rate, business cycle, Byte Shop, Cal Newport, capital controls, clean tech, Community Supported Agriculture, deal flow, deliberate practice, do what you love, financial independence, follow your passion, Frank Gehry, information asymmetry, job satisfaction, job-hopping, knowledge worker, Mason jar, medical residency, new economy, passive income, Paul Terrell, popular electronics, renewable energy credits, Results Only Work Environment, Richard Bolles, Richard Feynman, rolodex, Sand Hill Road, side project, Silicon Valley, Skype, Steve Jobs, Steve Wozniak, Stuart Kauffman, TED Talk, web application, winner-take-all economy

“I agree that it would be ideal to continue to develop my vision,” she admitted. “However, I also need money in order to eat.” Without even a college degree to her name, finding this money was proving difficult. A commitment to dogsledding across Antarctica, it turns out, doesn’t read well on a résumé. Control Requires Capital Control is seductive. As I discovered at Red Fire Farm, this trait defines the type of dream jobs that keeps cubicle dwellers up at night. It was this appeal that convinced Jane to leave her comfortable life as a student and pursue adventure. In doing so, however, she fell into a trap that threatens many in their quest for control: The First Control Trap Control that’s acquired without career capital is not sustainable.


pages: 258 words: 63,367

Making the Future: The Unipolar Imperial Moment by Noam Chomsky

Alan Greenspan, Albert Einstein, Berlin Wall, Bretton Woods, British Empire, capital controls, collective bargaining, corporate governance, corporate personhood, creative destruction, deindustrialization, energy security, failed state, Fall of the Berlin Wall, financial deregulation, Frank Gehry, full employment, Glass-Steagall Act, Howard Zinn, Joseph Schumpeter, kremlinology, liberation theology, Long Term Capital Management, market fundamentalism, Mikhail Gorbachev, Nelson Mandela, no-fly zone, Occupy movement, oil shale / tar sands, precariat, public intellectual, RAND corporation, Robert Solow, Ronald Reagan, Seymour Hersh, structural adjustment programs, The Great Moderation, too big to fail, uranium enrichment, Washington Consensus, WikiLeaks, working poor

Free capital movement creates what some economists have called a “virtual parliament” of investors and lenders, who closely monitor government programs and “vote” against them if they are considered irrational: for the benefit of people, rather than concentrated private power. Investors and lenders can “vote” by capital flight, attacks on currencies and other devices offered by financial liberalization. That is one reason why the Bretton Woods system established by the United States and Britain after World War II instituted regulated currencies and permitted capital controls. The Great Depression and the war had aroused powerful radical democratic currents, ranging from the anti-fascist resistance to working-class organization. These pressures made it necessary to permit social democratic policies. The Bretton Woods system was designed in part to create a space for government action responding to public will—for some measure of democracy, that is.


pages: 239 words: 62,311

The Next Factory of the World: How Chinese Investment Is Reshaping Africa by Irene Yuan Sun

"World Economic Forum" Davos, asset light, barriers to entry, Bretton Woods, business logic, capital controls, clean water, Computer Numeric Control, deindustrialization, demographic dividend, Deng Xiaoping, Donald Trump, European colonialism, floating exchange rates, full employment, global supply chain, Great Leap Forward, invisible hand, job automation, low skilled workers, M-Pesa, manufacturing employment, means of production, mobile money, Multi Fibre Arrangement, post-industrial society, profit motive, purchasing power parity, race to the bottom, RAND corporation, Ronald Reagan, Shenzhen special economic zone , Shenzhen was a fishing village, Silicon Valley, Skype, special economic zone, structural adjustment programs, tacit knowledge, Triangle Shirtwaist Factory, union organizing, Washington Consensus, working-age population

Finally, to the north of Kenya, in the Horn of Africa, lies proud Ethiopia, the only African country never to have been colonized by a European power. Yet its 100 million people have spent the past twenty-five years rebuilding from a convulsive decade of famines and “Red Terror” inflicted by a brutal Marxist dictatorship in the 1970s. Ethiopia today is transitioning to a market economy in a piecemeal way, with strict capital controls and state monopolies over many industries that call to mind no other country so much as China. It is no wonder that Chinese companies feel at home here, building special economic zones and investing in sectors deemed priorities by the Ethiopian government. Taken together, these four countries by no means constitute a representative picture of Africa, but they do give a flavor across several important dimensions: big, medium, and small countries; eastern, western, and southern Africa; resource-rich, resource-poor, and somewhere-in-between economies.


Phil Thornton by The Great Economists Ten Economists whose thinking changed the way we live-FT Publishing International (2014)

Alan Greenspan, availability heuristic, behavioural economics, Berlin Wall, bitcoin, Bretton Woods, British Empire, business cycle, business process, call centre, capital controls, Cass Sunstein, choice architecture, cognitive bias, collapse of Lehman Brothers, Corn Laws, creative destruction, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, double helix, endogenous growth, endowment effect, Eugene Fama: efficient market hypothesis, Fall of the Berlin Wall, fiat currency, financial deregulation, fixed income, Ford Model T, full employment, hindsight bias, income inequality, inflation targeting, invisible hand, Isaac Newton, John Maynard Keynes: Economic Possibilities for our Grandchildren, joint-stock company, Kenneth Arrow, Kenneth Rogoff, Kickstarter, liquidity trap, loss aversion, mass immigration, means of production, mental accounting, Myron Scholes, paradox of thrift, Pareto efficiency, Paul Samuelson, Post-Keynesian economics, price mechanism, pushing on a string, quantitative easing, Richard Thaler, road to serfdom, Ronald Coase, Ronald Reagan, school vouchers, Simon Kuznets, The Chicago School, The Wealth of Nations by Adam Smith, Thomas Malthus, Toyota Production System, trade route, transaction costs, unorthodox policies, Vilfredo Pareto, women in the workforce

Another cause of the crisis is likely to be the huge imbalance between savings and investment due to the amassing of reserves by China and other Asian nations, particularly of US dollars. In the run-up to the crisis concern over the deficits in the US and Europe and the surpluses in China were downplayed. In the wake of the crisis attention focused on the use of capital controls, something Keynes advocated, to curb potentially destabilising investment flows. However, it was in the response to the crisis that Keynes was most visible. Political leaders and the head of the IMF started calling for a coordinated global stimulus package to prevent a further deterioration in the world economy.


pages: 585 words: 165,304

Trust: The Social Virtue and the Creation of Prosperity by Francis Fukuyama

Alvin Toffler, barriers to entry, Berlin Wall, blue-collar work, business climate, business cycle, capital controls, classic study, collective bargaining, corporate governance, corporate raider, creative destruction, deindustrialization, Deng Xiaoping, deskilling, double entry bookkeeping, equal pay for equal work, European colonialism, Francis Fukuyama: the end of history, Frederick Winslow Taylor, full employment, George Gilder, glass ceiling, Glass-Steagall Act, global village, Gunnar Myrdal, hiring and firing, industrial robot, Jane Jacobs, job satisfaction, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, Kanban, Kenneth Arrow, land reform, liberal capitalism, liberation theology, low skilled workers, manufacturing employment, mittelstand, price mechanism, profit maximization, RAND corporation, rent-seeking, Ronald Coase, scientific management, Silicon Valley, Steve Jobs, Steve Wozniak, The Death and Life of Great American Cities, The Nature of the Firm, the scientific method, The Wealth of Nations by Adam Smith, transaction costs, transfer pricing, traveling salesman, union organizing, vertical integration, W. E. B. Du Bois

(Boston: Houghton Mifflin, 1990), pp. 126-130. 24On this general point, see Dennis J. Encarnation, Rivals Beyond Trade: American versus Japan in Global Competition (Ithaca, N.Y: Cornell University Press, 1992). 25Mark Mason, American Multinationals and Japan: The Political Economy of Japanese Capital Controls, 1899-1980 (Cambridge: Council on East Asian Studies, Harvard University, 1992), pp. 205-207. 26Shumpei Kumon, “Japan as a Network Society,” in Kumon and Rosovsky (1992), p. 121. 27One member of a large automaker’s keiretsu network was told to cut prices for parts by fifteen percent over three years, or the parent firm could seek other suppliers.

Reclaiming the Sciences, the Family, and Education (Chicago: University of Chicago Press, 1993). Mason, Edward S., The Economic and Social Modernization of the Republic of Korea (Cambridge: Harvard University Press, 1980). Mason, Mark, American Multinationals and Japan: The Political Economy of Japanese Capital Controls, 1899-1980 (Cambridge: Harvard University Press, 1992). Mathias, Peter and Postan, M. M., eds., The Cambridge Economic History of Europe, Vol. VII: The Industrial Economies: Capital, Labour, and Enterprise. Part I: Britain, Prance, Germany, and Scandinavia (London: Cambridge University Press, 1978).


pages: 442 words: 39,064

Why Stock Markets Crash: Critical Events in Complex Financial Systems by Didier Sornette

Alan Greenspan, Asian financial crisis, asset allocation, behavioural economics, Berlin Wall, Black Monday: stock market crash in 1987, Bretton Woods, Brownian motion, business cycle, buy and hold, buy the rumour, sell the news, capital asset pricing model, capital controls, continuous double auction, currency peg, Deng Xiaoping, discrete time, diversified portfolio, Elliott wave, Erdős number, experimental economics, financial engineering, financial innovation, floating exchange rates, frictionless, frictionless market, full employment, global village, implied volatility, index fund, information asymmetry, intangible asset, invisible hand, John von Neumann, joint-stock company, law of one price, Louis Bachelier, low interest rates, mandelbrot fractal, margin call, market bubble, market clearing, market design, market fundamentalism, mental accounting, moral hazard, Network effects, new economy, oil shock, open economy, pattern recognition, Paul Erdős, Paul Samuelson, power law, quantitative trading / quantitative finance, random walk, risk/return, Ronald Reagan, Schrödinger's Cat, selection bias, short selling, Silicon Valley, South Sea Bubble, statistical model, stochastic process, stocks for the long run, Tacoma Narrows Bridge, technological singularity, The Coming Technological Singularity, The Wealth of Nations by Adam Smith, Tobin tax, total factor productivity, transaction costs, tulip mania, VA Linux, Y2K, yield curve

Third, the resurgence of capital flows also reflected the clear recognition by investors that the economic fundamentals in most emerging markets in the 1990s had vastly improved over those that prevailed in the late 1970s. Since 1987, both the direct barriers, such as capital controls, and the indirect barriers, such as difficulties in evaluating corporate information, that prevented the free flow of capital had gradually been reduced. As capital controls were gradually lifted, global investors with more diversified portfolios began to influence stock prices, particularly in emerging markets [422]. This trend of opening up financial markets meant that firms from emerging markets were able to raise capital, both domestically and internationally, at a lower cost.


pages: 237 words: 67,154

Ours to Hack and to Own: The Rise of Platform Cooperativism, a New Vision for the Future of Work and a Fairer Internet by Trebor Scholz, Nathan Schneider

1960s counterculture, activist fund / activist shareholder / activist investor, Airbnb, Amazon Mechanical Turk, Anthropocene, barriers to entry, basic income, benefit corporation, Big Tech, bitcoin, blockchain, Build a better mousetrap, Burning Man, business logic, capital controls, circular economy, citizen journalism, collaborative economy, collaborative editing, collective bargaining, commoditize, commons-based peer production, conceptual framework, content marketing, crowdsourcing, cryptocurrency, data science, Debian, decentralized internet, deskilling, disintermediation, distributed ledger, driverless car, emotional labour, end-to-end encryption, Ethereum, ethereum blockchain, food desert, future of work, gig economy, Google bus, hiring and firing, holacracy, income inequality, independent contractor, information asymmetry, Internet of things, Jacob Appelbaum, Jeff Bezos, job automation, Julian Assange, Kickstarter, lake wobegon effect, low skilled workers, Lyft, Mark Zuckerberg, means of production, minimum viable product, moral hazard, Network effects, new economy, offshore financial centre, openstreetmap, peer-to-peer, planned obsolescence, post-work, profit maximization, race to the bottom, radical decentralization, remunicipalization, ride hailing / ride sharing, Rochdale Principles, SETI@home, shareholder value, sharing economy, Shoshana Zuboff, Silicon Valley, smart cities, smart contracts, Snapchat, surveillance capitalism, TaskRabbit, technological solutionism, technoutopianism, transaction costs, Travis Kalanick, Tyler Cowen, Uber for X, uber lyft, union organizing, universal basic income, Vitalik Buterin, W. E. B. Du Bois, Whole Earth Catalog, WikiLeaks, women in the workforce, workplace surveillance , Yochai Benkler, Zipcar

If the means of production are available to all, then there can be no capital. Like the colonies, the Internet needed to be systematically colonized in order to create the conditions needed by capital. This was also accomplished by enclosure. The original infrastructure was taken over and brought under capital control, and decentralized systems were displaced with centralized systems. “Social media” and “sharing” platforms are two forms of this centralization, two business models for platform capitalism. SURPLUS VALUE VS. SURPLUS PROFIT It’s tempting to look at sites like Facebook and YouTube and conclude that they earn their profits by exploiting their own users, who generate all the content that makes the sites popular.


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

Asian financial crisis, banking crisis, Berlin Wall, Bletchley Park, Bretton Woods, British Empire, business cycle, capital controls, Carmen Reinhart, cognitive bias, contact tracing, cuban missile crisis, currency risk, energy security, Fairchild Semiconductor, flex fuel, global pandemic, Herman Kahn, income per capita, informal economy, Intergovernmental Panel on Climate Change (IPCC), invisible hand, John von Neumann, low interest rates, mass immigration, Menlo Park, Mikhail Gorbachev, moral hazard, Norbert Wiener, oil rush, oil shale / tar sands, oil shock, packet switching, RAND corporation, Ray Kurzweil, reserve currency, Ronald Reagan, The Wisdom of Crowds, trade route, Vannevar Bush, Vernor Vinge, Yom Kippur War

First, bankers perceived a close link between governments and business that they believed would lessen the risk that banks or private companies would go bankrupt. The data on the concentration of share ownership in various Asian countries illustrated the power of family groups. The share of stock market capitalization controlled by the top fifteen families was 62 percent in Indonesia, 38 percent in Korea, 28 percent in Malaysia, and 53 percent in Thailand. The banking system was also highly concentrated. The market share of the five leading banking institutions was 41 percent in Indonesia, 75 percent in Korea, 41 percent in Malaysia, and 70 percent in Thailand.


Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages by Carlota Pérez

agricultural Revolution, Alan Greenspan, Big bang: deregulation of the City of London, Bob Noyce, Bretton Woods, business cycle, capital controls, commoditize, Corn Laws, creative destruction, David Ricardo: comparative advantage, deindustrialization, distributed generation, financial deregulation, financial innovation, Financial Instability Hypothesis, financial intermediation, Ford Model T, full employment, Hyman Minsky, informal economy, joint-stock company, Joseph Schumpeter, junk bonds, knowledge economy, late capitalism, market fundamentalism, military-industrial complex, new economy, nuclear winter, offshore financial centre, post-industrial society, profit motive, railway mania, Robert Shiller, Sand Hill Road, satellite internet, scientific management, Silicon Valley, Simon Kuznets, South Sea Bubble, Suez canal 1869, technological determinism, The Theory of the Leisure Class by Thorstein Veblen, Thomas Kuhn: the structure of scientific revolutions, Thorstein Veblen, trade route, tulip mania, Upton Sinclair, vertical integration, Washington Consensus

Palma, Gabriel (1978), ‘Growth and Structure of Chilean Manufacturing Industry from 1830 to 1935: Origins and Development of a Process of Industrialisation in an Export Economy’, D. Phil. thesis, Oxford University. Forthcoming, Oxford University Press. Palma, Gabriel (2001), ‘Three Routes to Financial Crises: The Need for Capital Controls’, CEPA Working Paper 2000–17, November 2000, www.newschool.edu/cepa/papers, forthcoming (2002) in Eatwell, J. and Taylor, L. (eds), International Capital Markets and the Future of Economic Policy, Oxford: Oxford University Press. Palma, Gabriel and Marcel, Mario (1989), ‘Kaldor on the Discreet Charm of the Chilean Bourgeoisie’, Cambridge Journal of Economics, April, pp. 245– 72.


pages: 246 words: 74,341

Financial Fiasco: How America's Infatuation With Homeownership and Easy Money Created the Economic Crisis by Johan Norberg

accounting loophole / creative accounting, Alan Greenspan, bank run, banking crisis, Bear Stearns, Bernie Madoff, Black Monday: stock market crash in 1987, Black Swan, business cycle, capital controls, central bank independence, collateralized debt obligation, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, David Brooks, diversification, financial deregulation, financial innovation, Greenspan put, helicopter parent, Home mortgage interest deduction, housing crisis, Howard Zinn, Hyman Minsky, Isaac Newton, Joseph Schumpeter, Long Term Capital Management, low interest rates, market bubble, Martin Wolf, Mexican peso crisis / tequila crisis, millennium bug, money market fund, moral hazard, mortgage tax deduction, Naomi Klein, National Debt Clock, new economy, Northern Rock, Own Your Own Home, precautionary principle, price stability, Ronald Reagan, savings glut, short selling, Silicon Valley, South Sea Bubble, The Wealth of Nations by Adam Smith, too big to fail

"This really was the last straw. A lot of Icelanders are asking, `Excuse me: who's the terrorist here? "'S1 In a single day, the Icelandic krona lost 27 percent of its value against the euro. The stock exchange was closed for three days. When it opened again, it fell 77 percent, reflecting the weight of the banks. Capital controls were introduced, meaning that nobody wanted to bring foreign currency into the country. Businesses could not renew their loans, and it became virtually impossible to import food, which is particularly devastating for a cold, barren country that does not really have an agricultural industry. At the end of the month, the central bank raised its benchmark rate from 12 to 18 percent to cushion the fall of the krona.


pages: 306 words: 78,893

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

"World Economic Forum" Davos, accounting loophole / creative accounting, affirmative action, Alan Greenspan, AOL-Time Warner, Asian financial crisis, barriers to entry, Benchmark Capital, book value, borderless world, Branko Milanovic, Bretton Woods, business cycle, California energy crisis, capital controls, corporate governance, corporate raider, correlation coefficient, credit crunch, deindustrialization, dematerialisation, deskilling, digital divide, electricity market, emotional labour, ending welfare as we know it, feminist movement, fulfillment center, full employment, gender pay gap, George Gilder, glass ceiling, Glass-Steagall Act, Gordon Gekko, government statistician, greed is good, half of the world's population has never made a phone call, income inequality, indoor plumbing, intangible asset, Internet Archive, job satisfaction, joint-stock company, Kevin Kelly, labor-force participation, Larry Ellison, liquidationism / Banker’s doctrine / the Treasury view, low interest rates, manufacturing employment, Mary Meeker, means of production, Michael Milken, minimum wage unemployment, Naomi Klein, new economy, occupational segregation, PalmPilot, pets.com, post-work, profit maximization, purchasing power parity, race to the bottom, Ralph Nader, rewilding, Robert Gordon, Robert Shiller, Robert Solow, rolling blackouts, Ronald Reagan, shareholder value, Silicon Valley, Simon Kuznets, statistical model, stock buybacks, structural adjustment programs, tech worker, Telecommunications Act of 1996, telemarketer, The Bell Curve by Richard Herrnstein and Charles Murray, The Wealth of Nations by Adam Smith, total factor productivity, union organizing, War on Poverty, warehouse automation, women in the workforce, working poor, zero-sum game

On the left, dependency theory gave this position some ideological cover, and today's debates are often filled with similar sentiments. Among NGOs and intellectuals working on development issues, there is talk of apartheid South Africa and Smith s Rhodesia as models of a possible autarkic dehnking from the world economy, and admiration for Mahathir's capital controls in Malaysia during the 1997-98 Asian financial crisis. It's often overlooked that Mahathir is a repressive bigot, and that the Southern African examples were part of strategies to sustain horrible societies. Any "progressive" alliance with national capitalism in the name of resistance to international capitaHsm can get very smelly.


pages: 280 words: 74,559

Fully Automated Luxury Communism by Aaron Bastani

"Peter Beck" AND "Rocket Lab", Alan Greenspan, Anthropocene, autonomous vehicles, banking crisis, basic income, Berlin Wall, Bernie Sanders, Boston Dynamics, Bretton Woods, Brexit referendum, capital controls, capitalist realism, cashless society, central bank independence, collapse of Lehman Brothers, computer age, computer vision, CRISPR, David Ricardo: comparative advantage, decarbonisation, deep learning, dematerialisation, DIY culture, Donald Trump, double helix, driverless car, electricity market, Elon Musk, energy transition, Erik Brynjolfsson, fake news, financial independence, Francis Fukuyama: the end of history, future of work, Future Shock, G4S, general purpose technology, Geoffrey Hinton, Gregor Mendel, housing crisis, income inequality, industrial robot, Intergovernmental Panel on Climate Change (IPCC), Internet of things, Isaac Newton, James Watt: steam engine, Jeff Bezos, Jeremy Corbyn, Jevons paradox, job automation, John Markoff, John Maynard Keynes: technological unemployment, Joseph Schumpeter, Kevin Kelly, Kuiper Belt, land reform, Leo Hollis, liberal capitalism, low earth orbit, low interest rates, low skilled workers, M-Pesa, market fundamentalism, means of production, mobile money, more computing power than Apollo, new economy, off grid, pattern recognition, Peter H. Diamandis: Planetary Resources, post scarcity, post-work, price mechanism, price stability, private spaceflight, Productivity paradox, profit motive, race to the bottom, rewilding, RFID, rising living standards, Robert Solow, scientific management, Second Machine Age, self-driving car, sensor fusion, shareholder value, Silicon Valley, Simon Kuznets, Slavoj Žižek, SoftBank, stem cell, Stewart Brand, synthetic biology, technological determinism, technoutopianism, the built environment, the scientific method, The Wealth of Nations by Adam Smith, Thomas Malthus, transatlantic slave trade, Travis Kalanick, universal basic income, V2 rocket, Watson beat the top human players on Jeopardy!, We are as Gods, Whole Earth Catalog, working-age population

And moving the emphasis away from inflation-busting would mean creditors no longer enjoy the structural bias they presently do. But it is also clear that additional protocols will be needed in the management of capital flows. A financial transactions tax on currency trading would be an obvious means of capital control. This tax would be levied at two variable rates: the lower one, which could be as little as 0.005 per cent would be imposed on day-to-day transactions in order to curb volatility, while a higher one would be deployed in the case of speculative attacks or large capital outflows – a probability as ever more countries turn their back on neoliberalism.


Where Does Money Come From?: A Guide to the UK Monetary & Banking System by Josh Ryan-Collins, Tony Greenham, Richard Werner, Andrew Jackson

bank run, banking crisis, banks create money, Basel III, Big bang: deregulation of the City of London, book value, Bretton Woods, business cycle, capital controls, cashless society, central bank independence, credit crunch, currency risk, double entry bookkeeping, en.wikipedia.org, eurozone crisis, fiat currency, financial innovation, fixed income, floating exchange rates, Fractional reserve banking, full employment, global reserve currency, Goodhart's law, Hyman Minsky, inflation targeting, interest rate derivative, interest rate swap, Joseph Schumpeter, low skilled workers, market clearing, market design, market friction, Modern Monetary Theory, Money creation, money market fund, money: store of value / unit of account / medium of exchange, moral hazard, Northern Rock, offshore financial centre, Post-Keynesian economics, price mechanism, price stability, proprietary trading, purchasing power parity, quantitative easing, Real Time Gross Settlement, reserve currency, Ronald Reagan, seigniorage, special drawing rights, the payments system, trade route, transaction costs

This strategy was successfully implemented by the Malaysia government after the outbreak of the Asian crisis and although this policy was initially opposed by the IMF, it has since reversed its opposition to capital controls30. China, India and Brazil have also all made routine use of such policies. However, the implementation of capital controls faces challenges, such as large firms attempting to disguise capital flows as current account transactions. 6.5. Summary This chapter has described the role of governments and foreign exchange in the money creation process, and in particular to what extent they can directly or indirectly influence the money supply through fiscal and monetary policies.


pages: 434 words: 77,974

Mastering Blockchain: Unlocking the Power of Cryptocurrencies and Smart Contracts by Lorne Lantz, Daniel Cawrey

air gap, altcoin, Amazon Web Services, barriers to entry, bitcoin, blockchain, business logic, business process, call centre, capital controls, cloud computing, corporate governance, creative destruction, cross-border payments, cryptocurrency, currency peg, disinformation, disintermediation, distributed ledger, Dogecoin, Ethereum, ethereum blockchain, fault tolerance, fiat currency, Firefox, global reserve currency, information security, initial coin offering, Internet of things, Kubernetes, litecoin, low interest rates, Lyft, machine readable, margin call, MITM: man-in-the-middle, multilevel marketing, Network effects, offshore financial centre, OSI model, packet switching, peer-to-peer, Ponzi scheme, prediction markets, QR code, ransomware, regulatory arbitrage, rent-seeking, reserve currency, Robinhood: mobile stock trading app, Ross Ulbricht, Satoshi Nakamoto, Silicon Valley, Skype, smart contracts, software as a service, Steve Wozniak, tulip mania, uber lyft, unbanked and underbanked, underbanked, Vitalik Buterin, web application, WebSocket, WikiLeaks

For example, most exchanges around the world can service customers who reside in other countries. However, exchanges in South Korea, for example, can only service customers who reside in that country. The South Korean government has banned exchanges from servicing foreigners. In addition, South Korea has capital controls that limit the amount of funds that can leave the country. During bitcoin’s bull run in 2017, these factors led to a long-sustained “Kimchi Premium” in South Korean exchanges, which often saw selling prices 5–10% higher than exchanges in other countries. Banking Risk When performing arbitrage that involves fiat, a bank account is required to shift the funds between exchanges.


pages: 840 words: 202,245

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

Abraham Maslow, accounting loophole / creative accounting, Alan Greenspan, AOL-Time Warner, Asian financial crisis, bank run, Bear Stearns, book value, Bretton Woods, business cycle, capital controls, Carl Icahn, collapse of Lehman Brothers, collateralized debt obligation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency risk, desegregation, disintermediation, diversified portfolio, Donald Trump, financial deregulation, fixed income, floating exchange rates, Frederick Winslow Taylor, full employment, George Akerlof, Glass-Steagall Act, Greenspan put, Hyman Minsky, income inequality, index fund, inflation targeting, inventory management, invisible hand, John Bogle, John Meriwether, junk bonds, Kitchen Debate, laissez-faire capitalism, locking in a profit, Long Term Capital Management, low interest rates, market bubble, Mary Meeker, Michael Milken, minimum wage unemployment, MITM: man-in-the-middle, Money creation, money market fund, Mont Pelerin Society, moral hazard, mortgage debt, Myron Scholes, new economy, Nixon triggered the end of the Bretton Woods system, North Sea oil, Northern Rock, oil shock, Paul Samuelson, Philip Mirowski, Phillips curve, price stability, quantitative easing, Ralph Nader, rent control, road to serfdom, Robert Bork, Robert Shiller, Ronald Coase, Ronald Reagan, Ronald Reagan: Tear down this wall, scientific management, shareholder value, short selling, Silicon Valley, Simon Kuznets, tail risk, Tax Reform Act of 1986, technology bubble, Telecommunications Act of 1996, The Chicago School, The Great Moderation, too big to fail, union organizing, V2 rocket, value at risk, Vanguard fund, War on Poverty, Washington Consensus, Y2K, Yom Kippur War

Wriston was bailed out by the government on his reckless loans to Penn Central, and also won the ability to raise money on CDs with the change in Regulation Q. “It was the beginning of the end,” said one banker, meaning the demise of Regulation Q. The financial economists Henry Kaufman and Albert Wojnilower argued that the essential nature of finance had now changed as long-standing capital controls on lending were dismantled by Burns or circumvented through the negotiable CDs and Eurodollar deposits. The rationing of credit would be determined by rising and falling interest rates, not explicit financial controls. Unlike free market advocates like Wriston, both Kaufman and Wojnilower were skeptical that the level of interest rates alone could regulate and stabilize the system.

The International Monetary Fund came forward with a rescue package, supported by Rubin, who also urged all central banks to loosen monetary policy. The Fed, according to economists Alan Blinder and Janet Yellen, was “poised” to raise rates in 1997, but now Greenspan cut them instead to limit the crisis. A cause of the crisis was the deregulatory policy of the Clinton administration, which had insisted that nations like Korea end capital controls, which had until then restricted the inflow of international capital. This policy once again reflected the free market attitudes now ascendant in the major rich nations and international agencies like the International Monetary Fund, policies generally known as the Washington Consensus. But the capital flows reached speculative heights because interest rates offered in these nations were so high and, because their currencies were pegged to the dollar, there was no currency risk.


pages: 275 words: 84,980

Before Babylon, Beyond Bitcoin: From Money That We Understand to Money That Understands Us (Perspectives) by David Birch

"World Economic Forum" Davos, agricultural Revolution, Airbnb, Alan Greenspan, bank run, banks create money, bitcoin, blockchain, Bretton Woods, British Empire, Broken windows theory, Burning Man, business cycle, capital controls, cashless society, Clayton Christensen, clockwork universe, creative destruction, credit crunch, cross-border payments, cross-subsidies, crowdsourcing, cryptocurrency, David Graeber, dematerialisation, Diane Coyle, disruptive innovation, distributed ledger, Dogecoin, double entry bookkeeping, Ethereum, ethereum blockchain, facts on the ground, fake news, fault tolerance, fiat currency, financial exclusion, financial innovation, financial intermediation, floating exchange rates, Fractional reserve banking, index card, informal economy, Internet of things, invention of the printing press, invention of the telegraph, invention of the telephone, invisible hand, Irish bank strikes, Isaac Newton, Jane Jacobs, Kenneth Rogoff, knowledge economy, Kuwabatake Sanjuro: assassination market, land bank, large denomination, low interest rates, M-Pesa, market clearing, market fundamentalism, Marshall McLuhan, Martin Wolf, mobile money, Money creation, money: store of value / unit of account / medium of exchange, new economy, Northern Rock, Pingit, prediction markets, price stability, QR code, quantitative easing, railway mania, Ralph Waldo Emerson, Real Time Gross Settlement, reserve currency, Satoshi Nakamoto, seigniorage, Silicon Valley, smart contracts, social graph, special drawing rights, Suez canal 1869, technoutopianism, The future is already here, the payments system, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, tulip mania, wage slave, Washington Consensus, wikimedia commons

VAT, for example, could be automatically levied – and reimbursed – in real time on transactions between liable bank accounts. Countries that struggle with tax collection could go a long way towards solving their problems by restricting the use of cash. Greece, in particular, could make lemonade out of lemons, using its current capital controls to push the country’s cash culture into new habits (Financial Times 2015). Not only would electronic money cut my tax bill, it would stop the ridiculous cross-subsidy from the lawful to the lawless that plagues our moral fibre. But my point is that if the black economy were turned white, UK GDP would grow by 20 per cent or so.


pages: 394 words: 85,734

The Global Minotaur by Yanis Varoufakis, Paul Mason

active measures, Alan Greenspan, AOL-Time Warner, banking crisis, Bear Stearns, Berlin Wall, Big bang: deregulation of the City of London, Bretton Woods, business climate, business cycle, capital controls, Carmen Reinhart, central bank independence, collapse of Lehman Brothers, collateralized debt obligation, colonial rule, corporate governance, correlation coefficient, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, debt deflation, declining real wages, deindustrialization, Easter island, endogenous growth, eurozone crisis, financial engineering, financial innovation, first-past-the-post, full employment, Glass-Steagall Act, Great Leap Forward, guns versus butter model, Hyman Minsky, industrial robot, Joseph Schumpeter, Kenneth Rogoff, Kickstarter, labour market flexibility, light touch regulation, liquidity trap, London Interbank Offered Rate, Long Term Capital Management, low interest rates, market fundamentalism, Mexican peso crisis / tequila crisis, military-industrial complex, Money creation, money market fund, mortgage debt, Myron Scholes, negative equity, new economy, Nixon triggered the end of the Bretton Woods system, Northern Rock, paper trading, Paul Samuelson, planetary scale, post-oil, price stability, quantitative easing, reserve currency, rising living standards, Ronald Reagan, special economic zone, Steve Jobs, structural adjustment programs, Suez crisis 1956, systematic trading, too big to fail, trickle-down economics, urban renewal, War on Poverty, WikiLeaks, Yom Kippur War

The Minotaur’s four charismas Reserve currency status While the Global Plan lasted, it did not matter much which currency one held, since the exchange rates against the dollar were more or less fixed and the exchange rate between the dollar and gold was welded at $35 to an ounce of the gleaming metal. Nevertheless, oil magnates, German industrialists, French winemakers and Japanese bankers preferred to store their cash in dollars simply because of capital controls – that is, restrictions on how much cash one could convert to dollars or other currencies at any one time. Once Bretton Woods was no longer, the psychological shock occasioned by the idea that currencies would soon be allowed to float freely created a stampede toward the dollar. To this day, whenever a crisis looms, capital flees to the greenback.


pages: 273 words: 87,159

The Vanishing Middle Class: Prejudice and Power in a Dual Economy by Peter Temin

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, affirmative action, Affordable Care Act / Obamacare, air traffic controllers' union, American Legislative Exchange Council, American Society of Civil Engineers: Report Card, anti-communist, Bernie Sanders, Branko Milanovic, Bretton Woods, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, carried interest, clean water, corporate raider, Corrections Corporation of America, crack epidemic, deindustrialization, desegregation, Donald Trump, driverless car, Edward Glaeser, Ferguson, Missouri, financial innovation, financial intermediation, floating exchange rates, full employment, income inequality, independent contractor, intangible asset, invisible hand, longitudinal study, low skilled workers, low-wage service sector, mandatory minimum, manufacturing employment, Mark Zuckerberg, mass immigration, mass incarceration, means of production, mortgage debt, Network effects, New Urbanism, Nixon shock, Nixon triggered the end of the Bretton Woods system, obamacare, offshore financial centre, oil shock, plutocrats, Powell Memorandum, price stability, race to the bottom, road to serfdom, Robert Solow, Ronald Reagan, Savings and loan crisis, secular stagnation, Silicon Valley, Simon Kuznets, the scientific method, War on Poverty, Washington Consensus, white flight, working poor

Just as Britain and Germany expanded industrial exports in the late nineteenth century, these new industrial powers promoted exports to increase their growth a century later. The gyrations of the emerging FTE sector in the 1970s and 1980s described in chapter 2 changed exchange rates as well as domestic prices. Finally, improved capital mobility coming from the removal of Bretton Woods capital controls allowed American firms to expand production in industrializing countries. These firms used their offshore production in bargaining with their workers. American workers were told they had to accept lower wages in order to maintain their jobs. These threats produced labor unrest, and the government increasingly favored employers as deregulation spread.


pages: 290 words: 84,375

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

"World Economic Forum" Davos, 2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, American Society of Civil Engineers: Report Card, Andrei Shleifer, Asian financial crisis, bank run, business cycle, California gold rush, capital controls, crony capitalism, dark matter, Deng Xiaoping, Donald Trump, Edward Glaeser, eurozone crisis, financial innovation, fixed income, Gini coefficient, Global Witness, Great Leap Forward, high-speed rail, if you build it, they will come, income inequality, industrial robot, invisible hand, low interest rates, megacity, middle-income trap, military-industrial complex, money market fund, mortgage debt, new economy, peer-to-peer lending, Ponzi scheme, Ronald Reagan, short selling, Silicon Valley, subprime mortgage crisis, too big to fail, trickle-down economics, urban planning, working-age population, zero-sum game

China’s banking system was designed not to serve the interests of the private sector but to provide credit—cheaply and in large amounts—to state-owned companies. To that end, it traditionally enjoyed an effective monopoly over national savings. The stock and bond markets were too small to absorb more than a small portion of China’s savings, and strict capital controls meant people couldn’t move their savings overseas into more-developed capital markets. That meant most people invested in housing or put their savings in the state-owned banking system. For most of this century, Beijing exploited that privilege by keeping deposit rates below the pace of inflation.


pages: 309 words: 85,584

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

Alan Greenspan, banking crisis, Bear Stearns, Berlin Wall, Big bang: deregulation of the City of London, Boris Johnson, Bretton Woods, Brexit referendum, British Empire, capital controls, congestion charging, deindustrialization, Donald Trump, Etonian, eurozone crisis, Fall of the Berlin Wall, financial engineering, financial innovation, financial thriller, floating exchange rates, foreign exchange controls, full employment, gig economy, inflation targeting, Jeremy Corbyn, Just-in-time delivery, light touch regulation, liquidity trap, low interest rates, Martin Wolf, military-industrial complex, moral hazard, negative equity, Neil Kinnock, Nixon triggered the end of the Bretton Woods system, non-tariff barriers, North Sea oil, Northern Rock, oil shock, Parkinson's law, Paul Samuelson, pre–internet, price mechanism, quantitative easing, Ronald Reagan, school vouchers, short selling, South Sea Bubble, Suez crisis 1956, The Chicago School, transaction costs, tulip mania, Winter of Discontent, Yom Kippur War

It was concern about these in the course of the 1970s that contributed to the decision on the part of Chancellor Schmidt, President Giscard and Roy Jenkins to press for ‘a zone of monetary stability’ in Europe, which led to the setting up of the European Monetary System. When Chancellor Lawson was conducting his campaign for the UK to join the ERM, one of the principal objections put forward by his bête noire Sir Alan Walters – Mrs Thatcher’s political adviser – was that the ERM was ‘half-baked’: the abolition of capital controls meant that the ERM was inevitably subject to what could become intolerable speculative pressures; by contrast, the proposed single currency, the euro, would not – at least for those within the system. (Though obviously there could still be large movements of the euro against the US dollar and other currencies.)


pages: 324 words: 86,056

The Socialist Manifesto: The Case for Radical Politics in an Era of Extreme Inequality by Bhaskar Sunkara

Affordable Care Act / Obamacare, agricultural Revolution, Bernie Sanders, British Empire, business climate, business cycle, capital controls, centre right, Charles Lindbergh, collective bargaining, Deng Xiaoping, deskilling, Donald Trump, equal pay for equal work, fake news, false flag, feminist movement, Ferguson, Missouri, Francis Fukuyama: the end of history, full employment, gig economy, Great Leap Forward, Gunnar Myrdal, happiness index / gross national happiness, high-speed rail, Honoré de Balzac, income inequality, inventory management, Jeremy Corbyn, labor-force participation, land reform, land value tax, Mark Zuckerberg, means of production, Meghnad Desai, Mikhail Gorbachev, Neil Kinnock, new economy, Occupy movement, postindustrial economy, precariat, race to the bottom, Ralph Waldo Emerson, self-driving car, Silicon Valley, SimCity, single-payer health, Steve Bannon, telemarketer, The Wealth of Nations by Adam Smith, too big to fail, union organizing, Upton Sinclair, urban renewal, We are all Keynesians now, We are the 99%

But we are calling for a standstill.” However, by the next year—when Labour’s James Callaghan replaced Wilson and had to borrow $3.9 billion from the International Monetary Fund—the standstill had become a rout. Within the cabinet, Benn put forward an Alternative Economic Strategy, characterized by capital controls and protectionism, but like elsewhere in Europe, there didn’t appear to be either the technical or the political means to avoid the monetarist call for a restoration of profit rates through tightening the money supply, diminishing the power of unions, and deregulation.23 The lead-up to the 1979 election saw a polarized response from the Left.


pages: 276 words: 82,603

Birth of the Euro by Otmar Issing

accounting loophole / creative accounting, behavioural economics, Bretton Woods, business climate, business cycle, capital controls, central bank independence, currency peg, currency risk, financial innovation, floating exchange rates, full employment, inflation targeting, information asymmetry, labour market flexibility, labour mobility, low interest rates, market fundamentalism, money market fund, moral hazard, oil shock, open economy, price anchoring, price stability, purchasing power parity, reserve currency, Robert Solow, Y2K, yield curve

Since restrictions on capital movements are incompatible with common market principles – disregarding other major objections 13 14 15 See Szasz, The Road to European Monetary Union. See O. Issing, ‘Economic prospects and policy in Germany’, Institute of Economic Affairs, Economic Affairs, 15:1 (Winter 1994). O. Issing, Frankfurter Allgemeine Zeitung, 16 January 1993. 8 • Historical background such as the practicability of capital controls – the only choice remaining is between the other two objectives. The option of flexible exchange rates was never seriously entertained in the context of European integration.6 However, the regime of fixed exchange rates that were nonetheless subject to sudden upward or downward revaluations, as embodied in the EMS, had over time proven to be so vulnerable to crises that it appeared to be only a matter of time before another crisis entailed even bigger abrupt changes in exchange rates.


pages: 627 words: 89,295

The Politics Industry: How Political Innovation Can Break Partisan Gridlock and Save Our Democracy by Katherine M. Gehl, Michael E. Porter

Affordable Care Act / Obamacare, barriers to entry, business cycle, capital controls, carbon footprint, collective bargaining, coronavirus, COVID-19, David Brooks, deindustrialization, disintermediation, Donald Trump, first-past-the-post, future of work, guest worker program, hiring and firing, Ida Tarbell, illegal immigration, immigration reform, Joseph Schumpeter, Kickstarter, labor-force participation, Menlo Park, military-industrial complex, Multics, new economy, obamacare, pension reform, Ronald Reagan, Silicon Valley, stem cell, Steve Jobs, Upton Sinclair, zero-sum game

Instead of the nationalization of competition that took place during the Gilded Age, we now have globalization. The years following World War II inaugurated a new era of global commerce and investment. Policy makers in nations across the world prioritized reducing barriers to trade, harmonizing intellectual property laws, and reducing capital controls. Efforts to economically integrate were successful: world exports as a share of gross world product climbed to 8.5 percent in 1970 and then to 16.2 percent by 2001.88 But as markets and competition have become increasingly global, companies and jobs that have been sources of opportunity and good wages—such as traditional small businesses (small shops, restaurants, personal services, etc.)


pages: 295 words: 87,204

The Capitalist Manifesto by Johan Norberg

AltaVista, anti-communist, barriers to entry, Berlin Wall, Bernie Sanders, Big Tech, Boris Johnson, business climate, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, carbon tax, Charles Babbage, computer age, coronavirus, COVID-19, creative destruction, crony capitalism, data is not the new oil, data is the new oil, David Graeber, DeepMind, degrowth, deindustrialization, Deng Xiaoping, digital map, disinformation, Donald Trump, Elon Musk, energy transition, Erik Brynjolfsson, export processing zone, failed state, Filter Bubble, gig economy, Gini coefficient, global supply chain, Google Glasses, Greta Thunberg, Gunnar Myrdal, Hans Rosling, Hernando de Soto, Howard Zinn, income inequality, independent contractor, index fund, Indoor air pollution, industrial robot, Intergovernmental Panel on Climate Change (IPCC), invention of the printing press, invisible hand, Jeff Bezos, Jeremy Corbyn, job automation, job satisfaction, Joseph Schumpeter, land reform, liberal capitalism, lockdown, low cost airline, low interest rates, low skilled workers, Lyft, manufacturing employment, Mark Zuckerberg, means of production, meta-analysis, Minecraft, multiplanetary species, Naomi Klein, Neal Stephenson, Nelson Mandela, Network effects, open economy, passive income, Paul Graham, Paul Samuelson, payday loans, planned obsolescence, precariat, profit motive, Ralph Nader, RAND corporation, rent control, rewilding, ride hailing / ride sharing, Ronald Coase, Rosa Parks, Salesforce, Sam Bankman-Fried, Shenzhen was a fishing village, Silicon Valley, Simon Kuznets, Snapchat, social distancing, social intelligence, South China Sea, Stephen Fry, Steve Jobs, tech billionaire, The Spirit Level, The Wealth of Nations by Adam Smith, TikTok, Tim Cook: Apple, total factor productivity, trade liberalization, transatlantic slave trade, Tyler Cowen, Uber and Lyft, uber lyft, ultimatum game, Virgin Galactic, Washington Consensus, working-age population, World Values Survey, X Prize, you are the product, zero-sum game

An innovative research project came to a rough estimate around the turn of the millennium: people in low- and middle-income countries hold informal land and buildings worth about $10,000 billion – almost as much as the total value of all companies on the rich countries’ stock exchanges at the time. Because governments do not recognize these holdings as property rights, the owners can’t use them to take loans, do not dare to expand and can’t transfer the property. It remains dead capital, controlled by the powerful rather than the real owners.22 Property rights are not just about sound incentives but also human dignity. I have, on a very modest scale, been involved in sponsoring a project that helps black South Africans formally register their property, in a country whose official policy has long been to deny it to them.


pages: 1,335 words: 336,772

The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance by Ron Chernow

Alan Greenspan, always be closing, bank run, banking crisis, Bear Stearns, Big bang: deregulation of the City of London, Black Monday: stock market crash in 1987, Bolshevik threat, book value, Boycotts of Israel, Bretton Woods, British Empire, buy and hold, California gold rush, capital controls, Carl Icahn, Charles Lindbergh, collective bargaining, Cornelius Vanderbilt, corporate raider, death from overwork, Dutch auction, Etonian, financial deregulation, financial engineering, fixed income, German hyperinflation, Glass-Steagall Act, index arbitrage, interest rate swap, junk bonds, low interest rates, margin call, Michael Milken, military-industrial complex, money market fund, Monroe Doctrine, North Sea oil, oil shale / tar sands, old-boy network, paper trading, plutocrats, Robert Gordon, Ronald Reagan, short selling, stock buybacks, strikebreaker, Suez canal 1869, Suez crisis 1956, the market place, the payments system, too big to fail, transcontinental railway, undersea cable, Yom Kippur War, young professional

They would actually buy receipts against shares held in a foreign bank vault. The coopera-ting American bank would convert dividends into dollars and spare the investor foreign-exchange problems. In the spring of 1960, Regis Moxley of Morgan Guaranty, an evangelist for ADRs, visited Japan to preach their virtues. Afraid ADRs would breach the nation’s capital controls, the Ministry of Finance warily consented to an ADR for Sony, the first ever for a Japanese stock. Setsuya Tabuchi, chairman of Nomura Securities, later said, “If there was a single milestone in the internationalization of the Japanese financial market, it came in 1961 when Sony issued American depositary receipts in the U.S.”49 As with Schwab, Morgan Guaranty, long absent from foreign markets, inadvertently stirred up local ire.

Preston, the tough, witty ex-marine who steered the Morgan bank back toward investment banking 81. 60 Wall Street, the new Morgan bank headquarters; more space and computers, but less poetry and mystery The advent of Phillips helped Morgan Guaranty solve its Morgan Stanley problem. To overcome any lingering Japanese doubts about the Morgan banks, John Meyer kept urging John Young of Morgan Stanley to open a Tokyo office. With the imposition of U.S. capital controls, Morgan Stanley needed to find money around the world for its clients, and Japan was becoming too big to ignore. So in 1970, Morgan Stanley agreed to set up a Tokyo representative office on two conditions—that it get space adjoining a new World Bank liaison office in Tokyo and that David Phillips head the office.

In the 1960s, the bankers were still more the instruments than the engines of takeovers. The Morgan Stanley-Morgan Grenfell team flew off to the City to mount the most vigorous operation in London Stock Exchange history, fortified by a $150-million credit led by Morgan Guaranty. Stymied by LBJ’s capital controls, American Tobacco could afford only a partial bid, and this enforced economy led to the controversy. All over the City, insurance companies, pension funds, and other underwriters sat with unwanted, depressed Gallaher shares, gnashing their teeth at Morgan Grenfell. At a Sunday night meeting, the takeover team plotted its strategy with Sir Antony Hornby, senior partner of Cazenove and Company, who was assigned to handle the Stock Exchange operation.


pages: 357 words: 95,986

Inventing the Future: Postcapitalism and a World Without Work by Nick Srnicek, Alex Williams

3D printing, additive manufacturing, air freight, algorithmic trading, anti-work, antiwork, back-to-the-land, banking crisis, basic income, battle of ideas, blockchain, Boris Johnson, Bretton Woods, business cycle, call centre, capital controls, capitalist realism, carbon footprint, carbon tax, Cass Sunstein, centre right, collective bargaining, crowdsourcing, cryptocurrency, David Graeber, decarbonisation, deep learning, deindustrialization, deskilling, Doha Development Round, Elon Musk, Erik Brynjolfsson, Evgeny Morozov, Ferguson, Missouri, financial independence, food miles, Francis Fukuyama: the end of history, full employment, future of work, gender pay gap, general purpose technology, housing crisis, housing justice, income inequality, industrial robot, informal economy, intermodal, Internet Archive, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, Kickstarter, Kiva Systems, late capitalism, liberation theology, Live Aid, low skilled workers, manufacturing employment, market design, Martin Wolf, mass immigration, mass incarceration, means of production, megaproject, minimum wage unemployment, Modern Monetary Theory, Mont Pelerin Society, Murray Bookchin, neoliberal agenda, New Urbanism, Occupy movement, oil shale / tar sands, oil shock, Overton Window, patent troll, pattern recognition, Paul Samuelson, Philip Mirowski, post scarcity, post-Fordism, post-work, postnationalism / post nation state, precariat, precautionary principle, price stability, profit motive, public intellectual, quantitative easing, reshoring, Richard Florida, rising living standards, road to serfdom, Robert Gordon, Ronald Reagan, Second Machine Age, secular stagnation, self-driving car, Slavoj Žižek, social web, stakhanovite, Steve Jobs, surplus humans, synthetic biology, tacit knowledge, technological determinism, the built environment, The Chicago School, The Future of Employment, the long tail, Tyler Cowen, Tyler Cowen: Great Stagnation, universal basic income, wages for housework, warehouse automation, We are all Keynesians now, We are the 99%, women in the workforce, working poor, working-age population

France undertook a neoliberal turn during the Mitterrand administration in the early 1980s, and the major economies of Europe became bound by the neoliberal policies embodied in the constitution of the European Union. In the United States and UK, a wave of systematic attacks were launched against the power of labour. Piece by piece, trade unions were demolished and labour regulations dismantled. Capital controls were loosened, finance was deregulated, and the welfare state began to be scavenged for profitable parts. Outside Europe and North America, neoliberalism had already been forced on Chile and Argentina in the aftermath of military coups in the 1970s. The developing world debt crisis of the 1980s acted as a key moment to break traditional proto-socialist hegemonies and institute a turn to neoliberalism across the world.53 Moreover, with the breakdown of the USSR, Eastern Europe saw a wave of neoliberalising trends that were spurred on by Western economic advisors.


pages: 344 words: 93,858

The Post-American World: Release 2.0 by Fareed Zakaria

"World Economic Forum" Davos, affirmative action, agricultural Revolution, airport security, Alan Greenspan, anti-communist, Asian financial crisis, battle of ideas, Bear Stearns, Berlin Wall, Bretton Woods, BRICs, British Empire, call centre, capital controls, central bank independence, centre right, collapse of Lehman Brothers, conceptual framework, Credit Default Swap, currency manipulation / currency intervention, delayed gratification, Deng Xiaoping, double entry bookkeeping, failed state, Fall of the Berlin Wall, financial innovation, global reserve currency, global supply chain, Great Leap Forward, illegal immigration, interest rate derivative, Intergovernmental Panel on Climate Change (IPCC), knowledge economy, low interest rates, Mahatma Gandhi, Martin Wolf, mutually assured destruction, National Debt Clock, new economy, no-fly zone, oil shock, open economy, out of africa, Parag Khanna, postindustrial economy, purchasing power parity, race to the bottom, reserve currency, Ronald Reagan, Silicon Valley, Silicon Valley startup, South China Sea, Steven Pinker, Suez crisis 1956, The future is already here, The Great Moderation, Thomas L Friedman, Thomas Malthus, three-masted sailing ship, trade route, Washington Consensus, working-age population, young professional, zero-sum game

But, he would add, they didn’t have to worry about that decision for a while: most of them were still much closer to the Soviet Union. The financial force that has powered the new era is the free movement of capital. This, too, is a relatively recent phenomenon. The post–World War II period was one of fixed exchange rates. Most Western countries, including France and Italy, had capital controls restricting the movement of currency in and out of their borders. The dollar was pegged to gold. But as global trade grew, fixed rates created frictions and inefficiencies and prevented capital from being put to its best use. Most Western countries removed controls during the 1970s and 1980s.


pages: 310 words: 90,817

Paper Money Collapse: The Folly of Elastic Money and the Coming Monetary Breakdown by Detlev S. Schlichter

bank run, banks create money, British Empire, business cycle, capital controls, Carmen Reinhart, central bank independence, currency peg, fixed income, Fractional reserve banking, German hyperinflation, global reserve currency, inflation targeting, Kenneth Rogoff, Kickstarter, Long Term Capital Management, low interest rates, market clearing, Martin Wolf, means of production, Money creation, money market fund, moral hazard, mortgage debt, open economy, Ponzi scheme, price discovery process, price mechanism, price stability, pushing on a string, quantitative easing, reserve currency, rising living standards, risk tolerance, savings glut, the market place, The Wealth of Nations by Adam Smith, Thorstein Veblen, transaction costs, We are all Keynesians now, Y2K

Pension funds with insufficient ratios of current assets to claims will be bailed out by the state. This will be used as a precursor to more state-run pension schemes. Policy makers have already floated ideas regarding new taxes on financial transactions. This will be the first step on the path to outright capital controls, the introduction or reintroduction of which appears a question of time only. Private citizens will increasingly face hurdles when taking control of their own financial assets and, in particular, when moving assets abroad. A free market in capital is impossible in an advanced state fiat money system.


The Making of a World City: London 1991 to 2021 by Greg Clark

Basel III, Berlin Wall, Big bang: deregulation of the City of London, Boris Johnson, British Empire, business climate, business cycle, capital controls, carbon footprint, congestion charging, corporate governance, cross-subsidies, Crossrail, deindustrialization, Dissolution of the Soviet Union, East Village, Fall of the Berlin Wall, financial innovation, financial intermediation, gentrification, global value chain, haute cuisine, high-speed rail, housing crisis, industrial cluster, intangible asset, job polarisation, Kickstarter, knowledge economy, knowledge worker, labour market flexibility, low skilled workers, manufacturing employment, Masdar, mass immigration, megacity, megaproject, New Urbanism, offshore financial centre, open immigration, Pearl River Delta, place-making, rent control, Robert Gordon, Silicon Valley, smart cities, sovereign wealth fund, trickle-down economics, urban planning, urban renewal, working poor

London contributes approximately £7 billion to the national pool of NNDR, over a quarter of the total, despite constituting only 15 per cent of the population. The city receives only £4.7 billion in the redistribution (DCLG, 2014a; DCLG, 2012c). London boroughs and the GLA rely on grant distributions and ad hoc allocations of specific grants for transport, housing, arts and economic development, and also face fairly tight capital controls set by central government which constrains capital investment. Even with national transfers, total revenues of £22–23 billion operated by boroughs and the GLA amount to only a quarter of all public expenditure in the city (Figure 12.2). The GLA Group’s primary 2010/11 (£102.2bn) 1999/00 (£64.1bn) Income tax VAT Other National Insurance Contributions Corporation tax Figure 12.1: Revenues raised by London’s economy Source: DCLG (2012c, 2012d); Oxford Economics, 2012: 8–9.


All About Asset Allocation, Second Edition by Richard Ferri

activist fund / activist shareholder / activist investor, Alan Greenspan, asset allocation, asset-backed security, barriers to entry, Bear Stearns, Bernie Madoff, Black Monday: stock market crash in 1987, book value, buy and hold, capital controls, commoditize, commodity trading advisor, correlation coefficient, currency risk, Daniel Kahneman / Amos Tversky, diversification, diversified portfolio, equity premium, equity risk premium, estate planning, financial independence, fixed income, full employment, high net worth, Home mortgage interest deduction, implied volatility, index fund, intangible asset, inverted yield curve, John Bogle, junk bonds, Long Term Capital Management, low interest rates, managed futures, Mason jar, money market fund, mortgage tax deduction, passive income, pattern recognition, random walk, Richard Thaler, risk free rate, risk tolerance, risk-adjusted returns, risk/return, Robert Shiller, selection bias, Sharpe ratio, stock buybacks, stocks for the long run, survivorship bias, too big to fail, transaction costs, Vanguard fund, yield curve

Emerging countries also have organized securities exchanges that trade stocks and bonds of large enterprises domiciled in that country. Foreigners are allowed to own those securities either directly or indirectly through a fund. An investible emerging market is defined by a number of factors, including gross domestic product per capita, local government regulations, perceived investment risk, foreign ownership limits, and capital controls. The MSCI Emerging Markets Index covers 22 investible countries. It is a market-weighted index that uses the float-adjusted value of each company to reflect restrictions on foreign investment. Some countries have much larger stock markets than others. Consequently, at times an emerging market index can be dominated by a few countries.


Rogue States by Noam Chomsky

"there is no alternative" (TINA), Alan Greenspan, anti-communist, Asian financial crisis, Berlin Wall, Branko Milanovic, Bretton Woods, business cycle, capital controls, classic study, collective bargaining, colonial rule, creative destruction, cuban missile crisis, declining real wages, deskilling, digital capitalism, Edward Snowden, experimental subject, Fall of the Berlin Wall, floating exchange rates, land reform, liberation theology, Mahbub ul Haq, Mikhail Gorbachev, Monroe Doctrine, new economy, Nixon triggered the end of the Bretton Woods system, no-fly zone, oil shock, precautionary principle, public intellectual, RAND corporation, Silicon Valley, strikebreaker, structural adjustment programs, Tobin tax, union organizing, Washington Consensus

Nor would it do to mention that the generosity was largely bestowed by US taxpayers upon the corporate sector, which was duly appreciative, recognizing years later that the Marshall Plan “set the stage for large amounts of private US direct investment in Europe,”6 establishing the basis for the modern transnational corporations, which “prospered and expanded on overseas orders, . . . fueled initially by the dollars of the Marshall Plan” and protected from “negative developments” by “the umbrella of American power.”7 Furthermore, “Marshall Plan aid was also crucial in offsetting capital flight from Europe to the United States,” political economist Eric Helleiner alleges, a matter of which “American policymakers were in fact keenly aware,” preferring that “wealthy Europeans” send their money to New York banks because “cooperative capital controls had proven unacceptable to the American banking community.” “The enormity of Marshall Plan aid thus did not so much reflect the resources required to rebuild Europe, . . . but rather the volume of funds that were needed to offset the ‘mass movements of nervous flight capital’” predicted by leading economists, a flow that apparently “exceeded” the Marshall Plan aid provided by US taxpayers—effectively, to “wealthy Europeans” and New York banks.8 The “prevailing orthodoxy” has sometimes been subjected to explicit test, on the obvious terrain.


pages: 391 words: 102,301

Zero-Sum Future: American Power in an Age of Anxiety by Gideon Rachman

"World Economic Forum" Davos, Alan Greenspan, Asian financial crisis, bank run, battle of ideas, Berlin Wall, Big bang: deregulation of the City of London, Bonfire of the Vanities, borderless world, Bretton Woods, BRICs, capital controls, carbon tax, centre right, clean water, collapse of Lehman Brothers, colonial rule, currency manipulation / currency intervention, deindustrialization, Deng Xiaoping, Doha Development Round, energy security, failed state, Fall of the Berlin Wall, financial deregulation, Francis Fukuyama: the end of history, full employment, Glass-Steagall Act, global reserve currency, Global Witness, Golden arches theory, Great Leap Forward, greed is good, Greenspan put, Hernando de Soto, illegal immigration, income inequality, invisible hand, It's morning again in America, Jeff Bezos, laissez-faire capitalism, Live Aid, low interest rates, market fundamentalism, Martin Wolf, mass immigration, Mexican peso crisis / tequila crisis, Mikhail Gorbachev, moral hazard, mutually assured destruction, Naomi Klein, Nelson Mandela, offshore financial centre, Oklahoma City bombing, open borders, open economy, Peace of Westphalia, peak oil, pension reform, plutocrats, popular capitalism, price stability, RAND corporation, reserve currency, rising living standards, road to serfdom, Ronald Reagan, Savings and loan crisis, shareholder value, Sinatra Doctrine, sovereign wealth fund, special economic zone, Steve Jobs, Stewart Brand, Tax Reform Act of 1986, The Chicago School, The Great Moderation, The Myth of the Rational Market, Thomas Malthus, Timothy McVeigh, trickle-down economics, Washington Consensus, Winter of Discontent, zero-sum game

The all-powerful market that always knows best is finished.”29 Sarkozy’s remarks were just a taste of the international assault on the free-market beliefs that, to a great extent, all the world’s major powers had subscribed to over the previous thirty years. Since the opening of China in 1978 and the Thatcher and Reagan revolutions of 1979 and 1980, the state had been in retreat in almost every major economy across the world. The mantras of the Age of Optimism were deregulation, free trade, the abolition of capital controls, and the encouragement of cross-border investment. But in the wake of the economic and financial crisis, the state was resurgent across the world as governments stepped in to save their economies. The extent of the intellectual reversal after the crash of 2008 was extraordinary. The collapse of Lehman Brothers sparked immediate fears of a global financial meltdown, and so prompted governments all over the world to pour money into their banks.


Who Rules the World? by Noam Chomsky

Able Archer 83, Alan Greenspan, Albert Einstein, anti-communist, Ayatollah Khomeini, Berlin Wall, Bretton Woods, British Empire, capital controls, classic study, corporate governance, corporate personhood, cuban missile crisis, deindustrialization, Donald Trump, Doomsday Clock, Edward Snowden, en.wikipedia.org, facts on the ground, failed state, Fall of the Berlin Wall, Garrett Hardin, high-speed rail, Howard Zinn, illegal immigration, Intergovernmental Panel on Climate Change (IPCC), invisible hand, liberation theology, Malacca Straits, Martin Wolf, Mikhail Gorbachev, Monroe Doctrine, Nelson Mandela, nuclear winter, Occupy movement, oil shale / tar sands, one-state solution, Plutonomy: Buying Luxury, Explaining Global Imbalances, precariat, public intellectual, Ralph Waldo Emerson, Robert Solow, Ronald Reagan, South China Sea, Stanislav Petrov, Strategic Defense Initiative, structural adjustment programs, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, trade route, Tragedy of the Commons, union organizing, uranium enrichment, wage slave, WikiLeaks, working-age population

They trace back to the 1970s, when the national political economy underwent major transformations, bringing to an end what is commonly called “the golden age of [state] capitalism.” Two major elements of this shift were financialization and the offshoring of production, both related to the decline in the rate of profit in manufacturing and the dismantling of the postwar Bretton Woods system of capital controls and regulated currencies. The ideological triumph of “free market doctrines,” highly selective as always, administered further blows as these doctrines were translated into deregulation, rules of corporate governance linking huge CEO rewards to short-term profits, and other such policy decisions.


pages: 351 words: 96,780

Hegemony or Survival: America's Quest for Global Dominance by Noam Chomsky

"World Economic Forum" Davos, anti-communist, Berlin Wall, Bretton Woods, British Empire, capital controls, cuban missile crisis, declining real wages, disinformation, Doomsday Clock, facts on the ground, failed state, Fall of the Berlin Wall, invisible hand, launch on warning, liberation theology, long peace, market fundamentalism, Monroe Doctrine, Nelson Mandela, public intellectual, RAND corporation, Ronald Reagan, Search for Extraterrestrial Intelligence, Strategic Defense Initiative, uranium enrichment

It has been regularly observed that the extension of formal democracy in Latin America has been accompanied by increasing disillusionment about democracy. One reason, pointed out some years ago by Argentine political scientist Atilio Boron, is that the new wave of democratization in Latin America has coincided with neoliberal economic reforms, which undermine effective democracy.59 The postwar Bretton Woods system was based on capital controls and relatively fixed currencies, not only in the expectation of economic benefit, as proved to be the case, but also to allow governments space to carry out highly popular social democratic policies. It was understood that the kind of financial liberalization that opened the neoliberal era in the 1970s reduces the options for democratic choice, transferring decisions to the hands of a “virtual Senate” of investors and lenders.60 Governments now face a “‘dual constituency conundrum,’ which pits the interests of voters against foreign currency traders and hedge fund managers ‘who conduct a moment-to-moment referendum’ on the economic and financial policies of developing and developed nations alike,” and the competition is highly unequal.


pages: 353 words: 98,267

The Price of Everything: And the Hidden Logic of Value by Eduardo Porter

Alan Greenspan, Alvin Roth, AOL-Time Warner, Asian financial crisis, Ayatollah Khomeini, banking crisis, barriers to entry, behavioural economics, Berlin Wall, British Empire, capital controls, carbon tax, Carmen Reinhart, Cass Sunstein, clean water, Credit Default Swap, Deng Xiaoping, Easter island, Edward Glaeser, European colonialism, Fall of the Berlin Wall, financial deregulation, financial engineering, flying shuttle, Ford paid five dollars a day, full employment, George Akerlof, Glass-Steagall Act, Gordon Gekko, guest worker program, happiness index / gross national happiness, housing crisis, illegal immigration, immigration reform, income inequality, income per capita, informal economy, Intergovernmental Panel on Climate Change (IPCC), invisible hand, Jean Tirole, John Maynard Keynes: technological unemployment, Joshua Gans and Andrew Leigh, junk bonds, Kenneth Rogoff, labor-force participation, laissez-faire capitalism, longitudinal study, loss aversion, low skilled workers, Martin Wolf, means of production, Menlo Park, Mexican peso crisis / tequila crisis, Michael Milken, Monkeys Reject Unequal Pay, new economy, New Urbanism, peer-to-peer, pension reform, Peter Singer: altruism, pets.com, placebo effect, precautionary principle, price discrimination, price stability, rent-seeking, Richard Thaler, rising living standards, risk tolerance, Robert Shiller, Ronald Reagan, search costs, Silicon Valley, stem cell, Steve Jobs, Stewart Brand, superstar cities, The Spirit Level, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, trade route, transatlantic slave trade, ultimatum game, unpaid internship, urban planning, Veblen good, women in the workforce, World Values Survey, Yom Kippur War, young professional, zero-sum game

A BANKER’S PARADISE This reconfiguration of prosperity is not simply about changes in the way we pay for work. The entire set of rules governing American capitalism changed. Those that emerged over the past three decades hammered the middle class. Trade barriers fell during this period, and capital controls were done away with. Welfare payments were redesigned to force the unemployed to look for work. Large swaths of regulation were cast aside as misguided hindrances to business. The shift lifted many of the protections that had shielded American workers from some of the harshest economic forces.


pages: 358 words: 104,664

Capital Without Borders by Brooke Harrington

Alan Greenspan, banking crisis, Big bang: deregulation of the City of London, British Empire, capital controls, Capital in the Twenty-First Century by Thomas Piketty, classic study, complexity theory, corporate governance, corporate social responsibility, diversified portfolio, emotional labour, equity risk premium, estate planning, eurozone crisis, family office, financial innovation, ghettoisation, Great Leap Forward, haute couture, high net worth, income inequality, information asymmetry, Joan Didion, job satisfaction, joint-stock company, Joseph Schumpeter, Kevin Roose, liberal capitalism, mega-rich, mobile money, offshore financial centre, prudent man rule, race to the bottom, regulatory arbitrage, Robert Shiller, South Sea Bubble, subprime mortgage crisis, the market place, The Theory of the Leisure Class by Thorstein Veblen, Thorstein Veblen, transaction costs, upwardly mobile, wealth creators, web of trust, Westphalian system, Wolfgang Streeck, zero-sum game

Instead of producing the global convergence in financial regulations that many expected, the agency of professionals such as wealth managers has resulted in expansion of gaps and conflicts.8 This benefits the professionals and their clients, while bringing mixed results for others. To be sure, this process began not with wealth managers but with the states themselves loosening capital controls and making their currencies fully exchangeable, setting the institutional groundwork for the international mobility of wealth. From this followed increased international mobility of wealthy people, undermining a system of state authority based primarily on a fixed subject: that is, individuals who consistently inhabit a specific space within a well-defined jurisdiction.9 Allowing capital and its owners to be more mobile gave rise to one of the novelties of globalization: “the ‘lifting out’ of social relations from local contexts of interaction and their restructuring across indefinite spans of time-space.”10 This contributed to the creation of an international elite, as hypermobile as their capital.


pages: 357 words: 99,684

Why It's Still Kicking Off Everywhere: The New Global Revolutions by Paul Mason

anti-globalists, back-to-the-land, balance sheet recession, bank run, banking crisis, Berlin Wall, business cycle, capital controls, capitalist realism, centre right, Chekhov's gun, citizen journalism, collapse of Lehman Brothers, collective bargaining, creative destruction, credit crunch, Credit Default Swap, currency manipulation / currency intervention, currency peg, disinformation, do-ocracy, eurozone crisis, Fall of the Berlin Wall, floating exchange rates, foreign exchange controls, Francis Fukuyama: the end of history, full employment, ghettoisation, illegal immigration, informal economy, land tenure, Leo Hollis, low skilled workers, mass immigration, means of production, megacity, Mohammed Bouazizi, Naomi Klein, Network effects, New Journalism, Occupy movement, price stability, quantitative easing, race to the bottom, rising living standards, short selling, Slavoj Žižek, Stewart Brand, strikebreaker, union organizing, We are the 99%, Whole Earth Catalog, WikiLeaks, Winter of Discontent, women in the workforce, working poor, working-age population, young professional

Brazil responded to a 40 per cent rise of the real against the dollar with a tax designed to suppress the flow of capital into Brazil. It spent tens of billions of dollars in the foreign exchange markets buying its own currency to depress the exchange rate, and slapped a ban on short-selling the dollar inside Brazil. But other countries could not, or would not, use capital controls. The outcome speaks for itself: the UN’s global Food Price Index, which had been set at 100 in 2004, rocketed from 180 in July 2010 to an all-time high of 234 in February 2011. In spring 2011, after Bernanke vigorously denied that QEII had had the slightest impact on the Arab Spring, UK economist Andrew Lilico produced a graph showing the almost exact correlation between Federal Reserve money-printing operations and global commodity prices.


pages: 846 words: 250,145

The Cold War: A World History by Odd Arne Westad

Able Archer 83, Albert Einstein, American ideology, anti-communist, Ayatollah Khomeini, Berlin Wall, Bolshevik threat, Bretton Woods, British Empire, capital controls, collective bargaining, colonial rule, continuous integration, cuban missile crisis, Deng Xiaoping, disinformation, Dissolution of the Soviet Union, energy security, European colonialism, facts on the ground, failed state, Fall of the Berlin Wall, financial deregulation, full employment, Great Leap Forward, household responsibility system, imperial preference, Internet Archive, land reform, Les Trente Glorieuses, liberal capitalism, long peace, means of production, Mikhail Gorbachev, military-industrial complex, mutually assured destruction, Nelson Mandela, new economy, Nixon shock, Nixon triggered the end of the Bretton Woods system, oil shock, out of africa, post-industrial society, Ronald Reagan, Ronald Reagan: Tear down this wall, South China Sea, special economic zone, Strategic Defense Initiative, Suez crisis 1956, union organizing, urban planning, War on Poverty, women in the workforce, Yom Kippur War, young professional, zero-sum game

These perceptions may have been less than true overall, but they were widely held at the time, both inside and outside the United States itself. More important than perceptions, though, were the new realities created by economic and technological change. The collapse of Bretton Woods and the floating of exchange rates were not a cause but a symptom of a global reshaping. In the capitalist West, the state-centered, tariff-oriented, capital-controls-dominated postwar world was giving way to international trade and international finance. World trade tripled from the mid-1960s to 1980, much helped by more effective forms of transport and by large amounts of currency, especially US dollars, held outside its country of origin. Overseas investments also increased dramatically, in part because improved communications provided investors with more information and therefore increased confidence.

The successes of commercial television indicated that in many parts of the world people’s priorities were beginning to change. This turn toward consumerism went along with fundamental changes in the global economy that got underway in the 1970s. As we have seen, the breakdown of the Bretton Woods system of fixed rates, regulated trade, and capital controls led to a sense of crisis in the West, and especially in the United States. But it also reflected a relative improvement in the economic position of others, above all in Asia. All over the globe, except in the Communist countries, people were reinventing themselves as consumers of products that earlier on had either not existed or been out of reach for anyone but the top layers of society.


pages: 416 words: 106,532

Cryptoassets: The Innovative Investor's Guide to Bitcoin and Beyond: The Innovative Investor's Guide to Bitcoin and Beyond by Chris Burniske, Jack Tatar

Airbnb, Alan Greenspan, altcoin, Alvin Toffler, asset allocation, asset-backed security, autonomous vehicles, Bear Stearns, bitcoin, Bitcoin Ponzi scheme, blockchain, Blythe Masters, book value, business cycle, business process, buy and hold, capital controls, carbon tax, Carmen Reinhart, Clayton Christensen, clean water, cloud computing, collateralized debt obligation, commoditize, correlation coefficient, creative destruction, Credit Default Swap, credit default swaps / collateralized debt obligations, cryptocurrency, disintermediation, distributed ledger, diversification, diversified portfolio, Dogecoin, Donald Trump, Elon Musk, en.wikipedia.org, Ethereum, ethereum blockchain, fiat currency, financial engineering, financial innovation, fixed income, Future Shock, general purpose technology, George Gilder, Google Hangouts, high net worth, hype cycle, information security, initial coin offering, it's over 9,000, Jeff Bezos, Kenneth Rogoff, Kickstarter, Leonard Kleinrock, litecoin, low interest rates, Marc Andreessen, Mark Zuckerberg, market bubble, money market fund, money: store of value / unit of account / medium of exchange, moral hazard, Network effects, packet switching, passive investing, peer-to-peer, peer-to-peer lending, Peter Thiel, pets.com, Ponzi scheme, prediction markets, quantitative easing, quantum cryptography, RAND corporation, random walk, Renaissance Technologies, risk free rate, risk tolerance, risk-adjusted returns, Robert Shiller, Ross Ulbricht, Salesforce, Satoshi Nakamoto, seminal paper, Sharpe ratio, Silicon Valley, Simon Singh, Skype, smart contracts, social web, South Sea Bubble, Steve Jobs, transaction costs, tulip mania, Turing complete, two and twenty, Uber for X, Vanguard fund, Vitalik Buterin, WikiLeaks, Y2K

Currently, the operations of different cryptoasset exchanges can be thought of as isolated liquidity pools, so if one exchange is experiencing significantly stronger demand than other exchanges, the bitcoin on that exchange may trade at a premium to other exchanges. In the equities markets, such differences in price would quickly be solved by arbitrage, but due to time delays in moving bitcoin between different exchanges, not to mention fiat currency capital controls, these pricing discrepancies persist. The combination of growing interest in bitcoin and recognition of the need for robust and regulated bitcoin indices has led two major investment markets, the NYSE and the Chicago Mercantile Exchange (CME), to implement their own bitcoin indices. The NYSE launched its bitcoin pricing index, NYXBT, in May 2015.33 At the time, the president of the NYSE, Thomas Farley, said, “Bitcoin values are quickly becoming a data point that our customers want to follow as they consider transacting, trading, or investing with this emerging asset class.


pages: 378 words: 110,518

Postcapitalism: A Guide to Our Future by Paul Mason

air traffic controllers' union, Alan Greenspan, Alfred Russel Wallace, bank run, banking crisis, banks create money, Basel III, basic income, Bernie Madoff, Bill Gates: Altair 8800, bitcoin, Bletchley Park, Branko Milanovic, Bretton Woods, BRICs, British Empire, business cycle, business process, butterfly effect, call centre, capital controls, carbon tax, Cesare Marchetti: Marchetti’s constant, Claude Shannon: information theory, collaborative economy, collective bargaining, commons-based peer production, Corn Laws, corporate social responsibility, creative destruction, credit crunch, currency manipulation / currency intervention, currency peg, David Graeber, deglobalization, deindustrialization, deskilling, discovery of the americas, disinformation, Downton Abbey, drone strike, en.wikipedia.org, energy security, eurozone crisis, factory automation, false flag, financial engineering, financial repression, Firefox, Fractional reserve banking, Frederick Winslow Taylor, fulfillment center, full employment, future of work, game design, Glass-Steagall Act, green new deal, guns versus butter model, Herbert Marcuse, income inequality, inflation targeting, informal economy, information asymmetry, intangible asset, Intergovernmental Panel on Climate Change (IPCC), Internet of things, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Perry Barlow, Joseph Schumpeter, Kenneth Arrow, Kevin Kelly, Kickstarter, knowledge economy, knowledge worker, late capitalism, low interest rates, low skilled workers, market clearing, means of production, Metcalfe's law, microservices, middle-income trap, Money creation, money: store of value / unit of account / medium of exchange, mortgage debt, Network effects, new economy, Nixon triggered the end of the Bretton Woods system, Norbert Wiener, Occupy movement, oil shale / tar sands, oil shock, Paul Samuelson, payday loans, Pearl River Delta, post-industrial society, power law, precariat, precautionary principle, price mechanism, profit motive, quantitative easing, race to the bottom, RAND corporation, rent-seeking, reserve currency, RFID, Richard Stallman, Robert Gordon, Robert Metcalfe, scientific management, secular stagnation, sharing economy, Stewart Brand, structural adjustment programs, supply-chain management, technological determinism, The Future of Employment, the scientific method, The Wealth of Nations by Adam Smith, Transnistria, Twitter Arab Spring, union organizing, universal basic income, urban decay, urban planning, vertical integration, Vilfredo Pareto, wages for housework, WikiLeaks, women in the workforce, Yochai Benkler

It would be more sensible to combine controlled debt write-offs with a ten- to fifteen-year global policy of ‘financial repression’: that is, to stimulate inflation, hold interest rates lower than the inflation rate, remove people’s ability to move money into non-financial investments or offshore, and thus inflate away the debts, writing off the part that remained. To be brutally clear, this would reduce the value of assets in pension funds, and thus the material wealth of the middle classes and the old; and by imposing capital controls you would be partially deglobalizing finance. But this is only a controlled way of doing what the market will do via chaos if, as S&P predicts, 60 per cent of all countries see their debt reduced to junk by 2050. In conditions of near-stagnation and long-term zero interest rates, the income generated by pension fund investments is in any case already minimal.


pages: 430 words: 109,064

13 Bankers: The Wall Street Takeover and the Next Financial Meltdown by Simon Johnson, James Kwak

Alan Greenspan, American ideology, Andrei Shleifer, Asian financial crisis, asset-backed security, bank run, banking crisis, Bear Stearns, Bernie Madoff, Black Monday: stock market crash in 1987, Bonfire of the Vanities, bonus culture, book value, break the buck, business cycle, business logic, buy and hold, capital controls, Carmen Reinhart, central bank independence, Charles Lindbergh, collapse of Lehman Brothers, collateralized debt obligation, commoditize, corporate governance, corporate raider, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, currency risk, Edward Glaeser, Eugene Fama: efficient market hypothesis, financial deregulation, financial engineering, financial innovation, financial intermediation, financial repression, fixed income, George Akerlof, Glass-Steagall Act, Gordon Gekko, greed is good, Greenspan put, Home mortgage interest deduction, Hyman Minsky, income per capita, information asymmetry, interest rate derivative, interest rate swap, junk bonds, Kenneth Rogoff, laissez-faire capitalism, late fees, light touch regulation, Long Term Capital Management, low interest rates, market bubble, market fundamentalism, Martin Wolf, Michael Milken, money market fund, moral hazard, mortgage tax deduction, Myron Scholes, Paul Samuelson, Ponzi scheme, price stability, profit maximization, proprietary trading, race to the bottom, regulatory arbitrage, rent-seeking, Robert Bork, Robert Shiller, Ronald Reagan, Saturday Night Live, Satyajit Das, Savings and loan crisis, sovereign wealth fund, Tax Reform Act of 1986, The Myth of the Rational Market, too big to fail, transaction costs, Tyler Cowen, value at risk, yield curve

Specific countries for which we have detailed data on the role of powerful business interests and their political clout include Thailand (Marianne Bertrand, Simon Johnson, Antoinette Schoar, and Krislert Samphantharak, “Mixing Family with Business: A Study of Thai Business Groups,” Journal of Financial Economics 88 [2008]: 466–98); Malaysia (Simon Johnson and Todd Mitton, “Cronyism and Capital Controls: Evidence from Malaysia,” Journal of Financial Economics 67 [2003]: 351–82; Edmund Terence Gomez and Jomo K. S., Malaysia’s Political Economy: Politics, Patronage, and Profits [Cambridge: Cambridge University Press, 1997]); and Pakistan (Asim I. Khwaja and Atif Mian, “Do Lenders Favor Politically Connected Firms?


pages: 363 words: 107,817

Modernising Money: Why Our Monetary System Is Broken and How It Can Be Fixed by Andrew Jackson (economist), Ben Dyson (economist)

Alan Greenspan, bank run, banking crisis, banks create money, Basel III, Bretton Woods, business cycle, call centre, capital controls, cashless society, central bank independence, credit crunch, David Graeber, debt deflation, double entry bookkeeping, eurozone crisis, financial exclusion, financial innovation, Financial Instability Hypothesis, financial intermediation, floating exchange rates, Fractional reserve banking, full employment, Greenspan put, Hyman Minsky, inflation targeting, informal economy, information asymmetry, intangible asset, land bank, land reform, London Interbank Offered Rate, low interest rates, market bubble, market clearing, Martin Wolf, means of production, Money creation, money: store of value / unit of account / medium of exchange, moral hazard, mortgage debt, negative equity, Northern Rock, Post-Keynesian economics, price stability, profit motive, quantitative easing, Real Time Gross Settlement, regulatory arbitrage, risk-adjusted returns, Savings and loan crisis, seigniorage, shareholder value, short selling, South Sea Bubble, technological determinism, The Great Moderation, the payments system, The Wealth of Nations by Adam Smith, too big to fail, total factor productivity, unorthodox policies

Nations agreed to manage their currencies to maintain a fixed exchange rate against the dollar, and America agreed to fix the dollar against gold. Maintenance of the Bretton Woods exchange rates shifted focus onto the flow of capital into and out of countries. To prevent these flows interfering with the fixed exchange rates, the UK used a combination of capital controls (to limit the outflows due to the acquisition of foreign assets), quantitative and qualitative restrictions on bank lending, and control of interest rates (to limit the availability and demand for domestic credit which could fuel imports). Despite the huge government deficits run up during the war, the destruction of large swathes of Europe, and a highly repressed financial system, from 1945 to 1971 growth was uniformly high and unemployment very low.


pages: 385 words: 111,807

A Pelican Introduction Economics: A User's Guide by Ha-Joon Chang

"there is no alternative" (TINA), Affordable Care Act / Obamacare, Alan Greenspan, Albert Einstein, antiwork, AOL-Time Warner, Asian financial crisis, asset-backed security, bank run, banking crisis, banks create money, Bear Stearns, Berlin Wall, bilateral investment treaty, borderless world, Bretton Woods, British Empire, call centre, capital controls, central bank independence, Charles Babbage, collateralized debt obligation, colonial rule, Corn Laws, corporate governance, corporate raider, creative destruction, Credit Default Swap, credit default swaps / collateralized debt obligations, David Ricardo: comparative advantage, deindustrialization, discovery of the americas, Eugene Fama: efficient market hypothesis, eurozone crisis, experimental economics, Fall of the Berlin Wall, falling living standards, financial deregulation, financial engineering, financial innovation, flying shuttle, Ford Model T, Francis Fukuyama: the end of history, Frederick Winslow Taylor, full employment, George Akerlof, Gini coefficient, Glass-Steagall Act, global value chain, Goldman Sachs: Vampire Squid, Gordon Gekko, Great Leap Forward, greed is good, Gunnar Myrdal, Haber-Bosch Process, happiness index / gross national happiness, high net worth, income inequality, income per capita, information asymmetry, intangible asset, interchangeable parts, interest rate swap, inventory management, invisible hand, Isaac Newton, James Watt: steam engine, Johann Wolfgang von Goethe, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Maynard Keynes: technological unemployment, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, knowledge economy, laissez-faire capitalism, land bank, land reform, liberation theology, manufacturing employment, Mark Zuckerberg, market clearing, market fundamentalism, Martin Wolf, means of production, Mexican peso crisis / tequila crisis, Neal Stephenson, Nelson Mandela, Northern Rock, obamacare, offshore financial centre, oil shock, open borders, Pareto efficiency, Paul Samuelson, post-industrial society, precariat, principal–agent problem, profit maximization, profit motive, proprietary trading, purchasing power parity, quantitative easing, road to serfdom, Robert Shiller, Ronald Coase, Ronald Reagan, savings glut, scientific management, Scramble for Africa, search costs, shareholder value, Silicon Valley, Simon Kuznets, sovereign wealth fund, spinning jenny, structural adjustment programs, The Great Moderation, The Market for Lemons, The Spirit Level, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen, trade liberalization, transaction costs, transfer pricing, trickle-down economics, Vilfredo Pareto, Washington Consensus, working-age population, World Values Survey

Rejecting the post-Second World War ‘wet’ Tory compromise with Labour, Thatcher began a radical dismantling of the mixed economy, in the process earning the sobriquet ‘The Iron Lady’ for her uncompromising attitude. The Thatcher government lowered higher-rate income taxes, reduced government spending (especially in education, housing and transport), introduced laws reducing union power and abolished capital control (restriction on the cross-border movement of money). The most symbolic move was privatization – sales of SOEs to private investors. Gas, water, electricity, steel, airline, automobile and parts of public housing were privatized. Interest rates were raised in order to reduce inflation by dampening economic activities and thus demand.


Python Geospatial Development - Second Edition by Erik Westra

business logic, capital controls, database schema, Firefox, functional programming, Golden Gate Park, Google Earth, Mercator projection, natural language processing, openstreetmap, Silicon Valley, systems thinking, web application

Index A AddGeometryColumn() function / Using SpatiaLite AddPoint() / Task – save the country bounding boxes into a shapefile add_dash() method / Dashed and dotted lines admin interface, Django applicationabout / The structure of a Django application admin system, Django applicationabout / Playing with the admin system adding / Playing with the admin system database, resynchronizing / Playing with the admin system database objects, adding / Playing with the admin system admin URLs, adding / Playing with the admin system working with / Playing with the admin system affine transformation, DEMabout / Task – analyze height data using a digital elevation map also rules / "Also" rules angular distanceabout / Distance / Using angular distances angular distances / Task – identify parks in or near urban areas Application Programming Interfaces (APIs)about / Recent developments application reviewabout / Application review and improvements usablity / Usability quality / Quality performance / Performance problem, searching / Finding the problem performance, improving / Improving performance tiled shorelines, calculating / Calculating the tiled shorelines tiled shorelines, using / Using tiled shorelines performance improvement, analyzing / Analyzing the performance improvement aspect ratio / Calculating the map's dimensions AsText() function / Using SpatiaLite attributesabout / Geospatial development authentication system, Django applicationabout / The structure of a Django application azimuthal projectionabout / Azimuthal projections B band.ReadRaster() method / Task – analyze height data using a digital elevation map Band Interleaved by Line (BIL) formatabout / GIS data formats Band Interleaved by Pixel (BIP) formatabout / GIS data formats Band Sequential (BSQ) formatabout / GIS data formats base layerabout / Tile rendering base mapsetting up / Setting up the base map best practices, geospatial databasesabout / Recommended best practices spatial references, monitoring / Using the database to keep track of spatial references appropriate spatial reference, using / Using the appropriate spatial reference for your data databases, using supporting geographies / Option 1 – using a database that supports geographies features, transforming / Option 2 – transforming features as required features, transforming outset / Option 3 – transforming features from the outset unprojected coordinates, using / When to use unprojected coordinates on-the-fly transformations, avoiding within query / Avoiding on-the-fly transformations within a query spatial indexes, using / Using spatial indexes appropriately limits, spatial query optimizer / Knowing the limits of your database's query optimizer Bingabout / Creating a geospatial mash-up bounding / The OpenStreetMap API C calc_search_radius() function / Implementing the find feature view changesets / The OpenStreetMap API civic locationabout / Location colorsusing / Using colors common spatially-enabled databasesabout / Commercial Spatially-enabled databases Oracle / Oracle MS SQL Server / MS SQL Server conditions, rules / Rules, filters, and styles conic projectionabout / Conic projections coordinatesabout / Geospatial development coordinate systemabout / Coordinate systems projected coordinate systems / Coordinate systems unprojected coordinate systems / Coordinate systems coordinate transformation / Task – change projections to combine shapefiles using geographic and UTM coordinates Core Based Statistical Areas (CBSAs) / Task – identify parks in or near urban areas country bounding boxes, geospatial datacalculating / Task – calculate the bounding box for each country in the world saving, into shapefile / Task – save the country bounding boxes into a shapefile coverage formatabout / GIS data formats CreateSpatialIndex() function / Using SpatiaLite crosses() method / Design cursor.execute() methodabout / MySQL cylindrical projectionsabout / Cylindrical projections D dash segments / Dashed and dotted lines datadownloading / Downloading the data World Borders Dataset / World Borders Dataset, World Borders Dataset GSHHS / GSHHS, GSHHS GNIS / GNIS GEOnet Names Server / GEOnet Names Server importing / Importing the data places’ name data / US place name data worldwide places’ name data / Worldwide place name data data modelsdefining / Defining the data models shapefile, importing / Shapefile attribute / Attribute feature / Feature AttributeValue object / AttributeValue models.py file / The models.py file data sourcesetting up / Setting up the data source Datasource object / Design datasourcesshapefile / Shapefile PostGIS / PostGIS Gdal / Gdal Org / Ogr SQLite / SQLite OSM / OSM MemoryDatasource / MemoryDatasource datumabout / Datums, Changing datums and projections reference points / Datums NAD 27 / Datums NAD 83 / Datums WGS 84 / Datums changing / Task – change datums to allow older and newer TIGER data to be combined decimal degrees / Analyzing geospatial data defaultHandlerOptions dictionary / Intercepting mouse clicks design, MapnikLayers / Design Styles / Design Symbolizers / Design Destroy() method / Task – save the country bounding boxes into a shapefile, Saving the features into the shapefile digital elevation maps (DEM) / Sources of geospatial data in raster formatabout / Task – analyze height data using a digital elevation map used, for analyzing height data / Task – analyze height data using a digital elevation map affine transformation / Task – analyze height data using a digital elevation map Digital Elevation Model (DEM) formatabout / GIS data formats Digital Raster Graphic (DRG) formatabout / GIS data formats DISTALbasic workflow / About DISTAL database, designing / Designing and building the database database, building / Designing and building the database DISTAL applicationimplementing / Implementing the DISTAL application, The "select country" script about / Implementing the DISTAL application shared database module / The shared "database" module select country script / The "select country" script select area script / The "select area" script show result script / The "show results" script DISTAL databasedesigning / Designing and building the database distanceabout / Distance angular distance / Distance linear distance / Distance traveling distance / Distance distance featuresidentifying, manually / Calculating distances manually angular distance, using / Using angular distances projected coordinates, using / Using projected coordinates hybrid approach / A hybrid approach result, displaying / Displaying the results Django administrationworking with / Playing with the admin system Django applicationdownloading / Prerequisites structure / The structure of a Django application authentication system / The structure of a Django application admin interface / The structure of a Django application markup application / The structure of a Django application messages framework / The structure of a Django application sessions system / The structure of a Django application sitemaps framework / The structure of a Django application syndication system / The structure of a Django application settings file / The structure of a Django application model / The structure of a Django application, Models view / The structure of a Django application, Views templates / The structure of a Django application, Templates URL dispatching / URL dispatching data-entry forms / Templates DSG (Feature Designation Code) field / Worldwide place name data E edit_feature() function / Editing features edit_shapefile() function / Intercepting mouse clicks edit_shapeFile() view function / Intercepting mouse clicks else rules / "Else" rules envelope / Task – calculate the bounding box for each country in the world ESRI format / Obtaining and using GLOBE data European Petroleum Survey Group (EPSG) / Using the database to keep track of spatial references EveryBlockURL / Mapnik example map, Mapnikcreating / Creating an example map expandRect() function / Calculating the tiled shorelines export_data() function / Exporting shapefiles, Saving the attributes into the shapefile export_shapefile() view function / Exporting shapefiles F FC (Feature Classification) field / Worldwide place name data Feature Classification (FC) / Obtaining and using GEOnet Names Server data Feature Designation Code (DSG) / Obtaining and using GEOnet Names Server data feature layerabout / Tile rendering featuresediting / Editing features adding / Adding features deleting / Deleting features fields / Task – calculate the bounding box for each country in the world filterabout / Introducing Mapnik Filter() constructor / Filters filters, Mapnikabout / Filters scale denominators / Scale denominators find feature viewimplementing / Implementing the find feature view findPoints() function / Working with GIS data manually find_feature() function / Implementing the find feature view find_feature_url parameter / Intercepting mouse clicks find_places_within() function / A hybrid approach fixtureabout / Setting up the base map form.as_table template function / Editing features formsabout / The "import shapefile" view function FWTools installerURL / Working with GIS data manually G gamma correction / Gamma correction GDALabout / Recent developments / Obtaining and using GLOBE data, Drawing raster images GDAL, for Mac OS X / Working with GIS data manually GDAL/OGRabout / GDAL/OGR documentation / Documentation availability / Availability Gdal data sourceabout / Gdal gdaldem utility / Obtaining and using NED data GDAL designabout / GDAL design dataset / GDAL design raster band / GDAL design raster size / GDAL design georeferencing transform / GDAL design affine transformation / GDAL design Ground Control Points (GCPs) / GDAL design coordinate system / GDAL design metadata / GDAL design band raster size / GDAL design band metadata / GDAL design color table / GDAL design raster data / GDAL design drivers / GDAL design GDAL example codeabout / GDAL example code GDAL Python librarydownloading / Working with GIS data manually Generalized Search Tree (GiST)about / Spatial indexes generateMap() functionabout / The MapGenerator interface / Rendering the map Generic Mapping Tools (GMT)URL / Data format about / Data format geocode / Analyzing geospatial data geocoder / Advanced PostGIS features Geodabout / Geod fwd() method / Geod inv() method / Geod npts() method / Geod geodetic locationabout / Location GeoDjango / Prerequisites Geographical Information System (GIS) vendors / Geospatial development geographies / Using PostGIS Geography Markup Language (GML) format / GIS data formats GeoJSON format / GIS data formats Geolocationabout / Recent developments geometries / Using PostGIS geometry / Task – calculate the bounding box for each country in the world GeometryCollection class / Design geometry typesPoint / Implementing the find feature view LineString / Implementing the find feature view Polygon / Implementing the find feature view MultiPoint / Implementing the find feature view MultiLineString / Implementing the find feature view MultiPolygon / Implementing the find feature view GeometryCollection / Implementing the find feature view geometry unitsconverting / Converting and standardizing units of geometry and distance standardizing / Converting and standardizing units of geometry and distance Thai-Myanmar border lenght, calculating / Task – calculate the length of the Thai-Myanmar border Shoshone latitude, calculating / Task – find a point 132.7 kilometers west of Soshone, California Shoshone longitude, calculating / Task – find a point 132.7 kilometers west of Soshone, California GEOnet Names Serverabout / GEOnet Names Server screenshot / GEOnet Names Server data format / Data format obtaining / Obtaining and using GEOnet Names Server data using / Obtaining and using GEOnet Names Server data / Designing and building the database, GEOnet Names Server GeoRSSabout / Recent developments geospatialabout / Geospatial development geospatial calculationsperforming / Performing geospatial calculations parks, identifying in or near urban areas / Task – identify parks in or near urban areas geospatial dataabout / Geospatial development coordinates / Geospatial development attributes / Geospatial development analyzing / Analyzing geospatial data, Analyzing and manipulating geospatial data visualizing / Visualizing geospatial data, Visualizing geospatial data GDAL / GDAL/OGR OGR / GDAL/OGR GDAL design / GDAL design GDAL example code / GDAL example code OGR design / OGR design OGR example code / OGR example code manipulating / Analyzing and manipulating geospatial data sources / Sources of other types of geospatial data pre-requisites / Pre-requisites reading / Reading and writing geospatial data writing / Reading and writing geospatial data country bounding boxes, calculating / Task – calculate the bounding box for each country in the world country bounding boxes, saving into shapefile / Task – save the country bounding boxes into a shapefile height data, analyzing with DEM / Task – analyze height data using a digital elevation map representing / Representing and storing geospatial data storing / Representing and storing geospatial data Thailand and Myanmar border, calculating / Task – define the border between Thailand and Myanmar geometries, saving into text file / Task – save geometries into a text file geospatial databasesbest practices / Recommended best practices geospatial databases, Python usedprerequisites / Prerequisites MySQL, working with / Working with MySQL PostGIS, working with / Working with PostGIS SpatiaLite, working with / Working with SpatiaLite comparing / Comparing the databases geospatial developmentabout / Geospatial development overview / Recent developments geospatial development applicationsgeospatial data, analyzing / Analyzing geospatial data geospatial data, visualizing / Visualizing geospatial data geospatial mash-up, creating / Creating a geospatial mash-up geospatial mash-upcreating / Creating a geospatial mash-up GeoTIFF files / Obtaining and using NED data getattr() function / Editing features GetNoDataValue() method / Task – analyze height data using a digital elevation map get_country_datasource() function / Displaying the results get_datasource() function / Setting up the data source get_map_form() function / Editing features get_map_widget() / Editing features get_ogr_feature_attribute() function / Saving the attributes into the shapefile get_shoreline_datasource() function / Using tiled shorelines GISspatially-enabled databases / Spatially-enabled databases spatial indexes / Spatial indexes open source spatially-enabled databases / Open source spatially-enabled databases common spatially-enabled databases / Commercial Spatially-enabled databases GIS conceptsabout / Core GIS concepts location / Location distance / Distance units / Units projection / Projections coordinate system / Coordinate systems datums / Datums shapes / Shapes GIS dataworking manually / Working with GIS data manually GIS data formatabout / GIS data formats raster format data / GIS data formats vector format data / GIS data formats micro-formats / GIS data formats Global Land Cover Facility / Obtaining Landsat imagery Global Positioning System (GPS)about / Recent developments GLOBEabout / Global Land One-kilometer Base Elevation (GLOBE) data format / Data format data, obtaining / Obtaining and using GLOBE data GLOBE DEM dataabout / Global Land One-kilometer Base Elevation (GLOBE) GMLabout / Recent developments GNISabout / Geographic Names Information System (GNIS) screenshot / Geographic Names Information System (GNIS) data format / Data format obtaining / Obtaining and using GNIS Data using / Obtaining and using GNIS Data / GNIS GNIS Database / Designing and building the database Google Earthabout / Recent developments Google Mapsabout / Recent developments Google Maps APIabout / Creating a geospatial mash-up great circle distance calculation / Working with GIS data manually GSHHSabout / Global, self-consistent, hierarchical, high-resolution shoreline database (GSHHS) screenshot / Global, self-consistent, hierarchical, high-resolution shoreline database (GSHHS) data format / Data format obtaining / Obtaining the GSHHS database / GSHHS H handleResponse() callback function / Intercepting mouse clicks Haversine formulaURL / Working with GIS data manually height data, geospatial dataanalyzing, DEM used / Task – analyze height data using a digital elevation map HTML Forms / The "select country" script I import shapefile view function / The "import shapefile" view function import_data() function / Importing shapefiles, Extracting the uploaded shapefile imposmURL / Working with OpenStreetMap data J jurisdictional locationsabout / Location K KMLabout / Recent developments L labelsdrawing / Drawing labels Landsatabout / Landsat data format / Data format Landsat imageryobtaining / Obtaining Landsat imagery Layer objectsabout / Introducing Mapnik layersabout / Maps and layers Layers, Mapnikabout / Design libspatialite / Installing SpatiaLite libspatialite extensionloading / Accessing SpatiaLite from Python line-drawing optionsline color / Line color line width / Line width opacity / Opacity line caps / Line caps line joins / Line joins dashed and dotted lines / Dashed and dotted lines linear distanceabout / Distance linear ringabout / Shapes LinearRing class / Design linear rings / Task – save the country bounding boxes into a shapefile LinePatternSymbolizerabout / LinePatternSymbolizer linesdrawing, onto map / Drawing lines linestringabout / Shapes LineString class / Design LineSymbolizerabout / Introducing Mapnik, LineSymbolizer using / LineSymbolizer LinuxSpatiaLite, installing / Installing SpatiaLite list shapefiles viewimplementing / Implementing the "list shapefiles" view list_countries() function / The "select country" script list_shapefiles() view function / Implementing the "list shapefiles" view locationsabout / Location measuring / Location LULC datafiles / Task – change projections to combine shapefiles using geographic and UTM coordinates M Mac OS XSpatiaLite, installing / Installing SpatiaLite Map Definition Fileabout / Introducing Mapnik map definition fileabout / Map definition files MapGeneratorabout / MapGenerator revisited interface / The MapGenerator interface main map layer, creating / Creating the main map layer points, displaying on map / Displaying points on the map map, rendering / Rendering the map mapGenerator.generateMap() function / Rendering the map image mapGenerator.py moduleabout / The MapGenerator interface Mapnikabout / Creating a geospatial mash-up, Mapnik, Introducing Mapnik features / Mapnik, Introducing Mapnik design / Design example code / Example code documentation / Documentation availability / Availability URL / Availability, Introducing Mapnik map, generating / Introducing Mapnik Polygons layer / Introducing Mapnik example map, creating / Creating an example map Python documentation / Mapnik in depth data sources / Data sources rules / Rules, filters, and styles styles / Rules, filters, and styles filters / Rules, filters, and styles symbolizers / Symbolizers maps / Maps and layers layers / Maps and layers map rendering / Map rendering mapnik.Layer classmethods / Layer attributes and methods mapnik.Map classattributes / Map attributes and methods methods / Map attributes and methods mapnik.Shapefile() function / Shapefile mapnik.SQLite() function / SQLite Mapnik Datasource objectsetting up / Data sources Mapnik WikiURL / Documentation map renderingabout / Map rendering mapsabout / Maps and layers MapServerabout / Creating a geospatial mash-up markup application, Django applicationabout / The structure of a Django application MBRContains() function / MySQL MemoryDatasourceabout / MemoryDatasource meridiansabout / Location messages framework, Django applicationabout / The structure of a Django application micro-formatsWell-known Text (WKT) / GIS data formats Well-known Binary (WKB) / GIS data formats GeoJSON / GIS data formats Geography Markup Language (GML) / GIS data formats minimum bounding rectangleabout / Spatial indexes / MySQL models, Djangoabout / Models models.py fileediting / The models.py file mouse clicks, ShapeEditor applicationintercepting / Intercepting mouse clicks MS SQL Serverabout / MS SQL Server MS WindowsSpatiaLite, installing / Installing SpatiaLite MultiLineString class / Design MultiPoint class / Design MultiPolygon class / Design MySQLabout / MySQL downloading / MySQL acessing, from Python programs / MySQL disadvantages / MySQL MySQL-Python driver / MySQLabout / MySQL MySQLdbURL / MySQL MySQL query optimizerabout / MySQL N NAD 27about / Datums NAD 83about / Datums National Map Viewer / Obtaining and using NED data Natural Earth, raster-format dataabout / Natural Earth raster maps / Natural Earth data format / Data format obtaining / Obtaining and using Natural Earth raster data using / Obtaining and using Natural Earth raster data Natural Earth, vector-format dataURL / Natural Earth about / Natural Earth cultural map data / Natural Earth physical map data / Natural Earth data format / Data format data, obtaining / Obtaining and using Natural Earth vector data data, using / Obtaining and using Natural Earth vector data nature of map projectionsabout / The nature of map projections NEDabout / National Elevation Dataset (NED) data format / Data format data, obtaining / Obtaining and using NED data data, using / Obtaining and using NED data no data value / Task – analyze height data using a digital elevation map NT (Name Type) field / Worldwide place name data O OGRabout / Recent developments Ogr data sourceabout / Ogr OGR designabout / OGR design data source / OGR design layers / OGR design spatial reference / OGR design feature / OGR design attributes / OGR design geometry / OGR design OGR example codeabout / OGR example code OGR Shapefiledefining / Defining the OGR shapefile onClick() function / Intercepting mouse clicks Open Geospatial ConsortiumURL / Recent developments about / Recent developments Openlayersabout / Creating a geospatial mash-up OpenLayersused, for displaying map / Using OpenLayers to display the map OpenLayers.Control.Click class / Intercepting mouse clicks OpenLayers.Request.GET function / Intercepting mouse clicks open source spatially-enabled databasesabout / Open source spatially-enabled databases MySQL / MySQL PostGIS / PostGIS SpatiaLite / SpatiaLite OpenStreetMapURL / Mapnik, OpenStreetMap about / OpenStreetMap screenshot / OpenStreetMap data format / Data format geospatial data, obtaining / Obtaining and using OpenStreetMap data geospatial data, using / Obtaining and using OpenStreetMap data data, working with / Working with OpenStreetMap data OpenStreetMap API / The OpenStreetMap API OpenStreetMap geocoderabout / Recent developments Oracleabout / Oracle Oracle Locatorabout / Oracle Oracle Spatialabout / Oracle orthorectification / Data format os.path.join() function / Shapefile osm2pgsql tool / Working with OpenStreetMap data OsmApi / The OpenStreetMap API OSM data sourceabout / OSM overlay / Visualizing geospatial data P painters algorithmabout / Introducing Mapnik parallelsabout / Location parametersabout / URL dispatching Planet.osmabout / Planet.osm mirror site / Mirror sites and extracts extracts / Mirror sites and extracts pointabout / Shapes Point class / Design pointsdrawing / Drawing points PointSymbolizerabout / PointSymbolizer polygonabout / Shapes polygon-drawing optionsfill color / Fill color attribute / Opacity gamma correction / Gamma correction polygon.contains(point) method / MySQL Polygon class / Design PolygonPatternSymbolizerabout / PolygonPatternSymbolizer polygonsdrawing / Drawing polygons PolygonSymbolizerabout / Introducing Mapnik, PolygonSymbolizer polylinesabout / Shapes PostGIS / Analyzing geospatial dataabout / Recent developments, PostGIS installing / Installing and configuring PostGIS downloading / Installing and configuring PostGIS configuring / Installing and configuring PostGIS using / Using PostGIS documentation / Documentation features / Advanced PostGIS features PostGIS databasesetting up, for ShapeEditor application / Setting up the database PostGIS datasourceabout / PostGIS PostGIS manualURL / Documentation PostGIS query optimizerabout / PostGIS PostgreSQL database / PostGIS PostgreSQL manualURL / Documentation prime meridianabout / Location Projabout / Proj PROJ.4about / Recent developments, Availability projected coordinate systemabout / Coordinate systems projectionabout / Geospatial development, Projections, Changing datums and projections cylindrical projections / Cylindrical projections conic projection / Conic projections azimuthal projection / Azimuthal projections nature of map projections / The nature of map projections dealing with / Dealing with projections pyproj / pyproj design / Design example code / Example code documentation / Documentation availability / Availability changing / Task – change projections to combine shapefiles using geographic and UTM coordinates Proj Python library / Analyzing geospatial data Psycopginstalling / Installing and configuring PostGIS Psycopg database / PostGIS Psycopg documentationURL / Documentation pyproj libraryabout / Design Proj / Proj Geod / Geod for MS Windows / Availability for Linux / Availability for Macintosh / Availability pysqliteinstalling / Installing pysqlite URL / Installing pysqlite PythonURL / Python about / Python features / Python Python Database APIabout / MySQL Python Database Programming Wiki pageURL / MySQL Python Package Indexabout / Python URL / Python geospatial development / Geospatial development Python Standard Librariesabout / Python Q qualityplace name issues / Place name issues Lat/Long coordinate problems / Lat/Long coordinate problems query optimization processMySQL / MySQL PostGIS / PostGIS SpatiaLite / SpatiaLite R R-Tree data structuresabout / Spatial indexes R-Tree indexesabout / Spatial indexes raster format dataabout / GIS data formats Digital Raster Graphic (DRG) / GIS data formats Digital Elevation Model (DEM) / GIS data formats BIL / GIS data formats BIP / GIS data formats BSQ / GIS data formats raster imagesdrawing / Drawing raster images raster mapsabout / Natural Earth Cross-Blended Hypsometric Tints / Natural Earth Natural Earth 1 / Natural Earth Natural Earth 2 / Natural Earth Ocean Bottom dataset / Natural Earth Shaded Relief imagery / Natural Earth RasterSymbolizerabout / Drawing raster images uses / Drawing raster images ReadRaster() method / Task – analyze height data using a digital elevation map reference pointsabout / Coordinate systems roadsdrawing / Drawing roads and other complex linear features root() functionabout / Implementing Tile Map Server ruleabout / Introducing Mapnik rules, Mapnikconditions / Rules, filters, and styles symbolizers / Rules, filters, and styles else rules / "Else" rules also rules / "Also" rules S scale denominators / Scale denominators select area scriptabout / The "select area" script bounding box, calculating / Calculating the bounding box map’s dimension, calculating / Calculating the map's dimensions data source, setting up / Setting up the data source map image, rendering / Rendering the map image select country script / The "select country" script select_feature.html template / Adding features service() functionabout / Implementing Tile Map Server sessions system, Django applicationabout / The structure of a Django application setattr() function / Editing features SetField() method / Saving the attributes into the shapefile setField() method / Task – save the country bounding boxes into a shapefile set_ogr_feature_attribute() function / Saving the attributes into the shapefile shaded relief imagery / Sources of geospatial data in raster format ShapeEditor applicationworkflow / About ShapeEditor, Selecting a feature to edit web interface / About ShapeEditor shapefile, importing / About ShapeEditor, Importing a shapefile, Importing shapefiles features / About ShapeEditor designing / Designing ShapeEditor feature, selecting / Selecting a feature feature, editing / Editing a feature shapefile, exporting / Exporting a shapefile, Exporting shapefiles prerequisites / Prerequisites database, setting up / Setting up the database setting up / Setting up the ShapeEditor project defining / Defining the ShapeEditor's applications shared application, creating / Creating the shared application data models, defining / Defining the data models admin system / Playing with the admin system list shapefiles view, implementing / Implementing the "list shapefiles" view feature, selecting for edit / Selecting a feature to edit Tile Map Server, implementing / Implementing Tile Map Server mouse clicks, intercepting / Intercepting mouse clicks features, editing / Editing features features, adding / Adding features features, deleting / Deleting features shapefiles, deleting / Deleting shapefiles using / Using ShapeEditor enhancements / Further improvements and enhancements shapefile datasourceabout / Shapefile Shapefile formatabout / GIS data formats Shapefile objectadding, to database / Add the Shapefile object to the database shapefilesimporting / Importing shapefiles contents, importing / Importing the shapefile's contents opening / Open the shapefile attributes, defining / Define the shapefile's attributes features, storing / Store the shapefile's features attributes, storing / Store the shapefile's attributes cleaning up / Cleaning up deleting / Deleting shapefiles shapefiles, exportingabout / Exporting shapefiles OGR Shapefile, defining / Defining the OGR shapefile features, saving into shapefile / Saving the features into the shapefile attributes, saving into shapefile / Saving the attributes into the shapefile shapefile, compressing / Compressing the shapefile temporary files, deleting / Deleting temporary files ZIP archive, returning to user / Returning the ZIP archive to the user Shapelyabout / Shapely design / Design Point class / Design LineString class / Design LinearRing class / Design Polygon class / Design MultiPoint class / Design MultiLineString class / Design MultiPolygon class / Design GeometryCollection class / Design example code / Example code documentation / Documentation availability / Availability shapesabout / Shapes point / Shapes linestring / Shapes polygon / Shapes shared.utils module / Implementing the find feature view shared database module / The shared "database" module ShieldSymbolizerabout / ShieldSymbolizer showResults.py script / Using tiled shorelines show result scriptabout / The "show results" script clicked-on point, identifying / Identifying the clicked-on point distance features, identifying / Identifying features by distance simple features formatabout / GIS data formats sitemaps framework, Django applicationabout / The structure of a Django application source code format, Linuxabout / MySQL source code format, Mac OS X about / MySQL sources, geospatial dataabout / Sources of other types of geospatial data GEOnet Names Server / GEOnet Names Server GNIS / Geographic Names Information System (GNIS) selecting / Choosing your geospatial data source sources, raster-format geospatial dataabout / Sources of geospatial data in raster format Landsat / Landsat Natural Earth / Natural Earth GLOBE / Global Land One-kilometer Base Elevation (GLOBE) National Elevation Dataset (NED) / National Elevation Dataset (NED) sources, vector-format geospatial dataOpenStreetMap / OpenStreetMap TIGER / TIGER Natural Earth / Natural Earth GSHHS / Global, self-consistent, hierarchical, high-resolution shoreline database (GSHHS) World Borders Dataset / World Borders Dataset spatial datatypes / Spatially-enabled databases spatial functions / Spatially-enabled databases spatial indexesabout / Spatial indexes R-Tree indexes / Spatial indexes SpatiaLiteabout / SpatiaLite installing / Installing SpatiaLite installing, on Mac OS X / Installing SpatiaLite installing, on MS Windows / Installing SpatiaLite installing, on Linux / Installing SpatiaLite pysqlite, installing / Installing pysqlite accessing, from Python / Accessing SpatiaLite from Python documentation / Documentation URL / Documentation online documentation / Documentation using / Using SpatiaLite capabilities / SpatiaLite capabilities SpatiaLite query optimizerabout / SpatiaLite spatial joins / Spatially-enabled databases spatially-enabled databasesabout / Spatially-enabled databases functioning / Spatially-enabled databases spatial queries / Spatially-enabled databases spatial query functions / Implementing the find feature view spatial reference / Design, Task – save the country bounding boxes into a shapefile, Representing and storing geospatial data, Using the database to keep track of spatial references Spatial Reference Identifier (SRID) / Using the database to keep track of spatial references SQLite data sourceabout / SQLite Styles, Mapnikabout / Design, Introducing Mapnik ST_AsText() function / Using PostGIS ST_CONTAINS() function / A hybrid approach ST_DWITHIN() function / A hybrid approach ST_GeomFromText() function / Using PostGIS subselect queryabout / PostGIS using / PostGIS Symbolizers, Mapnikabout / Design, Introducing Mapnik PolygonSymbolizer / Introducing Mapnik LineSymbolizer / Introducing Mapnik TextSymbolizer / Introducing Mapnik lines, drawing / Drawing lines polygons, drawing / Drawing polygons labels, drawing / Drawing labels points, drawing / Drawing points syndication system, Django applicationabout / The structure of a Django application T template, Djangoabout / Templates terminology, TMS protocolTile Map Server / Implementing Tile Map Server Tile Map Service / Implementing Tile Map Server Tile Map / Implementing Tile Map Server Tile Set / Implementing Tile Map Server Tile / Implementing Tile Map Server TextSymbolizerabout / Introducing Mapnik, TextSymbolizer text, selecting for display / Specifying the text to be displayed font, selecting / Selecting a suitable font semi-transparent text, drawing / Drawing semi-transparent text text placement, controlling / Controlling text placement labels, repeating / Repeating labels text overlap, controlling / Controlling text overlap text, drawing on dark background / Drawing text on a dark background position, adjusting of text / Adjusting the position of the text labels, splitting across multiple lines / Splitting labels across multiple lines character spacing, controlling / Controlling character and line spacing line spacing, controlling / Controlling character and line spacing capitalization, controlling / Controlling capitalization advanced text placement and formatting / Advanced text placement and formatting TIGERabout / TIGER data format / Data format data, obtaining / Obtaining and using TIGER data data, using / Obtaining and using TIGER data TIGER/Line formatabout / GIS data formats Tileabout / Implementing Tile Map Server Tile Mapabout / Implementing Tile Map Server tileMap() function / Implementing Tile Map Serverabout / Implementing Tile Map Server Tile Map Servercompleting / Completing the Tile Map Server Tile Map Server (TMS) / Selecting a feature Tile Map Serviceabout / Implementing Tile Map Server tilePolys array / Calculating the tiled shorelines tile renderingabout / Tile rendering query parameters, parsing / Parsing the query parameters map, setting up / Setting up the map base layer, defining / Defining the base layer feature layer, defining / Defining the feature layer map tile, rendering / Rendering the map tile Tile Setabout / Implementing Tile Map Server TMS protocolimplementing / Implementing Tile Map Server about / Implementing Tile Map Server terminology / Implementing Tile Map Server error handling / Implementing Tile Map Server base map, setting up / Setting up the base map tile, rendering / Tile rendering map, displaying with OpenLayers / Using OpenLayers to display the map traveling distanceabout / Distance triggersabout / SpatiaLite U unitsabout / Units Universal Transverse Mercator (UTM) coordinate systemabout / Coordinate systems Universal Transverse Mercator (UTM) projection / Task – change projections to combine shapefiles using geographic and UTM coordinates unprojected coordinatesabout / Geospatial development unprojected coordinate systemabout / Coordinate systems unwrap_geos_geometry() function / Saving the features into the shapefile uploaded shapefileextracting / Extracting the uploaded shapefile URLConfabout / URL dispatching URL dispatching, Djangoabout / URL dispatching usability / Usability US Census BureauURL / Working with GIS data manually utils.calc_geometry_field() / Editing features utils.get_map_form() / Editing features utils.get_ogr_feature_attribute() function / Saving the attributes into the shapefile V vector-format geospatial dataabout / Sources of geospatial data in vector format sources / Sources of geospatial data in vector format vector format dataabout / GIS data formats shapefile / GIS data formats simple features / GIS data formats TIGER/Line / GIS data formats coverage / GIS data formats view, Djangoabout / Views Virtual Datasource (VRT) formatabout / Ogr W WCSabout / Recent developments WebGIS websiteURL / Task – change projections to combine shapefiles using geographic and UTM coordinates Well-known Binary (WKB) format / GIS data formats, Representing and storing geospatial data Well-known Text (WKT) format / GIS data formats, Representing and storing geospatial data WFSabout / Recent developments WGS 84about / Datums WMSabout / Recent developments World Borders Datasetabout / World Borders Dataset data format / Data format obtaining / Obtaining World Borders Dataset downloading / Task – calculate the bounding box for each country in the world / World Borders Dataset, World Borders Dataset World Data Bank II / Global, self-consistent, hierarchical, high-resolution shoreline database (GSHHS) world reference system (WRS) / Obtaining Landsat imagery World Vector Shoreline / Global, self-consistent, hierarchical, high-resolution shoreline database (GSHHS) X XCodeabout / Availability installing / Availability


pages: 403 words: 110,492

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

Affordable Care Act / Obamacare, Airbnb, airport security, Albert Einstein, Asian financial crisis, asset allocation, bank run, barriers to entry, birth tourism , bitcoin, blockchain, business process, call centre, capital controls, car-free, content marketing, cryptocurrency, currency risk, digital nomad, diversification, diversified portfolio, Donald Trump, Double Irish / Dutch Sandwich, Elon Musk, failed state, fiat currency, Fractional reserve banking, gentrification, intangible asset, land reform, low interest rates, medical malpractice, new economy, obamacare, offshore financial centre, passive income, peer-to-peer lending, Pepsi Challenge, place-making, risk tolerance, side hustle, Silicon Valley, Skype, too big to fail, white picket fence, work culture , working-age population

The second thing I told Bryan was that nothing was stopping him from living the Nomad Capitalist lifestyle right then. His employees may have been based in South Africa, but his IT business was already global in scope. I explained how he could easily use a foreign company and foreign bank accounts to make doing business easier, bypass South Africa’s growing capital controls, and keep his money in dollars rather than the unstable South African rand. He did not need to leave South Africa to accomplish any of that. The third thing I told Bryan was that his business could be location independent if he wanted it to be. Like many of us, he was afraid to leave his team in charge of the operation.


pages: 363 words: 109,077

The Raging 2020s: Companies, Countries, People - and the Fight for Our Future by Alec Ross

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, Affordable Care Act / Obamacare, air gap, air traffic controllers' union, Airbnb, Albert Einstein, An Inconvenient Truth, autonomous vehicles, barriers to entry, benefit corporation, Bernie Sanders, Big Tech, big-box store, British Empire, call centre, capital controls, clean water, collective bargaining, computer vision, coronavirus, corporate governance, corporate raider, COVID-19, deep learning, Deng Xiaoping, Didi Chuxing, disinformation, Dissolution of the Soviet Union, Donald Trump, Double Irish / Dutch Sandwich, drone strike, dumpster diving, employer provided health coverage, Francis Fukuyama: the end of history, future of work, general purpose technology, gig economy, Gini coefficient, global supply chain, Goldman Sachs: Vampire Squid, Gordon Gekko, greed is good, high-speed rail, hiring and firing, income inequality, independent contractor, information security, intangible asset, invisible hand, Jeff Bezos, knowledge worker, late capitalism, low skilled workers, Lyft, Marc Andreessen, Marc Benioff, mass immigration, megacity, military-industrial complex, minimum wage unemployment, mittelstand, mortgage tax deduction, natural language processing, Oculus Rift, off-the-grid, offshore financial centre, open economy, OpenAI, Parag Khanna, Paris climate accords, profit motive, race to the bottom, RAND corporation, ride hailing / ride sharing, Robert Bork, rolodex, Ronald Reagan, Salesforce, self-driving car, shareholder value, side hustle, side project, Silicon Valley, smart cities, Social Responsibility of Business Is to Increase Its Profits, sovereign wealth fund, sparse data, special economic zone, Steven Levy, stock buybacks, strikebreaker, TaskRabbit, tech bro, tech worker, transcontinental railway, transfer pricing, Travis Kalanick, trickle-down economics, Uber and Lyft, uber lyft, union organizing, Upton Sinclair, vertical integration, working poor

“The mid-20th century stands out as a period where there’s the sort of near identity between the interests of big companies and the big governments where they reside,” said historian and Stanford University professor Niall Ferguson. “It only really starts to change in a meaningful way, I think, in the ’80s and ’90s as exchange controls and capital controls were gotten rid of. It just becomes easier to invest in other countries—the Europeans were actually in some ways pushing as hard as the Americans in this respect. “There’s this tremendous shift away from national bases, and I think that gives rise to a very different corporate culture. Facebook … Google and Apple think of themselves as global companies and not American companies.


pages: 460 words: 107,454

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

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, 3D printing, additive manufacturing, agricultural Revolution, air traffic controllers' union, Anthropocene, Apple II, Asian financial crisis, Asperger Syndrome, basic income, Berlin Wall, Big Tech, biodiversity loss, bitcoin, Black Lives Matter, blockchain, blue-collar work, Branko Milanovic, Bretton Woods, British Empire, business process, capital controls, Capital in the Twenty-First Century by Thomas Piketty, car-free, carbon footprint, carbon tax, centre right, clean tech, clean water, cloud computing, collateralized debt obligation, collective bargaining, colonial rule, company town, contact tracing, contact tracing app, Cornelius Vanderbilt, coronavirus, corporate governance, corporate social responsibility, COVID-19, creative destruction, Credit Default Swap, credit default swaps / collateralized debt obligations, cryptocurrency, cuban missile crisis, currency peg, cyber-physical system, decarbonisation, demographic dividend, Deng Xiaoping, Diane Coyle, digital divide, don't be evil, European colonialism, Fall of the Berlin Wall, family office, financial innovation, Francis Fukuyama: the end of history, future of work, gender pay gap, general purpose technology, George Floyd, gig economy, Gini coefficient, global supply chain, global value chain, global village, Google bus, green new deal, Greta Thunberg, high net worth, hiring and firing, housing crisis, income inequality, income per capita, independent contractor, industrial robot, intangible asset, Intergovernmental Panel on Climate Change (IPCC), Internet of things, invisible hand, James Watt: steam engine, Jeff Bezos, job automation, joint-stock company, Joseph Schumpeter, Kenneth Rogoff, Khan Academy, Kickstarter, labor-force participation, lockdown, low interest rates, low skilled workers, Lyft, manufacturing employment, Marc Benioff, Mark Zuckerberg, market fundamentalism, Marshall McLuhan, Martin Wolf, means of production, megacity, microplastics / micro fibres, Mikhail Gorbachev, mini-job, mittelstand, move fast and break things, neoliberal agenda, Network effects, new economy, open economy, Peace of Westphalia, Peter Thiel, precariat, Productivity paradox, profit maximization, purchasing power parity, race to the bottom, reserve currency, reshoring, ride hailing / ride sharing, Ronald Reagan, Salesforce, San Francisco homelessness, School Strike for Climate, self-driving car, seminal paper, shareholder value, Shenzhen special economic zone , Shenzhen was a fishing village, Silicon Valley, Simon Kuznets, social distancing, Social Responsibility of Business Is to Increase Its Profits, special economic zone, Steve Jobs, Steve Wozniak, synthetic biology, TaskRabbit, The Chicago School, The Future of Employment, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, the scientific method, TikTok, Tim Cook: Apple, trade route, transfer pricing, Uber and Lyft, uber lyft, union organizing, universal basic income, War on Poverty, We are the 99%, women in the workforce, working poor, working-age population, Yom Kippur War, young professional, zero-sum game

For some, though, this globalization was too much, too quickly. In 1997, several Asian emerging economies experienced a severe financial crisis, caused in large part by unchecked financial globalization, or the flow of hot money, international investor money that flows easily from one country to another, chasing returns, relaxed capital controls, and bond speculation. At the same time, in the West, an anti-globalization movement took hold, as multinational companies started to have more control over national economies. Even Ravensburger didn't escape the backlash. In 1997, the company management announced that it wished to “introduce a ‘pact for the safeguarding of production sites,’ as a ‘preventive initiative for the maintenance of national and international competitiveness,’” the European Observatory of Working Life wrote in a later case study on the mater.23 The result was the so-called Ravensburger Pact, in which the company offered its employees job security in exchange for concessions.


pages: 460 words: 107,454

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

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, 3D printing, additive manufacturing, agricultural Revolution, air traffic controllers' union, Anthropocene, Apple II, Asian financial crisis, Asperger Syndrome, basic income, Berlin Wall, Big Tech, biodiversity loss, bitcoin, Black Lives Matter, blockchain, blue-collar work, Branko Milanovic, Bretton Woods, British Empire, business process, capital controls, Capital in the Twenty-First Century by Thomas Piketty, car-free, carbon footprint, carbon tax, centre right, clean tech, clean water, cloud computing, collateralized debt obligation, collective bargaining, colonial rule, company town, contact tracing, contact tracing app, Cornelius Vanderbilt, coronavirus, corporate governance, corporate social responsibility, COVID-19, creative destruction, Credit Default Swap, credit default swaps / collateralized debt obligations, cryptocurrency, cuban missile crisis, currency peg, cyber-physical system, decarbonisation, demographic dividend, Deng Xiaoping, Diane Coyle, digital divide, don't be evil, European colonialism, Fall of the Berlin Wall, family office, financial innovation, Francis Fukuyama: the end of history, future of work, gender pay gap, general purpose technology, George Floyd, gig economy, Gini coefficient, global supply chain, global value chain, global village, Google bus, green new deal, Greta Thunberg, high net worth, hiring and firing, housing crisis, income inequality, income per capita, independent contractor, industrial robot, intangible asset, Intergovernmental Panel on Climate Change (IPCC), Internet of things, invisible hand, James Watt: steam engine, Jeff Bezos, job automation, joint-stock company, Joseph Schumpeter, Kenneth Rogoff, Khan Academy, Kickstarter, labor-force participation, lockdown, low interest rates, low skilled workers, Lyft, manufacturing employment, Marc Benioff, Mark Zuckerberg, market fundamentalism, Marshall McLuhan, Martin Wolf, means of production, megacity, microplastics / micro fibres, Mikhail Gorbachev, mini-job, mittelstand, move fast and break things, neoliberal agenda, Network effects, new economy, open economy, Peace of Westphalia, Peter Thiel, precariat, Productivity paradox, profit maximization, purchasing power parity, race to the bottom, reserve currency, reshoring, ride hailing / ride sharing, Ronald Reagan, Salesforce, San Francisco homelessness, School Strike for Climate, self-driving car, seminal paper, shareholder value, Shenzhen special economic zone , Shenzhen was a fishing village, Silicon Valley, Simon Kuznets, social distancing, Social Responsibility of Business Is to Increase Its Profits, special economic zone, Steve Jobs, Steve Wozniak, synthetic biology, TaskRabbit, The Chicago School, The Future of Employment, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, the scientific method, TikTok, Tim Cook: Apple, trade route, transfer pricing, Uber and Lyft, uber lyft, union organizing, universal basic income, War on Poverty, We are the 99%, women in the workforce, working poor, working-age population, Yom Kippur War, young professional, zero-sum game

For some, though, this globalization was too much, too quickly. In 1997, several Asian emerging economies experienced a severe financial crisis, caused in large part by unchecked financial globalization, or the flow of hot money, international investor money that flows easily from one country to another, chasing returns, relaxed capital controls, and bond speculation. At the same time, in the West, an anti-globalization movement took hold, as multinational companies started to have more control over national economies. Even Ravensburger didn't escape the backlash. In 1997, the company management announced that it wished to “introduce a ‘pact for the safeguarding of production sites,’ as a ‘preventive initiative for the maintenance of national and international competitiveness,’” the European Observatory of Working Life wrote in a later case study on the mater.23 The result was the so-called Ravensburger Pact, in which the company offered its employees job security in exchange for concessions.


EuroTragedy: A Drama in Nine Acts by Ashoka Mody

Alan Greenspan, Andrei Shleifer, asset-backed security, availability heuristic, bank run, banking crisis, Basel III, Bear Stearns, Berlin Wall, book scanning, book value, Bretton Woods, Brexit referendum, call centre, capital controls, Carmen Reinhart, Celtic Tiger, central bank independence, centre right, credit crunch, currency risk, Daniel Kahneman / Amos Tversky, debt deflation, Donald Trump, eurozone crisis, Fall of the Berlin Wall, fear index, financial intermediation, floating exchange rates, forward guidance, George Akerlof, German hyperinflation, global macro, global supply chain, global value chain, hiring and firing, Home mortgage interest deduction, income inequality, inflation targeting, Irish property bubble, Isaac Newton, job automation, Johann Wolfgang von Goethe, Johannes Kepler, Kenneth Rogoff, Kickstarter, land bank, liberal capitalism, light touch regulation, liquidity trap, loadsamoney, London Interbank Offered Rate, Long Term Capital Management, low interest rates, low-wage service sector, Mikhail Gorbachev, mittelstand, money market fund, moral hazard, mortgage tax deduction, neoliberal agenda, offshore financial centre, oil shock, open borders, pension reform, precautionary principle, premature optimization, price stability, public intellectual, purchasing power parity, quantitative easing, rent-seeking, Republic of Letters, Robert Gordon, Robert Shiller, Robert Solow, short selling, Silicon Valley, subprime mortgage crisis, The Great Moderation, The Rise and Fall of American Growth, too big to fail, total factor productivity, trade liberalization, transaction costs, urban renewal, working-age population, Yogi Berra

Lars Svensson, the international macroeconomist and later deputy governor of the Swedish Riksbank, added that the promise to maintain fixed exchange rates had kept the capital inflows charged until the very end: foreign creditors who were lending to the weakening economies sought to earn the last extra buck, making the judgment that they would exit before the system collapsed.156 Now, suddenly in early September 1992, it did seem that the system could collapse. Under the phased timetable for monetary union, the uncontroversial step of eliminating capital controls was largely complete.157 Investors began moving their funds from the vulnerable countries, Italy and the United Kingdom, and sought refuge in German bonds. The pressure to revalue the D-​mark increased, as did the need to devalue the lira and the British pound. kohl’s euro 99 On September 3, Mitterrand faced the charismatic opposition spokesman Philippe Séguin in a televised debate at the Sorbonne.

Through these years, banks also became powerful domestic political players.33 They nurtured long-​term lending relationships with their often equally influential borrowers. Banks Merge and Expand As Euro Approaches This European banking legacy soon met and interacted powerfully with the other great historical force: the drive toward a single currency. In the early 1990s, capital controls were dismantled, as a first step on the way to the 164   e u r o t r a g e d y single currency. Suddenly, banks faced the threat that a “giant” German bank would compete with them in their hitherto protected domestic markets. Bankers and policymakers drew the inference that “only the giants” would survive.34 Thus, in anticipation of the euro’s introduction, European banks frantically sought merger partners with whom they hoped to stake out positions of greater strength.


pages: 492 words: 118,882

The Blockchain Alternative: Rethinking Macroeconomic Policy and Economic Theory by Kariappa Bheemaiah

"World Economic Forum" Davos, accounting loophole / creative accounting, Ada Lovelace, Adam Curtis, Airbnb, Alan Greenspan, algorithmic trading, asset allocation, autonomous vehicles, balance sheet recession, bank run, banks create money, Basel III, basic income, behavioural economics, Ben Bernanke: helicopter money, bitcoin, Bletchley Park, blockchain, Bretton Woods, Brexit referendum, business cycle, business process, call centre, capital controls, Capital in the Twenty-First Century by Thomas Piketty, cashless society, cellular automata, central bank independence, Charles Babbage, Claude Shannon: information theory, cloud computing, cognitive dissonance, collateralized debt obligation, commoditize, complexity theory, constrained optimization, corporate governance, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, cross-border payments, crowdsourcing, cryptocurrency, data science, David Graeber, deep learning, deskilling, Diane Coyle, discrete time, disruptive innovation, distributed ledger, diversification, double entry bookkeeping, Ethereum, ethereum blockchain, fiat currency, financial engineering, financial innovation, financial intermediation, Flash crash, floating exchange rates, Fractional reserve banking, full employment, George Akerlof, Glass-Steagall Act, Higgs boson, illegal immigration, income inequality, income per capita, inflation targeting, information asymmetry, interest rate derivative, inventory management, invisible hand, John Maynard Keynes: technological unemployment, John von Neumann, joint-stock company, Joseph Schumpeter, junk bonds, Kenneth Arrow, Kenneth Rogoff, Kevin Kelly, knowledge economy, large denomination, Large Hadron Collider, Lewis Mumford, liquidity trap, London Whale, low interest rates, low skilled workers, M-Pesa, machine readable, Marc Andreessen, market bubble, market fundamentalism, Mexican peso crisis / tequila crisis, Michael Milken, MITM: man-in-the-middle, Money creation, money market fund, money: store of value / unit of account / medium of exchange, mortgage debt, natural language processing, Network effects, new economy, Nikolai Kondratiev, offshore financial centre, packet switching, Pareto efficiency, pattern recognition, peer-to-peer lending, Ponzi scheme, power law, precariat, pre–internet, price mechanism, price stability, private sector deleveraging, profit maximization, QR code, quantitative easing, quantitative trading / quantitative finance, Ray Kurzweil, Real Time Gross Settlement, rent control, rent-seeking, robo advisor, Satoshi Nakamoto, Satyajit Das, Savings and loan crisis, savings glut, seigniorage, seminal paper, Silicon Valley, Skype, smart contracts, software as a service, software is eating the world, speech recognition, statistical model, Stephen Hawking, Stuart Kauffman, supply-chain management, technology bubble, The Chicago School, The Future of Employment, The Great Moderation, the market place, The Nature of the Firm, the payments system, the scientific method, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, too big to fail, trade liberalization, transaction costs, Turing machine, Turing test, universal basic income, Vitalik Buterin, Von Neumann architecture, Washington Consensus

As of March 2016, under the implementation of the Basel III framework, the average capital ratio for Group 1 banks is 11.5%, with a Tier 1 capital ratio of 12.2% and total capital ratio of 13.9%. For Group 2 banks, the average capital ratio is at 12.8%, with a Tier 1 capital ratio of 13.2% and a total capital ratio of 14.5% (BIS, 2016). In the context of creating money these capital requirements, in the form of tiered capital controls, allow central banks to control the issuance of debt, and hence money, by commercial banks. For the sake of simplicity, let’s assume that the minimum amount of capital to be held by a commercial bank (Group 1 or Group 2) is rounded off to around 10% of its total capital. The capital percentage to be held at the central bank would then be calculated as: This 10% minimum requirement is the basis of fractional reserve banking.


pages: 397 words: 112,034

What's Next?: Unconventional Wisdom on the Future of the World Economy by David Hale, Lyric Hughes Hale

"World Economic Forum" Davos, affirmative action, Alan Greenspan, Asian financial crisis, asset-backed security, bank run, banking crisis, Basel III, Bear Stearns, behavioural economics, Berlin Wall, biodiversity loss, Black Swan, Bretton Woods, business cycle, capital controls, carbon credits, carbon tax, Cass Sunstein, central bank independence, classic study, cognitive bias, collapse of Lehman Brothers, collateralized debt obligation, corporate governance, corporate social responsibility, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency manipulation / currency intervention, currency peg, currency risk, Daniel Kahneman / Amos Tversky, debt deflation, declining real wages, deindustrialization, diversification, energy security, Erik Brynjolfsson, Fall of the Berlin Wall, financial engineering, financial innovation, floating exchange rates, foreign exchange controls, full employment, Gini coefficient, Glass-Steagall Act, global macro, global reserve currency, global village, high net worth, high-speed rail, Home mortgage interest deduction, housing crisis, index fund, inflation targeting, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), inverted yield curve, invisible hand, Just-in-time delivery, Kenneth Rogoff, Long Term Capital Management, low interest rates, Mahatma Gandhi, Martin Wolf, Mexican peso crisis / tequila crisis, Mikhail Gorbachev, military-industrial complex, Money creation, money market fund, money: store of value / unit of account / medium of exchange, mortgage tax deduction, Network effects, new economy, Nicholas Carr, oil shale / tar sands, oil shock, open economy, passive investing, payday loans, peak oil, Ponzi scheme, post-oil, precautionary principle, price stability, private sector deleveraging, proprietary trading, purchasing power parity, quantitative easing, race to the bottom, regulatory arbitrage, rent-seeking, reserve currency, Richard Thaler, risk/return, Robert Shiller, Ronald Reagan, Savings and loan crisis, sovereign wealth fund, special drawing rights, subprime mortgage crisis, technology bubble, The Great Moderation, Thomas Kuhn: the structure of scientific revolutions, Tobin tax, too big to fail, total factor productivity, trade liberalization, Tragedy of the Commons, Washington Consensus, Westphalian system, WikiLeaks, women in the workforce, yield curve

CAPACITY UTILIZATION: This metric measures the extent to which the nation’s capital is being used in the production of goods. The utilization rate rises and falls with business cycles. As production increases, capacity utilization rises, and vice versa. CAPITAL ACCOUNT: The component of a country’s balance of payments that records the nation’s outflow and inflow of financial securities. CAPITAL CONTROLS: When government restricts capital flows into or out of a country. CAPITAL FLOW: When investment money from one country goes to another country. CAPITAL GOODS: Durable goods that are used to produce other goods for consumption. CAPITAL REQUIREMENTS: Standardized requirements that determine how much liquidity is required to be held for a certain level of assets for banks and other depository institutions.


pages: 457 words: 125,329

Value of Everything: An Antidote to Chaos The by Mariana Mazzucato

"Friedman doctrine" OR "shareholder theory", activist fund / activist shareholder / activist investor, Affordable Care Act / Obamacare, Airbnb, Alan Greenspan, bank run, banks create money, Basel III, behavioural economics, Berlin Wall, Big bang: deregulation of the City of London, bonus culture, Bretton Woods, business cycle, butterfly effect, buy and hold, Buy land – they’re not making it any more, capital controls, Capital in the Twenty-First Century by Thomas Piketty, carbon tax, Carmen Reinhart, carried interest, clean tech, Corn Laws, corporate governance, corporate social responsibility, creative destruction, Credit Default Swap, David Ricardo: comparative advantage, debt deflation, European colonialism, Evgeny Morozov, fear of failure, financial deregulation, financial engineering, financial innovation, Financial Instability Hypothesis, financial intermediation, financial repression, full employment, G4S, George Akerlof, Glass-Steagall Act, Google Hangouts, Growth in a Time of Debt, high net worth, Hyman Minsky, income inequality, independent contractor, index fund, informal economy, interest rate derivative, Internet of things, invisible hand, John Bogle, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, knowledge economy, labour market flexibility, laissez-faire capitalism, light touch regulation, liquidity trap, London Interbank Offered Rate, low interest rates, margin call, Mark Zuckerberg, market bubble, means of production, military-industrial complex, Minsky moment, Money creation, money market fund, negative equity, Network effects, new economy, Northern Rock, obamacare, offshore financial centre, Pareto efficiency, patent troll, Paul Samuelson, peer-to-peer lending, Peter Thiel, Post-Keynesian economics, profit maximization, proprietary trading, quantitative easing, quantitative trading / quantitative finance, QWERTY keyboard, rent control, rent-seeking, Robert Solow, Sand Hill Road, shareholder value, sharing economy, short selling, Silicon Valley, Simon Kuznets, smart meter, Social Responsibility of Business Is to Increase Its Profits, software patent, Solyndra, stem cell, Steve Jobs, The Great Moderation, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, Tobin tax, too big to fail, trade route, transaction costs, two and twenty, two-sided market, very high income, Vilfredo Pareto, wealth creators, Works Progress Administration, you are the product, zero-sum game

Bans on speculative derivatives trading, enacted in the US in the 1930s because of its role in magnifying the 1929 Crash and Great Depression, were effectively sidestepped by the growth of unregulated over-the-counter derivatives trading, which grew explosively in the 1980s and defied subsequent efforts at re-regulation.13 Banks' invention of ‘offshore' currencies, to sidestep cross-border capital controls, was especially effective. In 1944, the Bretton Woods system had pegged the value of the dollar to gold. But when the post-war boom, based on manufacturing, tailed off around 1970, ‘light-touch' financial regulation increasingly appealed to policymakers on both sides of the Atlantic. The financial sector reacted to this interest by developing a new currency, the Eurodollar.


pages: 265 words: 15,515

Nomad Citizenship: Free-Market Communism and the Slow-Motion General Strike by Eugene W. Holland

business cycle, capital controls, cognitive dissonance, Colonization of Mars, commons-based peer production, complexity theory, continuation of politics by other means, deskilling, Eben Moglen, Firefox, Frederick Winslow Taylor, Free Software Foundation, full employment, Herbert Marcuse, informal economy, invisible hand, it's over 9,000, Jane Jacobs, Kim Stanley Robinson, Lewis Mumford, means of production, microcredit, military-industrial complex, money: store of value / unit of account / medium of exchange, Naomi Klein, New Urbanism, peak oil, post-Fordism, price mechanism, Richard Stallman, Rochdale Principles, Ronald Coase, scientific management, slashdot, Stuart Kauffman, The Death and Life of Great American Cities, The Wisdom of Crowds, transaction costs, Upton Sinclair, urban renewal, wage slave, working poor, Yochai Benkler

., rights, labor contracts) to resist political oppression and economic exploitation, even if the main objective of nomad citizenship is to develop superior weap­ ons (abilities, autonomy) outside the ambit of the State. In a somewhat different but related sense, nomadology construes so-called primitive ac­ cumulation as the outside of the capitalist mode of production and seeks to displace capital-controlled “free markets” with truly free ones. This is not a kind of neoliberalism: the point is to rescue market exchange, not perpetuate capitalism, and to enable noncapitalist markets to coordinate socialized production on a global scale, with an eye to the Common Good, by freeing them precisely from capitalist control.


pages: 387 words: 112,868

Digital Gold: Bitcoin and the Inside Story of the Misfits and Millionaires Trying to Reinvent Money by Nathaniel Popper

4chan, Airbnb, Alan Greenspan, Apple's 1984 Super Bowl advert, banking crisis, Ben Horowitz, Benchmark Capital, bitcoin, Bitcoin Ponzi scheme, blockchain, Burning Man, buy and hold, capital controls, Colonization of Mars, crowdsourcing, cryptocurrency, David Graeber, Dogecoin, Edward Snowden, Elon Musk, Extropian, fiat currency, Fractional reserve banking, Jeff Bezos, Julian Assange, Kevin Roose, Kickstarter, life extension, litecoin, lone genius, low interest rates, M-Pesa, Marc Andreessen, Mark Zuckerberg, Max Levchin, Neal Stephenson, Occupy movement, off-the-grid, PalmPilot, peer-to-peer, peer-to-peer lending, Peter Thiel, Ponzi scheme, price stability, QR code, Ross Ulbricht, Satoshi Nakamoto, Silicon Valley, Simon Singh, Skype, slashdot, smart contracts, Startup school, stealth mode startup, the payments system, transaction costs, tulip mania, Tyler Cowen, Virgin Galactic, Vitalik Buterin, WikiLeaks

The authoritarian government also wanted to keep a close check on what its citizens were doing. Each Chinese citizen could move only the equivalent of $50,000 out of the country each year. As a result, it became difficult for wealthy people, including government officials, to get their riches out of China and into more secure foreign bank accounts. Living in Shanghai, Bobby saw how capital controls did not just make it hard for rich people to hide their money in other countries. The controls also made it harder for China’s rising middle class to invest in anything that wasn’t Chinese. It was all but impossible to buy American or European stocks and bonds. This meant that ordinary Chinese investors eagerly latched onto every half-plausible new investment opportunity that presented itself.


pages: 354 words: 118,970

Transaction Man: The Rise of the Deal and the Decline of the American Dream by Nicholas Lemann

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, Abraham Maslow, Affordable Care Act / Obamacare, Airbnb, airline deregulation, Alan Greenspan, Albert Einstein, augmented reality, basic income, Bear Stearns, behavioural economics, Bernie Sanders, Black-Scholes formula, Blitzscaling, buy and hold, capital controls, Carl Icahn, computerized trading, Cornelius Vanderbilt, corporate governance, cryptocurrency, Daniel Kahneman / Amos Tversky, data science, deal flow, dematerialisation, diversified portfolio, Donald Trump, Elon Musk, Eugene Fama: efficient market hypothesis, Fairchild Semiconductor, financial deregulation, financial innovation, fixed income, future of work, George Akerlof, gig economy, Glass-Steagall Act, Henry Ford's grandson gave labor union leader Walter Reuther a tour of the company’s new, automated factory…, Ida Tarbell, index fund, information asymmetry, invisible hand, Irwin Jacobs, Joi Ito, Joseph Schumpeter, junk bonds, Kenneth Arrow, Kickstarter, life extension, Long Term Capital Management, Mark Zuckerberg, Mary Meeker, mass immigration, means of production, Metcalfe’s law, Michael Milken, money market fund, Mont Pelerin Society, moral hazard, Myron Scholes, Neal Stephenson, new economy, Norman Mailer, obamacare, PalmPilot, Paul Samuelson, Performance of Mutual Funds in the Period, Peter Thiel, price mechanism, principal–agent problem, profit maximization, proprietary trading, prudent man rule, public intellectual, quantitative trading / quantitative finance, Ralph Nader, Richard Thaler, road to serfdom, Robert Bork, Robert Metcalfe, rolodex, Ronald Coase, Ronald Reagan, Sand Hill Road, Savings and loan crisis, shareholder value, short selling, Silicon Valley, Silicon Valley ideology, Silicon Valley startup, Snow Crash, Social Responsibility of Business Is to Increase Its Profits, Steve Jobs, TaskRabbit, TED Talk, The Nature of the Firm, the payments system, the strength of weak ties, Thomas Kuhn: the structure of scientific revolutions, Thorstein Veblen, too big to fail, transaction costs, universal basic income, War on Poverty, white flight, working poor

Their disempowerment was merely a piece of evidence used by Berle to sound the alarm about the excessive power of the men who were running corporations—and therefore, really, the country. (It also differentiated his theories from those of the thinkers he thought of as his competition, Adam Smith and Karl Marx, since they both had posited that capital controlled capitalism; Berle was saying that was no longer the case.) He believed that the big corporation itself was the problem, and that government had to be empowered to counteract it. As early as 1929, just as he was homing in on the full extent of corporate wealth, Berle wrote to a friend, “This is a problem of government rather than finance.”


pages: 380 words: 116,919

Britain's Europe: A Thousand Years of Conflict and Cooperation by Brendan Simms

anti-communist, Berlin Wall, Big bang: deregulation of the City of London, Boris Johnson, Bretton Woods, BRICs, British Empire, business cycle, capital controls, Corn Laws, credit crunch, eurozone crisis, Fall of the Berlin Wall, first-past-the-post, guns versus butter model, imperial preference, Jeremy Corbyn, land reform, Monroe Doctrine, moral panic, oil shock, open economy, plutocrats, race to the bottom, Ronald Reagan, sceptred isle, South Sea Bubble, Suez canal 1869, Suez crisis 1956, trade route, éminence grise

When Thatcher won re-election two years later, in any case, the Conservatives were even more the ‘party of Europe’.74 During her second term, Thatcher supported substantial further integration on the continent in the shape of the Single European Act of 1985, with its provisions for greater political cooperation, especially in the field of foreign policy. Conceived at the height of the Second Cold War, this was primarily intended by her to ensure a common front against the rampant Soviet Union. It was also designed to promote another British objective: the Single Market. Significantly, the task of ending customs, currency and capital controls across Europe was entrusted to a UK commissioner, Lord Cockfield. These were, of course, all intergovernmental rather than supranational initiatives, and thus did not compromise the sovereignty of the member states. Soon after her third election victory, Thatcher’s view of Europe changed for two reasons,75 both of which reflected a new surge in integration, not a change of heart on her side.


pages: 288 words: 16,556

Finance and the Good Society by Robert J. Shiller

Alan Greenspan, Alvin Roth, bank run, banking crisis, barriers to entry, Bear Stearns, behavioural economics, benefit corporation, Bernie Madoff, buy and hold, capital asset pricing model, capital controls, Carmen Reinhart, Cass Sunstein, cognitive dissonance, collateralized debt obligation, collective bargaining, computer age, corporate governance, Daniel Kahneman / Amos Tversky, democratizing finance, Deng Xiaoping, diversification, diversified portfolio, Donald Trump, Edward Glaeser, eurozone crisis, experimental economics, financial engineering, financial innovation, financial thriller, fixed income, full employment, fundamental attribution error, George Akerlof, Great Leap Forward, Ida Tarbell, income inequality, information asymmetry, invisible hand, John Bogle, joint-stock company, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, land reform, loss aversion, Louis Bachelier, Mahatma Gandhi, Mark Zuckerberg, market bubble, market design, means of production, microcredit, moral hazard, mortgage debt, Myron Scholes, Nelson Mandela, Occupy movement, passive investing, Ponzi scheme, prediction markets, profit maximization, quantitative easing, random walk, regulatory arbitrage, Richard Thaler, Right to Buy, road to serfdom, Robert Shiller, Ronald Reagan, selection bias, self-driving car, shareholder value, Sharpe ratio, short selling, Simon Kuznets, Skype, social contagion, Steven Pinker, tail risk, telemarketer, Thales and the olive presses, Thales of Miletus, The Market for Lemons, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, Vanguard fund, young professional, zero-sum game, Zipcar

Under U.S. law, the bank can even go out and buy highly rated RMBSs with the money, on the assumption that these are nearly riskless. It may end up holding essentially the same mortgages as it started out with, but the regulators’ formula quanti es the change as meaningful, and so banks that pursue this strategy are freer to lend.10 Part of the motivation for the creation of RMBSs was essentially to allow banks to escape capital controls. In 2001 the Federal Deposit Insurance Corporation, the Federal Reserve, the Comptroller of the Currency, and the O ce of Thrift Supervision promulgated a new regulation, called the Recourse Rule, that o ered special incentives for banks to hold securitized mortgages rather than mortgages themselves.


pages: 382 words: 120,064

Bank 3.0: Why Banking Is No Longer Somewhere You Go but Something You Do by Brett King

3D printing, Abraham Maslow, additive manufacturing, Airbus A320, Albert Einstein, Amazon Web Services, Any sufficiently advanced technology is indistinguishable from magic, Apollo 11, Apollo 13, Apollo Guidance Computer, asset-backed security, augmented reality, barriers to entry, behavioural economics, bitcoin, bounce rate, business intelligence, business process, business process outsourcing, call centre, capital controls, citizen journalism, Clayton Christensen, cloud computing, credit crunch, crowdsourcing, disintermediation, en.wikipedia.org, fixed income, George Gilder, Google Glasses, high net worth, I think there is a world market for maybe five computers, Infrastructure as a Service, invention of the printing press, Jeff Bezos, jimmy wales, Kickstarter, London Interbank Offered Rate, low interest rates, M-Pesa, Mark Zuckerberg, mass affluent, Metcalfe’s law, microcredit, mobile money, more computing power than Apollo, Northern Rock, Occupy movement, operational security, optical character recognition, peer-to-peer, performance metric, Pingit, platform as a service, QR code, QWERTY keyboard, Ray Kurzweil, recommendation engine, RFID, risk tolerance, Robert Metcalfe, self-driving car, Skype, speech recognition, stem cell, telepresence, the long tail, Tim Cook: Apple, transaction costs, underbanked, US Airways Flight 1549, web application, world market for maybe five computers

In China, the players have gone one step further, with online vendors hiring professionals to play online games earning QQ coins as currency. Some even use hackers and other methods to steal the coins. They then sell the virtual currency below its official value, at a rate of 0.4–0.8 yuan per coin. The Chinese government initially tried placing capital controls on QQ coins, but that just led to scarcity, driving up their real-world value by 70 per cent in a matter of weeks. Considering the QQ Instant Messenger platform has over 900 million subscribers, can this phenomenon be stopped? Virtual economies are becoming increasingly important, says Wharton legal studies professor Dan Hunter, adding that they could redefine the concept of work, help test economic theories and contribute to the gross domestic product.


pages: 756 words: 120,818

The Levelling: What’s Next After Globalization by Michael O’sullivan

"World Economic Forum" Davos, 3D printing, Airbnb, Alan Greenspan, algorithmic trading, Alvin Toffler, bank run, banking crisis, barriers to entry, Bernie Sanders, Big Tech, bitcoin, Black Swan, blockchain, bond market vigilante , Boris Johnson, Branko Milanovic, Bretton Woods, Brexit referendum, British Empire, business cycle, business process, capital controls, carbon tax, Celtic Tiger, central bank independence, classic study, cloud computing, continuation of politics by other means, corporate governance, credit crunch, CRISPR, cryptocurrency, data science, deglobalization, deindustrialization, disinformation, disruptive innovation, distributed ledger, Donald Trump, driverless car, eurozone crisis, fake news, financial engineering, financial innovation, first-past-the-post, fixed income, gentrification, Geoffrey West, Santa Fe Institute, Gini coefficient, Glass-Steagall Act, global value chain, housing crisis, impact investing, income inequality, Intergovernmental Panel on Climate Change (IPCC), It's morning again in America, James Carville said: "I would like to be reincarnated as the bond market. You can intimidate everybody.", junk bonds, knowledge economy, liberal world order, Long Term Capital Management, longitudinal study, low interest rates, market bubble, minimum wage unemployment, new economy, Northern Rock, offshore financial centre, open economy, opioid epidemic / opioid crisis, Paris climate accords, pattern recognition, Peace of Westphalia, performance metric, Phillips curve, private military company, quantitative easing, race to the bottom, reserve currency, Robert Gordon, Robert Shiller, Robert Solow, Ronald Reagan, Scramble for Africa, secular stagnation, Silicon Valley, Sinatra Doctrine, South China Sea, South Sea Bubble, special drawing rights, Steve Bannon, Suez canal 1869, supply-chain management, The inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions, total factor productivity, trade liberalization, tulip mania, Valery Gerasimov, Washington Consensus

Other indicators of globalization paint a more negative picture: cross-border flows of financial assets (relative to GDP) have continued downward from their pre-financial-crisis peak, probably because of the effects of regulation and the general shrinking of the banking sector. Foreign direct investment has recovered in the past two years, but it too is now well below the levels reached in 2009, according to the World Bank. Restrictions on foreign (mostly Chinese) investment in the United States and Europe, together with capital controls in China, have also sharply curtailed cross-border investment flows. Similarly, the profits of multinational companies—which, though not strictly an indicator of globalization, are a useful gauge of the health of the actors who have driven globalization—now look as if they have peaked. Profit margins for large US companies are very high historically, at close to 10 percent, but are now slowly contracting.


pages: 518 words: 128,324

Destined for War: America, China, and Thucydides's Trap by Graham Allison

9 dash line, anti-communist, Berlin Wall, borderless world, Bretton Woods, British Empire, capital controls, Carmen Reinhart, conceptual framework, cuban missile crisis, currency manipulation / currency intervention, Deng Xiaoping, disruptive innovation, Donald Trump, Dr. Strangelove, escalation ladder, facts on the ground, false flag, Flash crash, Francis Fukuyama: the end of history, game design, George Santayana, Great Leap Forward, guns versus butter model, Haber-Bosch Process, Herman Kahn, high-speed rail, industrial robot, Internet of things, Kenneth Rogoff, liberal world order, long peace, Mark Zuckerberg, megacity, megaproject, middle-income trap, Mikhail Gorbachev, Monroe Doctrine, mutually assured destruction, Nelson Mandela, one-China policy, Paul Samuelson, Peace of Westphalia, public intellectual, purchasing power parity, RAND corporation, Ronald Reagan, Scramble for Africa, selection bias, Silicon Valley, Silicon Valley startup, South China Sea, special economic zone, spice trade, Suez canal 1869, synthetic biology, TED Talk, the rule of 72, The Wealth of Nations by Adam Smith, too big to fail, trade route, UNCLOS, Washington Consensus, zero-sum game

According to World Bank estimates, China’s increasingly unlivable environment costs it several percent of GDP annually.54 To reverse these trends, China has embarked on what the Natural Resources Defense Council called its “greenest Five-Year Plan ever”: sixteen of the thirty-three targets concern the environment, and all are mandatory.55 The IMF describes corporate debt, currently at 145 percent of GDP, as “a key fault line in the Chinese economy.”56 But some of this debt can be shifted to government, which has a much lower debt ratio at 17 percent of GDP.57 China is also moving cautiously toward a more free-floating currency with fewer restrictions on capital controls. At the same time, it seeks to avoid what some Chinese see as dangers in the Western-style unregulated casino that gives the global financial system too much sway over national economic policy. Many Western analysts also highlight the consequences of the ruthless one-child policy imposed by Deng Xiaoping in 1980.


pages: 589 words: 128,484

America's Bank: The Epic Struggle to Create the Federal Reserve by Roger Lowenstein

bank run, Bear Stearns, Berlin Wall, Bretton Woods, business cycle, capital controls, central bank independence, Charles Lindbergh, corporate governance, fiat currency, financial independence, full employment, Glass-Steagall Act, Ida Tarbell, Long Term Capital Management, low interest rates, Michael Milken, Money creation, moral hazard, off-the-grid, old-boy network, quantitative easing, The Wealth of Nations by Adam Smith, Upton Sinclair, walking around money

In June 1911, in Harrisburg, Pennsylvania, he told a cheering throng that “the greatest monopoly in this country is the money monopoly,” adding that “all of our [financial] activities are in the hands of a few men.” Later that summer, he told an interviewer that a banking measure bearing Aldrich’s name “must have been drawn in the offices of the few men who, in the present system of concentrated capital, control the banking and industrial activities of the country.” Wall Street was naturally stung by such comments. It was said with some exaggeration that “everyone south of Canal Street was in a frenzy against Wilson.” For sure, J. P. Morgan despised him. New Yorkers felt a hint of betrayal, for Wilson had distanced himself from Harvey, the editor who had been his champion—and whose support he now considered an embarrassment.


pages: 493 words: 132,290

Vultures' Picnic: In Pursuit of Petroleum Pigs, Power Pirates, and High-Finance Carnivores by Greg Palast

"RICO laws" OR "Racketeer Influenced and Corrupt Organizations", anti-communist, back-to-the-land, bank run, Berlin Wall, Bernie Madoff, British Empire, capital asset pricing model, capital controls, centre right, Chelsea Manning, classic study, clean water, collateralized debt obligation, creative destruction, Credit Default Swap, credit default swaps / collateralized debt obligations, currency risk, disinformation, Donald Trump, energy security, Exxon Valdez, Glass-Steagall Act, invisible hand, junk bonds, means of production, Myron Scholes, Nelson Mandela, offshore financial centre, Pepto Bismol, random walk, Ronald Reagan, sensible shoes, Seymour Hersh, transfer pricing, uranium enrichment, Washington Consensus, Yogi Berra

The charm I used on him was a theory I had about a new phenomenon: multinational corporations. These huge international corporations could, through their internal transfer pricing and accounting methods, work around the centuries-old laws that controlled, and pretty much prevented, speculators from shifting capital across borders. Once these capital controls were finally defeated and removed, I foresaw a dystopic world, with borders erased, with international corporations more powerful than any nation and above any one nation’s laws or regulations, markets unchained, trade barriers demolished, and finance capital racing like a wild animal from continent to continent.


Making Globalization Work by Joseph E. Stiglitz

"World Economic Forum" Davos, affirmative action, Alan Greenspan, Andrei Shleifer, Asian financial crisis, banking crisis, barriers to entry, benefit corporation, Berlin Wall, blood diamond, business process, capital controls, carbon tax, central bank independence, corporate governance, corporate social responsibility, currency manipulation / currency intervention, Doha Development Round, Exxon Valdez, Fall of the Berlin Wall, Firefox, full employment, Garrett Hardin, Gini coefficient, global reserve currency, Global Witness, Great Leap Forward, Gunnar Myrdal, happiness index / gross national happiness, illegal immigration, income inequality, income per capita, incomplete markets, Indoor air pollution, informal economy, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), inventory management, invisible hand, John Markoff, Jones Act, Kenneth Arrow, Kenneth Rogoff, low interest rates, low skilled workers, manufacturing employment, market fundamentalism, Martin Wolf, microcredit, moral hazard, negative emissions, new economy, North Sea oil, offshore financial centre, oil rush, open borders, open economy, price stability, profit maximization, purchasing power parity, quantitative trading / quantitative finance, race to the bottom, reserve currency, rising living standards, risk tolerance, Seymour Hersh, Silicon Valley, special drawing rights, statistical model, the market place, The Wealth of Nations by Adam Smith, Thomas L Friedman, trade liberalization, Tragedy of the Commons, trickle-down economics, union organizing, Washington Consensus, zero-sum game

When the losses in the value of the dollar are taken into account, keeping money in dollars appears foolish; returns are just too small to justify the risk. There is, of course, no such thing as a safe bet; but, perceiving the risk-iness of the dollar, more and more investors will decide to shift more and more of their money out of dollars into euros, yen, or, where possible, the yuan, China’s currency. (In spite of capital controls, there was an inflow of some $100 billion into China, in addition to foreign direct investment, in 2004.) As this happens, more and more downward pressure is put on the dollar. Simultaneously, as investors pull their money out of American securities, stock prices will fall or stagnate. Keeping money in the United States will look increasingly like a bad bet.


Year 501 by Noam Chomsky

air traffic controllers' union, anti-communist, Bartolomé de las Casas, Berlin Wall, Bolshevik threat, Bretton Woods, British Empire, business cycle, capital controls, Caribbean Basin Initiative, classic study, colonial rule, corporate governance, cuban missile crisis, declining real wages, Deng Xiaoping, deskilling, Dissolution of the Soviet Union, European colonialism, experimental subject, Fall of the Berlin Wall, Howard Zinn, invisible hand, land reform, land tenure, long peace, mass incarceration, means of production, Monroe Doctrine, Nixon triggered the end of the Bretton Woods system, non-tariff barriers, offshore financial centre, plutocrats, price stability, Ralph Nader, Ralph Waldo Emerson, RAND corporation, Robert Solow, Ronald Reagan, scientific management, Simon Kuznets, strikebreaker, structural adjustment programs, the scientific method, The Wealth of Nations by Adam Smith, trade liberalization, trickle-down economics, union organizing, War on Poverty, working poor

Nixon’s initiatives constituted “a sort of mercantilist revolution in domestic and foreign policy,” political economist David Calleo observed a few years later. The international system grew more disorderly, “with rules eroded and power more significant.” There was less “rational control over national economic life,” hence great advantages to internationalist business and banking, freed from capital controls and official restraint and secure in the expectation of a state-organized public bail-out if something goes wrong. International capital markets rapidly expanded as a consequence of the decline of regulation and control, the huge flow of petrodollars after the 1973-1974 oil price rise, and the information-telecommunications revolution, which greatly facilitated capital transfers.


pages: 496 words: 131,938

The Future Is Asian by Parag Khanna

3D printing, Admiral Zheng, affirmative action, Airbnb, Amazon Web Services, anti-communist, Asian financial crisis, asset-backed security, augmented reality, autonomous vehicles, Ayatollah Khomeini, barriers to entry, Basel III, bike sharing, birth tourism , blockchain, Boycotts of Israel, Branko Milanovic, British Empire, call centre, capital controls, carbon footprint, cashless society, clean tech, clean water, cloud computing, colonial rule, commodity super cycle, computer vision, connected car, corporate governance, CRISPR, crony capitalism, cross-border payments, currency peg, death from overwork, deindustrialization, Deng Xiaoping, Didi Chuxing, Dissolution of the Soviet Union, Donald Trump, driverless car, dual-use technology, energy security, European colonialism, factory automation, failed state, fake news, falling living standards, family office, financial engineering, fixed income, flex fuel, gig economy, global reserve currency, global supply chain, Great Leap Forward, green transition, haute couture, haute cuisine, illegal immigration, impact investing, income inequality, industrial robot, informal economy, initial coin offering, Internet of things, karōshi / gwarosa / guolaosi, Kevin Kelly, Kickstarter, knowledge worker, light touch regulation, low cost airline, low skilled workers, Lyft, machine translation, Malacca Straits, Marc Benioff, Mark Zuckerberg, Masayoshi Son, megacity, megaproject, middle-income trap, Mikhail Gorbachev, money market fund, Monroe Doctrine, mortgage debt, natural language processing, Netflix Prize, new economy, off grid, oil shale / tar sands, open economy, Parag Khanna, payday loans, Pearl River Delta, prediction markets, purchasing power parity, race to the bottom, RAND corporation, rent-seeking, reserve currency, ride hailing / ride sharing, Ronald Reagan, Salesforce, Scramble for Africa, self-driving car, Shenzhen special economic zone , Silicon Valley, smart cities, SoftBank, South China Sea, sovereign wealth fund, special economic zone, stem cell, Steve Jobs, Steven Pinker, supply-chain management, sustainable-tourism, synthetic biology, systems thinking, tech billionaire, tech worker, trade liberalization, trade route, transaction costs, Travis Kalanick, uber lyft, upwardly mobile, urban planning, Vision Fund, warehouse robotics, Washington Consensus, working-age population, Yom Kippur War

Asians see the market as a partner, not a master. Asia became such a powerful economic region by applying lessons from the spectacular economic rise of Japan and South Korea through export-oriented, state-directed capitalism, as well as China’s usage of special economic zones to attract foreign capital and technology, capital controls to prevent destabilizing short-term financial flows, incremental trade opening to protect key sectors, and industrial policy to stimulate strategic commercial niches and exports. From Russia to Saudi Arabia to Vietnam, state-backed companies ensure national control over critical industrial domains.


pages: 572 words: 134,335

The Making of an Atlantic Ruling Class by Kees Van der Pijl

anti-communist, banking crisis, Berlin Wall, book value, Boycotts of Israel, Bretton Woods, British Empire, business cycle, capital controls, collective bargaining, colonial rule, cuban missile crisis, deindustrialization, deskilling, diversified portfolio, European colonialism, floating exchange rates, full employment, imperial preference, Joseph Schumpeter, liberal capitalism, mass immigration, means of production, military-industrial complex, North Sea oil, plutocrats, profit maximization, RAND corporation, scientific management, strikebreaker, Suez crisis 1956, trade liberalization, trade route, union organizing, uranium enrichment, urban renewal, War on Poverty

With exchange rate of the dollar fixed, inflation quickly spread across the Atlantic. The unilateralism underlying this policy, although not yet fully unfolded, caused grave concern in the traditional East Coast centres of Atlanticism. The New York Times warned early in 1971 that ‘a return to protectionism, capital controls, unilaterally fixed exchange rates and all that would be a tragedy for the industrial nations of the West, both economically and politically’.39 In May, the West German government stopped supporting the dollar. With the mark floating upward, Connally and Federal Reserve Chairman Burns flew to Munich to address a bankers’ meeting and exhort the European states to assume a greater part of ‘world responsibilities’.


pages: 537 words: 144,318

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

Albert Einstein, AOL-Time Warner, Asian financial crisis, asset allocation, asset-backed security, backtesting, banking crisis, Bear Stearns, Bernie Madoff, Black Swan, bond market vigilante , book value, Bretton Woods, BRICs, British Empire, business cycle, business process, buy and hold, capital asset pricing model, capital controls, central bank independence, collateralized debt obligation, commoditize, commodity super cycle, commodity trading advisor, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency peg, debt deflation, diversification, diversified portfolio, equity premium, equity risk premium, family office, fiat currency, fixed income, follow your passion, full employment, George Santayana, global macro, Greenspan put, Hyman Minsky, implied volatility, index fund, inflation targeting, interest rate swap, inventory management, inverted yield curve, invisible hand, junk bonds, Kickstarter, London Interbank Offered Rate, Long Term Capital Management, low interest rates, market bubble, market fundamentalism, market microstructure, Minsky moment, moral hazard, Myron Scholes, North Sea oil, open economy, peak oil, pension reform, Ponzi scheme, prediction markets, price discovery process, price stability, private sector deleveraging, profit motive, proprietary trading, purchasing power parity, quantitative easing, random walk, Reminiscences of a Stock Operator, reserve currency, risk free rate, risk tolerance, risk-adjusted returns, risk/return, savings glut, selection bias, Sharpe ratio, short selling, SoftBank, sovereign wealth fund, special drawing rights, statistical arbitrage, stochastic volatility, stocks for the long run, stocks for the long term, survivorship bias, tail risk, The Great Moderation, Thomas Bayes, time value of money, too big to fail, Tragedy of the Commons, transaction costs, two and twenty, unbiased observer, value at risk, Vanguard fund, yield curve, zero-sum game

Anecdotally, as a sanity check, the consensus amongst the Turkish political and corporate leaders we met on the trip was orthogonal to the consensus in London and New York. With one-year yields above 100 percent, there was a lot of potential alpha in the trade and you had a massive cushion. Turkey is a very large economy where the population has understood the time value of money since Ottoman rule. The country has never had capital controls. Financially speaking, the Turkish population today is much more sophisticated than that of the United States, the United Kingdom, or even Switzerland. Persistent high inflation has forced the merchant class to develop a certain financial knowledge; cab drivers wax lyrically about simple and compounded yield, and the average bank managers are familiar with Treasury funding and supply schedules.


Mastering Private Equity by Zeisberger, Claudia,Prahl, Michael,White, Bowen, Michael Prahl, Bowen White

Alan Greenspan, asset allocation, backtesting, barriers to entry, Basel III, Bear Stearns, book value, business process, buy low sell high, capital controls, carbon credits, carried interest, clean tech, commoditize, corporate governance, corporate raider, correlation coefficient, creative destruction, currency risk, deal flow, discounted cash flows, disintermediation, disruptive innovation, distributed generation, diversification, diversified portfolio, family office, fixed income, high net worth, impact investing, information asymmetry, intangible asset, junk bonds, Lean Startup, low interest rates, market clearing, Michael Milken, passive investing, pattern recognition, performance metric, price mechanism, profit maximization, proprietary trading, risk tolerance, risk-adjusted returns, risk/return, Savings and loan crisis, shareholder value, Sharpe ratio, Silicon Valley, sovereign wealth fund, statistical arbitrage, time value of money, transaction costs, two and twenty

., areas with obvious potential for operational improvement—for value creation, which are likely to be at the core of the initial “100-day plan.”2 A careful examination of the previous owner’s operating model will not only aim to build on the company’s established strengths but also look for new ways to release cash or increase profit margins. Typical initiatives include working capital controls and the adoption of more sophisticated pricing strategies. Where an improvement is expected to be self-funding, PE will assess the opportunity using conventional measures such as payback period, return on investment and return on capital employed. In contrast, in cases where injection of additional (equity) capital is required, the PE firm will evaluate whether the project will increase company value and achieve the required hurdle return on this “fresh” equity.


pages: 454 words: 134,482

Money Free and Unfree by George A. Selgin

Alan Greenspan, asset-backed security, bank run, banking crisis, barriers to entry, Bear Stearns, break the buck, Bretton Woods, business cycle, capital controls, central bank independence, centralized clearinghouse, Charles Lindbergh, credit crunch, Credit Default Swap, crony capitalism, disintermediation, Dutch auction, fear of failure, fiat currency, financial deregulation, financial innovation, Financial Instability Hypothesis, financial intermediation, financial repression, foreign exchange controls, Fractional reserve banking, German hyperinflation, Glass-Steagall Act, Hyman Minsky, incomplete markets, inflation targeting, information asymmetry, invisible hand, Isaac Newton, Joseph Schumpeter, large denomination, liquidity trap, Long Term Capital Management, low interest rates, market microstructure, Money creation, money market fund, moral hazard, Network effects, Northern Rock, oil shock, Paul Samuelson, Phillips curve, plutocrats, price stability, profit maximization, purchasing power parity, quantitative easing, random walk, rent-seeking, reserve currency, Robert Gordon, Robert Solow, Savings and loan crisis, savings glut, seigniorage, special drawing rights, The Great Moderation, the payments system, too big to fail, transaction costs, Tyler Cowen, unorthodox policies, vertical integration, Y2K

As the November elections loomed, Aldrich’s last hope was that Woodrow Wilson, who was looking increasingly strong in his bid for the White House, might favor his plan; as an academic (and a lecturer on economics), Wilson had spoken favorably of European-style central banking. In the course of his campaign, however, Wilson had publicly declared—with noteworthy accuracy—that any plan bearing Aldrich’s name “must have been drawn in the offices of the few men who, in the present system of concentrated capital, control the banking and industrial activities of this country” (Lowenstein 2015: 145). Despite every effort, Aldrich’s accomplices were unable to prevent Wilson from categorically rejecting the plan for the sake of gaining Bryan’s support. It was, in fact, Bryan himself who had drafted most of the Democratic Party’s platform, including the plank stating, “We oppose the so-called Aldrich Bill or the establishment of a central bank” (Lowenstein 2015: 164).


The Hour of Fate by Susan Berfield

bank run, buy and hold, capital controls, collective bargaining, company town, Cornelius Vanderbilt, death from overwork, friendly fire, Howard Zinn, Ida Tarbell, income inequality, new economy, plutocrats, Ralph Waldo Emerson, Simon Kuznets, strikebreaker, the market place, transcontinental railway, wage slave, working poor

But many were also confused, uprooted, and surrounded by the unfamiliar. There were more roads and rail lines, more people and buildings, bigger farms, bigger corporations, bigger cities. For those who stayed in place, the new rules and rhythms seemed determined by distant and abstract forces: technology controlled by private corporations, capital controlled by Wall Street, wages and prices controlled by industrialists. Those who left for the factories joined an industrial world where their productivity was measured and their safety often disregarded. If they were cheated or hurt, their options for recourse were scant. Almost half a million17 immigrants arrived in 1901, drawn by dreams of freedom and a better life, but they were unprotected, crowded into unhealthy tenements and some of the most unreliable jobs.


pages: 892 words: 91,000

Valuation: Measuring and Managing the Value of Companies by Tim Koller, McKinsey, Company Inc., Marc Goedhart, David Wessels, Barbara Schwimmer, Franziska Manoury

accelerated depreciation, activist fund / activist shareholder / activist investor, air freight, ASML, barriers to entry, Basel III, Black Monday: stock market crash in 1987, book value, BRICs, business climate, business cycle, business process, capital asset pricing model, capital controls, Chuck Templeton: OpenTable:, cloud computing, commoditize, compound rate of return, conceptual framework, corporate governance, corporate social responsibility, creative destruction, credit crunch, Credit Default Swap, currency risk, discounted cash flows, distributed generation, diversified portfolio, Dutch auction, energy security, equity premium, equity risk premium, financial engineering, fixed income, index fund, intangible asset, iterative process, Long Term Capital Management, low interest rates, market bubble, market friction, Myron Scholes, negative equity, new economy, p-value, performance metric, Ponzi scheme, price anchoring, proprietary trading, purchasing power parity, quantitative easing, risk free rate, risk/return, Robert Shiller, Savings and loan crisis, shareholder value, six sigma, sovereign wealth fund, speech recognition, stocks for the long run, survivorship bias, technology bubble, time value of money, too big to fail, transaction costs, transfer pricing, two and twenty, value at risk, yield curve, zero-coupon bond

We recommend this approach because capital markets have become global, in the sense that a considerable share of all equity trades is now international, and global traders, primarily large institutional investors, draw their capital from and invest it all around the world. For investors and companies in markets facing capital controls that prevent them from freely investing abroad, we recommend using a so-called local ESTIMATING THE COST OF CAPITAL 495 CAPM. By definition, they can invest in domestic assets only and should estimate the cost of capital from a domestic perspective, measuring market risk premium and beta versus a (diversified) domestic portfolio.

reference to estimate the cost of capital. As a result, valuations in such restricted markets can be out of line with those in global markets—which is what we have encountered in the past for valuations in, for example, the Indian and mainland Chinese stock markets. Estimating Market Risk Premium in Global CAPM In the absence of capital controls for investors, the global market risk premium should be based on a global index that includes most of the world’s investment assets. As explained in Chapter 13, the market risk premium for an index can be estimated from its historical returns, from current financial ratios, or from forward-looking models, which, by and large, lead to similar results.


pages: 590 words: 153,208

Wealth and Poverty: A New Edition for the Twenty-First Century by George Gilder

accelerated depreciation, affirmative action, Albert Einstein, Bear Stearns, Bernie Madoff, book value, British Empire, business cycle, capital controls, clean tech, cloud computing, collateralized debt obligation, creative destruction, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, deindustrialization, diversified portfolio, Donald Trump, equal pay for equal work, floating exchange rates, full employment, gentrification, George Gilder, Gunnar Myrdal, Home mortgage interest deduction, Howard Zinn, income inequality, independent contractor, inverted yield curve, invisible hand, Jane Jacobs, Jeff Bezos, job automation, job-hopping, Joseph Schumpeter, junk bonds, knowledge economy, labor-force participation, longitudinal study, low interest rates, margin call, Mark Zuckerberg, means of production, medical malpractice, Michael Milken, minimum wage unemployment, Money creation, money market fund, money: store of value / unit of account / medium of exchange, Mont Pelerin Society, moral hazard, mortgage debt, non-fiction novel, North Sea oil, paradox of thrift, Paul Samuelson, plutocrats, Ponzi scheme, post-industrial society, power law, price stability, Ralph Nader, rent control, Robert Gordon, Robert Solow, Ronald Reagan, San Francisco homelessness, scientific management, Silicon Valley, Simon Kuznets, Skinner box, skunkworks, Solyndra, Steve Jobs, The Wealth of Nations by Adam Smith, Thomas L Friedman, upwardly mobile, urban renewal, volatility arbitrage, War on Poverty, women in the workforce, working poor, working-age population, yield curve, zero-sum game

It is a principle sometimes as obscure to conservatives, with their often excessive preoccupation with the statistics of money and deficit spending, as it is to liberals, with their obsession for aggregate demand and consumer spending. Wisdom on the subject can sometimes be found in strange places. Even Karl Marx knew enough not to stress, as the crux and keystone of capitalism, control over the means of consumption—or even of the supply of money. Marx, however, erroneously located the means of production in the material arrangements of the society rather than in the metaphysical capital of human freedom and creativity. The problem of contemporary capitalism lies not chiefly in a deterioration of physical capital, but in a persistent subversion of the psychological means of production—the morale and inspiration of economic man—undermining the very conscience of capitalism: the awareness that one must give in order to get, supply in order to demand.


pages: 504 words: 143,303

Why We Can't Afford the Rich by Andrew Sayer

"World Economic Forum" Davos, accounting loophole / creative accounting, Alan Greenspan, Albert Einstein, Anthropocene, anti-globalists, asset-backed security, banking crisis, banks create money, basic income, biodiversity loss, bond market vigilante , Boris Johnson, Bretton Woods, British Empire, Bullingdon Club, business cycle, call centre, capital controls, carbon footprint, carbon tax, collective bargaining, corporate raider, corporate social responsibility, creative destruction, credit crunch, Credit Default Swap, crony capitalism, David Graeber, David Ricardo: comparative advantage, debt deflation, decarbonisation, declining real wages, deglobalization, degrowth, deindustrialization, delayed gratification, demand response, don't be evil, Double Irish / Dutch Sandwich, en.wikipedia.org, Etonian, financial engineering, financial innovation, financial intermediation, Fractional reserve banking, full employment, G4S, Goldman Sachs: Vampire Squid, green new deal, high net worth, high-speed rail, income inequality, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), investor state dispute settlement, Isaac Newton, James Carville said: "I would like to be reincarnated as the bond market. You can intimidate everybody.", James Dyson, job automation, Julian Assange, junk bonds, Kickstarter, labour market flexibility, laissez-faire capitalism, land bank, land value tax, long term incentive plan, low skilled workers, Mark Zuckerberg, market fundamentalism, Martin Wolf, mass immigration, means of production, moral hazard, mortgage debt, negative equity, neoliberal agenda, new economy, New Urbanism, Northern Rock, Occupy movement, offshore financial centre, oil shale / tar sands, patent troll, payday loans, Philip Mirowski, plutocrats, popular capitalism, predatory finance, price stability, proprietary trading, pushing on a string, quantitative easing, race to the bottom, rent-seeking, retail therapy, Ronald Reagan, shareholder value, short selling, sovereign wealth fund, Steve Jobs, tacit knowledge, TED Talk, The Nature of the Firm, The Spirit Level, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, transfer pricing, trickle-down economics, universal basic income, unpaid internship, upwardly mobile, Washington Consensus, wealth creators, WikiLeaks, Winter of Discontent, working poor, Yom Kippur War, zero-sum game

Sixth, there’s a more technical point that’s become important in financialised economies: if the lender can sell on the debt as a security – a financial asset that promises to yield the buyer a flow of unearned income – to some other organisation, then the asymmetry in the distribution of risk is all the greater. Offloading the risk allows the lender to issue more credit and escape capital controls on the ratio of loans to cash reserves. Apologists call this managing or distributing risk, but all too often it has just encouraged more risky lending. More on this when we come to the financial crisis. Worst of all, when banks are deemed ‘too big to fail’, they have less reason to manage risk prudently, for they know that if they get into trouble they will be bailed out by taxpayers.


pages: 524 words: 143,993

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

air freight, Alan Greenspan, anti-communist, Asian financial crisis, asset allocation, asset-backed security, balance sheet recession, bank run, banking crisis, banks create money, Basel III, Bear Stearns, Ben Bernanke: helicopter money, Berlin Wall, Black Swan, bonus culture, break the buck, Bretton Woods, business cycle, call centre, capital asset pricing model, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, collateralized debt obligation, corporate governance, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency manipulation / currency intervention, currency peg, currency risk, debt deflation, deglobalization, Deng Xiaoping, diversification, double entry bookkeeping, en.wikipedia.org, Erik Brynjolfsson, Eugene Fama: efficient market hypothesis, eurozone crisis, Fall of the Berlin Wall, fiat currency, financial deregulation, financial innovation, financial repression, floating exchange rates, foreign exchange controls, forward guidance, Fractional reserve banking, full employment, Glass-Steagall Act, global rebalancing, global reserve currency, Growth in a Time of Debt, Hyman Minsky, income inequality, inflation targeting, information asymmetry, invisible hand, Joseph Schumpeter, Kenneth Rogoff, labour market flexibility, labour mobility, Les Trente Glorieuses, light touch regulation, liquidationism / Banker’s doctrine / the Treasury view, liquidity trap, Long Term Capital Management, low interest rates, mandatory minimum, margin call, market bubble, market clearing, market fragmentation, Martin Wolf, Mexican peso crisis / tequila crisis, Minsky moment, Modern Monetary Theory, Money creation, money market fund, moral hazard, mortgage debt, negative equity, new economy, North Sea oil, Northern Rock, open economy, paradox of thrift, Paul Samuelson, price stability, private sector deleveraging, proprietary trading, purchasing power parity, pushing on a string, quantitative easing, Real Time Gross Settlement, regulatory arbitrage, reserve currency, Richard Feynman, risk-adjusted returns, risk/return, road to serfdom, Robert Gordon, Robert Shiller, Ronald Reagan, savings glut, Second Machine Age, secular stagnation, shareholder value, short selling, sovereign wealth fund, special drawing rights, subprime mortgage crisis, tail risk, The Chicago School, The Great Moderation, The Market for Lemons, the market place, The Myth of the Rational Market, the payments system, The Wealth of Nations by Adam Smith, too big to fail, Tyler Cowen, Tyler Cowen: Great Stagnation, vertical integration, very high income, winner-take-all economy, zero-sum game

In Greece and Portugal, the youth unemployment rate has exceeded 55 per cent. Not just a decade is being lost, but sizeable parts of an entire generation. By early 2014, one could see signs of a feeble recovery, but unemployment is likely to remain very high until the end of the decade or even later. Cyprus even imposed capital controls in 2013, thereby establishing what everybody already knew: a euro is not a euro, unless it is a physical note or a coin. A euro in a bank account in Cyprus is not necessarily the same thing as a euro in a bank account in Germany: the latter can be used freely as a means of payment at all times and anywhere; the former cannot.


pages: 539 words: 151,425

Lords of the Desert: The Battle Between the US and Great Britain for Supremacy in the Modern Middle East by James Barr

Albert Einstein, anti-communist, Bretton Woods, British Empire, capital controls, cuban missile crisis, disinformation, false flag, illegal immigration, imperial preference, Khartoum Gordon, land reform, Mahatma Gandhi, Suez crisis 1956, trade route

EPILOGUE While Egypt’s defeat during the Six-Day War destroyed Nasser’s reputation, the closure of the Suez Canal and the Arabs’ oil embargo put Britain under severe financial strain yet again. Over the next three years, the need to buy dollar-denominated oil cost the country £175 million it could ill afford. A mixture of anger and fear that the government might introduce capital controls led Arab investors to pull about the same amount from British banks. Harold Wilson had been loath to devalue the currency, believing that was what had done for the last Labour government’s credibility. But by the autumn of 1967 he no longer had a choice. On 19 November – ten days before the last troops pulled out of Aden – the government devalued the pound by forty cents and the chancellor, Jim Callaghan, resigned.


pages: 559 words: 155,777

The Sinner and the Saint: Dostoevsky and the Gentleman Murderer Who Inspired a Masterpiece by Kevin Birmingham

banking crisis, business cycle, capital controls, classic study, death of newspapers, full employment, income inequality, laissez-faire capitalism, lateral thinking, new economy, New Journalism, Panopticon Jeremy Bentham, Peter Singer: altruism, trade route, traveling salesman

It announced that Russia was on the brink of “a bloody and pitiless revolution, a revolution which must change everything down to the very roots, utterly overthrowing all the foundations of present society.” It was a manifesto signed by something called the Central Revolutionary Committee, and it attacked religion, family structures, and the social order. Russia’s ruling class, the leaflet proclaimed, was separated from the people. “Under this regime a small number of people who own capital control the fate of the rest.” The coming revolution would establish a socialist republic with national and regional assemblies, universal suffrage, universal rights, and progressive taxation. The program would be enacted by a dictatorship of revolutionary elites. The “Young Russia” manifesto was recklessly violent.


pages: 596 words: 163,682

The Third Pillar: How Markets and the State Leave the Community Behind by Raghuram Rajan

"Friedman doctrine" OR "shareholder theory", activist fund / activist shareholder / activist investor, affirmative action, Affordable Care Act / Obamacare, air traffic controllers' union, airline deregulation, Albert Einstein, Andrei Shleifer, banking crisis, barriers to entry, basic income, battle of ideas, Bernie Sanders, blockchain, borderless world, Bretton Woods, British Empire, Build a better mousetrap, business cycle, business process, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carl Icahn, central bank independence, computer vision, conceptual framework, corporate governance, corporate raider, corporate social responsibility, creative destruction, crony capitalism, crowdsourcing, cryptocurrency, currency manipulation / currency intervention, data acquisition, David Brooks, Deng Xiaoping, desegregation, deskilling, disinformation, disruptive innovation, Donald Trump, driverless car, Edward Glaeser, facts on the ground, financial innovation, financial repression, full employment, future of work, Glass-Steagall Act, global supply chain, Great Leap Forward, high net worth, household responsibility system, housing crisis, Ida Tarbell, illegal immigration, income inequality, industrial cluster, intangible asset, invention of the steam engine, invisible hand, Jaron Lanier, job automation, John Maynard Keynes: technological unemployment, joint-stock company, Joseph Schumpeter, labor-force participation, Les Trente Glorieuses, low interest rates, low skilled workers, manufacturing employment, market fundamentalism, Martin Wolf, means of production, Money creation, moral hazard, Network effects, new economy, Nicholas Carr, obamacare, opioid epidemic / opioid crisis, Productivity paradox, profit maximization, race to the bottom, Richard Thaler, Robert Bork, Robert Gordon, Ronald Reagan, Sam Peltzman, shareholder value, Silicon Valley, social distancing, Social Responsibility of Business Is to Increase Its Profits, SoftBank, South China Sea, South Sea Bubble, Stanford marshmallow experiment, Steve Jobs, superstar cities, The Future of Employment, The Wealth of Nations by Adam Smith, trade liberalization, trade route, transaction costs, transfer pricing, Travis Kalanick, Tyler Cowen, Tyler Cowen: Great Stagnation, universal basic income, Upton Sinclair, Walter Mischel, War on Poverty, women in the workforce, working-age population, World Values Survey, Yom Kippur War, zero-sum game

In the United States, states passed “fair trade” legislation that set floors for retail prices, protecting small-town manufacturers and retailers from competition from big business. Custom tariffs went up to curb imports, including the infamous Smoot Hawley Act passed by the US Congress in 1930, which prompted tit-for-tat tariffs across the developed world. Capital controls limited cross-border investment flows, while industry-wide or even economy-wide agreements between firms, and between firms and labor such as the Saltsjöbaden Agreement in Sweden in 1938, sought to sacrifice competition for stability. Governments effectively suspended antitrust. In country after country, the private sector was significantly more heavily regulated, while many industries were nationalized.


pages: 566 words: 163,322

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

"World Economic Forum" Davos, Asian financial crisis, backtesting, bank run, banking crisis, Berlin Wall, Bernie Sanders, BRICs, business climate, business cycle, business process, call centre, capital controls, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, centre right, colonial rule, commodity super cycle, corporate governance, creative destruction, crony capitalism, currency peg, dark matter, debt deflation, deglobalization, deindustrialization, demographic dividend, demographic transition, Deng Xiaoping, Doha Development Round, Donald Trump, driverless car, Edward Glaeser, Elon Musk, eurozone crisis, failed state, Fall of the Berlin Wall, falling living standards, financial engineering, Francis Fukuyama: the end of history, Freestyle chess, Gini coefficient, global macro, Goodhart's law, guns versus butter model, hiring and firing, hype cycle, income inequality, indoor plumbing, industrial robot, inflation targeting, Internet of things, Japanese asset price bubble, Jeff Bezos, job automation, John Markoff, Joseph Schumpeter, junk bonds, Kenneth Rogoff, Kickstarter, knowledge economy, labor-force participation, Larry Ellison, lateral thinking, liberal capitalism, low interest rates, Malacca Straits, Mark Zuckerberg, market bubble, Mary Meeker, mass immigration, megacity, megaproject, Mexican peso crisis / tequila crisis, middle-income trap, military-industrial complex, mittelstand, moral hazard, New Economic Geography, North Sea oil, oil rush, oil shale / tar sands, oil shock, open immigration, pattern recognition, Paul Samuelson, Peter Thiel, pets.com, plutocrats, Ponzi scheme, price stability, Productivity paradox, purchasing power parity, quantitative easing, Ralph Waldo Emerson, random walk, rent-seeking, reserve currency, Ronald Coase, Ronald Reagan, savings glut, secular stagnation, Shenzhen was a fishing village, Silicon Valley, Silicon Valley startup, Simon Kuznets, smart cities, Snapchat, South China Sea, sovereign wealth fund, special economic zone, spectrum auction, Steve Jobs, tacit knowledge, tech billionaire, The Future of Employment, The Wisdom of Crowds, Thomas Malthus, total factor productivity, trade liberalization, trade route, tulip mania, Tyler Cowen: Great Stagnation, unorthodox policies, Washington Consensus, WikiLeaks, women in the workforce, work culture , working-age population

Strong investment in supply networks—ports, phone systems, factories—allows an economy to grow rapidly without high inflation, the ideal combination. In Venezuela, the socialists appear unwilling to cede any state power without a fight, so the nation’s prospects are still ugly in the extreme. But in Argentina incoming president Mauricio Macri started with a big and promising move. He lifted capital controls, which immediately sent the overvalued peso tumbling to a more competitive price. He cut export taxes, removed tariffs and quotas on farm exports, and raised prices on subsidized power and water. He brought in a new central bank chief and, after years of political interference, vowed to restore the bank’s independence, which is critical in the fight against inflation.


pages: 597 words: 172,130

The Alchemists: Three Central Bankers and a World on Fire by Neil Irwin

"World Economic Forum" Davos, Alan Greenspan, Ayatollah Khomeini, bank run, banking crisis, Bear Stearns, Berlin Wall, Bernie Sanders, break the buck, Bretton Woods, business climate, business cycle, capital controls, central bank independence, centre right, collapse of Lehman Brothers, collateralized debt obligation, credit crunch, currency peg, eurozone crisis, financial engineering, financial innovation, Flash crash, foreign exchange controls, George Akerlof, German hyperinflation, Google Earth, hiring and firing, inflation targeting, Isaac Newton, Julian Assange, low cost airline, low interest rates, market bubble, market design, middle-income trap, Money creation, money market fund, moral hazard, mortgage debt, new economy, Nixon triggered the end of the Bretton Woods system, Northern Rock, Paul Samuelson, price stability, public intellectual, quantitative easing, rent control, reserve currency, Robert Shiller, Robert Solow, rolodex, Ronald Reagan, Savings and loan crisis, savings glut, Socratic dialogue, sovereign wealth fund, The Great Moderation, too big to fail, union organizing, WikiLeaks, yield curve, Yom Kippur War

In 2008, seizing on the need for Chinese municipalities to borrow money amid stimulus spending to combat the financial crisis, the PBOC prevailed in creating a market for medium-term local government debt. The central bank successfully argued, as part of the campaign to make the renminbi a more international currency, for loosening capital control rules to allow “dim sum bonds”—that is, bonds traded in Hong Kong but denominated in the Chinese currency—starting in 2010. And in 2012, the PBOC and securities regulators relaxed rules to make it easier for corporations and municipalities to issue debt for even longer periods of time. Zhou and the PBOC, in other words, were persistent and opportunistic in pushing for the development of the Chinese bond market, using loopholes, the need for stimulus spending amid the crisis, and Chinese financial nationalism to get his way.


pages: 632 words: 166,729

Addiction by Design: Machine Gambling in Las Vegas by Natasha Dow Schüll

airport security, Albert Einstein, Build a better mousetrap, business intelligence, capital controls, cashless society, commoditize, corporate social responsibility, deindustrialization, dematerialisation, deskilling, emotional labour, Future Shock, game design, impulse control, information asymmetry, inventory management, iterative process, jitney, junk bonds, large denomination, late capitalism, late fees, longitudinal study, means of production, meta-analysis, Nash equilibrium, Panopticon Jeremy Bentham, Paradox of Choice, post-industrial society, postindustrial economy, profit motive, RFID, scientific management, Silicon Valley, Skinner box, Slavoj Žižek, statistical model, the built environment, yield curve, zero-sum game

addiction-detection algorithm addiction recovery: and the actuarial self; casino funding of; gamblers’ experience of; as an industry; online forums for; as part of addiction process; and self-governancef; self-help forms of; as similar to the zone state; state funding of in Nevada; as a state of equilibrium; as technological self-management. See also addiction; gambling addiction; Gamblers Anonymous. affect: and addiction; and capitalism; control of by the gambling industry; equilibration of in the zone; management of in addiction recovery; management of through casino ambience; management of through casino spatial design; management of through gambling machine design; monitoring of through player tracking technology; self-management of through technological interactions; theories of affective economy affective grip of technology affective labor affordance AGA.


The Economic Weapon by Nicholas Mulder

anti-communist, Boycotts of Israel, Bretton Woods, British Empire, capital controls, classic study, deglobalization, European colonialism, falling living standards, false flag, foreign exchange controls, global pandemic, guns versus butter model, Monroe Doctrine, power law, reserve currency, rising living standards, Suez crisis 1956, transatlantic slave trade, éminence grise

Its economic intelligence section warned that “it is an established fact that the Germans have been looking for some time to acquire the shares of the firms that find themselves in regions occupied by them, as a way to assure themselves of the majority of their capital and to take over control of these firms.”55 In response to this threat—a hostile takeover if ever there was one—the French National Assembly passed the most far-reaching capital controls of the war. The law of 3 April 1918, written jointly by the finance and war ministries and rushed through parliament, effectively forbade French investors from selling specific financial assets to foreign parties. An initial list of firms to which the law applied had already been drawn up in late March, containing dozens of majority French–owned firms in the Balkans and the Ottoman Empire.56 Octave Homberg, the banker in charge of the French financial blockade, wrote to Clemenceau that the 3 April law would “prevent the export from France of the assets of enterprises situated in Russia, in Turkey, in Romania and in Serbia, where French capital has an interest, and in which the enemy is looking to acquire a preponderant influence.”57 Since the Ministry of Finance was already paying rentiers interest on defaulted Russian state debt, its financial controls affected stakes in Russian industrial, mining, railway, timber, oil, and agricultural enterprises that were easy to sell and hence likely to end up in enemy hands.58 But by preventing French savers from selling the defaulted debt elsewhere, even at a steep discount, the financial blockade reinforced the loss of wealth inflicted by the Bolshevik default.


The Life and Death of Ancient Cities: A Natural History by Greg Woolf

agricultural Revolution, Anthropocene, capital controls, classic study, Columbian Exchange, demographic transition, Dunbar number, Easter island, endogenous growth, Eratosthenes, European colonialism, global village, invention of agriculture, invention of writing, joint-stock company, mass immigration, megacity, New Urbanism, out of africa, Scramble for Africa, social intelligence, social web, the strength of weak ties, trade route, urban planning, urban sprawl, zoonotic diseases

This was true of Babylonia, where city-states with their temples continued a tradition that went back to Sumerian roots. It was also true of Egypt, where the centralized Pharaonic state contained some of the largest urban settlements in the region but where nothing like citizenship existed. Egypt was divided into nomes, each of which had an administrative capital controlled by royal appointees. The pharaohs occasionally built vast cities for themselves, and by the Persian period the capital had come to settle at Memphis, near modern Cairo. The Levant and Syria had been divided into city-states since the end of the Iron Age. Most were subject to local kings or powerful temples.


pages: 816 words: 191,889

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

"World Economic Forum" Davos, American ideology, anti-communist, Asian financial crisis, autonomous vehicles, Black Lives Matter, Bretton Woods, capital controls, coronavirus, COVID-19, crony capitalism, cross-border payments, cryptocurrency, defense in depth, deindustrialization, Deng Xiaoping, deplatforming, disinformation, Dissolution of the Soviet Union, Donald Trump, drone strike, energy security, European colonialism, eurozone crisis, financial innovation, George Floyd, global pandemic, global reserve currency, global supply chain, global value chain, Great Leap Forward, high-speed rail, Internet Archive, Internet of things, Kickstarter, kremlinology, Malacca Straits, middle-income trap, Mikhail Gorbachev, MITM: man-in-the-middle, Monroe Doctrine, Network effects, Nixon triggered the end of the Bretton Woods system, offshore financial centre, positional goods, post-truth, purchasing power parity, RAND corporation, reserve currency, rolodex, Ronald Reagan, South China Sea, special drawing rights, special economic zone, TikTok, trade liberalization, transaction costs, UNCLOS, UNCLOS, undersea cable, zero-sum game

Indeed, as Kirshner argues, the renminbi is not likely to overtake the dollar in the near future globally, but China’s centrality to Asia’s economy and supply chains makes it likely that it will eventually become the dominant currency in the region.75 He further argues that China may be taking a different path to regional internationalization, one that involves creating infrastructure for the renminbi, promoting its use in transactions, and encouraging central banks to hold it as a reserve currency—all while retaining some capital controls and regulation.76 China’s swap agreements help advance this goal, as does China’s promotion of renminbi-denominated bonds that can be purchased by foreign central banks, which creates a deeper and more liquid pool of renminbi assets others might invest in—a key reason for dollar dominance. If much of Asia becomes an effective renminbi zone in the next decade or more, then some of the instruments of American financial power could be wielded by China against its neighbors.


pages: 775 words: 208,604

The Great Leveler: Violence and the History of Inequality From the Stone Age to the Twenty-First Century by Walter Scheidel

agricultural Revolution, assortative mating, basic income, Berlin Wall, Bernie Sanders, Branko Milanovic, British Empire, capital controls, Capital in the Twenty-First Century by Thomas Piketty, classic study, collective bargaining, colonial rule, Columbian Exchange, conceptual framework, confounding variable, corporate governance, cosmological principle, CRISPR, crony capitalism, dark matter, declining real wages, democratizing finance, demographic transition, Dissolution of the Soviet Union, Downton Abbey, Edward Glaeser, failed state, Fall of the Berlin Wall, financial deregulation, fixed income, Francisco Pizarro, full employment, Gini coefficient, global pandemic, Great Leap Forward, guns versus butter model, hiring and firing, income inequality, John Markoff, knowledge worker, land reform, land tenure, low skilled workers, means of production, mega-rich, Network effects, nuclear winter, offshore financial centre, plutocrats, race to the bottom, recommendation engine, rent control, rent-seeking, road to serfdom, Robert Gordon, Ronald Reagan, Second Machine Age, Simon Kuznets, synthetic biology, The Future of Employment, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Thomas Malthus, transaction costs, transatlantic slave trade, universal basic income, very high income, working-age population, zero-sum game

From 1943 the government enforced an all-encompassing shift into armaments production: ill-founded promises of future compensation were the only inducement. In 1944 the state assumed further powers, and some businesses were nationalized. One survey lists about seventy different economic controls that were created between 1937 and 1945—a wide range of measures that included rationing, capital controls, wage control, price control, and land rent control.6 The zaibatsu system of business conglomerates that were tightly controlled by a few wealthy families began to weaken. As corporate savings and investment by the rich proved insufficient to raise the necessary capital for wartime industrial expansion, funds had to be borrowed from outside these formerly closed circles, and the Industrial Bank of Japan reduced the market share of private financial institutions.


pages: 772 words: 203,182

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

"Friedman doctrine" OR "shareholder theory", "World Economic Forum" Davos, 8-hour work day, active measures, activist fund / activist shareholder / activist investor, affirmative action, Affordable Care Act / Obamacare, Alan Greenspan, bank run, banking crisis, Basel III, Bear Stearns, behavioural economics, benefit corporation, Black Swan, blood diamond, blue-collar work, Bolshevik threat, bonus culture, British Empire, business cycle, business process, buy and hold, capital controls, Carmen Reinhart, carried interest, cognitive dissonance, collateralized debt obligation, collective bargaining, commoditize, company town, compensation consultant, corporate governance, corporate personhood, corporate raider, corporate social responsibility, creative destruction, credit crunch, crony capitalism, crowdsourcing, currency manipulation / currency intervention, David Brooks, David Graeber, David Ricardo: comparative advantage, declining real wages, deindustrialization, Diane Coyle, disruptive innovation, Double Irish / Dutch Sandwich, eurozone crisis, financial deregulation, financial engineering, financial innovation, fixed income, Ford Model T, Francis Fukuyama: the end of history, full employment, George Akerlof, George Gilder, Gini coefficient, Glass-Steagall Act, Gordon Gekko, Greenspan put, hiring and firing, Ida Tarbell, income inequality, independent contractor, invisible hand, job satisfaction, John Markoff, joint-stock company, Joseph Schumpeter, junk bonds, Kenneth Rogoff, labor-force participation, laissez-faire capitalism, lake wobegon effect, light touch regulation, Long Term Capital Management, low interest rates, manufacturing employment, market clearing, market fundamentalism, Martin Wolf, minimum wage unemployment, mittelstand, Money creation, moral hazard, Myron Scholes, Naomi Klein, Northern Rock, obamacare, offshore financial centre, Paul Samuelson, Paul Volcker talking about ATMs, pension reform, performance metric, Pershing Square Capital Management, pirate software, plutocrats, Ponzi scheme, precariat, price stability, profit maximization, profit motive, prosperity theology / prosperity gospel / gospel of success, purchasing power parity, race to the bottom, Ralph Nader, rent-seeking, reshoring, Richard Thaler, rising living standards, road to serfdom, Robert Gordon, Robert Shiller, rolling blackouts, Ronald Reagan, Sand Hill Road, Savings and loan crisis, shareholder value, Silicon Valley, Social Responsibility of Business Is to Increase Its Profits, South Sea Bubble, sovereign wealth fund, Steve Ballmer, Steve Jobs, stock buybacks, subprime mortgage crisis, The Chicago School, The Spirit Level, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen, too big to fail, transcontinental railway, transfer pricing, trickle-down economics, tulip mania, Tyler Cowen, Tyler Cowen: Great Stagnation, union organizing, Upton Sinclair, upwardly mobile, women in the workforce, working poor, zero-sum game

Here is a frank assessment of that nation’s contemporary political environment by Sydney Morning Herald reporter Tim Colbatch, writing in mid-2012: “Conservative leader Tony Abbott’s war against everything has made good government in Australia almost impossible…. Whatever it [the Labor party] proposes, he opposes.”29 CHAPTER 28 AMERICAN FAMILY CAPITALISM “Control of rent-seeking requires decentralization of economic power.”1 JOHN KAY, Financial Times, Nov. 10, 2009 “Many of the factors that have long driven American innovation have dried up. Droves of investors, disappointed by their returns, have abandoned the venture capital firms of Silicon Valley.


pages: 708 words: 196,859

Lords of Finance: The Bankers Who Broke the World by Liaquat Ahamed

Alan Greenspan, Albert Einstein, anti-communist, bank run, banking crisis, Bretton Woods, British Empire, business cycle, capital controls, central bank independence, centre right, credit crunch, currency manipulation / currency intervention, Etonian, Ford Model T, full employment, gentleman farmer, German hyperinflation, Glass-Steagall Act, index card, invisible hand, Lao Tzu, large denomination, Long Term Capital Management, low interest rates, margin call, market bubble, Mexican peso crisis / tequila crisis, mobile money, money market fund, moral hazard, new economy, open economy, plutocrats, price stability, purchasing power parity, pushing on a string, rolodex, scientific management, the market place

Though the net impact on credit availability of the present crisis and the remedial actions taken by central banks is still uncertain and won’t be known for many months, the authorities seemed to have at least staved off a catastrophe. Finally, the European financial crisis of 1931 also has its modern-day counterpart in the “emerging markets” crisis of 1997-98. In 1931, the evaporation of confidence in European banks and currencies caused Germany and much of the rest of Central Europe to impose capital controls and default on their debts, leading to a contagion of fear that culminated in forcing Britain off the gold standard. In 1997, a similar sequence of rolling crises afflicted Asia. South Korea, Thailand, and Indonesia all had to suspend payments on hundreds of billions of dollars of debt. Asian currencies collapsed against the dollar, undermining all confidence in emerging-market securities and eventually setting off the default of Russia in 1998 and of Argentina two years later.


The Age of Turbulence: Adventures in a New World (Hardback) - Common by Alan Greenspan

addicted to oil, air freight, airline deregulation, Alan Greenspan, Albert Einstein, asset-backed security, bank run, Berlin Wall, Black Monday: stock market crash in 1987, Bretton Woods, business cycle, business process, buy and hold, call centre, capital controls, carbon tax, central bank independence, collateralized debt obligation, collective bargaining, compensation consultant, conceptual framework, Corn Laws, corporate governance, corporate raider, correlation coefficient, cotton gin, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, cuban missile crisis, currency peg, currency risk, Deng Xiaoping, Dissolution of the Soviet Union, Doha Development Round, double entry bookkeeping, equity premium, everywhere but in the productivity statistics, Fall of the Berlin Wall, fiat currency, financial innovation, financial intermediation, full employment, Gini coefficient, Glass-Steagall Act, Hernando de Soto, income inequality, income per capita, information security, invisible hand, Joseph Schumpeter, junk bonds, labor-force participation, laissez-faire capitalism, land reform, Long Term Capital Management, low interest rates, Mahatma Gandhi, manufacturing employment, market bubble, means of production, Mikhail Gorbachev, moral hazard, mortgage debt, Myron Scholes, Nelson Mandela, new economy, North Sea oil, oil shock, open economy, open immigration, Pearl River Delta, pets.com, Potemkin village, price mechanism, price stability, Productivity paradox, profit maximization, purchasing power parity, random walk, Reminiscences of a Stock Operator, reserve currency, Right to Buy, risk tolerance, Robert Solow, Ronald Reagan, Savings and loan crisis, shareholder value, short selling, Silicon Valley, special economic zone, stock buybacks, stocks for the long run, Suez crisis 1956, the payments system, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thorstein Veblen, Tipper Gore, too big to fail, total factor productivity, trade liberalization, trade route, transaction costs, transcontinental railway, urban renewal, We are all Keynesians now, working-age population, Y2K, zero-sum game

For example, economist Barry Eichengreen and political scientist David Leblang, in a paper delivered in late 2006, found "evidence [during the 130-year span from 1870 to 2000] of positive relationships running in both directions between globalization and democracy." They found "that trade openness promotes democracy . . . The impact of financial openness on democracy [is] not as strong but still point[s] in the same direction [and] .. . democracies are more likely to remove capital controls." Accordingly, we should focus on addressing and assuaging the fears induced by the dark side of creative destruction rather than imposing limits on the economic edifice on which worldwide prosperity depends. Innovation is as important to our global financial marketplace as it is to technology, consumer products, or health care.


pages: 920 words: 233,102

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

"Friedman doctrine" OR "shareholder theory", Alan Greenspan, Andrei Shleifer, bank run, banking crisis, barriers to entry, Basel III, battle of ideas, Bear Stearns, Ben Bernanke: helicopter money, Berlin Wall, Bretton Woods, Brexit referendum, business cycle, capital controls, Carmen Reinhart, Cass Sunstein, central bank independence, centre right, conceptual framework, corporate governance, diversified portfolio, electricity market, Fall of the Berlin Wall, financial innovation, financial intermediation, financial repression, first-past-the-post, floating exchange rates, forensic accounting, forward guidance, Fractional reserve banking, Francis Fukuyama: the end of history, full employment, George Akerlof, Greenspan put, incomplete markets, inflation targeting, information asymmetry, invisible hand, iterative process, Jean Tirole, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, liberal capitalism, light touch regulation, Long Term Capital Management, low interest rates, means of production, Money creation, money market fund, Mont Pelerin Society, moral hazard, Northern Rock, operational security, Pareto efficiency, Paul Samuelson, price mechanism, price stability, principal–agent problem, profit maximization, public intellectual, quantitative easing, regulatory arbitrage, reserve currency, risk free rate, risk tolerance, risk-adjusted returns, road to serfdom, Robert Bork, Ronald Coase, seigniorage, short selling, Social Responsibility of Business Is to Increase Its Profits, stochastic process, subprime mortgage crisis, tail risk, The Chicago School, The Great Moderation, The Market for Lemons, the payments system, too big to fail, transaction costs, Vilfredo Pareto, Washington Consensus, yield curve, zero-coupon bond, zero-sum game

The Bretton Woods framework collapsed in the early 1970s under the weight of US fiscal profligacy and inflationary incontinence. Since then, most countries have opted for a floating exchange rate with domestic (or, as in the euro area, regional) control of monetary policy. Technically, each jurisdiction is free under IMF treaty rules to adopt capital controls, but the strong norm has been that they do not do so. This was a world, most thought, in which the effects of one country’s monetary policy on others would be confined to shifts in exchange rates, leaving national economies to manage their own domestic monetary course in the interests of their own citizens.


pages: 1,034 words: 241,773

Enlightenment Now: The Case for Reason, Science, Humanism, and Progress by Steven Pinker

3D printing, Abraham Maslow, access to a mobile phone, affirmative action, Affordable Care Act / Obamacare, agricultural Revolution, Albert Einstein, Alfred Russel Wallace, Alignment Problem, An Inconvenient Truth, anti-communist, Anton Chekhov, Arthur Eddington, artificial general intelligence, availability heuristic, Ayatollah Khomeini, basic income, Berlin Wall, Bernie Sanders, biodiversity loss, Black Swan, Bonfire of the Vanities, Brexit referendum, business cycle, capital controls, Capital in the Twenty-First Century by Thomas Piketty, carbon footprint, carbon tax, Charlie Hebdo massacre, classic study, clean water, clockwork universe, cognitive bias, cognitive dissonance, Columbine, conceptual framework, confounding variable, correlation does not imply causation, creative destruction, CRISPR, crowdsourcing, cuban missile crisis, Daniel Kahneman / Amos Tversky, dark matter, data science, decarbonisation, degrowth, deindustrialization, dematerialisation, demographic transition, Deng Xiaoping, distributed generation, diversified portfolio, Donald Trump, Doomsday Clock, double helix, Eddington experiment, Edward Jenner, effective altruism, Elon Musk, en.wikipedia.org, end world poverty, endogenous growth, energy transition, European colonialism, experimental subject, Exxon Valdez, facts on the ground, fake news, Fall of the Berlin Wall, first-past-the-post, Flynn Effect, food miles, Francis Fukuyama: the end of history, frictionless, frictionless market, Garrett Hardin, germ theory of disease, Gini coefficient, Great Leap Forward, Hacker Conference 1984, Hans Rosling, hedonic treadmill, helicopter parent, Herbert Marcuse, Herman Kahn, Hobbesian trap, humanitarian revolution, Ignaz Semmelweis: hand washing, income inequality, income per capita, Indoor air pollution, Intergovernmental Panel on Climate Change (IPCC), invention of writing, Jaron Lanier, Joan Didion, job automation, Johannes Kepler, John Snow's cholera map, Kevin Kelly, Khan Academy, knowledge economy, l'esprit de l'escalier, Laplace demon, launch on warning, life extension, long peace, longitudinal study, Louis Pasteur, Mahbub ul Haq, Martin Wolf, mass incarceration, meta-analysis, Michael Shellenberger, microaggression, Mikhail Gorbachev, minimum wage unemployment, moral hazard, mutually assured destruction, Naomi Klein, Nate Silver, Nathan Meyer Rothschild: antibiotics, negative emissions, Nelson Mandela, New Journalism, Norman Mailer, nuclear taboo, nuclear winter, obamacare, ocean acidification, Oklahoma City bombing, open economy, opioid epidemic / opioid crisis, paperclip maximiser, Paris climate accords, Paul Graham, peak oil, Peter Singer: altruism, Peter Thiel, post-truth, power law, precautionary principle, precision agriculture, prediction markets, public intellectual, purchasing power parity, radical life extension, Ralph Nader, randomized controlled trial, Ray Kurzweil, rent control, Republic of Letters, Richard Feynman, road to serfdom, Robert Gordon, Rodney Brooks, rolodex, Ronald Reagan, Rory Sutherland, Saturday Night Live, science of happiness, Scientific racism, Second Machine Age, secular stagnation, self-driving car, sharing economy, Silicon Valley, Silicon Valley ideology, Simon Kuznets, Skype, smart grid, Social Justice Warrior, sovereign wealth fund, sparse data, stem cell, Stephen Hawking, Steve Bannon, Steven Pinker, Stewart Brand, Stuxnet, supervolcano, synthetic biology, tech billionaire, technological determinism, technological singularity, Ted Kaczynski, Ted Nordhaus, TED Talk, The Rise and Fall of American Growth, the scientific method, The Signal and the Noise by Nate Silver, The Spirit Level, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Thomas Kuhn: the structure of scientific revolutions, Thomas Malthus, total factor productivity, Tragedy of the Commons, union organizing, universal basic income, University of East Anglia, Unsafe at Any Speed, Upton Sinclair, uranium enrichment, urban renewal, W. E. B. Du Bois, War on Poverty, We wanted flying cars, instead we got 140 characters, women in the workforce, working poor, World Values Survey, Y2K

Another explanation is cultural: America has lost its mojo.12 Workers in depressed regions no longer pick up and move to vibrant ones but collect disability insurance and drop out of the labor force. A precautionary principle prevents anyone from trying anything for the first time. Capitalism has lost its capitalists: too much investment is tied up in “gray capital,” controlled by institutional managers who seek safe returns for retirees. Ambitious young people want to be artists and professionals, not entrepreneurs. Investors and the government no longer back moonshots. As the entrepreneur Peter Thiel lamented, “We wanted flying cars; instead we got 140 characters.”


pages: 864 words: 272,918

Palo Alto: A History of California, Capitalism, and the World by Malcolm Harris

2021 United States Capitol attack, Aaron Swartz, affirmative action, air traffic controllers' union, Airbnb, Alan Greenspan, Alvin Toffler, Amazon Mechanical Turk, Amazon Web Services, Apple II, Apple's 1984 Super Bowl advert, back-to-the-land, bank run, Bear Stearns, Big Tech, Bill Gates: Altair 8800, Black Lives Matter, Bob Noyce, book scanning, British Empire, business climate, California gold rush, Cambridge Analytica, capital controls, Charles Lindbergh, classic study, cloud computing, collective bargaining, colonial exploitation, colonial rule, Colonization of Mars, commoditize, company town, computer age, conceptual framework, coronavirus, corporate personhood, COVID-19, cuban missile crisis, deindustrialization, Deng Xiaoping, desegregation, deskilling, digital map, double helix, Douglas Engelbart, Edward Snowden, Elon Musk, Erlich Bachman, estate planning, European colonialism, Fairchild Semiconductor, financial engineering, financial innovation, fixed income, Frederick Winslow Taylor, fulfillment center, future of work, Garrett Hardin, gentrification, George Floyd, ghettoisation, global value chain, Golden Gate Park, Google bus, Google Glasses, greed is good, hiring and firing, housing crisis, hydraulic fracturing, if you build it, they will come, illegal immigration, immigration reform, invisible hand, It's morning again in America, iterative process, Jeff Bezos, Joan Didion, John Markoff, joint-stock company, Jony Ive, Kevin Kelly, Kickstarter, knowledge worker, land reform, Larry Ellison, Lean Startup, legacy carrier, life extension, longitudinal study, low-wage service sector, Lyft, manufacturing employment, Marc Andreessen, Marc Benioff, Mark Zuckerberg, Marshall McLuhan, Max Levchin, means of production, Menlo Park, Metcalfe’s law, microdosing, Mikhail Gorbachev, military-industrial complex, Monroe Doctrine, Mont Pelerin Society, moral panic, mortgage tax deduction, Mother of all demos, move fast and break things, mutually assured destruction, new economy, Oculus Rift, off grid, oil shale / tar sands, PageRank, PalmPilot, passive income, Paul Graham, paypal mafia, Peter Thiel, pets.com, phenotype, pill mill, platform as a service, Ponzi scheme, popular electronics, power law, profit motive, race to the bottom, radical life extension, RAND corporation, Recombinant DNA, refrigerator car, Richard Florida, ride hailing / ride sharing, rising living standards, risk tolerance, Robert Bork, Robert Mercer, Robert Metcalfe, Ronald Reagan, Salesforce, San Francisco homelessness, Sand Hill Road, scientific management, semantic web, sexual politics, Sheryl Sandberg, Silicon Valley, Silicon Valley ideology, Silicon Valley startup, social web, SoftBank, software as a service, sovereign wealth fund, special economic zone, Stanford marshmallow experiment, Stanford prison experiment, stem cell, Steve Bannon, Steve Jobs, Steve Wozniak, Steven Levy, Stewart Brand, stock buybacks, strikebreaker, Suez canal 1869, super pumped, TaskRabbit, tech worker, Teledyne, telemarketer, the long tail, the new new thing, thinkpad, Thorstein Veblen, Tim Cook: Apple, Tony Fadell, too big to fail, Toyota Production System, Tragedy of the Commons, transcontinental railway, traumatic brain injury, Travis Kalanick, TSMC, Uber and Lyft, Uber for X, uber lyft, ubercab, union organizing, Upton Sinclair, upwardly mobile, urban decay, urban renewal, value engineering, Vannevar Bush, vertical integration, Vision Fund, W. E. B. Du Bois, War on Poverty, warehouse robotics, Wargames Reagan, Washington Consensus, white picket fence, William Shockley: the traitorous eight, women in the workforce, Y Combinator, Y2K, Yogi Berra, éminence grise

State support for education and infrastructure combined with low wages to make the mainland too attractive to resist. (Russia’s population is stagnant, while China’s has grown quickly.) China’s entry into the World Trade Organization, in 2001, gave investors more confidence. Meanwhile, strong capital controls kept the country out of the offshore trap, and state development priorities took precedence over extraction and get-rich-quick schemes. Chinese private wealth was rechanneled into domestic financial assets—equity and bonds or other loan instruments—at a much higher rate than it was in Russia.


The Empire Project: The Rise and Fall of the British World-System, 1830–1970 by John Darwin

anti-communist, banking crisis, Bretton Woods, British Empire, capital controls, classic study, cognitive bias, colonial rule, Corn Laws, disinformation, European colonialism, floating exchange rates, full employment, imperial preference, Joseph Schumpeter, Khartoum Gordon, Kickstarter, labour mobility, land tenure, liberal capitalism, liquidationism / Banker’s doctrine / the Treasury view, Mahatma Gandhi, Monroe Doctrine, new economy, New Urbanism, open economy, railway mania, reserve currency, Right to Buy, rising living standards, scientific management, Scientific racism, South China Sea, Suez canal 1869, Suez crisis 1956, tacit knowledge, the market place, The Wealth of Nations by Adam Smith, trade route, transaction costs, transcontinental railway, undersea cable

Even in inhospitable states like Paraguay and Venezuela, there were British-owned railways like the Paraguay Central and the Bolivar.102 Sixty per cent of Colombia's network was British-owned.103 In Peru, where the government had defaulted on its railway loans in 1879, a British holding company, the Peruvian Corporation, administered the country's railways, guano deposits and certain utilities under the ‘Grace Contract’ of 1890.104 In Chile, British capital controlled one-third of nitrates production – Chile's principal export and its main source of public revenue – by the 1880s.105 In fact, British capital was concentrated in Mexico, Chile and along the Atlantic coast in Brazil, Uruguay and Argentina. Mexico ranked third in 1913, with some £132 million in railways, mines and the oil concessions into which the Pearson interests had diversified – a figure broadly equal to that of American investment.106 In Uruguay, British commercial predominance was proverbial.


Greece Travel Guide by Lonely Planet

active transport: walking or cycling, Airbnb, capital controls, car-free, carbon footprint, credit crunch, haute couture, haute cuisine, illegal immigration, indoor plumbing, Kickstarter, low cost airline, pension reform, period drama, sensible shoes, trade route, urban sprawl

With Greece's debt crisis, repeated bailouts (sponsored by the European Commission, International Monetary Fund and European Central Bank – the so-called troika) began in 2010. Athens is regularly beset by strikes and demonstrations in protest to strict austerity measures. With pension cuts and one of Europe's highest unemployment rates, life is hard for many. In early 2015, when the ECB cut off emergency aid, banks closed briefly and capital controls were imposed, causing lines to form at ATMs across the city. The anti-austerity government, headed by the Syriza party (elected in 2015), has sought to stanch the depression, but at the time of writing talks with the troika were still underway for a third loan. Nevertheless, small businesses persist and Athens’ creative life continues to flourish in the face of adversity.


Principles of Corporate Finance by Richard A. Brealey, Stewart C. Myers, Franklin Allen

3Com Palm IPO, accelerated depreciation, accounting loophole / creative accounting, Airbus A320, Alan Greenspan, AOL-Time Warner, Asian financial crisis, asset allocation, asset-backed security, banking crisis, Bear Stearns, Bernie Madoff, big-box store, Black Monday: stock market crash in 1987, Black-Scholes formula, Boeing 747, book value, break the buck, Brownian motion, business cycle, buy and hold, buy low sell high, California energy crisis, capital asset pricing model, capital controls, Carl Icahn, Carmen Reinhart, carried interest, collateralized debt obligation, compound rate of return, computerized trading, conceptual framework, corporate governance, correlation coefficient, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, cross-border payments, cross-subsidies, currency risk, discounted cash flows, disintermediation, diversified portfolio, Dutch auction, equity premium, equity risk premium, eurozone crisis, fear index, financial engineering, financial innovation, financial intermediation, fixed income, frictionless, fudge factor, German hyperinflation, implied volatility, index fund, information asymmetry, intangible asset, interest rate swap, inventory management, Iridium satellite, James Webb Space Telescope, junk bonds, Kenneth Rogoff, Larry Ellison, law of one price, linear programming, Livingstone, I presume, London Interbank Offered Rate, Long Term Capital Management, loss aversion, Louis Bachelier, low interest rates, market bubble, market friction, money market fund, moral hazard, Myron Scholes, new economy, Nick Leeson, Northern Rock, offshore financial centre, PalmPilot, Ponzi scheme, prediction markets, price discrimination, principal–agent problem, profit maximization, purchasing power parity, QR code, quantitative trading / quantitative finance, random walk, Real Time Gross Settlement, risk free rate, risk tolerance, risk/return, Robert Shiller, Scaled Composites, shareholder value, Sharpe ratio, short selling, short squeeze, Silicon Valley, Skype, SpaceShipOne, Steve Jobs, subprime mortgage crisis, sunk-cost fallacy, systematic bias, Tax Reform Act of 1986, The Nature of the Firm, the payments system, the rule of 72, time value of money, too big to fail, transaction costs, University of East Anglia, urban renewal, VA Linux, value at risk, Vanguard fund, vertical integration, yield curve, zero-coupon bond, zero-sum game, Zipcar

If not, then the debt must be partly supported by Sangria’s other assets, and only part of the $5 million in PV(interest tax shields) can be attributed to Rio itself. 25Kaplan and Ruback actually used “compressed” APV, in which all cash flows, including interest tax shields, are discounted at the opportunity cost of capital. S. N. Kaplan and R. S. Ruback, “The Valuation of Cash Flow Forecasts: An Empirical Analysis,” Journal of Finance 50 (September 1995), pp. 1059–1093. 26Such capital controls have been described as financial roach motels: Money can get in, but it can’t get out. 27In theory, safe means literally “risk-free,” like the cash returns on a Treasury bond. In practice, it means that the risk of not paying or receiving a cash flow is small. 28In Section 13-1 we calculated the NPV of subsidized financing using the pretax borrowing rate.