broken markets [electronic resource] a user's guide to the post-finance economy

[...]... sense, because the sheer scale of the financial economy relative to the real economy made the consequences of a market panic too scary to contemplate in terms of damage to real output and production More controversially, the argument can be made that the financialization of wealth had created a new relationship between finance and government Financial wealth was not reactionary or conservative wealth, but... Indeed, the union movement—traditional vehicles for workers to push back against capital—has largely collapsed over the last generation Most union members today are in the public sector The reasons behind this are complex and controversial but, yet again, financial leverage played a role Role of Consumer Debt The same financial markets that facilitated the financialization of wealth and the rise of the CEO... expanded the role and power of government in shaping the economy and society itself a profound break with the classical liberal tradition Are we about to repeat the trauma of the Great Depression? We have much better analytical and policy tools at our disposal today than were available in the 1930s, plus the great advantage of having lessons of what went wrong in the 1930s to guide us Moreover, the. .. companies Its ability to capture as much as a fifth of total corporate profits is a matter of positional power and the tolerance of the institutions that hold their shares Broken Markets If, then, most of the increase in American incomes (and wealth, which is harder to measure) was captured by 1 percent of the top 1 percent of earners over the last 25 years, what was the fate of everybody else? The relative... jurisdiction The much-maligned deregulation of US financial markets only took place much later (the final demise of Glass-Steagall took place on President Bill Clinton’s watch), after the repression was no longer effective And deregulation has proved remarkably easy to throw into reverse The Dodd-Frank Act, the new Basel III international bank capital regime, and the policies of the European Central Bank make... conditions of the masses become intolerable A key factor in this process, one that Marx took for granted as a resident of Victorian Britain, was that capital flowed freely around the world, ruthlessly seeking the highest returns In other words, there was a global financial marketplace that allowed capital to become concentrated into fewer and fewer hands Of course, today we call integration of markets for... Treasury were always quick to flood the market with money and slash interest rates in order to limit the damage to the financial 17 18 Chapter 1 | The Rise and Fall of the Finance-Driven Economy economy Except for the collapse of the dot-com stock market bubble, largescale destruction of financialized wealth was a thing of the past Another problem, of course, is that markets are reflections of human nature,... Cause and Effect Much 20/20 hindsight lavished on the financial market meltdown revolves around the collapse of Lehman Brothers and the market freefall that ensued What made the event so shocking was that the Great Moderation had taught the global financial economy that a large market player with huge obligations to and from other key players would somehow be saved Certainly Lehman’s management must have... debt the war had generated The big difference was that it was New York, not London, that held the keys of the global financial system Having been a destination of global finance capital for a century, America became the world’s creditor as well as the biggest industrial economy For a while it worked: global capital flows were eventually rejiggered, so the Americans loaned money to the Germans so the Germans... research This was also true of my earlier book on the crisis, or rather the nature of all financial crises Financial Market Meltdown (Praeger, 2009) Both books take their inspiration from the great Victorian banker and journalist Walter Bagehot, creator of the Economist newspaper, who wrote in a very similar way since he had two jobs as banker and journalist Bagehot tried very hard to make abstractions . Financial Market Meltdown (Praeger, 2009)—required reading for new recruits in a leading global financial-services firm a short history and explanation of financial markets, manias, and panics to. that eschews the narrative temptations of either villainy or heroism, and makes a sober attempt to step back and ask the more basic questions of whether this thing was ever really avoidable at. and images may appear in this book. Rather than use a trademark symbol with every occurrence of a trademarked name, logo, or image we use the names, logos, and images only in an editorial fashion