kunt (eds.) - the international financial crisis; have the rules of finance changed (2011)

[...]... that this aspect of the policy response has been highly effective in alleviating the real decline and counteracting the effects of the financial crisis Noticeably missing from my discussion so far has been any mention of the international dimension of the downturn Though centered in the United States, the financial crisis and the real economic collapse quickly enveloped the rest of the world In this... similar in magnitude to the one we have seen over the past two years We also need to devise mechanisms to dampen the adverse effects of any disruption that might occur This year, as in others, this conference invites us to examine and discuss financial crises and asks whether the rules of finance have changed I have argued that, in order to avoid a situation like the one we have faced in the past two years,... turn the podium over to Doug, I would like to offer a few remarks on the theme of this year’s conference — financial crisis — with an emphasis on the oversight of financial markets I should note that my remarks reflect my own views and are not those of the Federal Open Market Committee or the Federal Reserve System When thinking about the events of the past couple of years, what comes to mind most often,... given the magnitude of the cost incurred 11 Not only would banks not see the benefits of disclosing this information; they could actually benefit from keeping this information from the supervisors The more opaque the operations and risk of institutions, the more likely they could be considered “too big to fail” if they encounter difficulties Thus, the “shelf plan” could force these issues to be on the. .. and the Federal Reserve Bank of Chicago, enjoy the 12th annual International Banking Conference * Charles L Evans is President and Chief Executive Officer of the Federal Reserve Bank of Chicago The views presented here are his own, and not necessarily those of the Federal Open Market Committee or the Federal Reserve System 3 b1038_Chapter-01.qxd 11/19/2010 8:49 AM Page 4 b1038 The International Financial. .. was even greater in the fall and winter of 2008 We can measure the volatility of stock prices using the variance of daily returns Using the S&P index, this measure was more than one-third larger in the current episode than in the final four months of 1929.5 1 Data for 1929 are for the S&P 90; data for 2008 are for the S&P 500 The data are from Global Financial Data (https://www.globalfinancialdata.com),... Saez (2004) Estimates of nominal end -of- year household net worth were provided by the authors via email 3 House price data are from the Federal Housing Finance Agency The calculation uses the seasonally adjusted purchase-only house price index (http://www.fhfa.gov/ webfiles/14980/MonthlyHPI92209.pdf) 4 Board of Governors of the Federal Reserve System, Flow of Funds Accounts of the United States, Table... threatened to trade at a discount.7 Whether the collapses of the Bank of the United States in 1930 and of Lehman Brothers in 2008 were bad luck, the almost inevitable consequence of declining asset values and a weakening economy, the result of poor behavior, or a policy failure is still a matter of hot debate All four points of view surely have a claim to at least an element of truth Whatever one’s perspective,... every sign of continuing: employment fell by 741,000 in January 2009 and real GDP declined at an even faster annual rate of 6.4% in the first quarter of 2009 2 The Policy Response This comparison between the initial months of the 1929 and 2008 crises makes real the frequent claim that the U.S economy following the collapse of Lehman Brothers did come to the edge of a cliff That we did not 9 Board of Governors... Sloan School of Management 415 Where to from Here? Have the Rules of Finance Changed? John Silvia, Wells Fargo & Co 421 Conference Agenda 425 Index 431 b1038_Chapter-01.qxd 11/19/2010 8:49 AM Page 1 b1038 The International Financial Crisis I SPECIAL ADDRESSES b1038_Chapter-01.qxd 11/19/2010 8:49 AM Page 2 b1038 The International Financial Crisis This page intentionally left blank b1038_Chapter-01.qxd 11/19/2010 . CRISIS Have the Rules of Finance Changed? Wanda - The Int'l Financial Crisis.pmd 3/2/2011, 9:23 AM1 b1038 The International Financial Crisis v Preface The great financial meltdown of 2007–2009. (University of Adelaide, Australia), David Parsons (KADIN Indonesia) & Mari Pangestu (Trade Minister of Indonesia) Vol. 14 The International Financial Crisis: Have the Rules of Finance Changed? edited. Regulation: Changing the Rules of the Game 47 Philipp M. Hildebrand, Swiss National Bank II. What Broke? The Root Causes of the Crisis 57 The Causes of the Financial Crisis and the Impact 59 of Raising