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Global financial crisis

Analysis and Comment (59)

Central bankers Glenn Stevens and Janet Yellen: both converts to macroprudential regulation. Central bankers Glenn Stevens and Janet Yellen: both converts to macroprudential regulation. William West/AAP

Macroprudential regulation: where central bankers stand depends on how they think

Perhaps the most interesting type of reform to have emerged from the global financial crisis is the call for “macroprudential” regulation. Macroprudential regulation, in broadest terms, seeks to manage…
Oxford’s dons need to get ready for some new thinking. Oxford’s dons need to get ready for some new thinking. lukecanvin

After the financial crisis, we need a new way to teach PPE

When it comes to debating the rights and wrongs of public policies, economists have always held a privileged position. While citizens and less respected social scientists must strive to get their voices…
What is the true state of Australia’s economy? What is the true state of Australia’s economy? Image sourced from www.shutterstock.com

The state of Australia: the economy

In the lead up to the budget, the story of crisis has been hammered home, but there’s more to a country than its structural deficit. So how is Australia doing overall? In this special series, ten writers…
Is Australia on its own ‘Great Gatsby curve’? Is Australia on its own ‘Great Gatsby curve’? Victoria Pickering/Flickr

The Great Gatsby days of inequality and social polarisation

In the popular novel of F. Scott Fitzgerald, James “Jimmy” Gatz (The Great Gatsby) climbs from his poor, rural North Dakotan origins to New York’s high society. His parties are as glamorous as they get…
Correcting Eire: the Irish state is serious about modernising. Correcting Eire: the Irish state is serious about modernising. William Murphy/Flickr

Ireland’s post-crash reforms promise more than just recovery

The Republic of Ireland’s calamitous recent years of financial crisis and government dysfunction look to be coming to an end, with an economic recovery gathering pace and a new administration that seems…
The evil empire? The evil empire? Stefan Rousseau/PA

It’s time to put social impact of finance on the curriculum

The global crash of 2008 kicked off a furious debate in the UK about whether or not the City of London is a real asset to the economy. There was huge anger about the multi-billion bail-out of failed banks…
Despite a topsy turvy global economy, inflation has remained stable in Australia. Despite a topsy turvy global economy, inflation has remained stable in Australia. zanoskim/Flickr

Inflation - the dog that didn’t bark

Australia’s cost of living is among the highest in the world, despite our low inflation rate. In this series we explore what consumers can expect from the big ticket items - petrol, power and groceries…
Those currency reserves must be somewhere, Mr President. Those currency reserves must be somewhere, Mr President. White House

US shutdown opens the way for China in global currency markets

The US shutdown and the fractious struggles in Congress are symptomatic of a broader trend in American politics. In the aftermath of the global financial crisis, a new political landscape has emerged…
A banking crash killed the Wall St bull market. A banking crash killed the Wall St bull market. Robin Stevens

Banking’s future depends on learning lessons from the past

A bank in trouble negotiates with its regulatory authorities and other banks for support, but is refused a bail out and closes abruptly, sparking a global contraction as its obligations are left unhonoured…
Parliament in the early 1800s: good at resolving banking crises. Parliament in the early 1800s: good at resolving banking crises.

Response to past crises shames post-Lehman dithering

The fifth anniversary of Lehman Brothers’ demise is an opportune moment to take stock and contextualise what has happened since. And one good way to do so is to compare this government’s policy response…
There are economic and moral justifications for debt forgiveness. There are economic and moral justifications for debt forgiveness. www.shutterstock.com

The debt jubilee: an Old Testament solution to a modern financial crisis?

The overhang of debt in Europe and the US has made recovery from the global financial crisis particularly tenuous. Is there a dramatic and simple way out of all this? Some argue that there is: a “debt…
Another day, another banking scandal: the UK Parliamentary Commission on Banking Standards has exposed the follies of the City’s badly behaved bankers. Another day, another banking scandal: the UK Parliamentary Commission on Banking Standards has exposed the follies of the City’s badly behaved bankers. AAP

London’s bad bankers thrown into the lion’s den

Though it rarely rates a mention in the Australian financial press, there is a spectacle in London at the moment that rivals even the most ferocious games at the Roman Colosseum. Almost every day, a bunch…
The fining of Barclays after it was found to be manipulating the UK’s inter-bank lending rate illustrates the failure of regulators to grapple with corruption in global financial markets. The fining of Barclays after it was found to be manipulating the UK’s inter-bank lending rate illustrates the failure of regulators to grapple with corruption in global financial markets. AAP

Back to the Future: how global financial regulation has failed

Welcome to the first of a three part series, Back to the Future, which explores the complicated reasons behind the continuing regulatory and judicial failure to regulate global financial markets. Professor…
Will ‘History of Financial Crises’ education really do anything to curb risk taking behaviour? Will ‘History of Financial Crises’ education really do anything to curb risk taking behaviour? shutterstock

Financial crises 101 could provide lessons for all

The chairman of the Australian government’s Financial Sector Advisory Council, Paul Binsted, believes that bankers who have experienced financial crises are more cautious about taking risks. However, short…
A rare win for investors: Litigation funder IMF (Australia) helped fund a class action case against Grange Securities, which was found to have misled unsophisticated investors. A rare win for investors: Litigation funder IMF (Australia) helped fund a class action case against Grange Securities, which was found to have misled unsophisticated investors. AAP

Too late for Storm, but bank liability the lesson from Wingecarribee

Justice Steven J. Rares was blunt when he handed down his judgement in the long-running class action, Wingecarribee Shire Council vs. Lehman Brothers Australia, last week. Grange Securities, a subsidiary…
Had it come out five years ago, APRA’s consultation paper could have left taxpayers footing the bill for BankWest’s collapse in 2008. Had it come out five years ago, APRA’s consultation paper could have left taxpayers footing the bill for BankWest’s collapse in 2008. AAP

Protecting taxpayers from systemic risk should be at the heart of APRA changes

At first glance, a consultation paper released by Treasury last week aimed at strengthening the crisis management powers of the Australian Prudential Regulation Authority, could pass for a routine tidy-up…
Former politician and economist John Hewson speaks to ANU’s Crawford School’s Bruce Chapman and Daniel Connell. Former politician and economist John Hewson speaks to ANU’s Crawford School’s Bruce Chapman and Daniel Connell.

John Hewson: tax reform doesn’t just mean lowering taxes

Welcome to the latest in our In Conversation series, between former politician and economist Dr John Hewson, Australian National University (ANU) Crawford School Director of Policy Impact Professor Bruce…
Worst hit by the Asian financial crisis in 1998, Indonesia’s economy has returned to pre-crisis growth rates. What lessons are there for Greece? Worst hit by the Asian financial crisis in 1998, Indonesia’s economy has returned to pre-crisis growth rates. What lessons are there for Greece? Flickr/Cillian Storm

Can Greece learn from the story of Indonesia in the Asian financial crisis?

European financial woes are mounting daily is what some have called the biggest economic challenge of our generation. However, just over a decade ago an even larger financial crisis was unfolding in Australia’s…
Emissions spiked, thanks to more intensive energy use. Emissions spiked, thanks to more intensive energy use. Louis Vest

The emissions rebound after the GFC: why greenhouse gases went up in 2010

Recessions are not the way to permanently cut greenhouse gas emissions. Global emissions surged during 2010, cancelling out the reductions from the global financial crisis (GFC). Emissions took off in…
Demonstrators in front of Standard & Poor’s credit rating agency offices in Paris 15 January 2012. Demonstrators in front of Standard & Poor’s credit rating agency offices in Paris 15 January 2012. AAP

Why we should be wary of ratings agencies

For decades, credit ratings agencies were largely ignored by the masses, but in recent months they have continued to hit the headlines again and again. The big three (Standard & Poor’s, Moody’s and…
Satyajit Das: “I think the democratic process and the politics of the world relies on a very fragile construct. One is trust. And trust relies on economic growth.” Satyajit Das: “I think the democratic process and the politics of the world relies on a very fragile construct. One is trust. And trust relies on economic growth.” Supplied

Satyajit Das: Europe will have far-reaching consequences for everybody

Welcome to the latest in our In Conversation series, between risk analyst and author Satyajit Das and Kevin Davis, Research Director of the Australian Centre for Financial Studies. Satyajit Das is an internationally-known…
What would Marx (left) and Engels say about capitalism’s current predicament? What would Marx (left) and Engels say about capitalism’s current predicament? Marcio Cabral de Moura

Marxism versus the mainstream: rethinking the economic crisis

The current economic crisis has renewed interest in alternative economic ideas. Most conspicuously, Keynesianism has returned from the margins. Unfortunately, particularly in Europe, policymakers quickly…
Celebrating: after being seen as a basket case for so long, Brazil’s economy is now powering. Celebrating: after being seen as a basket case for so long, Brazil’s economy is now powering. AAP

Brazil and Australia: the rise of the southern hemisphere powers

Few countries have been left unscathed by the global financial crisis and it seems that they are all situated in the southern hemisphere. Brazil and Australia are some of them. Recently, their economies…
Senator Arthur Sinodinos makes his maiden speech earlier this year. Senator Arthur Sinodinos makes his maiden speech earlier this year. AAP/Alan Porritt

In Conversation: Senator Arthur Sinodinos

Welcome to this In Conversation between Liberal Senator Arthur Sinodinos and Macquarie University politics expert Craig Mark. Sinodinos is a political paradox: he’s the newest member of the Australian…
Personal loans should be used to fund major infrastructure projects, like the National Broadband Network. Personal loans should be used to fund major infrastructure projects, like the National Broadband Network. AAP

Want to end the GFC? Put debt to good use

The Global Financial Crisis should be called the Global Debt Crisis. Too much debt has been created and there is not enough productive capacity to pay the interest on the debt, let alone repay the loans…
The Irish have seen their booming economy implode. Is it a good lesson for Australia? The Irish have seen their booming economy implode. Is it a good lesson for Australia? AAP

The lessons Europe forgot are the ones Australia will do well to remember

When Treasurer Wayne Swan finger-wagged at the recent set of G20 events, scolding his European colleagues and telling them to get their act together, he had more of a point than perhaps the Australian…
The rise of extreme wealth has gone hand-in-hand with absolute poverty in the US. The rise of extreme wealth has gone hand-in-hand with absolute poverty in the US. AAP

How extreme wealth and absolute poverty have returned to disfigure the West

The rediscovery of inequality is one of the more startling realisations of the post-global financial crisis, post-globalisation world. A Berkeley University professor Emmanuel Saez with colleagues has…
Former Goldman Sachs and Procter & Gamble director Rajat Gupta faces securities fraud charges. Former Goldman Sachs and Procter & Gamble director Rajat Gupta faces securities fraud charges. AAP

Trading on reputation: the trials of Rajat Gupta and the SEC

The Department of Justice in the United States has significantly broadened the reach of its investigation into insider trading. The charging of a former director of Goldman Sachs and Procter & Gamble…
After the global financial crisis, a more restrained and open-minded approach to economics is needed. After the global financial crisis, a more restrained and open-minded approach to economics is needed. AAP

Time to accept economic known unknowns? The case for ‘pluralism’

Confidence in economics has been dented by the global financial crisis. But what is reasonable to expect of economists? People joke about economists disagreeing, but is it feasible for there to be one…
Protests continue - but are global economies now bound inextricably together? Protests continue - but are global economies now bound inextricably together?

Remember globalisation? It’s all around you

Remember globalisation? It’s not a term that’s much in vogue any more. Here at Flinders University, our globalisation program closed down last year. But if you were around in the 1980s and 1990s, you might…
Banks such as NAB are reportedly positioning themselves to use covered bonds to raise funds. Banks such as NAB are reportedly positioning themselves to use covered bonds to raise funds.

Banks want covered bonds, but could taxpayers be left with the risk?

Australian banks are positioning themselves to take advantage of new laws allowing them to use the new instrument of covered bonds to raise funds. Our large banks especially have enthusiastically welcomed…
Slovakian Prime Minister Iveta Radikova’s government was a political victim of the continuing Euro debt crisis. Slovakian Prime Minister Iveta Radikova’s government was a political victim of the continuing Euro debt crisis. AAP

Slovakian political crisis highlights fragility of Eurozone debt solution

The Central European country of Slovakia has finally ratified the EU bailout fund – but not before its initial refusal caused a spill of the Slovakian government and highlighted the deep political divisions…
A reduction in Arctic sea ice isn’t just a problem for polar bears, it’s a problem for all of us. A reduction in Arctic sea ice isn’t just a problem for polar bears, it’s a problem for all of us. Carlos Duarte

Loss of Arctic sea ice: don’t let the GFC distract you, climate change is happening

A few weeks ago, NASA announced that the area of Arctic ice is now almost as low as it was in 2007, its historic minimum. The extent of ice has reduced to 4.33 million km² compared to the mean (1979 to…
London trader Alessio Rastani has told the BBC he “dreamed” of recession. But traders often don’t know how they’ll react to losses. London trader Alessio Rastani has told the BBC he “dreamed” of recession. But traders often don’t know how they’ll react to losses. YouTube

‘Dreaming’ of recession: what to make of market makers and their noise?

Trading in financial securities has sometimes been regarded as a “black box”. This is particularly the case in markets where there is increased uncertainty. The current world economy is a prime candidate…
World Bank chief Robert Zoellick and IMF head Christine Lagarde have doubts about global growth. World Bank chief Robert Zoellick and IMF head Christine Lagarde have doubts about global growth. AAP

Spooking the markets: should financial leaders keep quiet during crises?

Global markets have tumbled again this week, following the downgrading of Italy’s debt rating and a series of negative comments from leaders of the world’s financial institutions. International Monetary…
Italy’s Silvio Berlusconi wants closer ties with China - but Europe shouldn’t believe this will save the EU. Italy’s Silvio Berlusconi wants closer ties with China - but Europe shouldn’t believe this will save the EU. AAP

Why China won’t – and can’t – save the Eurozone

Earlier this week, reports emerged that Italian finance officials had held talks with their Chinese counterparts regarding the possibility of China making significant purchases of Italy’s public debt…
The British banking sector is facing a major shakeup in the wake of the global crisis. The British banking sector is facing a major shakeup in the wake of the global crisis. AAP

Three years after UK’s banking crisis, will reforms deliver?

Major proposals designed to reform Britain’s banking sector after its spectacular 2008 crash have been described as one of the biggest shakeups in a generation. But they are likely be inadequate for a…
If Greece’s economy collapses, it could easily lead to a breakdown of civil order. If Greece’s economy collapses, it could easily lead to a breakdown of civil order. AAP

What will happen if Greece defaults?

Global markets look set for a rough week amid new concerns that Greece could default on its massive debt. The Australian share market has spent most of the day down 3% after reports that Germany could…
China may appear strong now compared to the troubled US, but still lags behind in technology and per-capita wealth. China may appear strong now compared to the troubled US, but still lags behind in technology and per-capita wealth. Flickr/futureatlas.com

Global economic shakeout: China may win this round, but don’t write the US off yet

Europe is on the decline. The US has its own problems. Meanwhile, China and India appear strong. But is it too soon pick the next global superpower? In this Q+A, Professor Geoffrey Garrett, CEO of the…
Unless the US can address structural problems, there no end in sight to this financial crisis. Unless the US can address structural problems, there no end in sight to this financial crisis. AAP

Keep an eye on the underlying economic threat, not market ups and downs

Global share markets were faltering even before the decision by Standard & Poor’s to downgrade the US government’s debt. The slump in share markets over the past week reflects a weaker outlook for…
The share market is often driven back into the black by canny investors looking for a bargain. The share market is often driven back into the black by canny investors looking for a bargain. AAP

Global economic shakeout: the zig-zag market heralds nasty times ahead

After falling by almost 20% in week-long sell-off, the Australian share market has bounced back and began trade today up more than 3.5%. The market’s recovery follows a strong comeback on Wall Street overnight…
As a new global financial crisis looms, Australia shouldn’t overestimate its dependence on China. As a new global financial crisis looms, Australia shouldn’t overestimate its dependence on China. AAP

Is Australia’s economic stability really made in China?

Amidst the widening global financial turmoil, a strong Chinese economy is certainly one positive for the Australian economy. But should we believe it is only factor that will save the day? The answer is…
Global markets have fallen dramatically over fear of a US double dip recession and global downturn. Global markets have fallen dramatically over fear of a US double dip recession and global downturn. AAP

Global market carnage: experts respond

The Australian share market has followed Wall street overnight and other global markets, with as much as $60 billion wiped in value throughout the day. The Reserve Bank of Australia has cut the forecast…
Silvio Berlusconi has blamed international economic conditions for Italy’s worsening crisis. Silvio Berlusconi has blamed international economic conditions for Italy’s worsening crisis. AAP

As Italy’s debt crisis deepens, is Berlusconi turning a blind eye?

Italian Prime Minister Silvio Berlusconi’s reassurance to his parliamentary colleagues during a speech on Wednesday did little allay about fears of a crisis in Eurozone’s third-biggest economy. The Italian…
Boom to bailout: Ireland’s economic implosion shows the consequences of unfettered policy. Boom to bailout: Ireland’s economic implosion shows the consequences of unfettered policy. AAP

Why it pays to believe economists

This year’s Economic Society of Australia conference saw a range of strong views expressed on what Australian policy makers have managed to get broadly right (carbon tax – hurrah!) and wrong (NBN – boo…
Nicolas Sarkozy, Christine Lagarde and Angela Merkel share a joke at Thursday’s Greece bailout talks. Nicolas Sarkozy, Christine Lagarde and Angela Merkel share a joke at Thursday’s Greece bailout talks. AAP

Greece is safe for now; but could Italy push Europe over the edge?

European leaders signed off on a second, 109 billion euro bailout for Greece overnight, while also establishing what has been described as an “infant monetary fund” to intervene if the bloc’s sovereign…
Minnesota’s three-week shutdown saw basic government services stripped back. Minnesota’s three-week shutdown saw basic government services stripped back. Flickr/mngop

Minnesota shutdown broadens the blue-red chasm in US politics

Minnesotans have breathed a sigh of relief after the state’s Republican-led legislature signed off on a budget deal negotiated with Democratic Governor Mark Dayton, ending a three-week state government…
Thursday’s make-or-break EU finance ministers meeting looks set to be a highly charged affair. Thursday’s make-or-break EU finance ministers meeting looks set to be a highly charged affair. AAP

Greece can’t be quarantined, so Europe will keep on giving it medicine

As Margaret Thatcher’s trade minister in the 1980s, Norman Tebbit devoted much of his time to dealing with the European Community – the precursor to the European Union. Routinely, at meetings in Brussels…
US House Speaker John Boehner wants government programs cut: but is austerity politics the answer? US House Speaker John Boehner wants government programs cut: but is austerity politics the answer? AAP

US austerity politics playing on default fears mask a looming problem

For some time, it appeared that the severity of the global financial crisis had created a compelling “learning moment” that promised to return the world to a more civilised form of capitalism. Insufficient…
Mexico’s Agustin Carstens is expected to lose out to France’s Christine Lagarde. Mexico’s Agustin Carstens is expected to lose out to France’s Christine Lagarde. AAP

A lost opportunity for IMF reform?

The International Monetary Fund executive board will complete interviews of the two leading candidates to replace Dominique Strauss-Kahn this week, with the aim of picking a new managing director by June…
Despite attempts at regulatory reform, ratings agencies still act with little threat of litigation. Despite attempts at regulatory reform, ratings agencies still act with little threat of litigation. AAP

Should investors sue ratings agencies? It’s a matter of opinion

Standard & Poor’s downgraded Greece’s sovereign debt rating by three notches on Monday, reflecting its view that it would be next to impossible to imagine a scenario where the country could restructure…
Greece would be better off defaulting on its debt than languishing under tough austerity measures. Greece would be better off defaulting on its debt than languishing under tough austerity measures. AAP

A Greek debt default wouldn’t be a tragedy

A poll of international investors last month found that 85% expect Greece to default on its debt this year. As market expectations go, that is very high. Moody’s has since downgraded Greece’s already abysmal…
Christine Lagarde is the favourite to become the IMF’s new chief. Christine Lagarde is the favourite to become the IMF’s new chief. AAP

Fund and games: loosening Europe’s grip on the IMF

Speculation last week that Paul Keating and Peter Costello could nominate for the top job at the International Monetary Fund (IMF) was a mere distraction, but the hoopla did manage to highlight a crucial…

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