Glass-Steagall Act

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The Great American Stickup: How Reagan Republicans and Clinton Democrats Enriched Wall Street While Mugging Main Street by Robert Scheer

Alan Greenspan, banking crisis, Bear Stearns, Bernie Madoff, Bernie Sanders, business cycle, California energy crisis, collateralized debt obligation, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, do well by doing good, facts on the ground, financial deregulation, fixed income, Glass-Steagall Act, housing crisis, invisible hand, Long Term Capital Management, low interest rates, mega-rich, mortgage debt, new economy, old-boy network, Ponzi scheme, profit motive, Ralph Nader, rolling blackouts, Ronald Reagan, Savings and loan crisis, too big to fail, trickle-down economics

The concentrations of economic power—and the failures of our political system to protect the American economy from its worst excesses—have been a staple of our past, most famously in the 1920s, when such excesses ultimately plunged the country into the Great Depression. That is when government stepped in to create a series of regulatory structures—from the FDIC to the Glass-Steagall Act—to serve as a corrective to protect the American people and American business. Instead of reasonable changes in regulation that protected the public interest while acknowledging the changes in trading and other aspects of doing business in a high-tech trading world, the reversal of the regulatory protections of Glass-Steagall took steps to wreck the economy rather than improve it.

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For these so-called FIRE firms—Finance, Insurance, and Real Estate—this half-century-old regulatory system, modest as it was, was an irritant that limited their ability to gamble and leverage their dominant positions. While the companies just wanted to be free of restraint to profit at will, Reagan and Gramm were true believers, arguing that the regulatory status quo was outmoded and onerous—even socialist—hobbling business growth. The top target in their sights was the New Deal-enacted Glass-Steagall Act of 1933, signed into law by President Roosevelt, which regulated the financial services industry. Key to its effectiveness was the seemingly simple wall it erected between the commercial banks entrusted with depositors’ funds—and insured by the government’s Federal Deposit Insurance Corporation (FDIC), the agency created by Glass-Steagall—and the wilder antics of basically unregulated Wall Street investment banks like Goldman Sachs.

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The White House had hoped the bill would remove many of the governmental shackles that inhibit competition between banks, securities firms and other institutions in the burgeoning field of financial services. In fact, it does just the opposite. Reagan signed the bill, the Competitive Equality Banking Act of 1987, only after criticizing it for not only failing to tear down the Glass-Steagall walls but, worse, temporarily extending “the 1933 Glass-Steagall Act restrictions on securities activities to state-chartered, non-member banks for the first time.” He made it clear he was signing the bill despite his quite vociferous objections because it contained provisions for funding for local banks in trouble. It was at once a statement of the enormous importance he attached to decimating Glass-Steagall and an admission that he would come to the end of his last term without accomplishing that goal.

Why Wall Street Matters by William D. Cohan

Alan Greenspan, Apple II, asset-backed security, bank run, Bear Stearns, Bernie Sanders, Blythe Masters, bonus culture, break the buck, buttonwood tree, Carl Icahn, corporate governance, corporate raider, creative destruction, Credit Default Swap, Donald Trump, Exxon Valdez, financial innovation, financial repression, Fractional reserve banking, Glass-Steagall Act, Gordon Gekko, greed is good, income inequality, Joseph Schumpeter, junk bonds, London Interbank Offered Rate, margin call, Michael Milken, money market fund, moral hazard, Potemkin village, quantitative easing, secular stagnation, Snapchat, South Sea Bubble, Steve Jobs, Steve Wozniak, tontine, too big to fail, WikiLeaks

We must tackle dangerous risks in big banks and elsewhere in the financial system.” And to do this, the Democrats advocated “breaking up too-big-to-fail financial institutions that pose a systemic risk to the stability of our economy” and an “updated and modernized” version of the so-called Glass-Steagall Act of 1933, which forced the separation of investment banking from commercial banking for the next sixty-six years, until its repeal in 1999. Plugging his new book, Our Revolution: A Future to Believe In, after the election of Donald Trump, Senator Sanders continues to lambast Wall Street. Hell, Wall Street has grown so unpopular that even the 2016 Republican Party platform called for the reinstatement of Glass-Steagall.

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For that reason, among others, in June 1933, in the wake of the Great Depression, the Federal Deposit Insurance Corporation, or FDIC, was created to protect the savings of individual depositors—the insurance now covers losses up to $250,000 per person at a single bank—as a way of trying to prevent a panic. It doesn’t always work, of course, and banks still have a way of failing, but at least nowadays depositors have the confidence of knowing that all will not be lost. These days, in part because of the 1999 repeal of the Glass-Steagall Act, the Depression-era law that separated commercial banking from investment banking, big banks do lots of other things, too. They manage people’s money in order to try to increase their wealth. They manage money for other institutions, such as endowment and pension funds. They advise corporate CEOs on the buying and selling of companies—their own or others’—or various pieces of their businesses or others’ businesses.

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On May 27, FDR signed the Securities Act of 1933, which required that investors receive important financial and other information from companies concerning securities offered for sale (hence the Apple IPO prospectus). Untruthful statements were a violation of the law. On June 16, FDR signed the Banking Act of 1933 (generally known as the Glass-Steagall Act), giving Wall Street banks one year to choose between commercial banking and investment banking. The law, barely thirty-seven pages long, was premised on the idea that in the years leading up to the Great Depression, commercial banks—which, as we learned earlier, are the institutions in the business of accumulating your deposits and then turning around and lending that money out—were taking way too many risks with their depositors’ money and had their collective fingers in way too many pies.

Sabotage: The Financial System's Nasty Business by Anastasia Nesvetailova, Ronen Palan

Alan Greenspan, algorithmic trading, bank run, banking crisis, barriers to entry, Basel III, Bear Stearns, Bernie Sanders, big-box store, bitcoin, Black-Scholes formula, blockchain, Blythe Masters, bonus culture, Bretton Woods, business process, collateralized debt obligation, corporate raider, Credit Default Swap, credit default swaps / collateralized debt obligations, critique of consumerism, cryptocurrency, currency risk, democratizing finance, digital capitalism, distributed ledger, diversification, Double Irish / Dutch Sandwich, en.wikipedia.org, Eugene Fama: efficient market hypothesis, financial engineering, financial innovation, financial intermediation, financial repression, fixed income, gig economy, Glass-Steagall Act, global macro, Gordon Gekko, high net worth, Hyman Minsky, independent contractor, information asymmetry, initial coin offering, interest rate derivative, interest rate swap, Joseph Schumpeter, junk bonds, Kenneth Arrow, litecoin, London Interbank Offered Rate, London Whale, Long Term Capital Management, margin call, market fundamentalism, Michael Milken, mortgage debt, new economy, Northern Rock, offshore financial centre, Paul Samuelson, peer-to-peer lending, plutocrats, Ponzi scheme, Post-Keynesian economics, price mechanism, regulatory arbitrage, rent-seeking, reserve currency, Ross Ulbricht, shareholder value, short selling, smart contracts, sovereign wealth fund, Thorstein Veblen, too big to fail

This is achieved by the issuer of the bonds insuring the buyer’s potential losses as part of the agreement. EMT: Efficient market theory. EPAs: Equity participation agreements. A type of contract. Glass–Steagall Act (1933): A major legislative piece of the regulatory foundations of the post-1929 economy in the US. Sponsored in Congress by Senator Carter Glass and Representative Carter Steagall, the Glass–Steagall Act separated commercial and investment banking functions in the financial system of the US. It was repealed in 1999. GRG: Global Restructuring Group. GRG was the former turnaround division of RBS/NatWest.

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Many of the members of Roosevelt’s ‘New Deal’ administration in the early 1930s, such as Adolf A. Berle, Rexford G. Tugwell and other members of Roosevelt’s ‘Brain Trust’, adopted Veblenian theory of business and its commensurate philosophy of regulation. They were explicitly concerned with business sabotage. It is only dimly remembered today that the Glass–Steagall Act consisted of a set of regulations that were aimed at limiting the propensity towards sabotaging in finance and redirecting the financial system towards its functional purpose of mediation between savers and borrowers. The argument was presented by President Roosevelt in his first presidential address: ‘The money changers have fled from their high seats in the temple of our civilization.

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Some studies reported that a number of commercial banks underwrote securities they privately knew were questionable, and then used the proceeds from the issue to pay down the loans they had issued. In this way those banks could protect their own interests at the expense of outside investors in the newly issued securities.26 Some sixty years before, similar incidences were recorded in the US by the Pecora Committee hearings. The Glass–Steagall Act of 1933 prohibited national banks from engaging in securities activities, either directly or through affiliates, precisely to avoid such practices. But in 1987 certain provisions of Glass–Steagall were relaxed, with some banks (for example, J. P. Morgan and Bankers Trust Co.) allowed to set up Section 20 subsidiaries that could underwrite securities.

The Bankers' New Clothes: What's Wrong With Banking and What to Do About It by Anat Admati, Martin Hellwig

Alan Greenspan, Andrei Shleifer, asset-backed security, bank run, banking crisis, Basel III, Bear Stearns, Bernie Madoff, Big bang: deregulation of the City of London, Black Swan, bonus culture, book value, break the buck, business cycle, Carmen Reinhart, central bank independence, centralized clearinghouse, collapse of Lehman Brothers, collateralized debt obligation, corporate governance, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, diversified portfolio, en.wikipedia.org, Exxon Valdez, financial deregulation, financial engineering, financial innovation, financial intermediation, fixed income, George Akerlof, Glass-Steagall Act, Growth in a Time of Debt, income inequality, information asymmetry, invisible hand, Jean Tirole, joint-stock company, joint-stock limited liability company, junk bonds, Kenneth Rogoff, Larry Wall, light touch regulation, London Interbank Offered Rate, Long Term Capital Management, margin call, Martin Wolf, Money creation, money market fund, moral hazard, mortgage debt, mortgage tax deduction, negative equity, Nick Leeson, Northern Rock, open economy, Paul Volcker talking about ATMs, peer-to-peer lending, proprietary trading, regulatory arbitrage, risk tolerance, risk-adjusted returns, risk/return, Robert Shiller, Satyajit Das, Savings and loan crisis, shareholder value, sovereign wealth fund, subprime mortgage crisis, technology bubble, The Market for Lemons, the payments system, too big to fail, Upton Sinclair, Yogi Berra

In the movie George Bailey’s bank is a savings institution, taking deposits and lending to home owners and doing nothing else.2 In particular, George Bailey’s bank does not trade stocks or other securities, nor does it provide brokerage services for its customers. In the United States, between 1933 and 1999, under the so-called Glass-Steagall Act, an institution that obtained funding through deposits was actually forbidden from engaging in such activities. Anything to do with stocks or other securities was left for so-called investment banks and brokerage houses. Since the repeal of the Glass-Steagall Act in 1999, U.S. banks have again been allowed to combine deposit taking and investment banking activities.3 Some nostalgia for the good old days is based on a sense that before the repeal of Glass-Steagall banking was better and safer.

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George Bailey’s Balance Sheet As mentioned, George Bailey’s bank in the movie takes deposits and makes loans. Under the Glass-Steagall Act, commercial banks and savings banks focused on taking deposits and making loans. The differences between these institutions do not matter for this discussion, so we treat them as one type of institution and focus on deposit taking and lending, their main activities. Figure 4.1 describes the broad categories on the balance sheet of a typical commercial bank or savings bank in the United States under the Glass-Steagall Act. These categories, as well as several others, would also appear on the balance sheet of a so-called universal bank, which engages in all financial activities, including securities trading.

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The distinction between checking accounts and savings accounts was eroded when in 1974 some savings banks in New England began to offer NOW accounts, savings accounts that allowed depositors to use “negotiable orders of withdrawal” to pay their bills. Before that, savings accounts could not be used directly for transactions. 6. Under the Glass-Steagall Act, until the early 1980s depository institutions were actually forbidden from paying interest on deposits that could be used for checking. This regulation allowed commercial banks to earn substantial net returns by investing a large part of the funds they received in deposits. They used these returns to cover the costs of services.

What Happened to Goldman Sachs: An Insider's Story of Organizational Drift and Its Unintended Consequences by Steven G. Mandis

activist fund / activist shareholder / activist investor, algorithmic trading, Bear Stearns, Berlin Wall, Bob Litterman, bonus culture, book value, BRICs, business process, buy and hold, Carl Icahn, collapse of Lehman Brothers, collateralized debt obligation, commoditize, complexity theory, corporate governance, corporate raider, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, disintermediation, diversification, eat what you kill, Emanuel Derman, financial innovation, fixed income, friendly fire, Glass-Steagall Act, Goldman Sachs: Vampire Squid, high net worth, housing crisis, junk bonds, London Whale, Long Term Capital Management, merger arbitrage, Myron Scholes, new economy, passive investing, performance metric, proprietary trading, radical decentralization, risk tolerance, Ronald Reagan, Saturday Night Live, Satyajit Das, shareholder value, short selling, sovereign wealth fund, subprime mortgage crisis, systems thinking, The Nature of the Firm, too big to fail, value at risk

The deal enables Travelers to market mutual funds and insurance to Citicorp’s retail customers while giving the banking divisions access to an expanded client base of investors and insurance buyers. The remaining provisions of the Glass–Steagall Act—enacted following the Great Depression—forbid banks to merge with insurance underwriters, and this means that Citigroup has two to five years to divest any prohibited assets. However, Weill states at the time of the merger that he believes that the legislation will change over time. (On CNBC’s “Squawk Box” in July 2012, Weill calls for a return of the Glass–Steagall Act.) Under pressure from competitors taking companies public that have no revenues or profits, Goldman starts to take companies like eToys and NetZero public, which have limited operating history and little to no profits (O, C). 1999: In January, Jon Corzine leaves Goldman to run for US Senate from New Jersey, leaving Paulson as sole chairman and CEO (O).

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Part Two DRIFT Chapter 4 Under Pressure, Goldman Grows Quickly and Goes Public AT A GOLDMAN PARTNER MEETING, THE STORY GOES, A SENIOR partner asked the new partners to identify the two men who were most important to the firm’s business. The new partners responded with last names: Goldman, Sachs, and Weinberg. The senior partner then revealed the answer: Senator Carter Glass and Representative Henry Steagall.1 Congress passed the Glass–Steagall Act (formally known as the Banking Act of 1933) to provide Depression-era deposit bank customers protection against the additional risks involved in trading and investing.2 Its intent was to separate the consumer deposit–based commercial banking industry from investment-banking activities by prohibiting well-capitalized commercial banks from getting involved in the securities business.

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The rapid growth, combined with multiple, conflicting organizational goals, resulted in a series of many small everyday decisions happening so quickly that most people didn’t notice (or were too busy to notice, or didn’t care). Regulatory Pressures A great many rules and regulations govern banking in the United States: the Glass–Steagall Act, the Sarbanes–Oxley Act, exchange rules, and so on.5 I focus here on the key regulatory changes that had a particularly strong influence on Goldman. Public Trading of Investment Banks in 1970 Even before the repeal of Glass–Steagall, Goldman was facing increasing competitive and other pressures, and those combined pressures led ultimately to the decision to go public, which the partners voted to do in 1998, before the act’s repeal (the IPO didn’t actually happen, though, until 1999).

Rigged Money: Beating Wall Street at Its Own Game by Lee Munson

affirmative action, Alan Greenspan, asset allocation, backtesting, barriers to entry, Bear Stearns, Bernie Madoff, Bretton Woods, business cycle, buy and hold, buy low sell high, California gold rush, call centre, Credit Default Swap, diversification, diversified portfolio, estate planning, fear index, fiat currency, financial engineering, financial innovation, fixed income, Flash crash, follow your passion, German hyperinflation, Glass-Steagall Act, global macro, High speed trading, housing crisis, index fund, joint-stock company, junk bonds, managed futures, Market Wizards by Jack D. Schwager, Michael Milken, military-industrial complex, money market fund, moral hazard, Myron Scholes, National best bid and offer, off-the-grid, passive investing, Ponzi scheme, power law, price discovery process, proprietary trading, random walk, Reminiscences of a Stock Operator, risk tolerance, risk-adjusted returns, risk/return, Savings and loan crisis, short squeeze, stocks for the long run, stocks for the long term, too big to fail, trade route, Vanguard fund, walking around money

Well, up until about 2008, when they got a lesson in long-term delusions, mainly by thinking they had a solid winner in the banking sector. It’s fine to be hoodwinked into opaque leveraged games the first time around, especially when the entire system to prevent this garbage was destroyed by Congress with the repeal of the Glass-Steagall Act in 1999. However, you know what they say, fool me twice. Or as I say, just give me a reason. Give me a reason to alert the bold and foolish lambs of the con that is about to take another turn. The bottom line—banks reinstating dividends is designed to do one thing: Assure the public that the banks are fine.

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As you will see over the following pages, there was a fatal error at the House of Representatives that opened up a new ball game. Let me give you some background on a change in the law that seeded this new game and how you can play it. In 1999 a change was made which was possibly the worst mistake in financial history: the repeal of the Glass-Steagall Act of 1933. The most important part of our society is the banking system. Our entire way of life in America is based on our ability to print, borrow, and lend money. After the 1929 devastation, and more importantly the severe depression economy of the early 1930s, Congress established regulation that was intended to control speculation in the banking system.

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After multiple runs on too many banks, people lost confidence in the dollar even though it was backed up by gold. Unlike 1907, things didn’t get better and a global depression followed in the years after the 1929 stock market crash. In order to restore confidence in the system, President Roosevelt signed into law The Banking Act of 1933 on June 16, 1933. We commonly refer to this as the Glass-Steagall Act. This came just six weeks after Roosevelt signed The Gold Confiscation Act. This act would be completely foreign to us today. Think about waking up one day to hear that all gold coins, gold bullion, and gold certificates were to be delivered to your nearest Federal Reserve Bank. Oh, and you had less than a month to do it.

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

The large European banks, however, were increasingly expanding into investment banking and hence held increasing amounts of market assets such as equities and bonds. This involved a different type of “market” risk—losses coming from a fall in the price of these assets. This contrasted with the United States where the Depression Era Glass–Steagall Act continued to separate commercial banking from investment banking (other members of the Basel Committee fell between the wide universal banking model in Europe and the narrower commercial banking one in the United States). In response to the increase in investment banking activities in its banks, the European Union decided that it needed rules on capital buffers for market risk.

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Banks were only allowed to operate within a single state, so that there were effectively fifty separate banking systems. Indeed, in many states banks were limited to operating out of a single branch. In addition, there were upper limits on interest rates banks could charge—deposits rates were limited by national regulations while charges on loans were constrained by individual state usury laws. Finally, the Glass–Steagall Act of 1933 separated these banks from investment banks that operated outside of the federal safety net. The outcome was a large but highly splintered regulated banking sector as well as a small nationwide investment banking industry which handled other peoples’ money but had minimal assets of its own.

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Over the same period, the strongly pro-deregulation Federal Reserve gradually reduced the restrictions on US regulated banks being involved in investment banking. These rules were initially motivated by concerns that banks could have inside information that could undermine the integrity of market transactions. They dated from the 1933 Glass–Steagall Act and had been reinforced in the Bank Holding Company Act of 1956 and its amendment in 1970.10 The relaxation of these rules started in 1987 when the Federal Reserve determined that “Section 20” subsidiaries of three bank holding companies could underwrite some previously prohibited securities as long as the revenue from such activities did not exceed 5 percent of total revenue.

Servant Economy: Where America's Elite Is Sending the Middle Class by Jeff Faux

air traffic controllers' union, Alan Greenspan, back-to-the-land, Bear Stearns, benefit corporation, Bernie Sanders, Black Swan, Bretton Woods, BRICs, British Empire, business cycle, call centre, centre right, classic study, cognitive dissonance, collateralized debt obligation, collective bargaining, creative destruction, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, currency manipulation / currency intervention, David Brooks, David Ricardo: comparative advantage, disruptive innovation, falling living standards, financial deregulation, financial innovation, full employment, Glass-Steagall Act, guns versus butter model, high-speed rail, hiring and firing, Howard Zinn, Hyman Minsky, illegal immigration, indoor plumbing, informal economy, invisible hand, John Maynard Keynes: Economic Possibilities for our Grandchildren, junk bonds, Kevin Roose, Kickstarter, lake wobegon effect, Long Term Capital Management, low interest rates, market fundamentalism, Martin Wolf, McMansion, medical malpractice, Michael Milken, military-industrial complex, Minsky moment, mortgage debt, Myron Scholes, Naomi Klein, new economy, oil shock, old-boy network, open immigration, Paul Samuelson, plutocrats, price mechanism, price stability, private military company, public intellectual, radical decentralization, Ralph Nader, reserve currency, rising living standards, Robert Shiller, rolodex, Ronald Reagan, Savings and loan crisis, school vouchers, Silicon Valley, single-payer health, Solyndra, South China Sea, statistical model, Steve Jobs, Suez crisis 1956, Thomas L Friedman, Thorstein Veblen, too big to fail, trade route, Triangle Shirtwaist Factory, union organizing, upwardly mobile, urban renewal, War on Poverty, We are the 99%, working poor, Yogi Berra, Yom Kippur War, you are the product

Unregulated investment banks were now taking deposits in the form of money-market accounts and investing them in higher paying, riskier securities that were off-limits to regulated banks because of the Glass-Steagall Act. The reasonable response would have been to extend federal regulation to these new banklike arrangements. But the bankers demanded that they be deregulated. Rubin, Summers, and Green-span were in their corner, and so was Republican senator Phil Gramm, who chaired the Senate Finance Committee. The Glass-Steagall Act was repealed. Perhaps even more important, the bipartisan globalization of finance had created a massively complex set of cross-border credit relationships that by itself put the large U.S. banks, investment houses, hedge funds, and leveraged buyout firms beyond the reach of U.S. regulators.

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The banks, the principal institutions of finance, were given a government safety net in the form of deposit insurance, which guaranteed bank customers that they would not lose the money they had deposited if their bank failed. In return, the banks were prohibited from making risky investments, and it was assumed that this prohibition would block the reappearance of the speculative Mr. Hyde. The Glass-Steagall Act of 1933 separated banking from the stock market, a Securities and Exchange Commission was set up to regulate security fraud and abuse, and a network of state and federal regulation was placed over insurance, savings institutions, and pension funds. The new system worked. The financial markets grew with the economy, but not much faster, and often slower.

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There was no potential for mobilizing public opinion.”35 Rubin also claimed that as secretary of the treasury, he had had little real power: “Even if I’d taken a placard and walked up and down Pennsylvania Avenue saying the financial system would come to an end without strict regulation of derivatives, I would have had no traction.”36 But in a host of other issues, the lack of public support had not seemed to deter him. He led the fight for the unpopular NAFTA, the even more unpopular 1995 Mexican peso bailout, the unpopular opening up of the U.S. market to China, and the repeal of the Glass-Steagall Act. “As long as the music is playing, you’ve got to get up and dance,” said Citigroup CEO Charles Prince in 2007, suggesting that he knew the music would stop.37 Yet Prince was, in fact, just doing his job. He was being evaluated by his board on the performance of his stock, which in turn rested on his ability to turn short-term profits as least as much as his competitors were doing—which in turn depended on him trading in riskier and riskier markets.

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

., 512, 582–88, 597, 598, 599, 602, 626, 668 changes at Morgan Stanley instigated by, 583, 585, 588, 592–93, 594, 622–23, 663 described, 582–83, 663 on ethical standards of Morgan Stanley, 628, 630, 631, 634 Rule 415 and, 661, 663 Baldwin, Stanley, 228, 265, 276, 277, 330, 333, 402 appeasement of Germany, 437, 438–39, 444 Ballets Russes, 271–72 Ballin, Albert, 101–102 Ballinger, Richard, 148 Banca d’Italia, 277, 280, 282, 402, 403, 549 Banker-government collaboration, 24–28, 131–38, 153, 205–206, 210, 216–17, 225–29, 461–68 Bankers, fall from grace of, 352, 355–57, 366, 369–84, 412–29 Bankers Trust, 123, 143, 152–53, 182, 364, 387, 527, 568, 644, 659, 696, 715, 716 Bank failures, 66, 326–27, 353, 357, 604, 656–60 European, 327–29 Glass-Steagall Act and, 375–76 Bank for International Settlements (BIS), 311–12, 325, 434, 521 Bankhaus Herstatt, 604 Bank holidays, 353, 357 Banking Act of 1933, see Glass-Steagall Act Banking Act of 1935, 383, 384 Banking reform, 129–30; see also Glass-Steagall Act Bank Leu, 683, 684 Bank mergers, 152–54, 275, 496, 530, 532–36, 675, 703 Bank of America, 534, 551, 604, 609, 659 Bank of England, 11, 12, 71, 72, 104, 182, 385, 397, 476, 485, 489, 521, 525, 567, 569, 589, 613, 653–54, 671, 672, 675, 689 Catto as Governor of, 476–77, 519, 520 debt repayment and, 433–35 Euromarkets and, 548 gold standard and, 273–77, 329–34 Guinness scandal and, 676, 683, 686–87, 688 Norman and, 244–52, 273–77, 476 Takeover Panel and, 571, 572 World War I and, 196, 197, 200, 202 Bank of Japan, 233, 337, 437 Bank of Manhattan, 496, 530 Bank of New York, 701, 703 Bank of Tokyo, 552, 644 Bank of the United States, 326–27 Banque Commerciale pour l’Europe du Nord, 545 Banque de France, 274, 310, 329, 450, 451 Banque de l’lndochine, 615 Barclays Bank, 674, 695 Baring, House of, 3, 5, 6, 11, 19, 36, 57, 81, 99, 210, 304, 521, 607, 637 government financing and, 25, 26, 71, 225, 236, 238 merger talks with Pierpont, 103–104 Barkley, Alben W., 366 Barnes, Harry Elmer, 448–49 Barney, Charles T., 123 Barnum, P.

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Pecora’s disclosure about the Morgan partners’ avoidance of income taxes made it impossible to delete this provision, so strong was public wrath.86 Adding to the pressure was Chase’s decision to disband its securities affiliate, whose refugees joined with renegades from the First National Bank of Boston to form First Boston, the first modern American investment bank. The Glass-Steagall Act took dead aim at the House of Morgan. After all, it was the bank that had most spectacularly fused the two forms of banking. It had, ironically, proved that the two types of services could be successfully combined; Kuhn, Loeb and Lehman Brothers did less deposit business, while National City and Chase had scandal-ridden securities affiliates. The House of Morgan was the active double threat, with its million-dollar corporate balances and blue-ribbon underwriting business. What was the theory behind the Glass-Steagall Act? Foremost, it was meant to restore a certain sobriety to American finance.

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At a time when a parochial America looked inward, the bank’s ties abroad, especially those with the British Crown, gave it an ambiguous character and raised questions about its national loyalties. The old Morgan partners were financial ambassadors whose daily business was often closely intertwined with affairs of state. Even today, J. P. Morgan and Company is probably closer to the world’s central banks than any other bank. This empire was shattered by the Glass-Steagall Act of 1933, which erected a high wall between commercial banking (making loans and accepting deposits) and investment banking (issuing stocks and bonds). In 1935, J. P. Morgan and Company chose to remain a commercial bank and spun off Morgan Stanley, an investment house. Seeded with J. P. Morgan capital and personnel, Morgan Stanley for decades clearly exhibited common ancestry with its Morgan brother down the block.

I.O.U.: Why Everyone Owes Everyone and No One Can Pay by John Lanchester

Alan Greenspan, asset-backed security, bank run, banking crisis, Bear Stearns, Berlin Wall, Bernie Madoff, Big bang: deregulation of the City of London, Black Monday: stock market crash in 1987, Black-Scholes formula, Blythe Masters, Celtic Tiger, collateralized debt obligation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency risk, Daniel Kahneman / Amos Tversky, diversified portfolio, double entry bookkeeping, Exxon Valdez, Fall of the Berlin Wall, financial deregulation, financial engineering, financial innovation, fixed income, George Akerlof, Glass-Steagall Act, greed is good, Greenspan put, hedonic treadmill, hindsight bias, housing crisis, Hyman Minsky, intangible asset, interest rate swap, invisible hand, James Carville said: "I would like to be reincarnated as the bond market. You can intimidate everybody.", Jane Jacobs, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Meriwether, junk bonds, Kickstarter, laissez-faire capitalism, light touch regulation, liquidity trap, Long Term Capital Management, loss aversion, low interest rates, Martin Wolf, money market fund, mortgage debt, mortgage tax deduction, mutually assured destruction, Myron Scholes, negative equity, new economy, Nick Leeson, Norman Mailer, Northern Rock, off-the-grid, Own Your Own Home, Ponzi scheme, quantitative easing, reserve currency, Right to Buy, risk-adjusted returns, Robert Shiller, Ronald Reagan, Savings and loan crisis, shareholder value, South Sea Bubble, statistical model, Tax Reform Act of 1986, The Great Moderation, the payments system, too big to fail, tulip mania, Tyler Cowen, value at risk

Morgan was more like the man’s photograph than his reputation: it was a superrespectable old-school Wall Street firm with a long list of similarly respectable clients. It was also one of two firms to carry on J.P.’s legacy: the other was the financial services company Morgan Stanley. The first incarnation of J.P. Morgan was broken into two in 1933 by the Glass-Steagall Act, passed during the Great Depression, which forced retail banks, that is, the ordinary sort of banks with which we’re all familiar, to split from investment banks, the sort which issue complex financial instruments, trade on capital markets, and run mergers and acquisitions. I call the two types the piggy bank and the casino; the idea behind Glass-Steagall was that the casino activities shouldn’t be allowed to endanger the banks which look after the deposits of the general public.

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That is a generally applicable historic pattern: societies tend to regulate their financial systems only in the aftermath of a scary failure. Conversely, when markets are booming, legislation tends to loosen, and so does enforcement of the existing legislation. The centerpiece of the Depression-era legislation was the Glass-Steagall Act of 1933, which separated investment banking (the casino, where the bank makes bets on its own behalf) and commercial banking (the piggy bank, where ordinary Joes deposit their savings and the bank lends it to other ordinary Joes to buy houses and cars and invest in their businesses). The idea was to let investment banks do their thing and blow themselves up without impacting on the general public.

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Because of Britain’s imperial and colonial history, its banks had a broad geographical spread: just as British Airways is, in the words of its own advertising, “the world’s favourite airline” because of its proliferation of routes and destinations associated with the imperial past, so Britain’s banks have long been international in their scope. In addition, we in Britain didn’t have the wave of bank-taming legislation that America undertook in the 1930s, as a way of preventing a repeat of the Crash of 1929 and the ensuing Depression. The Glass-Steagall act was only the best known of a series of laws designed to limit the size and influence and, especially, the cross-state operation of the American banks. In Britain we never had a comparable set of laws targeting the size and activities of our banks. That was partly because we never had a moment of banker bashing to rival the one which took place during the Depression.

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

Reporters, for instance, might look into the initial deregulation of banking—enacted by the Democratic Congress and president in 1980—when interest-rate ceilings were repealed and the sin of usury was decriminalized, authorizing the predatory lending and sky-high rates that are now commonplace. Another bipartisan project worth investigating was ably assisted by the Federal Reserve—the repeal, in 1999, of the New Deal’s Glass-Steagall Act by the Gramm-Leach-Bliley Act. The latter measure allowed the merger of closely regulated commercial banks with unregulated investment houses and opened numerous trapdoors and escape hatches for bankers to game the differences between the two. At the time, leading newspapers led cheers for this stuff, but even the New York Times editorial page is revising its views.

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Recently Greenspan—that trustworthy fellow who guaranteed the morality of Keating and was one of the chief boosters of junk-bond purchases by S&Ls—guided his Fed colleagues into a disastrous decision. They ruled that J.P. Morgan (Morgan Guaranty Trust) could trade and sell corporate stocks. With this cloven hoof in the door, other banks will follow, and that will be the death of the Glass-Steagall Act, which Congress passed in 1933 to separate commercial banks from investment banks and thereby control some of the outlawry that had caused thousands of banks to fail. Next they will probably be targeting the Bank Holding Act of 1956, which was intended to keep banking out of commerce, and the McFadden Act, which limits interstate banking.

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Short of these reforms—which, it must be emphasized, would be taken by Wall Street as revolutionary—reform of the Fed alone would turn out to be little more than cosmetic. Breaking Glass-Steagall E D I T O R S O F T H E N AT I O N November 15, 1999 Although wall street has pushed for financial deregulation for two decades, it was last year’s merger of Citicorp and Travelers that set the stage for Congress’s effective revocation of the Glass-Steagall Act in late October. The merger was a violation of the longstanding laws separating banking and insurance companies, but Citicorp and Travelers, because they well knew their power to ram deregulation through Congress, exploited loopholes that gave them a temporary exemption. Indeed, further proving that Wall Street and Washington are two branches of the same firm, the newly formed Citigroup announced only days after the deal that it had hired recently departed Treasury secretary Robert Rubin as a member of its three-person office of the chairman.

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

To be attacked as antisocial was bewildering; to be excluded from the formation of public policy was beyond endurance.”99 The new legislation of the 1930s—primarily the Banking Act of 1933, better known as the Glass-Steagall Act—reduced the riskiness of the financial system, with a particular emphasis on protecting ordinary citizens. The regulatory framework, however, was relatively simple. Commercial banks, which handled deposits made by ordinary households and businesses, needed to be protected from failure; investment banks and brokerages, which traded securities and raised money for companies, did not. The Glass-Steagall Act separated commercial banking from investment banking to prevent commercial banks from being “infected” by the risky activities of investment banks.

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Ordinarily, low equity levels (high debt levels) should increase a bank’s riskiness by increasing the likelihood that it will not be able to pay off its debts in a crisis. Yet despite the increase in leverage, tighter regulation prevented any serious banking crises. As Figure 1-1 demonstrates, the half-century following the Glass-Steagall Act saw by far the fewest bank failures in American history.103 But once financial deregulation began in the 1970s, these low equity levels became increasingly dangerous.104 Figure 1-1: Bank Suspensions and Failures Per Year, 1864—Present * Actual values for 1930-33 are 1,352, 2,294, 1,456, and 4,004.

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These new businesses helped blur the traditional line between commercial and investment banks, replacing it with a divide between small banks, which continued taking deposits and making loans, and big banks, which could branch out into securitization, proprietary trading, and derivatives. BIGGER BANKING At the same time, large banks were also growing by invading each other’s territories and acquiring smaller rivals. Banks had been trying to get around the restrictions on interstate banking and the constraints of the Glass-Steagall Act for decades. Congress responded repeatedly with legislation limiting bank activities, including the Bank Holding Company Act of 1956, the Savings and Loan Holding Company Act of 1967, and the Bank Holding Company Act Amendments of 1970. Beginning in the 1970s, however, the banks became more aggressive, while Congress’s resolve waned.

A First-Class Catastrophe: The Road to Black Monday, the Worst Day in Wall Street History by Diana B. Henriques

Alan Greenspan, asset allocation, bank run, banking crisis, Bear Stearns, behavioural economics, Bernie Madoff, Black Monday: stock market crash in 1987, break the buck, buttonwood tree, buy and hold, buy low sell high, call centre, Carl Icahn, centralized clearinghouse, computerized trading, Cornelius Vanderbilt, corporate governance, corporate raider, Credit Default Swap, cuban missile crisis, Dennis Tito, Edward Thorp, Elliott wave, financial deregulation, financial engineering, financial innovation, Flash crash, friendly fire, Glass-Steagall Act, index arbitrage, index fund, intangible asset, interest rate swap, It's morning again in America, junk bonds, laissez-faire capitalism, locking in a profit, Long Term Capital Management, margin call, Michael Milken, money market fund, Myron Scholes, plutocrats, Ponzi scheme, pre–internet, price stability, proprietary trading, quantitative trading / quantitative finance, random walk, Ronald Reagan, Savings and loan crisis, short selling, Silicon Valley, stock buybacks, The Chicago School, The Myth of the Rational Market, the payments system, tulip mania, uptick rule, Vanguard fund, web of trust

It might have been just an academic concern, but the “snowball” scenario was a puzzle, and a warning. 9 CHICAGO RISING Thursday, June 16, 1983, was the fiftieth anniversary of the Glass-Steagall Act, the landmark Depression-era law that was intended to firmly separate the nation’s banking industry from the risky world of Wall Street. To mark the occasion, Congressman Timothy E. Wirth of Colorado opened a hearing that afternoon to examine how porous the Glass-Steagall wall had become and what, if anything, should be done about it. Wirth was specifically incensed by the FDIC’s approach to the issue. In a handful of cases since 1969, the FDIC’s lawyers had quietly determined that the Glass-Steagall Act applied only to banks in the Federal Reserve System.

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Congressman Wirth, who opposed the cuts, had asked Shad’s colleagues on the commission for their views. Longstreth and his three fellow commissioners, in a private response to the congressman, said they thought staffing should in fact be increased by 4 percent. Wirth had promptly released the exchange of letters to the media. However, on the topic of the Glass-Steagall Act, John Shad and Timothy Wirth were almost allies. Shad had frequently argued, in congressional testimony and public speeches, that the banking industry’s forays into traditional Wall Street activities should be curbed until the regulatory borders could be more clearly drawn and rule books written.

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Soon after the Boesky scandal broke, in fact, Regan was considering ways the president could publicly show his support for John Shad’s beleaguered enforcement staff—an insightful gesture that certainly would have been welcome at the SEC in those demoralizing weeks. But as the Iran-Contra scandal eclipsed the continuing coverage of the Boesky investigation, Regan’s days in the White House were numbered. Volcker, too, was facing an uncertain climb into 1987. The Federal Reserve voted in December 1986 to liberalize its interpretation of the Glass-Steagall Act, allowing national banks to expand into certain precincts of the securities business. Whatever Volcker’s misgivings, the Fed’s new majority apparently planned to continue chopping holes in the Glass-Steagall fence until Congress either shored up the barrier between the banks and Wall Street or tore it down entirely.

How the Other Half Banks: Exclusion, Exploitation, and the Threat to Democracy by Mehrsa Baradaran

access to a mobile phone, affirmative action, Alan Greenspan, asset-backed security, bank run, banking crisis, banks create money, barriers to entry, Bear Stearns, British Empire, call centre, Capital in the Twenty-First Century by Thomas Piketty, cashless society, credit crunch, David Graeber, disintermediation, disruptive innovation, diversification, failed state, fiat currency, financial innovation, financial intermediation, Glass-Steagall Act, Goldman Sachs: Vampire Squid, housing crisis, income inequality, Internet Archive, invisible hand, junk bonds, Kickstarter, low interest rates, M-Pesa, McMansion, Michael Milken, microcredit, mobile money, Money creation, moral hazard, mortgage debt, new economy, Own Your Own Home, Paul Volcker talking about ATMs, payday loans, peer-to-peer lending, price discrimination, profit maximization, profit motive, quantitative easing, race to the bottom, rent-seeking, Ronald Reagan, Ronald Reagan: Tear down this wall, Savings and loan crisis, savings glut, subprime mortgage crisis, the built environment, the payments system, too big to fail, trade route, transaction costs, unbanked and underbanked, underbanked, union organizing, W. E. B. Du Bois, white flight, working poor

He also believed that it was the government’s role to limit the excesses of the banking sector, and he crafted banking policy, as other presidents had before him, to achieve his political objectives. He fought effectively to limit the power of “a small minority of business men and financiers” by enacting wide-reaching activity restrictions and antitrust rules. Roosevelt and key legislators like Carter Glass and Henry Steagall (of the Glass-Steagall Act) also passed reforms to prevent destructive bank runs and to separate riskier investment banking activity from deposit-taking and lending. The federal government would provide a banking safety net, or deposit insurance, contingent on federal oversight and certain restrictions. The bargain that was struck allowed unit banks to survive, even though most of the bank failures of the time were due to their concentrated investments and general instability.

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The long-lasting and comprehensive reforms of the era included deposit insurance, a continuation of unit banking, and federal laws on activity restrictions. These rules imposed a separation of traditional banking activities, such as lending and deposit-taking, from commercial activities, such as securities underwriting and brokering. The Glass-Steagall Act, the pillar of the New Deal banking reforms, thus entrenched the doctrine of “separation of banking and commerce” in U.S. banking regulation.82 The act also contained interest rate limits—the amount a bank could offer for deposits—intended to deter competition among banks. Reduced competition, it was believed, would lead to a more dispersed banking sector and more credit availability.

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At the time, deposit insurance represented just one side of the social contract in which the federal government imposed a framework of controls intended to minimize the moral hazard effects of such insurance and to protect the insurance fund from losses. Banks operated conservatively and bank regulators, unchallenged, enforced the Glass-Steagall Act and other New Deal regulatory mandates. During this time, the regulatory goal of bank stability and the policy goal of reducing bank size and influence motivated banking regulation. Accordingly, the Bank Holding Company Act (BHCA) of 1956 would be added to the New Deal measures to limit bank size and power.

Investment: A History by Norton Reamer, Jesse Downing

activist fund / activist shareholder / activist investor, Alan Greenspan, Albert Einstein, algorithmic trading, asset allocation, backtesting, banking crisis, Bear Stearns, behavioural economics, Berlin Wall, Bernie Madoff, book value, break the buck, Brownian motion, business cycle, buttonwood tree, buy and hold, California gold rush, capital asset pricing model, Carmen Reinhart, carried interest, colonial rule, Cornelius Vanderbilt, credit crunch, Credit Default Swap, Daniel Kahneman / Amos Tversky, debt deflation, discounted cash flows, diversified portfolio, dogs of the Dow, equity premium, estate planning, Eugene Fama: efficient market hypothesis, Fall of the Berlin Wall, family office, Fellow of the Royal Society, financial innovation, fixed income, flying shuttle, Glass-Steagall Act, Gordon Gekko, Henri Poincaré, Henry Singleton, high net worth, impact investing, index fund, information asymmetry, interest rate swap, invention of the telegraph, James Hargreaves, James Watt: steam engine, John Bogle, joint-stock company, Kenneth Rogoff, labor-force participation, land tenure, London Interbank Offered Rate, Long Term Capital Management, loss aversion, Louis Bachelier, low interest rates, managed futures, margin call, means of production, Menlo Park, merger arbitrage, Michael Milken, money market fund, moral hazard, mortgage debt, Myron Scholes, negative equity, Network effects, new economy, Nick Leeson, Own Your Own Home, Paul Samuelson, pension reform, Performance of Mutual Funds in the Period, Ponzi scheme, Post-Keynesian economics, price mechanism, principal–agent problem, profit maximization, proprietary trading, quantitative easing, RAND corporation, random walk, Renaissance Technologies, Richard Thaler, risk free rate, risk tolerance, risk-adjusted returns, risk/return, Robert Shiller, Sand Hill Road, Savings and loan crisis, seminal paper, Sharpe ratio, short selling, Silicon Valley, South Sea Bubble, sovereign wealth fund, spinning jenny, statistical arbitrage, survivorship bias, tail risk, technology bubble, Teledyne, The Wealth of Nations by Adam Smith, time value of money, tontine, too big to fail, transaction costs, two and twenty, underbanked, Vanguard fund, working poor, yield curve

Progress in Managing Cyclical Crises 31. Matthew P. Fink, The Rise of Mutual Funds: An Insider’s View, 2nd ed. (Oxford: Oxford University Press, 2011), 23–24. 32. SEC, “Laws That Govern the Securities Industry.” 33. “Topics: Glass-Steagall Act (1933),” New York Times, accessed January 2015, http://topics.nytimes.com/top/reference/timestopics/subjects/g /glass_steagall_act_1933/index.html. 34. Hyman P. Minsky, Stabilizing an Unstable Economy (New Haven, CT: Yale University Press, 1986). 35. William Seyfried, “Monetary Policy and Housing Bubbles: A Multinational Perspective,” Research in Business and Economics Journal 2 (March 2010), http://www.aabri.com/manuscripts/09351.pdf, 1–2. 36.

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“The 2010 Institutional Investment Report: Trends in Asset Allocation and Portfolio Composition.” Research Report R-1468-10-RR, The Conference Board, New York, NY, 2010. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1707512. “Topics: Glass-Steagall Act (1933).” New York Times, accessed January 2015. http://topics.nytimes.com/top/reference/timestopics/subjects/g /glass_steagall_act_1933/index.html. Toutain, Jules. The Economic Life of the Ancient World. Translated by M. R. Dobie. Abingdon, UK: Routledge, 1996. Towers Watson and Financial Times. “Global Alternatives Survey 2012.” Last modified July 2012. http://www.towerswatson.com/en-US/Insights /IC-Types/Sur vey-Research-Results/2012/07/Global-Alternatives -Survey-2012.

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During the years leading up to the Great Recession of 2007–2009, there were widespread attitudes in various administrations and Congresses that led to relaxation of some of the more restrictive prohibitions that were the legacy of the Great Depression and subsequent financial crises such as the savings and loan crisis of the late 1980s, various international crises of the 1990s, and the collapse of Long-Term Capital Management in 1998. One notable example was the repeal of Glass-Steagall in the late 1990s. The Glass-Steagall Act passed by Congress in the 1930s prevented commercial banks from owning investment banks in a post-Depression attempt to prevent deposit-taking institutions from engaging in high-risk financial transactions.33 Throughout the period, competitive regulatory agencies were allowed to develop, gaps in regulatory coverage occurred and were not corrected, clarity in regulatory responsibilities was not established, and lapses in regulatory enforcement occurred.

The Globalization of Inequality by François Bourguignon

Berlin Wall, Branko Milanovic, Capital in the Twenty-First Century by Thomas Piketty, collective bargaining, Credit Default Swap, deglobalization, deindustrialization, Doha Development Round, Edward Glaeser, European colonialism, Fall of the Berlin Wall, financial deregulation, financial intermediation, gender pay gap, Gini coefficient, Glass-Steagall Act, income inequality, income per capita, labor-force participation, liberal capitalism, low interest rates, minimum wage unemployment, offshore financial centre, open economy, Pareto efficiency, purchasing power parity, race to the bottom, Robert Gordon, Simon Kuznets, structural adjustment programs, The Spirit Level, too big to fail, very high income, Washington Consensus

In particular, returning to a strict separation between managing savings and offering loans to individuals or companies, and investing in financial markets,15 would allow us to cease being held hostage to these giant banks whose risky investments threaten individual savings as well as the financing of the economy. It is in part this idea that some banks are “too big to fail” that has allowed them to extract the rents that make possible the astronomical remuneration they offer a portion of their employees. More generI.e., re-­establishing some form of the Glass-­Steagall Act in the United States, which was abolished in 1999. 15 Policies for a Fairer Globalization 175 ally, any regulation that would lower the probability of systemic risk and by extension decrease the pressure that the large financial institutions are able to exert on elected officials would have the same effect.

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Index 9/11 attacks, 139 Abacha, 151 Abu Dhabi, 127 Africa: Economic Partnership Agreements (EPAs) and, 156; evolution of inequality and, 46t, 54–55; fairer globalization and, 147, 151, 154–56, 179, 183; global inequality and, 16, 21, 23, 30–31, 34, 36; globalization and, 122–23, 126–27; population growth and, 183; rise in inequality and, 90, 109, 111–12, 185 African Growth Opportunity Act (AGOA), 155 agriculture, 12, 82, 84, 122–23, 127–28, 155 AIDS, 156 Alesina, Alberto, 134 Anand, Sudhir, 13n4 Argentina, 46t, 110, 172 artists, 86–87 Asian dragons, 34, 82 Bangladesh, 30, 46t, 54 Belgium, 46t, 53, 101–2, 169 Berlin Wall, 91 Big Bang, 95 Bolivia, 16, 24 Bolsa Familia, 166 bonuses, 87, 174 Bottom Billion, The (Collier), 23 Brazil, 110, 186; evolution of inequality and, 46t, 55, 59, 70; fairer globalization and, 150, 154, 166–68, 173; Gini coeffi- cient of, 22; global inequality and, 21–23; globalization and, 127, 133 Buffett, Warren, 5–6, 159–60 Cameroon, 46t, 54 Canada, 46t, 51f capital: developed/developing countries and, 5; evolution of inequality and, 55–58, 60, 73; fairer globalization and, 158–62, 167, 171, 175, 182; GDP measurement and, 13–15, 20–21, 23, 26, 27f, 29–30, 39, 41–45, 56–57, 94, 123, 127, 165–66, 176; globalization and, 117, 125–26, 132, 137; human, 74, 167, 175; labor and, 3–4, 55– 58, 60, 158, 161n7, 185; liberalization and, 96; mobility of, 3, 73–74, 93, 98–99, 115, 160, 162, 182, 185; rise in inequality and, 74, 76–80, 84–85, 89, 93, 95–99, 103, 109, 114–15; taxes and, 187, 189 (see also taxes) Card, David, 105–6 Caruso, Enrico, 86 Checchi, Daniele, 107 China: evolution of inequality and, 47, 53, 57–60; fairer globalization and, 150, 154, 165–66, 172, 178; geographical disequilibria and, 83; global inequality and, 16; globalization and, 120– 22, 128; Huajian and, 155; Human Development Report and, 25; international trade and, 75; Kuznets hypothesis and, 192 China (cont.) 113; protectionism and, 178; Revolution of, 26; rise in inequality and, 2, 11n2, 17, 25, 30, 36, 38, 46t, 75, 82–83, 112–13; standard of living and, 16, 120– 22; taxes and, 165 Cold War, 149, 153 Collier, Paul, 23 Colombia, 133 commodity prices, 147, 182 competition: Asian dragons and, 34, 82; deindustrialization and, 75–82; effect of new players and, 75–76; emerging economies and, 178, 187–88; fairer globalization and, 155, 169, 173, 176–79, 182; globalization and, 117–18, 130; markets and, 76– 77, 79–82, 84, 86, 94–98, 102, 104, 115–18, 130, 155, 169, 173, 176–79, 182, 186–88; offshoring and, 81–82; rents and, 102; rise in inequality and, 76– 77, 79–82, 84, 86, 94–96, 98, 102, 104, 115–16; Southern perspective on, 82–85; United Kingdom and, 78–79; United States and, 78–79; wage ladder effects and, 78–79 conditional cash transfers, 165–66 consumers: fairer globalization and, 177–78; spending of, 10, 12–13, 61; subsidies and, 109–10 consumption: evolution of inequality and, 42t, 44t; expenditure per capita and, 13, 15, 42t, 44t; fairer globalization and, 159, 177; globalization and, 137–39; growth and, 13–15, 42t, 44t, 80, 137–39, 159, 177; protection- Index ism and, 7, 147, 154, 157, 176– 79; rise in inequality and, 80 convergence: evolution of inequality and, 65, 69; fairer globalization and, 146–47, 157; globalization and, 120–22, 125; growth and, 16; income and, 16; poverty reduction and, 147–48; standard of living and, 7, 147–48 credit: default swaps and, 139; evolution of inequality and, 61; fairer globalization and, 164–65, 172, 180; globalization and, 131–32, 137–40; rise in inequality and, 96; taxes and, 164 credit cards, 165 criminal activity, 133–34, 152 crises: evolution of inequality and, 48, 50, 54, 57, 73–74; fairer globalization and, 163, 176; Glass-­ Steagall Act and, 174n15; global inequality and, 20, 38–41; globalization and, 119–22, 125, 135–39, 142; recent, 48, 110, 135, 142, 163, 188; rise in inequality and, 92, 94, 96, 99, 109–11; “too big to fail” concept and, 174–75 Current Population Survey, 21 debit cards, 165 deindustrialization, 1, 102, 188; effects on developed countries, 75–82; exports and, 76, 82; globalization and, 120; international trade and, 75–76, 78–79; manufacturing and, 75–82, 84, 123; North vs.

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See also emerging economies development aid, 148–53, 157 development gap, 34–35, 83 Di Bao program, 166 discrimination: ghettos and, 66– 67; immigrants and, 64, 66, 127; labor and, 64–66, 69, 132, 142, 180–81; non-­material inequalites and, 64–66, 69; racial, 65; women and, 64–65, 103 disinflation, 95, 102, 110 distribution, 10n1, 186; capital-­ labor split and, 55–58, 60; efficiency and, 142–45; evolution of inequality and, 41, 42t, 44t, 45, 46t, 48–59, 64, 71–72; fairer globalization and, 148, 153, 156–73, 175, 178; geographical disequilibria and, 83; Gini coefficient and, 18 (see also Gini coefficient); global, 18–19, 25, 29, 39, 41, 46t, 121, 124–38, 141– 45, 156; growth and, 49–50, 188; international, 17–18, 30, 148; median of, 31; OECD countries and, 10–11, 12n3; policy and, 26, 72, 135, 188; range of, 16; real earnings loss and, 78; redistribution and, 4, 7, 37 (see also redistribution); rise in inequality and, 74, 77–79, 82, 85, 90–92, 94–96, 99, 103–4, 106–7, 112, 114–15; Southern perspective on, 82–85; standard of living and, 16, 18 (see also standard of living); taxes and, 37, 92–94 (see also taxes); Theil coefficient and, 18–19, 37–38, 194 distribution (cont.) 52; transfers and, 4, 14, 48, 105, 110, 130, 135–36, 142, 148, 153, 158–67, 170, 175, 181, 183, 187; wage, 3, 78–79, 107 Divided We Stand report, 52 Doha negotiations, 154 drugs, 66, 133 Dubai, 127 Economic Partnership Agreements (EPAs), 156 education, 34, 187; college, 132; evolution of inequality and, 61, 65–68; fairer globalization and, 149, 152, 167–73, 180–81; globalization and, 132, 140, 143; labor and, 168, 180; Millennium Development Goals and, 149– 50; national inequality and, 167–73; poverty and, 24; preschool, 169–70; redistribution and, 149, 152, 167–73; rise in inequality and, 111; taxes and, 167–73; tuition and, 170 efficiency: data transfer technology and, 78; deregulation and, 94, 96, 105, 108; economic, 1, 4, 6, 111, 116, 119, 129–33, 135, 140–45, 158, 164, 167, 171, 181; emerging economies and, 78; equality and, 116, 129–31; fairness and, 8, 129– 31; globalization and, 1, 4, 6, 8, 36, 78, 94, 96, 105, 108, 111, 116, 118–19, 129–35, 140–45, 157–58, 164, 167, 170–71, 175, 180–81, 188; human capital and, 175; import substitution and, 34, 180; inefficiency and, 105, 129–30, 132–33, 135, 140, 170–71, 180, 188; labor Index and, 175; loss of, 142, 164; opportunity and, 142–45; Pareto, 130n5; privatization and, 94, 96, 105, 108; redistribution and, 142–45; rents and, 180; social tensions and, 188; spontaneous redistribution and, 133; taxes and, 170; technology and, 78; weak institutions and, 36; wealth of nations and, 1 elitism, 182; fairer globalization and, 151, 165; globalization and, 127n4, 136, 138; rise in inequality and, 4, 6–7 emerging economies: Africa and, 122–23 (see also Africa); competition and, 178, 187–88; conditional cash transfers and, 165– 66; credit cards and, 165; domestic markets and, 120, 125; efficient data transfer and, 78; evolution of inequality and, 57; fairer globalization and, 147, 154, 158, 165–66, 177–78, 182; global inequality and, 40, 77– 80, 82, 109, 113, 115, 188–89; globalization and, 117, 119–22, 125–27; institutions and, 109– 12; Kuznets curve and, 113; labor and, 77; natural resources and, 127; profits and, 117; rise in inequality and, 109–12; structural adjustment and, 109– 12; taxes and, 165; trends in, 57; Washington consensus and, 109–10, 153 entrepreneurs, 83, 92, 96, 131–32, 135, 143, 170–71, 188 equality: efficiency and, 116, 129– 31; policy for, 184–89; relative gap and, 18, 28, 30, 31–32, 36 Ethiopia, 21–22, 46t, 155 Index195 European Union (EU), 24, 156, 174, 177 Everything But Arms (EBA) initiative, 155 evolution of inequality: Africa and, 46t, 54–55; Brazil and, 46t, 55, 59, 70; capital and, 55–58, 60, 73; China and, 47, 53, 57–60; consumption and, 42t, 44t; convergence and, 65, 69; credit and, 61; crises and, 48, 50, 54, 57, 73–74; developed countries and, 47, 52–53, 56, 59–64, 66; developing countries and, 47, 53–55, 57, 63, 68; distribution and, 41, 42t, 44t, 45, 46t, 48–59, 64, 71– 72; education and, 61, 65–68; elitism and, 4, 6–7, 46t; emerging economies and, 57; exceptions and, 52–53; France and, 46t, 51f, 52–53, 55, 58, 59n8, 62–63, 66, 70–71; ghettos and, 66–67; Gini coefficient and, 39, 42t, 44t, 48, 50, 51f, 53, 58–59; Great Depression and, 48; growth and, 33, 49–50, 54; India and, 54, 57, 59–60; institutions and, 55, 69; investment and, 56; labor and, 55–58, 60; markets and, 48–50, 53–54, 64, 69; national income inequality and, 48–52; non-­monetary inequalities and, 49, 60–70; normalization and, 41, 43–44; opportunity and, 61–62, 68, 70–71; perceptions of inequality and, 69–73; policy and, 55, 72; primary income and, 48–50, 58; production and, 57; productivity and, 63; profit and, 56; reform and, 54, 72; rise in inequality in, 48–52, 73, 77–80, 91–95, 97–98, 102–8; risk and, 63, 66; standard of living and, 41, 43– 45, 46t, 53–55, 58, 60–62, 67, 69, 73; surveys and, 42t, 43–45, 56, 68n17, 69–71; taxes and, 12–14, 37, 48, 50, 56n5; Theil coefficient and, 42; United Kingdom and, 46t, 50, 51f, 59, 67, 68n17; United States and, 2, 4–6, 9, 11, 21, 33, 46t, 47–50, 51f, 58, 59n9, 66–70, 73; wealth and, 58–60 executives, 73, 88–89, 97, 174 expenditure per capita, 13, 15, 42t, 44t exports: deindustrialization and, 76, 82; fairer globalization and, 147, 154–55, 176, 178; globalization and, 124, 128; rise in inequality and, 76, 82–84 fairer globalization: Africa and, 147, 151, 154–56, 179, 183; African Growth Opportunity Act (AGOA) and, 155; Bolsa Familia and, 166; Brazil and, 150, 154, 166–68, 173; capital and, 158–62, 167, 171, 175, 182; China and, 150, 154, 165–66, 172, 178; competition and, 155, 169, 173, 176–79, 182; consumers and, 177–78; consumption and, 159, 177; convergence and, 146–47, 157; correcting national inequalities and, 158–80; credit and, 164–65, 172, 180; crises and, 163, 176; deregulation and, 173; developed countries and, 150, 154–57, 160, 162, 164, 168–72, 176, 178–79, 181; developing countries and, 154, 166; development aid and, 196 fairer globalization (cont.) 148–53, 157; Di Bao program and, 166; distribution and, 148, 153, 156–73, 175, 178; Economic Partnership Agreements (EPAs) and, 156; education and, 149, 152, 167–73; 180–81; elitism and, 151, 165; emerging economies and, 147, 154, 158, 165–66, 177–78, 182; Everything But Arms (EBA) initiative and, 155; exports and, 147, 154–55, 176, 178; France and, 147, 159–61, 164, 169, 175, 177; Gini coefficient and, 156, 166; goods and services sector and, 180; growth and, 147–52, 155, 162, 167–68, 171, 177, 180, 183; health issues and, 152, 166; imports and, 154, 177–78, 180; India and, 150, 154, 165– 66, 172; inheritance and, 170– 73; institutions and, 151, 168, 174–75; international trade and, 176–77; investment and, 150, 155, 157, 160, 170, 174, 179; liberalization and, 156, 179; markets and, 147–48, 154–58, 168, 173–75, 178–81; Millennium Development Goals and, 149–50; national inequality and, 147, 158; opportunity and, 155, 167, 170, 172; policy and, 147–53, 157, 167–73, 175, 177, 179–83; poverty and, 147–52, 164, 166, 175; prices and, 147– 48, 176, 178, 182; primary income and, 158, 163n10, 167, 173; production and, 155–57, 167, 176, 178–79; productivity and, 155, 177–78; profit and, 173, 176; Progresa program and, Index 166; protectionism and, 7, 147, 154, 157, 176–79; redistribution and, 148, 153, 156–73, 175, 178; reform and, 151, 161, 163, 168–69; regulation and, 152, 173–76, 181–82; risk and, 148, 154, 156, 159, 164, 171, 174–75, 178; standard of living and, 146–48, 154, 156–58, 160, 165, 168–69; surveys and, 169; taxes and, 148, 158–73, 175, 181–83; technology and, 156, 173; TRIPS and, 156; United Kingdom and, 163, 169; United States and, 155, 159–61, 163– 64, 169, 174–75, 182; wealth and, 162, 164, 167, 170–73 Fitoussi, Jean-­Paul, 14 France: evolution of inequality and, 46t, 51f, 52–53, 55, 58, 59n8, 62–63, 66, 70–71; fairer globalization and, 147, 159–61, 164, 169, 175, 177; Gini coefficient of, 20; global inequality and, 2, 9, 11, 20–21; offshoring and, 81; rise in inequality and, 80, 88, 92–93, 95, 97, 99, 103; soccer and, 87; wage deductions and, 159 G7 countries, 56 G20 countries, 182 Garcia-­Panalosa, Cecilia, 107 Gates, Bill, 5–6, 70, 150 Germany, 2, 21, 46t, 50, 51f, 80, 88, 92 Ghana, 46t, 54 ghettos, 66–67 Giertz, Seth, 160–61 Gini coefficient: Brazil and, 22; Current Population Survey and, 21; evolution of inequality and, Index197 39, 42t, 44t, 48, 50, 51f, 53, 58– 59; fairer globalization and, 156, 166; France and, 20; historical perspective on, 27–28; meaning of, 18–19; purchasing power parity and, 28; rise in inequality and, 110; United States and, 21; wealth inequality and, 58–60 Glass-­Steagall Act, 174n15 global distribution, 18–19, 25, 29, 39, 41, 46t, 121, 156 global inequality: Africa and, 16, 21, 23, 30–31, 34, 36; between countries, 2–3, 5, 7, 9, 16–19, 23, 33, 36, 38–39, 42–45, 47, 53, 58, 68, 90–91, 107, 117–19, 123, 128, 153; Brazil and, 21– 23; crises and, 20, 38–41; cross-­ country heterogeneity and, 13; definition of, 3–4, 9–10, 25–26, 30–32, 39; developed countries and, 10–11, 21, 34–39; developing countries and, 10–11, 13, 21, 32, 34–39; effects of, 38–40; emerging economies and, 40, 77–80, 82, 109, 113, 115, 188– 89; at the end of the 2000s, 20– 25; evolution of inequality and, 41 (see also evolution of inequality); expenditure per capita and, 13, 15, 42t, 44t; France and, 2, 9, 11, 20–21; globalization and, 117–18, 121–23, 128; great gap and, 33–36; historic turning point for, 25–32; Human Development Report and, 25; institutions and, 36; measuring, 10– 20; Millennium Development Goals and, 149–50, 185; normalization and, 13, 15, 22–23, 26, 29; OECD Database on Household Income Distribution and Poverty and, 11–12; policy and, 185–89; Povcal database and, 10, 12, 42t, 43, 44t; prices and, 27–28, 74, 80, 84, 91–92, 94, 97, 110; profit and, 13; reduction of, 2, 185–86; relative gap and, 18, 28, 30–32, 36; rise of, 2–4, 7; risk and, 20; standard of living and, 10–26, 29, 31–33, 36, 39; surveys on, 10, 12–15, 20n10, 21–22, 29, 42t, 43–45; technology and, 3–4, 34–35; trend reversal in, 37–38; within countries, 2, 5–7, 9, 16, 30, 33, 35–45, 47, 113–14, 118, 124– 29, 184–85, 189 globalization: Africa and, 122–23, 126–27; Asian dragons and, 34, 82; Brazil and, 127, 133; capital and, 117, 125–26, 132, 137; China and, 120–22, 128; competition and, 117–18, 130, 186 (see also competition); as complex historical phenomenon, 1–2; consumption and, 137–39; convergence and, 120–22, 125; credit and, 131–32, 137–40; crises and, 119–22, 125, 135–39, 142; debate over, 1; deindustrialization in developed countries and, 75–82; democratic societies and, 135–36; deregulation and, 95–99; developed countries and, 117, 119, 121, 127n4, 128, 133, 143; developing countries and, 121, 127n4, 128, 132, 143; education and, 132, 140, 143; efficiency and, 1, 4, 6, 8, 36, 78, 94, 96, 105, 108, 111, 116, 118–19, 129–35, 140–45, 157–58, 164, 167, 170–71, 175, 180–81, 188; elitism and, 127n4, 136, 138; 198 globalization (cont.) emerging economies and, 117, 119–22, 125–27; exports and, 124, 128; fairer, 146–83 (see also fairer globalization); future of inequality between countries and, 119–22; global inequality and, 117–18, 121–23, 128; goods and services sector and, 127, 130; growth and, 118–29, 134–39; health issues and, 140– 41, 144; Heckscher-­Ohlin model and, 76; imports and, 119, 124; inequality within countries and, 124–29; inheritance and, 144–45; institutions and, 124; as instrument for modernization, 1; international trade and, 3, 75–76, 78–79, 83, 112, 114, 176–77; investment and, 119, 130, 134–35, 143; laissez-­faire approach and, 118, 129; markets and, 118, 120–21, 124–37, 140, 143–44; as moral threat, 1; national inequality and, 119; negative consequences of inequality and, 131–42; opportunity and, 133–34, 139, 142–44; as panacea, 1; policy and, 118–19, 124, 126, 128–31, 139, 143–44; poverty and, 117, 123, 126–27, 134, 144; prices and, 118, 122, 126, 136–38; primary income and, 135, 143–44; production and, 119, 124, 126, 129, 131, 133, 137; productivity and, 120, 125, 127, 144; profit and, 117; redistribution and, 121, 124–38, 141–45; reform and, 124, 126–27, 138; regulation and, 136; rise in inequality and, 117–18; risk and, 127–28, Index 137–39, 144; shocks and, 38, 55, 91–92, 175; Southern perspective on, 82–85; standard of living and, 120–23, 126, 138, 143; surveys and, 127n4, 141n15; taxes and, 74, 89n10, 91–94, 104, 114–15, 129–30, 135–36, 142–45; technology and, 86–91, 118–20, 125; trends and, 118; United States and, 135–39; wealth and, 74, 95, 98, 125, 127, 129, 131–32, 139, 143–45 Great Depression, 48 Greece, 46t, 135 gross domestic product (GDP) measurement: Current Population Survey and, 21; evolution of inequality and, 41–45, 56–57; fairer globalization and, 123, 127, 165–66, 176; global inequality and, 13–15, 20–21, 23, 26, 27f, 29–30, 39; normalization and, 29, 41, 43–45; rise in inequality and, 94; Sen-­Stiglitz-­ Fitoussi report and, 14 Gross National Income (GNI), 148–49 Growing Unequal report, 52 growth, 4; African Growth Opportunity Act (AGOA) and, 155; constraints and, 35; consumption and, 13–15, 42t, 44t, 80, 137–39, 159, 177; convergence and, 16; determinants of, 34; distribution and, 49–50, 188; emerging economies and, 125 (see also emerging economies); evolution of inequality and, 33, 49–50, 54; fairer globalization and, 147–52, 155, 162, 167–68, 171, 177, 180, 183; GDP mea- Index199 surement of, 30, 39 (see also gross domestic product (GDP) measurement); globalization and, 118–29, 134–39; great gap in, 33–36; import substitution and, 34, 180; inflation and, 50, 95, 102, 110; negative, 31; political reversals and, 36; poverty and, 28–29; production and, 3, 34–35, 57, 74, 76–81, 84–86, 119, 124, 126, 129, 131, 133, 137, 155–57, 167, 176, 178–79; rate of, 15, 29–35, 79, 125, 185; recession and, 6, 31, 99, 120; relative gap and, 18, 20, 30–32, 36; rise in inequality and, 75, 79, 82, 84, 109–12; trends in, 40, 121 health issues, 24, 187; fairer globalization and, 152, 166; globalization and, 140–41, 144; public healthcare and, 37, 111, 140 Heckscher-­Ohlin model, 76 Hong Kong, 34, 82, 174 housing, 12, 61, 137 human capital, 74, 167, 175 Human Development Report, 25 Ibrahimovich, Zlata, 87 IKEA, 172 immigrants, 64, 66, 127 imports: fairer globalization and, 154, 177–78, 180; globalization and, 119, 124; import substitution and, 34, 180; rise in inequality and, 80 income: average, 9, 18, 21, 29–30, 43, 72; bonuses and, 87, 174; convergence and, 16; currency conversion and, 11; definition of, 45; deindustrialization and, 75–82; developed/developing countries and, 5, 36; disposable, 20, 22, 24, 48, 50, 51f, 74, 91, 163; distribution of, 3 (see also distribution); executives and, 73, 88–89, 97, 174; family, 10; financial operators and, 87–88, 90–91; gap in, 3, 5–6, 27f, 33– 36, 42t, 44t, 149; GDP measurement and, 13–15, 20–21, 23, 26, 27f, 29–30, 39, 41–45, 56–57, 94, 123, 127, 165–66, 176; high, 50, 52, 56, 85–93, 97–99, 140, 143, 158–62, 164, 189; household, 10–12, 43, 45, 50, 58, 105, 107, 137, 163, 177; inequality in, 2, 4, 41, 48–50, 56–64, 68, 70, 72–73, 83, 98, 102–3, 107–8, 114, 125, 132– 34, 137, 140–41, 143–44, 163; inflation and, 50, 95, 102, 110; international scale for, 17–18, 23, 30; lawyers and, 89–90; mean, 17, 20n10, 27f, 42t, 44t; median, 6, 49, 71, 102–3, 106; minimum wage and, 52–53, 100, 102–8, 175, 177; national, 7, 16–19, 30, 43, 48–52, 60, 73, 84n6, 125, 149, 153, 172; OECD Database on Household Income Distribution and Poverty and, 11; opportunity and, 5; payroll and, 53, 93, 100, 104, 107, 175; pension systems and, 167; per capita, 20, 25, 29–30, 42t, 45, 48, 55–56, 120; portfolios and, 88; poverty and, 1, 11, 15n6, 19–20, 22–25, 28–29, 32, 44t, 109, 117, 123, 126–27, 134, 144, 147–52, 164, 166, 175; primary, 48–50, 58, 135, 143–44, 158, 163n10, 167, 173; 200 income (cont.) purchasing power and, 11, 13, 19–24, 27f, 28, 50, 80, 144, 158, 178; real earnings loss and, 78; relative gap and, 18, 28, 30, 31– 32, 36; superstars and, 85–87, 89–90; taxes and, 37, 89n10, 92–93, 145, 159, 161–65, 170 (see also taxes); technology and, 34, 180; virtual, 12; wage inequality and, 51–53, 79, 101–3, 106, 108; wage ladder effects and, 78–79; wealth inequality and, 58–60; women and, 64– 65, 103 India: evolution of inequality and, 54, 57, 59–60; fairer globalization and, 150, 154, 165– 66, 172; household consumption and, 15; international trade and, 75; Kuznets hypothesis and, 113; rise in inequality and, 2, 15–16, 19, 30, 34, 46t, 75, 83, 90, 112–13; taxes and, 165 Indonesia, 30, 46t, 54, 111, 127 industrialization: deindustrialization and, 1, 75–82, 102, 120, 188; labor and, 1, 26, 29, 33, 35, 54, 82, 84, 102, 113, 120, 127, 179, 188 Industrial Revolution, 26, 29, 33, 35 inequality: between countries, 2–3, 5, 7, 9, 16–19, 23, 33, 36, 38– 39, 42–45, 47, 53, 58, 68, 90– 91, 107, 117–19, 123, 128, 153; efficiency and, 1, 4, 6, 8, 36, 78, 94, 96, 105, 108, 111, 116, 118– 19, 129–35, 140–45, 157–58, 164, 167, 170–71, 175, 180–81, 188; Gini coefficient and, 18 (see Index also Gini coefficient); income, 2, 4, 41, 48–50, 56–64, 68, 70, 72–73, 83, 98, 102–3, 107–8, 114, 125, 132–34, 137, 140–41, 143–44, 163; international, 17; inverted U curve and, 54, 113; measurement of, 18; negative consequences of, 131–42; non-­ monetary, 49, 60–70; perceptions of, 69–73; social tensions and, 188; standard of living and, 18 (see also standard of living); Theil coefficient and, 18–19, 37–38, 42; wealth, 58–60; within countries, 2, 5–7, 9, 16, 30, 33, 37–45, 47, 113–14, 118, 124–29, 184–85, 189 infant mortality, 150 inflation, 50, 95, 102, 110 inheritance: fairer globalization and, 170–73; globalization and, 144–45; rise in inequality and, 93 institutions: deregulation and, 91– 112 (see also deregulation); disinflation and, 95, 102, 110; emerging economies and, 109– 12; evolution of inequality and, 55, 69; fairer globalization and, 151, 168, 174–75; global inequality and, 36; globalization and, 124; markets and, 91–92; privatization and, 94–109; reform and, 91–112; rise in inequality and, 91–112, 114; structural adjustment and, 109– 12; taxes and, 92–94; “too big to fail” concept and, 174–75; Washington consensus and, 109–10, 153 International Development Association, 149 Index201 international income scale, 17–18, 23, 30 International Labor Organization, 51 International Monetary Fund (IMF), 54, 57, 84, 90, 109–10 international trade: capital mobility and, 74; China and, 75; de­ industrialization and, 75–76, 78–79; effect of new players, 75–76; Heckscher-­Ohlin model and, 76; India and, 75; offshoring and, 81–82; rise in inequality and, 75–76, 78–79, 83, 112, 114; Soviet Union and, 75; theory of, 76; wage ladder effects and, 78–79 inverted U curve, 54, 113 investment: direct, 76, 79; evolution of inequality and, 56; fairer globalization and, 150, 155, 157, 160, 170, 174, 179; foreign, 83, 85, 112, 155, 157, 160, 179; globalization and, 119, 130, 134– 35, 143; production and, 119; public services and, 143; re-­ investment and, 56; rise in inequality and, 76, 79, 82–83, 85, 92, 97–98, 112; taxes and, 92 Ivory Coast, 54 Japan, 34, 46t, 51f, 103 job training, 34, 181, 187 Kenya, 46t, 54 kidnapping, 133 Kuznets, Simon, 113, 126 labor: agriculture and, 12, 82, 84, 122–23, 127–28, 132, 155; artists and, 86–87; bonuses and, 87, 174; capital and, 3–4, 55– 58, 60, 158, 161n7, 185; capital mobility and, 3; cheap, 77, 117; costs of, 81, 100, 104–5, 117, 176, 187; decline in share of national income and, 73; deindustrialization and, 75–82; demand for, 168; deregulation and, 99– 109; discrimination and, 64–66, 69, 132, 142, 180–81; distribution of income and, 175 (see also distribution); education and, 168, 180; efficiency and, 96–97, 175; emerging economies and, 77; entrepreneurs and, 83, 92, 96, 131–32, 135, 143, 170–71, 188; evolution of inequality and, 55–58, 60; excess, 81, 83; executives and, 73, 88–89, 97, 174; goods and services sector and, 13, 73, 80, 85, 91, 102, 127, 130, 180; growth and, 154, 179; immigrant, 64, 66, 127; increased mobility and, 90–91; industrialization and, 1, 26, 29, 33, 35, 54, 80, 82, 84, 102, 113, 120, 127, 179, 188; inflation and, 50, 95, 102, 110; International Labor Organization and, 51; job training and, 34, 181, 187; manufacturing and, 57, 80–82, 84, 123, 154–55, 157; median wage and, 49, 71, 102– 3, 106; minimum wage and, 52– 53, 100, 102–8, 175, 177; mobility of, 185; offshoring and, 81–82; payroll and, 53, 93, 100, 104, 107, 175; pension systems and, 167; portfolios and, 88; poverty and, 1, 11, 15n6, 19– 20, 22–25, 28–29, 32, 44t, 109, 117, 123, 126–27, 134, 144, 147–52, 164, 166, 175; 202 labor (cont.) privatization and, 99–109; productivity and, 63, 79, 81–82, 89, 100, 102, 104, 114, 120, 125, 127, 144, 155, 177–78; protectionism and, 7, 147, 154, 157, 176–79; real earnings loss and, 78; reserve, 84; security and, 133; skilled, 76–78, 82–83, 86, 90, 114, 117, 126, 176; standard of living and, 69 (see also standard of living); superstars and, 85, 87, 89–90; supply of, 130– 31, 164; taxes and, 159–60, 171; technology and, 85–91 (see also technology); unemployment and, 37, 39, 53, 62–63, 66, 69, 77, 94, 100–108, 164, 175–76; unions and, 100–106, 108, 156, 179; unskilled, 3, 76–77, 79, 83, 105, 117, 154; wage inequality and, 51–53, 79, 101–3, 106, 108; wage ladder effects and, 78–79; women and, 64–65, 103, 114; writers and, 86–87 Lady Gaga, 5–6 laissez-­faire approach, 118, 129 Latin America, 9, 34, 36, 54–55, 58, 109–11, 155, 165–66, 168, 180 lawyers, 89–90 liberalization: capital and, 96; customs, 156; deregulation and, 96–99, 108–9, 112 (see also deregulation); fairer globalization and, 156, 179; mobility of capital and, 115; policy effects of, 97–99; Reagan administration and, 91; recession and, 6, 31, 99, 120; rise in inequality and, 76, 91, 93, 96–99, 108–9, 112, 115; tax rates and, 93 Luxembourg, 16, 19 Index Madonna, 71 Malaysia, 127 manufacturing: deindustrialization and, 75–82, 84, 123; emerging economies and, 57, 84; fairer globalization and, 154–55, 157; France and, 81; offshoring and, 81–82; United Kingdom and, 80; United States and, 80 markets: competition and, 76–77, 79–82, 84, 86, 94–98, 102, 104, 115–18, 130, 155, 169, 173, 176–79, 182, 186–88; credit, 131; deindustrialization and, 1, 75–82, 102, 120, 188; deregulation and, 91–92, 99–109 (see also deregulation); development gap and, 34–35, 83; Economic Partnership Agreements (EPAs) and, 156; effect of new players, 75–76; emerging economies and, 120 (see also emerging economies); entrepreneurs and, 83, 92, 96, 131–32, 135, 143, 170–71, 188; evolution of inequality and, 48–50, 53–54, 64, 69; exports and, 76, 82–84, 124, 128, 147, 154–55, 176, 178; fairer globalization and, 147–48, 154–58, 168, 173–75, 178–81; GDP measurement and, 13–15, 20–21, 23, 26, 27f, 29–30, 39, 41–45, 56–57, 94, 123, 127, 165–66, 176; globalization and, 35, 118, 120–21, 124–37, 140, 143–44; Heckscher-­Ohlin model and, 76; housing, 12, 61, 137; imports and, 1, 34, 80, 119, 124, 154, 177–78, 180; institutions and, 91–112; international trade and, 3, 75–76, 78–79, 83, 112, 114, 176–77; labor and, Index203 144 (see also labor); liberalization and, 112 (see also liberalization); monopolies and, 94, 111, 127, 136; offshoring and, 81– 82; protectionism and, 7, 147, 154, 157, 176–79; purchasing power and, 11, 13, 19–24, 27f, 28, 50, 80, 144, 158, 178; reform and, 54 (see also reform); regulation and, 74 (see also regulation); rise in inequality and, 74, 76– 79, 83, 86, 90–112, 114; shocks and, 38, 55, 91–92, 175; single market and, 76; South-­South exchange and, 35; TRIPS and, 156 median wage, 49, 71, 102–3, 106 Mexico, 46t, 57, 59, 109–10, 133, 166, 172 middle class, 51, 71, 93, 109, 133– 34, 136, 140 Milanovic, Branko, 4–5, 17n8, 29n16 Millennium Development Goals, 149–50, 185 minerals, 84, 127 minimum wage, 52–53, 100, 102– 8, 175, 177 monopolies, 94, 111, 127, 136 Morocco, 173 Morrisson, Christian, 28 movies, 87 Murtin, Fabrice, 28 national inequality, 2–4; correcting, 158–80; education and, 167–73; fairer globalization and, 147, 158; Gini coefficient and, 27 (see also Gini coefficient); globalization and, 119; market regulation and, 173–75; protectionism and, 147, 157, 176–79; redistribution and, 158–73, 175, 178; rise in, 6, 48– 52, 115, 204; taxes and, 158–73, 175, 181–83 natural resources, 84–85, 92, 122, 126–28, 127, 151 Netherlands, 46t, 50, 66, 70, 102 Nigeria, 9, 46t, 54, 127, 151 non-­monetary inequalities: access and, 61, 67–68; capability and, 61; differences in environment and, 66–68; discrimination and, 64–66, 69; employment precariousness and, 63–64; evolution of inequality and, 49, 60–70; intergenerational mobility and, 68; opportunities and, 49, 60– 70; social justice and, 60, 70; unemployment and, 62–63 normalization: evolution of inequality and, 41, 43–44; GDP measurement and, 29, 41, 43– 45; global inequality and, 13, 15, 22–23, 26, 29 Occupy Wall Street movement, 6, 135 OECD countries, 27t; evolution of inequality and, 42t, 43, 44t, 50– 52, 64, 65n13; fairer globalization and, 149, 159, 162, 164– 65; Gini coefficient and, 51; income distribution and, 51; relaxation of regulation and, 99; restrictive, 64; rise in inequality and, 50–51, 94, 99, 102, 106n18, 107; social programs and, 94; standard of living and, 11–12, 43, 50–52, 64, 94, 99, 102, 107, 120, 149, 159, 162, 164–65; U-­shaped curve on income and, 50 OECD Database on Household 204 Income Distribution and Poverty, 11–12 offshoring, 81–82 oil, 92, 127 opportunity, 5; African Growth Opportunity Act (AGOA) and, 155; as capability, 61; efficiency and, 142–45; evolution of inequality and, 61–62, 68, 70–71; fairer globalization and, 155, 167, 170, 172; globalization and, 133–34, 139, 142–44; redistribution and, 142–45; rise in inequality and, 102 Pakistan, 46t, 111 Pareto efficiency, 130n5 Pavarotti, Luciano, 86–87 payroll, 53, 93, 100, 104, 107, 175 Pearson Commission, 149 pension systems, 167 Perotti, Roberto, 134 Philippines, 46t, 111 Pickett, Kate, 140 Piketty, Thomas, 4, 48, 59n8, 60, 89n10, 125, 160n4 PISA survey, 169–70 policy, 4; adjustment, 109, 153; Cold War and, 149, 153; convergence and, 147–48; development aid and, 148–53; distributive, 26, 72, 135, 188; educational, 149, 152, 167–73; evolution of inequality and, 55, 72; fairer globalization and, 147–53, 157–58, 167–73, 175–83; Glass-­Steagall Act and, 174n15; global inequality and, 185–89; globalization and, 118–19, 124, 126, 128–31, 139, 143–44; globalizing equality and, 184–89; import substi- Index tution and, 34; Millennium Development Goals and, 149– 50, 185; poverty reduction and, 147–48; protectionist, 7, 99– 100, 107–8, 147, 154, 157, 176–79; reform and, 74 (see also reform); rise in inequality and, 34, 74–75, 85, 94, 97, 99– 100, 104, 106–11, 114–16; social, 7; standard of living and, 147–48 population growth, 28–29, 110, 183 portfolios, 88 Povcal database, 10, 12, 42t, 43, 44t poverty, 1, 44t, 109; Collier on, 23; convergence and, 147–48; criminal activity and, 133–34; definition of, 24; development aid and, 147–52; fairer globalization and, 147–52, 164, 166, 175; ghettos and, 66–67; global inequality and, 11, 15n6, 19–20, 22–25, 28–29, 32; globalization and, 117, 123, 126–27, 134, 144; growth and, 28–29; measurement of, 23–24; Millennium Development Goals and, 149– 50, 185; OECD Database on Household Income Distribution and Poverty and, 11–12; reduction policies for, 147–48; traps of, 144, 150, 164 prices: commodity, 84, 182; exports and, 178; factor, 74, 126; fairer globalization and, 147–48, 176, 178, 182; global inequality and, 27–28, 74, 80, 84, 91–92, 94, 97, 110; globalization and, 118, 122, 126, 136–38; imports and, 80; international compari- Index205 sons of, 11; lower, 94, 137; oil, 92; rise in inequality and, 74, 80, 84, 91–92, 94, 97, 110; rising, 110, 122, 178; shocks and, 38, 55, 91–92, 175; statistics on, 11, 27; subsidies and, 109–10, 175 primary income: evolution of inequality and, 48–50, 58; fairer globalization and, 158, 163n10, 167, 173; globalization and, 135, 143–44 privatization: deregulation and, 94–112; efficiency and, 94, 96, 105, 108; globalization of finance and, 95–99; institutions and, 94–109; labor market and, 99–109; reform and, 94–109; telecommunications and, 111 production: deindustrialization and, 75–82; evolution of inequality and, 57; fairer globalization and, 155–57, 167, 176, 178–79; globalization and, 119, 124, 126, 129, 131, 133, 137; growth and, 3, 34–35, 57, 74, 76–81, 84–86, 119, 124, 126, 129, 131, 133, 137, 155–57, 167, 176, 178–79; material investment and, 119; North vs.

Manias, Panics and Crashes: A History of Financial Crises, Sixth Edition by Kindleberger, Charles P., Robert Z., Aliber

active measures, Alan Greenspan, Asian financial crisis, asset-backed security, bank run, banking crisis, Basel III, Bear Stearns, Bernie Madoff, Black Monday: stock market crash in 1987, Black Swan, Boeing 747, Bonfire of the Vanities, break the buck, Bretton Woods, British Empire, business cycle, buy and hold, Carmen Reinhart, central bank independence, cognitive dissonance, collapse of Lehman Brothers, collateralized debt obligation, Corn Laws, corporate governance, corporate raider, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, cross-border payments, currency peg, currency risk, death of newspapers, debt deflation, Deng Xiaoping, disintermediation, diversification, diversified portfolio, edge city, financial deregulation, financial innovation, Financial Instability Hypothesis, financial repression, fixed income, floating exchange rates, George Akerlof, German hyperinflation, Glass-Steagall Act, Herman Kahn, Honoré de Balzac, Hyman Minsky, index fund, inflation targeting, information asymmetry, invisible hand, Isaac Newton, Japanese asset price bubble, joint-stock company, junk bonds, large denomination, law of one price, liquidity trap, London Interbank Offered Rate, Long Term Capital Management, low interest rates, margin call, market bubble, Mary Meeker, Michael Milken, money market fund, money: store of value / unit of account / medium of exchange, moral hazard, new economy, Nick Leeson, Northern Rock, offshore financial centre, Ponzi scheme, price stability, railway mania, Richard Thaler, riskless arbitrage, Robert Shiller, short selling, Silicon Valley, South Sea Bubble, special drawing rights, Suez canal 1869, telemarketer, The Chicago School, the market place, The Myth of the Rational Market, The Wealth of Nations by Adam Smith, too big to fail, transaction costs, tulip mania, very high income, Washington Consensus, Y2K, Yogi Berra, Yom Kippur War

Investors may be increasingly aware of the approach to a limit, such as the ceiling on note issues by the Bank of England stipulated in the Bank Act of 1844, the $100 million gold minimum requirement of the US Treasury in 1893, the ceiling on advances from the Bank of France to the French Treasury in 1924, the gold reserve ratio of the Reichsbank under the Dawes Plan in June 1931, or the free gold available to the Federal Reserve System prior to the passage of the Glass-Steagall Act in February 1932. A ratio of external debt to GDP of 60 percent for a country has been viewed as a premonitory indicator by investors; the ‘ice is thin’ for a country when this ratio is much higher. Similarly a ratio of government debt to GDP of significantly more than 60 percent is viewed as too high.

…

Another German financier, the Hamburg banker Gustav Goddefroy, lost heavily in railroad and mining shares in 1873 and then bled his overseas trading company to support his position in the stock market.34 These incurable optimists, who know they are going to win the first time, but lose, frequently try again, often doubling their bets and increasing their risks by transactions that either are of dubious morality or clearly illegal. In the late 1920s, when US banks were still allowed to underwrite securities (before the Glass-Steagall Act of 1932), Albert Wiggins of the Chase Bank and Charles Mitchell of National City continued to sell Chilean and Peruvian bonds at the old prices even after they had learned by cable from those governments that they had stopped paying interest.35 Horace understood the position, if Sprague quotes and translates him accurately: ‘Make money; make it honestly if you can; at all events, make money.’36 Equally cynical is Jonathan Swift over the South Sea Bubble: Get money, money still And then let virtu follow, if she will.37 On this topic, Balzac has the last word: ‘The most virtuous merchants tell you with the most candid air this word of the most unrestrained immorality: “One gets out of a bad affair as one can”.’38 Noble gamblers The literature abounds in condemnation of noble gamblers and insiders, who might have been thought to regard financial obligations as debts of honor but are better at promising than at paying their subscriptions.39 The Austrian nobility was worse than the Junkers, who at least ostensibly disdained money.

…

The major investment banks had very high incomes from the fees associated with underwriting new issues of stocks and bonds, especially those of firms associated with information technologies and bio-genetics. The traditional ‘Chinese wall’ between the investment banking activities of these firms and their asset management activities was supposed to be retained after the repeal of the Glass-Steagall Act, which had become law in the early 1930s to force the separation of the traditional commercial banking activities of firms from their investment banking activities. The law had been adopted in response to the abuses of the 1920s. The firms ‘promised’ that they would maintain a Chinese wall and that the statements made by their security analysts would not be influenced by the desire of their investment bankers to sell more securities.

Beyond Outrage: Expanded Edition: What Has Gone Wrong With Our Economy and Our Democracy, and How to Fix It by Robert B. Reich

2013 Report for America's Infrastructure - American Society of Civil Engineers - 19 March 2013, affirmative action, Alan Greenspan, banking crisis, benefit corporation, business cycle, carried interest, collateralized debt obligation, collective bargaining, Cornelius Vanderbilt, Credit Default Swap, credit default swaps / collateralized debt obligations, desegregation, electricity market, Ford Model T, full employment, Glass-Steagall Act, Home mortgage interest deduction, job automation, low interest rates, Mahatma Gandhi, minimum wage unemployment, money market fund, Nelson Mandela, new economy, Occupy movement, offshore financial centre, plutocrats, Ponzi scheme, race to the bottom, Ronald Reagan, Savings and loan crisis, single-payer health, special drawing rights, The Wealth of Nations by Adam Smith, Tim Cook: Apple, too big to fail, trickle-down economics, women in the workforce, working poor, zero-sum game

“We will admit it, we will fix it and move on.” Ever since the start of the banking crisis in 2008, Dimon had been arguing that more government regulation of Wall Street was unnecessary. In 2011 he vehemently and loudly opposed the so-called Volcker Rule, itself a watered-down version of the old Glass-Steagall Act—the Depression-era law that had separated investment banking (betting in the financial casino) from commercial banking (taking in deposits and lending them out). Glass-Steagall’s repeal in 1999 had allowed bankers to place large bets with other people’s money—and make huge windfalls for themselves.

…

Behind them—funding their activities but carefully remaining out of the spotlight—are the media mogul Rupert Murdoch, the billionaires Charles and David Koch, and a coterie of other big-moneyed interests on and off Wall Street who view the regressive movement as their best means of maintaining their power and privilege and accumulating even more. Many of these people would like to return America to the 1920s—before Social Security, unemployment insurance, labor laws, the minimum wage, Medicare and Medicaid, worker safety laws, the Environmental Protection Act, the Glass-Steagall Act, the Securities Exchange Act, and the Voting Rights Act. In the 1920s, Wall Street was unfettered, the rich grew far richer and everyone else went deep into debt, and the nation closed its doors to immigrants. These regressives also want to resurrect the classical economics of the 1920s—the view that economic downturns are best addressed by doing nothing until the “rot” is purged out of the system (as Andrew Mellon, Herbert Hoover’s Treasury secretary, so decorously put it).

…

Europe was in a debt crisis, many developing nations were gripped by fears the contagion would spread to them, the Japanese economy remained in poor condition, and China’s growth was slowing. These conditions won’t continue forever, of course, but the dollar will remain a safe haven for many years. It’s the ideal time to redevelop the public goods America desperately needs. RESURRECT THE GLASS-STEAGALL ACT There is no good reason that banks should ever be permitted to use people’s bank deposits, insured by the federal government, to place risky bets on the banks’ own behalf. Yet Wall Street lobbyists have made sure the new Dodd-Frank law has enough loopholes to allow financiers to continue to gamble with other people’s money.

With Liberty and Dividends for All: How to Save Our Middle Class When Jobs Don't Pay Enough by Peter Barnes

adjacent possible, Alfred Russel Wallace, banks create money, basic income, Buckminster Fuller, carbon tax, collective bargaining, computerized trading, creative destruction, David Ricardo: comparative advantage, declining real wages, deindustrialization, diversified portfolio, driverless car, en.wikipedia.org, Fractional reserve banking, full employment, Glass-Steagall Act, hydraulic fracturing, income inequality, It's morning again in America, Jaron Lanier, Jevons paradox, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, land reform, Mark Zuckerberg, Money creation, Network effects, oil shale / tar sands, Paul Samuelson, power law, profit maximization, quantitative easing, rent-seeking, Ronald Coase, Ronald Reagan, Silicon Valley, sovereign wealth fund, Stuart Kauffman, the map is not the territory, The Spirit Level, The Wealth of Nations by Adam Smith, Thorstein Veblen, transaction costs, Tyler Cowen, Tyler Cowen: Great Stagnation, Upton Sinclair, Vilfredo Pareto, wealth creators, winner-take-all economy

For one, they charge hefty fees for taking private companies public, thus seizing part of the liquidity premium that public trading creates. For another, they make lofty sums by creating, and then manipulating, hyper-complex financial “products” that are, in effect, bets on bets. This pumps up the casino economy and extracts capital that could otherwise benefit the real economy. For many decades, the Glass-Steagall Act of 1933 prevented a single company from being both a commercial and an investment bank. The law’s reasoning was that since commercial banks are federally insured, they shouldn’t engage in the riskier activities of investment banks. In the 1980s and ’90s, however, banking regulations were trimmed, and New Deal laws, including Glass-Steagall, were repealed.

…

Williams and, 123–124 Alaska Permanent Fund, 69–77 The American Crisis (Paine), 8 Appleby, Joyce, 25 Apple Computers, 25–26 Atmospheric carbon fees, 94 Australia, carbon taxing in, 114 Average Is Over (Cowen), 135 Axtell, Robert, 31–33 B Baker v. Carr, 123 Banks co-owned wealth and, 88 fractional reserve banking and, 54, 90 Glass-Steagall Act of 1933 and, 54–55 Barnes, Leo, 34–35 Bell curve, 30–31 Bernanke, Ben, 91–92 Biden, Joe, 21 Bismarck, Otto von, 37 Bollier, David, 62 Bonds. See Stocks and bonds Boucher, Rick, 109–110 Brazil, cash payment program in, 131 Bristol Bay, Inc., 70 Buffet, Warren, 49 Burtraw, Dallas, 64 Bush, George H.

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See also Banks; Stocks and bonds as co-owned wealth, 61 rent from, 142–145 Financial leverage, 47–48 Financial Times (Kay), 53 Financial transaction taxes, 143 Fisher, Irving, 91 Ford, Henry, 8, 19 Ford Motor Company, 18 Foreign Affairs, 130–131 Foreign exchange transitions, value of, 57 Foreign manufacturing, 16 Fossil fuels, 115–116 401(k) plans, 123 Foxconn, 25 Fractional reserve banking, 54, 90 Friedman, Milton, 80–81, 85–87, 91, 119 Fuller, Buckminster, 66 Future scenarios, 135–136 G Galbraith, John Kenneth, 34, 80 Gates, Bill, 48–49, 84 General Motors, jobs at, 23 George, Henry, 4, 51, 66 Germany, 19, 37–38 GI Bill, 16 Glass-Steagall Act of 1933, 54–55 Globalization, 17 Global Warming Solutions, 117 God Bless You, Mr. Rosewater (Vonnegut), 45, 46 Google, 26 Gore, Al, 100 Gould, Stephen Jay, 120 Government. See also Social insurance nonlabor income and, 42 price-setting and, 63–64 recycled rent and, 66 sustainable purchasing by, 37 Green jobs, recommendations for, 21 Guaranteed minimum income, 80–81 H Hacker, Jacob, 125 Hammond, Jay, 69–77, 121–122 Hannity, Sean, 75 Hansen, James, 115 Health care.

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

.; see also corporations; federal government; Organization Man insurance companies Intel Interest Equalization Tax interest groups; desire to eliminate; successes of; types of interest rates; deregulation and; Greenspan and; inflation and; on mortgages Internal Revenue Service International Nickel International Typographical Union Internet; bubble of 2000; early conceptions of; financial industry on; as predicted in fiction; regulation of; see also networks; Silicon Valley interstate banking Interstate Commerce Commission Investing in US investment banking; academic paradigm shift in; antitrust suit against; changes to in 1970s; commercial banking vs.; computerization of; deregulation of, see deregulation; diversified portfolios in; Glass-Steagall Act and, see Glass-Steagall Act; SEC and, see Securities and Exchange Commission; shifting clients of; see also Morgan Stanley; specific financial instruments Irish Americans Italian Americans Itô, Kiyosi ITT Jackson, Andrew Jackson, Jesse Jackson, Mahalia Jacobs, Irwin Japan; auto industry in Jdate Jefferson, Thomas Jensen, Michael; as advocate for free markets; background of; character of; corporations studied by; at Harvard; on integrity; in Landmark; mind shift of; at Rochester; at University of Chicago Jensen, Stephanie Jews; in finance Jhering, Rudolf von Jobs, Steve Johns Hopkins University Johnson, Earl Johnson, Jonathan Jones, Doug Journal of Applied Corporate Finance Journal of Financial Economics J.P.

…

., made him into the main public villain. These hearings—along with the Depression, Roosevelt’s political skill, and the ideas that Adolf Berle and other advisers to Roosevelt had been working up for years—prepared the ground for the new banking laws that sailed through Congress at the outset of the New Deal. The passage of the Glass-Steagall Act, which forbade banks that accepted deposits from underwriting stocks and bonds, forced the Morgan bank, previously private, nearly unregulated, and active in all forms of finance, to make a choice about its future. It chose to keep banking and stop underwriting. That was in 1934. In 1935 a small group of Morgan partners announced that they would move one block east on Wall Street and form the firm of Morgan Stanley to go into the underwriting business.

…

Taken together, they profoundly changed not only finance but American society and the world—both economically and politically. * * * The leaders of Morgan Stanley, like most of their peers, were for deregulation in a general way, though some of the specific changes felt like setbacks because they chipped away at the privileged position the Glass-Steagall Act had given the firm back in 1934. What all the changes, as they emerged from Washington one by one, noticed by bankers but not by the public, had in common was that they were expressions of the mood of the time: they loosened restrictions, they trusted markets, they favored consumer interests over institutional interests.

Two Nations, Indivisible: A History of Inequality in America: A History of Inequality in America by Jamie Bronstein

Affordable Care Act / Obamacare, back-to-the-land, barriers to entry, basic income, Bernie Sanders, big-box store, Black Lives Matter, blue-collar work, Branko Milanovic, British Empire, Capital in the Twenty-First Century by Thomas Piketty, clean water, cognitive dissonance, collateralized debt obligation, collective bargaining, Community Supported Agriculture, corporate personhood, crony capitalism, deindustrialization, desegregation, Donald Trump, ending welfare as we know it, Frederick Winslow Taylor, full employment, Gini coefficient, Glass-Steagall Act, income inequality, interchangeable parts, invisible hand, job automation, John Maynard Keynes: technological unemployment, labor-force participation, land reform, land tenure, longitudinal study, low skilled workers, low-wage service sector, mandatory minimum, mass incarceration, minimum wage unemployment, moral hazard, moral panic, mortgage debt, New Urbanism, non-tariff barriers, obamacare, occupational segregation, Occupy movement, oil shock, plutocrats, price discrimination, race to the bottom, rent control, road to serfdom, Ronald Reagan, Sam Peltzman, scientific management, Scientific racism, Simon Kuznets, single-payer health, Strategic Defense Initiative, strikebreaker, the long tail, too big to fail, trade route, transcontinental railway, Triangle Shirtwaist Factory, trickle-down economics, universal basic income, Upton Sinclair, upwardly mobile, urban renewal, vertical integration, W. E. B. Du Bois, wage slave, War on Poverty, women in the workforce, working poor, Works Progress Administration

To avoid some of the financial problems that had led up to the Great Crash, the Federal Deposit Insurance Corporation (FDIC) and the Securities and Exchange Commission (SEC) were empowered to regulate savings bank deposits and the disclosures of public corporations, respectively. Some in Roosevelt’s cabinet advocated more radical plans, like bank nationalization or the establishment of post-office savings banks, which would allow small depositors to earn interest by depositing their funds at the post office. The Glass-Steagall Act, which prohibited commercial banks from engaging in speculative investments, served to regulate the nation’s financial institutions well for the next six decades until its 1999 repeal.18 Roosevelt also instituted reforms to address concerns about corporate greed. While Hoover had not been concerned with income inequality, Roosevelt’s administration embedded rules in the Reconstruction Finance Corporation to regulate executive compensation.

…

As this chapter has shown, the stock market crash and imploding economy of the early 1930s showed that an economy that valorized unlimited business growth without considering distributive justice was doomed. Hoover and the economy both floundered until Roosevelt’s victory and inauguration. Roosevelt introduced important regulation through the Securities and Exchange Commission, the Federal Deposit Insurance Corporation, and the Glass-Steagall Act. The federal government also assumed responsibility for relief and reform through major Keynesian spending programs, NIRA, the CCC, the AAA, and the TVA, among others; created the first national minimum wage; and began to construct a social safety net with social security. As had happened during Woodrow Wilson’s administration, the New Deal programs reflected the racial discrimination and political power of southern Democrats.95 This would set the stage for poverty and race to be linked concepts in subsequent decades.

…

The wealth distribution pattern that had been established in the 1980s remained steady, but only because, up to 2006, house prices were generally rising, and most of the wealth of those in the bottom four quintiles of wealth holders was in the form of home equity. Rising home prices even offset the tendency of the middle three quintiles of wealth holders to draw on their home equity for lines of credit.10 In a sense, most middle-class people had placed all of their wealth-earning eggs in the basket of home ownership. In 1999, the repeal of the Glass-Steagall Act of 1933 removed federal oversight from large commercial banks that wished to branch out into speculative investments. During the Bush administration, mortgage lenders offered mortgages to many individuals who ordinarily would not have met income qualifications. Banks then packaged these “subprime” mortgages into instruments called collateralized debt obligations (CDOs), which were thought to be safe investments because generally, housing prices increased, and mortgage defaults were thought to be random.

Panderer to Power by Frederick Sheehan

Alan Greenspan, Asian financial crisis, asset-backed security, bank run, banking crisis, Bear Stearns, book value, Bretton Woods, British Empire, business cycle, buy and hold, California energy crisis, call centre, central bank independence, collateralized debt obligation, corporate governance, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, deindustrialization, diversification, financial deregulation, financial innovation, full employment, Glass-Steagall Act, Greenspan put, guns versus butter model, inflation targeting, interest rate swap, inventory management, Isaac Newton, John Meriwether, junk bonds, low interest rates, margin call, market bubble, Mary Meeker, McMansion, Menlo Park, Michael Milken, money market fund, mortgage debt, Myron Scholes, new economy, Nixon triggered the end of the Bretton Woods system, Norman Mailer, Northern Rock, oil shock, Paul Samuelson, place-making, Ponzi scheme, price stability, reserve currency, rising living standards, Robert Solow, rolodex, Ronald Reagan, Sand Hill Road, Savings and loan crisis, savings glut, shareholder value, Silicon Valley, Silicon Valley startup, South Sea Bubble, stock buybacks, stocks for the long run, supply-chain management, supply-chain management software, The Great Moderation, too big to fail, transaction costs, trickle-down economics, VA Linux, Y2K, Yom Kippur War, zero-sum game

Morgan to underwrite Xerox debt, the first such issue from a commercial bank since 1933, the year of the Glass-Steagall Act. (That legislation had separated commercial from investment banking.) In what Time magazine called “the widest breach of Glass-Steagall yet,”21 the Federal Reserve permitted J. P. Morgan to underwrite stock in 1990.22 18 Ibid., p. 4. Today, Greenspan’s forbearance from regulating banks and derivatives is ascribed to his Ayn Rand–freemarket beliefs. Greenspan has no such beliefs. Senator Proxmire understood competitive banking. Competition was disappearing. After the Glass-Steagall Act was repealed in 1999, the largest banks devoured the minnows until the supermarketmegabanks were so large that they did not compete.

…

Rubin acknowledged that even while he [was] negotiating his own job with Citigroup, he had helped broker the compromise agreement repealing Glass-Steagall.” Also “Rubin Calls for Modernization through Reform of Glass-Steagall Act,” Journal of Accountancy, May 1, 1995: “Robert E. Rubin, secretary of the Treasury, recommended that Congress pass legislation to reform or repeal the Glass-Steagall Act of 1933 to modernize the country’s financial system. In testimony before the House Committee on Banking and Financial Services, Rubin said Clinton administration proposals would permit affiliations between banks and other financial services companies, such as securities firms and insurance companies.” 57 “The Long Demise of Glass-Steagall.”

…

Bear Stearns and Lehman Brothers were among the first Wall Street firms to offer warehouse lines.50 In turn, the nonbank mortgage lenders promised the firms a percentage of their loans, which the brokerage houses bundled into securities and sold to the public.51 Was Alan Greenspan aware of the whirlwind? Whatever the case, he made his contribution to the GrammLeach-Bliley Act of 1999, which revoked the last vestiges of the Glass-Steagall Act of 1934. This was the legislation that had separated investment banking (dealing in securities) from commercial banking (lending). The distinction had blurred over the years. Greenspan’s Fed had stimulated the new era when it permitted J.P. Morgan to underwrite debt and equity issues early in his term.52 There were still encumbrances to unfettered financial dealings by banks, a specific case being Citicorp’s merger with Travelers.

The System: Who Rigged It, How We Fix It by Robert B. Reich

"World Economic Forum" Davos, Adam Neumann (WeWork), affirmative action, Affordable Care Act / Obamacare, Alan Greenspan, Bernie Madoff, Bernie Sanders, Big Tech, Boeing 737 MAX, business cycle, Carl Icahn, clean water, collective bargaining, Cornelius Vanderbilt, corporate governance, corporate raider, corporate social responsibility, Credit Default Swap, crony capitalism, cryptocurrency, Donald Trump, ending welfare as we know it, financial deregulation, Glass-Steagall Act, Gordon Gekko, green new deal, Greta Thunberg, immigration reform, income inequality, independent contractor, Jeff Bezos, job automation, junk bonds, London Whale, Long Term Capital Management, market fundamentalism, mass incarceration, Michael Milken, mortgage debt, Occupy movement, opioid epidemic / opioid crisis, Paris climate accords, peak TV, Ponzi scheme, race to the bottom, Robert Bork, Ronald Reagan, Savings and loan crisis, shareholder value, Sheryl Sandberg, stock buybacks, too big to fail, trickle-down economics, union organizing, WeWork, women in the workforce, working poor, zero-sum game

Most had grown up during the Great Depression, when one out of four Americans was out of work and when Franklin D. Roosevelt had public backing to “try anything” to get the nation back on its feet—collaborating with big businesses in order to boost their profits (the National Recovery Administration); constraining them with tight regulations (the Securities and Exchange Acts, Glass-Steagall Act, Fair Labor Standards Act); making it easier for workers to unionize and forcing companies to negotiate (National Labor Relations Act). Many of these CEOs had served in World War II. Some had participated in the vast mobilization of American industry into war production. At that time, the privilege and status of being the CEO of a large public company was as much a reward as the pay that went with it.

…

In 1980, under pressure from financial entrepreneurs like Weill, Congress lifted that ban, and Weill quickly got to work merging banks. A related Depression-era rule erected a strict wall between commercial banking (collecting deposits and making loans) and investment banking (making bets), called the Glass-Steagall Act. By the mid-1980s, as the stock market took off courtesy of Carl Icahn and the other raiders, people like Weill and Dimon noted that huge money could be made by taking down that wall. In early 1985, three of the Street’s biggest banks—JPMorgan, Citicorp, and Bankers Trust—asked the Federal Reserve Board to remove a few bricks.

…

The rise, however, was propelled by an upturn in the business cycle rather than any enduring change in the system, so it turned out to be a blip. Once the economy cooled, most family incomes were barely higher than before. And when the bubble burst, all hell broke loose. In 1999, Weill and Dimon parted ways. “The problem was…he wanted to be C.E.O. and I didn’t want to retire,” Weill said of Dimon. A few months later, after the Glass-Steagall Act was repealed and Rubin stepped down as Clinton’s Treasury secretary, Weill recruited Rubin to be chair of Citgroup’s executive committee and, briefly, chair of its board of directors. * * * — Between 1980 and 2008, as Wall Street was deregulated and unleashed, more than $6.6 trillion of wealth was transferred to financial firms in the United States.

Broken Markets: A User's Guide to the Post-Finance Economy by Kevin Mellyn

Alan Greenspan, banking crisis, banks create money, Basel III, Bear Stearns, Bernie Madoff, Big bang: deregulation of the City of London, bond market vigilante , Bonfire of the Vanities, bonus culture, Bretton Woods, BRICs, British Empire, business cycle, buy and hold, call centre, Carmen Reinhart, central bank independence, centre right, cloud computing, collapse of Lehman Brothers, collateralized debt obligation, compensation consultant, corporate governance, corporate raider, creative destruction, credit crunch, crony capitalism, currency manipulation / currency intervention, currency risk, disintermediation, eurozone crisis, fiat currency, financial innovation, financial repression, floating exchange rates, Fractional reserve banking, Glass-Steagall Act, global reserve currency, global supply chain, Home mortgage interest deduction, index fund, information asymmetry, joint-stock company, Joseph Schumpeter, junk bonds, labor-force participation, light touch regulation, liquidity trap, London Interbank Offered Rate, low interest rates, market bubble, market clearing, Martin Wolf, means of production, Michael Milken, mobile money, Money creation, money market fund, moral hazard, mortgage debt, mortgage tax deduction, negative equity, Nixon triggered the end of the Bretton Woods system, Paul Volcker talking about ATMs, Ponzi scheme, profit motive, proprietary trading, prudent man rule, quantitative easing, Real Time Gross Settlement, regulatory arbitrage, reserve currency, rising living standards, Ronald Coase, Savings and loan crisis, seigniorage, shareholder value, Silicon Valley, SoftBank, Solyndra, statistical model, Steve Jobs, The Great Moderation, the payments system, Tobin tax, too big to fail, transaction costs, underbanked, Works Progress Administration, yield curve, Yogi Berra, zero-sum game

The bank role was to “originate” assets such as credit card loans and mortgages through “channels” such as direct mail, home banking, and specialized sales forces (e.g., mortgage brokers). These assets would be “packaged” into securities investment banks and sold, held in portfolio, and traded. Increasingly, banks came to play more of these capital market roles themselves as the constraints of the Depression-era Glass-Steagall Act (which strictly separated commercial and investment banking) were allowed to lapse by degrees.The old core functions of the bank were relatively unremunerative compared to this “originate, manufacture, and distribute” model. Regulators were becoming increasingly comfortable with the “market-centric” model too, because the securities churned out had to be properly vetted and rated by the credit agencies under SEC (Securities and Exchange Commission) rules.

…

The wholesale financial market trading of the company would have to fund itself instead of having use of customer deposits. Whether this can be made to work is a good question, but the principle of not gambling with deposits from the public is appealing. The United States tried something similar under the Glass-Steagall Act of 1933, which separated investment and commercial banking in a more straightforward way. Under this system, banks can be very big without threatening the deposit money and payments system that Main Street relies on, at least in theory. The objection is that the so-called universal bank model, where commercial and market activities are under one roof, is better for clients (onestop shopping), but also safer since wholesale financial markets, retail banking, and commercial banking have different cycles and present different risks.

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w 163 I Index A C Anglo-Saxon capitalism, 84 Card Act, 68, 70 Anglo-Saxon-type banking systems, 156 CHIPS.See Clearing House Interbank Payment System Asset securitization, 66 Association of Community Organizers for Reform Now (ACORN), 65 Austerity definition, 98 Euro, real unification, 99 Germany, 99–101 B BankAmericard, 29 Bankcard association/card scheme, 29 Bank-centric system, 110 Bank for International Settlements (BIS), 108 Basel III process, 50–51 Basel process, 27–28 Basel standards, 61 Bipartisan government policy, 72 Boom optimistic entrepreneurs, 77 Bretton Woods system, 26, 111 Bureaucracies, 21 Civilization, 64 Clearing House Interbank Payment System (CHIPS), 106, 107 Committee of Payment and Settlement Systems (CPSS), 108 Community Reinvestment Act (CRA), 65–66 Consumer banking BankAmericard, 29 bankcard association/card scheme, 29 branch-based customer relationship, 29 credit card industry, 30 Depression-era Glass-Steagall Act, 33 “diseconomies of scale”, 35 FDIC, 34 four-party model, 29 institutional investors, 34 “market-centric” financial system, 33 merchant/customer relationship, 29 Pac-Man banking, 34 risky business, 31–33 RTC, 31 SEC, 33 S&L industry, 28, 30 1 166 Index Consumer banking (continued) statistical analysis, 30 US “flow-of-funds” data, 28 usury laws, 30 Consumer Finance Protection Bureau (CFPB), 68 Continuous Linked Settlement (CLS), 108 Creative destruction, 85 Credit-driven economy, 76–77 Crony capitalism, 85 Cross-Pacific economy, 97 D Debtor Nation, 64 Dirigisme, 83 Dollar-centric financial system, 112 Durbin Amendment, 70 E ECB.See European Central Bank Economic consequences, financial regulation, 55 bank P & Ls and balance sheets bureaucratic regulation, 59 capital allocation, 57 capitalism, 57 clearinghouse/transaction switch, 58 contradictory rules, 59 creative destruction, 63 free-market capitalism, 57 full-blown panic leading, 57 lender-of-last-resort function, 58 payments system, 58–59 private-sector banks, 58 consumer protection vs. access, 67–68 financial access restriction brick-and-mortar branches, 66 civilization, 64 clearinghouse, 63 CRA, 65–66 credit judgments, 65 economic enfranchisement, 64 government paternalism, 65 joint-stock banks, 63 loan securitization, 66 mass-market retail banking, 66 national and multilateral development agencies, 65 non-credit worthy segments, 66 ownership society, 66 paychecks, 64 premium/reward cards, 66 individual banker accountability, 55 interest reduction, 56 predatory lending, 56 product differentiation, 68–69 public utility, 55, 56 regulatory, capital, and litigation costs, 56 regulatory compliance and fraud losses, 56 savers and investors, 71–73 shell game asset-securitization process, 61 commercial and industrial loans, 62 credible assessment, 62 Dodd-Frank Act, 63 Federal Reserve Bank, 63 free-market creative destruction, 63 globalization, 62–63 Great Depression, 61 Great Moderation, 61 least-regulated jurisdictions, 61 regulatory arbitrage, 61 relationship banking, 62 retail banking revolution, 63 return-on-equity business, 62 rules-based regulation, 61 securitization and market-based funding, 63 supervision vs. rule making, 59–60 unbanking, 70–71 utility-style banking, 56 European Central Bank (ECB), 6, 99, 102–103 F Federal Deposit Insurance Corporation (FDIC), 34 Index Federal Reserve, 101 Finance consumers, 117 American Revolutionary War song, 118 bondholders and money market funds, 138 Bureau of Labor Statistics, 126 business-to-business commerce, 119 consumerism, 118 credit score, 120–121 debt free, 138–139 “dot-com” bubble, 1264 employment and consumer credit, 121–122 Gallup polling organization, 127 Great Society, 126 house prices, 133 “infrastructure”, 119 innovation and education, America advantage, 129 American living standards, 129 global success, 128 high-stakes examinations, 130 industrial policy, 128 student loans, 131 mass-market pottery, 119 money saving, 136–137 New Class, new elite educated caste, 132–133 non-tradable private sector, 127 one’s station in life, 118 overseas trade, 119 pent-up demand, 119 private-sector employment, 125 property taxes, 127 “self-liquidating”, definition, 119 shelter asset bubbles and distorts markets, 133 electoral process, 134 Japanese economy, 135–136 retirement plans and financial advisors, 134 Travellers Club, 133 wealth effect, 133 short-term insurance scheme, unemployment assistance, 127 stock market, 137–138 structural unemployment American economy, 123–125 labor force participation rate, 123 labor markets, Europe, 122 solidarity, 123 three-tiered system, 122 subsidy-based industries, 125 super-safe government debt, 125 technological creativity and economic progress, 117 unionized public-service employees, 125 US job growth, 126 “welfare to work” requirements, 126 You, Inc., 139 Finance-driven economy, 1, 72 anti-capitalism, 2 capitalism, 1 chronic debt crisis, 22 corporate America, 20 current movie artificial bank earnings, 7 asset prices, 6 banking implosions, 6 borrowers and investors connection, 10 borrowing demand, 7 catastrophic financial bubble, 10 civilization, 10 corporatism, 9 democratic crony capitalism, 9 Dodd-Frank act, 8 economic growth and social stability, 10 financial repression, 9 Glass-Steagall Act, 8 human ingenuity, 10 interbank funding markets, 6 low interest rates and easy money, 6 market collapse, 10 money market, 6 overexuberence, 6 overinvestment and speculation, 6 pre-crisis conditions, 8 printing money, 7 private capital, 7 167 168 Index Finance-driven economy (continued) profitability, 7 quantitative easing, 8 recovery, 8 regulation, 8 regulatory capital rules, 8 resources and tools, 9 shell-shocked enterprises and households, 8 end of employment, 21–22 financial leverage magic and poison CEO class, 14–15 consumer debt, 15–16 disconnection problem, 11–12 market bargain, 10 real economy, 10 wealth financialization, 13–14 working capital, 11 global financial crisis, 2 Great Moderation, 16–18 Great Panic, 18–19 household sector agony, 19–20 investor class, 22 Marx, Karl asset bubble, 5 cash nexus, 4 dot-com bubble, 5 economic revolution, 3 First World War, 4 free markets, 3 French Revolution, 3 globalization, 3 Great Depression, 5 liberalism, 3 normalcy, 4 overproduction and speculation, 3 Wall Street, 4, 5 revolutionary socialism, 2 sovereign debt, 8, 22 Finance reconstruction, 142 bank bashing, 146 “bankers”, 142 business model, challenges, 145 Citigroup, 145 cyclical businesses, 143 government management, 142 legitimacy bonus culture, 148–150 privileged opportunity, longestablished bank, 146 short-term share-price manipulation, 148 state and legal systems, 147 stock price, 147 mark-to-market price, 144 “producers”, 143 profession, definition, 163 prudence, 145, 161–163 root-and-branch transformation, 145 talent pool, 144 “the race for talent”, 143 trust cash management, 160 Financial Market Meltdown, 159 FSA, 159 hackneyed term, 159 information asymmetry, 159 non-bank financial service provider, 161 oversold/up-sold products, 159 utility Anglo-Saxon-type banking systems, 156 big data tools, 158 bills-of-exchange market, 150 branch and payment services, 157 clearinghouse creation, 158 core banking, 154 economic value transmission, 150 exchange of claims, 151 fee-income growth, 155 fiat money system, 151 financial intermediation, 150 financial transactions, 157 flexible contractor/subcontractor relationship, 158 information technology, 156 “liquidity premium”, 152 multidivisional/M-form organization, 153 non-interest income, 155 old-media companies, 157 Index overhead value analysis, 154 “privileged opportunity”, 152 quill pen–era practice, 158 sheer utility value, 155 silos, product business, 153 transaction accounts, 152 venture capital industry, 142 “War for Talent”, 143 Financial crises, 23 affordable housing, 24 banking “transmission” mechanism, 43 Basel III process, 50–51 basel process, 27–28 consumer banking(see Consumer banking) Dodd-Frank, 49–50 domestic banking system, 38 European Union, 51–53 FDIC, 40 finance-driven economy’s leverage machine, 43 Financial Market Meltdown, 25 GDP, 38 Government Policy and Central Banks, market meltdown(see Regulation process) government policy failure, 45 “government-sponsored” public companies, 24 Great Depression, 44 GSEs, 24 legal missteps, 47–48 New Deal, 43 panic-stricken markets, 40 political missteps, 45–47 Ponzi scheme, 42 postwar financial order, 25–27 printing money, 38 private profits and socialized losses, 40 private-sector demand, 43 public-sector demand, 42 quantitative approach, 25 TARP, 39 too-big-to-fail institutions, 41 Triple A bonds, 41 US Federal Reserve System, 38 Financial liberalization, 89 Financial Market Meltdown, 25, 61, 89, 109, 159 Financial repression, 9, 78, 111 Financial Services Authority (FSA), 60, 159 Food and Drug Administration (FDA), 69 Fordism, 68 Free-market capitalism, 89 Free markets, 3 French Revolution, 3 Front-end trading systems, 107 FSA.See Financial Services Authority G GDP, 11 “Giro” payments systems, 151 Global imbalance, 96 Globalization, 3 Global whirlwinds, 93 Asia, finance movement cultural differences, 110–111 Financial Market Meltdown, 109 Interest Equalization Tax, 109 language, law, and business culture, 109 primacy, 109 austerity(see Austerity) British Empire, 30 Chimerica, 97 China and United States cross-Pacific economy, 97 foreign interference and aggression, 98 headline growth rates, 97 repression revolution and series, 97–98 Second World War, 98 Smoot-Hawley Tariff, 98 surpluse trade, 97 sustainable development, 98 Chinese ascendancy, 113 clearing and settlement bottleneck, 106–107 Dynastic China, 112 169 Download from Wow!

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

The reason, as the Beards also noted, was of course that the emergency legislation “drove no money changers from the temple. On the contrary it gave the support of public credit to bankers while establishing the supremacy of the Federal Government over gold.”46 The passage a few months later of the Glass-Steagall Act to regulate the domestic banking system by separating commercial banks from investment banks (thereby barring the latter from using deposits to speculate on securities) was widely seen as delivering “the coup de grace to the House of Morgan.”47 But this was by no means unpalatable to all the bankers.

…

Facilitated by technological innovations in communications, the internationalization of US finance took the form of a competitive push abroad across the full range of financial services, which then rebounded back home in the form of intensified domestic competition. All this strained against the compartmentalization laid down in the Glass-Steagall Act, and was particularly manifested in mounting pressure to remove price controls on brokerage fees for investment banks, as well as the limits on the interest commercial banks could pay on deposits. The move abroad by US finance was in fact part and parcel of a long process whereby Wall Street would gradually bring the Eurodollar market home, as “the very same practices, strategies and techniques that drove the international expansion of American finance also laid the foundation for its continued domestic expansion.”24 And what this clearly portended was the process of international regulatory arbitrage which would soon become so central to the making of global capitalism, in which less onerous regulations in one financial center (in this case London’s Eurodollar market) would be exploited to undermine stronger regulations in another (in this case the US’s own New Deal banking regulations).

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The large US multinational commercial banks were also now fully engaged in what Gillian Tett has described as the “years of bold innovation that made high-risk trading and aggressive deal-making the gold standard of the Street [where] a ‘kill or be killed’ ethic prevailed.”61 She notes that, shortly after Salomon Brothers engineered the first major derivative bond swap between IBM and the World Bank in the early 1980s, J.P. Morgan used its City of London operations to circumvent the Glass-Steagall Act and allow its clients to take advantage of the explosion of derivatives markets. By the early 1990s, after also pioneering the development of credit default swaps, half of Morgan’s trading revenues came from derivatives contracts. But Morgan was only one of eight US banks that by then accounted for over 50 percent of interest-rate and currency swaps worldwide, as well as 90 percent of US bank derivatives activity; and there was a similar concentration of derivatives activity in the US investment banking sector.62 This concentration was closely related to the highly complex information and risk-management systems that were required to allow the risk on bonds with different interest-rate and currency structures to be traded without any bonds actually changing hands.

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

Such are the workings of the neoliberal mind, yielding the conclusion that crises may be necessary evils; that no human design can avert economic meltdowns. For a few decades, beginning with President Roosevelt’s post-1932 attempts to regulate the banks, the Leviathan solution became widely accepted: the state could and should play its Hobbesian role in regulating greed and bringing it into some balance with propriety. The Glass–Steagall Act of 1933 is possibly the most often quoted example of that regulatory effort.8 However, the 1970s saw a steady retreat away from this regulatory framework and toward the re-establishment of the fatalistic view that human nature will always find ways of defeating its own best intentions. This ‘retreat to fatalism’ coincided with the period when neoliberalism and financialization were rearing their unsightly heads.

…

In reacting to this ‘betrayal’, President Obama boxed clever: he empowered Paul Volcker (who is still going strong in his eighties) to author the regulatory legislation under which Wall Street would have had to labour in the future – and to write it in such a manner as to tighten the authorities’ grip over Wall Street in important ways. Volcker, in his new capacity as head of the Economic Recovery Advisory Board (ERAB), came up with the Volcker Rule, which the administration promised to push through Congress. The Volcker Rule revived the New Dealers’ Glass–Steagall Act, which Larry Summers had done away with in the 1990s. It would have prohibited banks from dabbling in derivatives and other exotic financial products. Volcker’s basic idea was that banks which accept deposits and are insured by the state against failure ought not to be allowed to participate in either the stock market or the derivatives trade.

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Originally it meant ‘table’ and is associated with banking because, in ancient Greek city-states, borrowing and lending transactions were carried out in the agora (‘marketplace’), with the parties to the transaction seated around long tables. Chapter 7 1. The US Treasury’s equity contribution of $5 would actually come from something called the Troubled Asset Relief Program (TARP), whereas the Fed’s $ 50 would come from the Federal Deposit Insurance Corporation (FDIC), set up by the New Dealers (as part of the Glass-Steagall Act of 1933) to guarantee depositors’ savings in case of a bank failure. The Geithner–Summers Plan set aside $150 billion for TARP, $ 820 billion for FDIC and expected the private sector (hedge and pension funds) to chip in $30 billion of their own money. 2. Under the good scenario, H’s net return equals $10.

When Free Markets Fail: Saving the Market When It Can't Save Itself (Wiley Corporate F&A) by Scott McCleskey

Alan Greenspan, Asian financial crisis, asset-backed security, bank run, barriers to entry, Bear Stearns, Bernie Madoff, break the buck, call centre, collateralized debt obligation, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, financial engineering, financial innovation, fixed income, Glass-Steagall Act, information asymmetry, invisible hand, Isaac Newton, iterative process, junk bonds, Long Term Capital Management, margin call, money market fund, moral hazard, mortgage debt, place-making, Ponzi scheme, prediction markets, proprietary trading, risk tolerance, Savings and loan crisis, shareholder value, statistical model, The Wealth of Nations by Adam Smith, time value of money, too big to fail, web of trust

It used to be a fairly straightforward task to divide the financial world into sectors—banking, securities, and insurance. For much of the past century, at least since the New Deal reforms of the 1930s, the law specifically forbade the mixing of commercial banking and investment banking, effectively separating the banking and securities sectors from one another. The law that created this separation, the Glass-Steagall Act, also established the Federal Deposit Insurance Corporation for the banking industry for the specific purpose of guaranteeing investors’ deposits in federally chartered banks (actual regulation of the federal banking system remained with the curiously named Office of the Comptroller of the Currency, established in the 1860s).

…

See Financial Industry Regulatory Authority (FINRA) First Amendment, 93, 154 Fitch, 84, 86, 88 foreign regulators, 133 Foreign Service Institute, 148, 150 Foreign Service Officers (FSOs), 148 Freddie Mac, 25, 181 FSOs. See Foreign Service Officers (FSOs) FTC. See Federal Trade Commission (FTC) G G-20. See Group of 20 (G-20) Glass-Steagall Act, 18–19, 76–77 GLB Act. See Gramm-Leach-Bliley Act (GLB Act) Goldman Sachs, 4, 17, 77, 87, 104, 160 Government Accountability Office (GAO), 57–58 government-sponsored enterprises (GSEs), 25 Gramm-Leach-Bliley Act (GLB Act), 77–78, 178 Great Crash, 76, 112 Great Recession, 3 Greece, 134–35 Greenberg, Chairman Ace, 4, 10 Greenspan, Alan, 42, 62, 64, 70 Group of 20 (G-20), 139–40, 184–86 GSEs.

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See also Troubled Asset Relief Program (TARP) accountability of senior management and boards, 22 Anti-Trust Division of Justice and phone market, 17–18 anti-trust powers/legislation, 18 assets weighted by level of risk, 16 banks, keep them small, 17–18 bonds, arbitrage between prices of, 16 capital cushion requirements, 17 capital requirements, increase, 19–20 commercial vs. investment banking activities, 18 conclusion, 22–23 do nothing, 22 financial disclosures, mandatory, 19 Glass-Steagall Act, bring back, 18–19 government intervention vs. free market principles, 17, 21 government support is swiftest, 23 hedge funds, 16, 19, 102, 105, 157–58 highly leveraged firm, 16 Long Term Capital Management, 16 market capitalization, 16 moral hazard encourages inordinate risks, 22 pay limits for officers, 20 n 191 Plan B, 10, 20, 22, 30, 81, 144 policy options, 17–22 proprietary trading by commercial banks, 19 Resolution Authority, 20–22 risk of unknown loss, 21 Sherman Anti-Trust Act, 18 systemic risk, identify, 22 too-big-to-fail concept, 15–17 Volcker, Fed Chairman Paul, 18–19 Volcker Rule, 19 Insurance Core Principles, 140 International Association of Insurance Supervisors (IAIS), 140–41 International Organization of Securities Commissioners (IOSCO), 140 international regulations Asia, regulatory initiatives in, 136 Basel Committee for Banking Supervision (BCBS), 140 Code of Conduct Fundamentals for Credit Rating Agencies, 140 conclusion, 141 EU privacy laws, 137, 141 Europe, stock exchanges in, 135 The European Union, 136–38 Financial Stability Board (FSB), 54, 139– 40, 184–85 FSA’s Handbook of regulations, 138 global markets, interconnectedness of, 134 herd mentality (short-term market movements), 134 Insurance Core Principles, 140 International Association of Insurance Supervisors (IAIS), 140–41 International Organization of Securities Commissioners (IOSCO), 140 international organizations, 139–41 Markets in Financial Instruments Directive (MiFID), 136 overseas regulators, 135–39 privacy laws, 134–35, 137, 141 Prospectus Directive governs filing requirements, 137 regulation, principles based vs. rulesbased, 138–39 SEC and shift toward principles-based regulation, 138 Sunday is the new Monday, 133–35 U.S.

Listen, Liberal: Or, What Ever Happened to the Party of the People? by Thomas Frank

Affordable Care Act / Obamacare, Airbnb, Alan Greenspan, Amazon Mechanical Turk, American ideology, antiwork, barriers to entry, Berlin Wall, Bernie Sanders, Black Lives Matter, blue-collar work, Burning Man, centre right, circulation of elites, Clayton Christensen, collective bargaining, Credit Default Swap, David Brooks, deindustrialization, disruptive innovation, Donald Trump, driverless car, Edward Snowden, Evgeny Morozov, Fall of the Berlin Wall, financial engineering, financial innovation, Frank Gehry, fulfillment center, full employment, George Gilder, gig economy, Gini coefficient, Glass-Steagall Act, high-speed rail, income inequality, independent contractor, Jaron Lanier, Jeff Bezos, knowledge economy, knowledge worker, Lean Startup, mandatory minimum, Marc Andreessen, Mark Zuckerberg, market bubble, mass immigration, mass incarceration, McMansion, microcredit, mobile money, moral panic, mortgage debt, Nelson Mandela, new economy, obamacare, payday loans, Peter Thiel, plutocrats, Ponzi scheme, post-industrial society, postindustrial economy, pre–internet, profit maximization, profit motive, race to the bottom, Republic of Letters, Richard Florida, ride hailing / ride sharing, Ronald Reagan, Savings and loan crisis, sharing economy, Silicon Valley, Steve Jobs, Steven Levy, TaskRabbit, tech worker, TED Talk, Thorstein Veblen, too big to fail, Travis Kalanick, Uber for X, union organizing, urban decay, WeWork, women in the workforce, Works Progress Administration, young professional

The Mexican operation probably served as a back-door bailout for Rubin’s old colleagues on Wall Street, but more important, it was what the admiring financial journalist Daniel Gross called “a turning point for Clinton” in his relationship with investment bankers: it “allowed Clinton to ingratiate himself with big investors at the institutional level.”33 The final great accomplishment of Bill Clinton’s presidency was another act of sweeping bank deregulation, the 1999 repeal of the Glass-Steagall Act, which had separated commercial from investment banking since 1933. Treasury Secretary Rubin had long argued that the old law had to go so that Wall Street could achieve “revenue diversification” and stay competitive with foreign banking establishments.34 Banking lobbyists agreed with him, as did lobbyists for the insurance industry and—well, lobbyists for just about everyone with money.

…

The term of art this time around was “Depression-era” (as in “Depression-era barriers” or “Depression-era rules” or “Depression-era walls”), which cast the old law’s repeal in the familiar terms of political rejuvenation, with the Democratic party symbolically casting off the conditions of its New Deal heyday. As with NAFTA, every expert who mattered was on the same page. A retrospective on the banking law published by the Minneapolis Fed in 2000 casually referred to it as “the now infamous Glass-Steagall Act of 1933.” “Almost everybody agreed that Glass-Steagall was an anachronism in a global economy,” proclaimed a 1995 New York Times news story on the effort to repeal the law. “Enacted in 1933 to prevent a recurrence of financial skulduggery that many believed touched off the Great Depression, the act is widely viewed today as a drag on the economy.”35 Not only did everybody agree on what was widely viewed, but repealing it was a bridge to the future itself.

…

In certain remarkable ways, each of these legislative achievements followed the same characteristic pattern—one that diminishes their effectiveness but allows Democrats to pursue the professional consensus they crave. THE ENDS OF COMPLEXITY All of them, for starters, chose complexity over straightforwardness. The virtue of the old Glass-Steagall Act, which regulated the banking industry from 1933 until its final repeal in the Clinton era, was its simplicity: It structurally separated investment banking from commercial banking and forced those parts to compete with one another. The 2010 Dodd-Frank Act, which was supposed to re-regulate the business, uses a different method—it instructs federal agencies to make detailed new rules for the industry.

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

Specifically, Gramm-Leach-Bliley amended the Bank Holding Company Act by providing for the creation of financial holding companies, which are bank holding companies that may engage in any activity or hold the shares of any company that engages in any activity that the Federal Reserve Board has determined is either financial in nature, incidental to financial activities, or complementary to existing activity and does not pose a substantial risk to the safety or soundness of depository institutions or the financial system generally. Some History Just what banks were and were not permitted to do was a tangled question before Gramm-Leach-Bliley. There were two principal federal acts guiding bank practices, the Glass-Steagall Act and the Bank Holding Company Act of 1956 as amended. There were four provisions of Glass-Steagall. Two provisions stated what a bank could do; two provisions, what a bank affiliate could do. Basically, a bank affiliate could engage in a wider range of activities than a bank. Each U.S. money center bank is owned by a holding company, which also owns other companies; these other companies are affiliates of the bank.

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Nonbank dealers naturally think that it would be dandy to have banks forever forbidden to tread on their turf. The skirmishing between banks and nonbank dealers dates back to at least 1978. In that year, Bankers Trust began to act as an advisor and agent to issuers of commercial paper, an activity that Bankers viewed as permissible under the Glass-Steagall Act. In 1979, the SIA asked the Fed to declare Bankers Trust’s commercial paper activities unlawful; the Fed declined to do so. The SIA then turned to the courts, which in two rulings at the district court level determined (1) that commercial paper was a security and (2) that Bankers Trust’s agency placements of commercial paper 12 It’s estimated that in 1988 slightly over $250 billion was raised through the sale of publicly offered debt.

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Gramm-Leach-Bliley; Summary of Provisions The Gramm-Leach-Bliley Act contains numerous provisions that allow banks, securities firms, and insurance companies to affiliate with each other. Below is the Senate Banking Committee’s summary of the many provisions contained in the act taken from the banking committee’s Web site. • Repeals the restrictions on banks affiliating with securities firms contained in sections 20 and 32 of the Glass-Steagall Act. • Creates a new “financial holding company” under section 4 of the Bank Holding Company Act. Such holding company can engage in a statutorily provided list of financial activities, including insurance and securities underwriting and agency activities, merchant banking and insurance company portfolio investment activities.

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

Roosevelt’s New Deal, a sweeping package of progressive political reforms in response to the First World War and the great crash of 1929 which shifted economic and political power away from finance and large corporations towards ordinary folk. The New Dealers created a carefully calibrated system of government checks and balances to mediate between competing social and national priorities, regionally and nationally, breaking up concentrations of power wherever they found it. Their flagship legislation was the Glass-Steagall Act of 1933, which forced banks to separate their commercial banking activities from the more speculative investment banking, thereby breaking up the banking behemoths. At every stage it was understood that this was not so much about economics as political power and protecting democracy. While Hayek and the neoliberals saw government as the agent of tyranny, and the Soviet Union as the prime bogey, the anti-monopoly crusaders saw the threat as coming from large concentrations of private power, which also led to tyrannical forms of government, especially fascism.

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The derivative the JP Morgan team came up with at Boca Raton was to become known as the credit default swap (CDS). This instrument enabled market players to bet (or insure themselves) not against movements in the price of something, but against the possibility that a bond or a loan would default. The centre of experimentation for this stuff was London because the Glass-Steagall Act of 1933, which separated investment banking from commercial banking, prohibited some of the riskier, more lucrative aspects of this from happening in the United States.10 And the rules of the European single market, which was launched in 1993, meant that banks could set up financial instruments in London and sell them across Europe without interference from national regulators in European countries.

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Ten years later, as the financial crisis began to bite, that number had risen three hundredfold to over $60 trillion – roughly equivalent to the gross domestic product of planet Earth.26 So the banks believed they had obtained an exemption from regulation for these exciting new instruments – at least in London. Then, in 1998, the next big hurdle fell when the US Federal Reserve gave its blessing for JP Morgan to get capital relief via its Bistro deal. This would open the way for the Basel rules on bank capital to accept the deals too. But there were still obstacles to be overcome. Next was the Glass-Steagall Act of 1933, which had separated US commercial banking from investment banking to stop speculators gambling with depositors’ money. Glass-Steagall didn’t contain explicit provisions on derivatives – this was a grey area – so an army of lobbyists, armed with the example of London and the offshore centres, mounted a blitzkrieg in Washington to bring it all above board.

Capitalism: Money, Morals and Markets by John Plender

activist fund / activist shareholder / activist investor, Alan Greenspan, Andrei Shleifer, asset-backed security, bank run, Berlin Wall, Big bang: deregulation of the City of London, Black Monday: stock market crash in 1987, Black Swan, bond market vigilante , bonus culture, Bretton Woods, business climate, business cycle, Capital in the Twenty-First Century by Thomas Piketty, central bank independence, collapse of Lehman Brothers, collective bargaining, computer age, Corn Laws, Cornelius Vanderbilt, corporate governance, creative destruction, credit crunch, Credit Default Swap, David Ricardo: comparative advantage, deindustrialization, Deng Xiaoping, discovery of the americas, diversification, Eugene Fama: efficient market hypothesis, eurozone crisis, failed state, Fall of the Berlin Wall, fiat currency, financial engineering, financial innovation, financial intermediation, Fractional reserve banking, full employment, Glass-Steagall Act, God and Mammon, Golden arches theory, Gordon Gekko, greed is good, Hyman Minsky, income inequality, industrial research laboratory, inflation targeting, information asymmetry, invention of the wheel, invisible hand, Isaac Newton, James Carville said: "I would like to be reincarnated as the bond market. You can intimidate everybody.", James Watt: steam engine, Johann Wolfgang von Goethe, John Maynard Keynes: Economic Possibilities for our Grandchildren, John Meriwether, joint-stock company, Joseph Schumpeter, labour market flexibility, liberal capitalism, light touch regulation, London Interbank Offered Rate, London Whale, Long Term Capital Management, manufacturing employment, Mark Zuckerberg, market bubble, market fundamentalism, mass immigration, means of production, Menlo Park, money market fund, moral hazard, moveable type in China, Myron Scholes, Nick Leeson, Northern Rock, Occupy movement, offshore financial centre, paradox of thrift, Paul Samuelson, plutocrats, price stability, principal–agent problem, profit motive, proprietary trading, quantitative easing, railway mania, regulatory arbitrage, Richard Thaler, rising living standards, risk-adjusted returns, Robert Gordon, Robert Shiller, Ronald Reagan, savings glut, shareholder value, short selling, Silicon Valley, South Sea Bubble, spice trade, Steve Jobs, technology bubble, The Chicago School, The Great Moderation, the map is not the territory, The Wealth of Nations by Adam Smith, Thorstein Veblen, time value of money, too big to fail, tulip mania, Upton Sinclair, Veblen good, We are the 99%, Wolfgang Streeck, zero-sum game

To get them, he was, for a man in a suit, surprisingly willing to cause trouble.38 After the Wall Street Crash in 1929, lawmakers decided that depositors’ funds should not be used in speculative investment banking activity. A rigid firewall was erected between commercial and investment banking by the Glass–Steagall Act of 1933. The legislation that imposed the division was repealed in 1999, when the world’s biggest banks were enthusiastically expanding while taking on more risk. Between 1990 and 2007, global bank balance sheets increased fourfold in size. On the eve of the crisis they had reached $75 trillion, or 1.5 times the output of the entire planet.39 At the same time, the amount of capital in those balance sheets – the cushion banks need to protect themselves from losses – was shrinking.

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In a paper to the central bankers’ annual jamboree at Jackson Hole, Wyoming, in 2012, Andy Haldane and Vasileios Madouros of the Bank of England described the Kafka-esque process thus: Contrast the legislative responses in the US to the two largest financial crises of the past century – the Great Depression and the Great Recession. The single most important legislative response to the Great Depression was the Glass–Steagall Act of 1933. Indeed, this may have been the single most influential piece of financial legislation of the twentieth century. Yet it ran to a mere thirty-seven pages. The legislative response to this time’s crisis, culminating in the Dodd–Frank Act of 2010, could not have been more different. On its own, the Act runs to 848 pages – more than twenty Glass–Steagalls.

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And the problem now is that despite its appalling cost in taxpayer bailouts and lost output, the crisis has not – incredibly – delivered a big enough shock to bring about a better, simpler and more fool-proof regulatory system, any more than it has succeeded in restoring the stock of moral capital. Moreover, history suggests that simple structural solutions such as the Glass–Steagall Act, with its clear split between commercial and investment banking, have a more powerful restraining influence on behaviour than detailed rule making. Yet there is a reluctance to return to such clear structural solutions, despite the toxicity, in particular, of the big banks’ market-making operations, whereby banks facilitate securities trading and trading in derivative instruments such as swaps and options by acting as an intermediary between buyers and sellers.

The Investopedia Guide to Wall Speak: The Terms You Need to Know to Talk Like Cramer, Think Like Soros, and Buy Like Buffett by Jack (edited By) Guinan

Albert Einstein, asset allocation, asset-backed security, book value, Brownian motion, business cycle, business process, buy and hold, capital asset pricing model, clean water, collateralized debt obligation, computerized markets, correlation coefficient, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency risk, discounted cash flows, diversification, diversified portfolio, dividend-yielding stocks, dogs of the Dow, equity premium, equity risk premium, fear index, financial engineering, fixed income, Glass-Steagall Act, implied volatility, index fund, intangible asset, interest rate swap, inventory management, inverted yield curve, junk bonds, London Interbank Offered Rate, low interest rates, margin call, money market fund, mortgage debt, Myron Scholes, passive investing, performance metric, risk free rate, risk tolerance, risk-adjusted returns, risk/return, shareholder value, Sharpe ratio, short selling, short squeeze, statistical model, time value of money, transaction costs, yield curve, zero-coupon bond

Related Terms: • Fannie Mae—Federal National Mortgage Association (FNMA) • Freddie Mac—Federal Home Loan Mortgage Corp. • Mortgage • Mortgage-Backed Securities—MBSs • Securitization 120 The Investopedia Guide to Wall Speak Glass-Steagall Act What Does Glass-Steagall Act Mean? An act passed by Congress in 1933 that prohibited commercial banks from collaborating with full-service brokerage firms or participating in investment banking activities. Investopedia explains Glass-Steagall Act The Glass-Steagall Act was enacted during the Great Depression to help protect depositors from the additional risks associated with security transactions. The act was dismantled in 1999.

Winner-Take-All Politics: How Washington Made the Rich Richer-And Turned Its Back on the Middle Class by Paul Pierson, Jacob S. Hacker

accounting loophole / creative accounting, active measures, affirmative action, air traffic controllers' union, Alan Greenspan, asset allocation, barriers to entry, Bear Stearns, Bonfire of the Vanities, business climate, business cycle, carried interest, Cass Sunstein, clean water, collective bargaining, corporate governance, Credit Default Swap, David Brooks, desegregation, employer provided health coverage, financial deregulation, financial innovation, financial intermediation, fixed income, full employment, Glass-Steagall Act, Home mortgage interest deduction, Howard Zinn, income inequality, invisible hand, John Bogle, knowledge economy, laissez-faire capitalism, Martin Wolf, medical bankruptcy, moral hazard, Nate Silver, new economy, night-watchman state, offshore financial centre, oil shock, Paul Volcker talking about ATMs, Powell Memorandum, Ralph Nader, Ronald Reagan, Savings and loan crisis, shareholder value, Silicon Valley, Tax Reform Act of 1986, The Wealth of Nations by Adam Smith, three-martini lunch, too big to fail, trickle-down economics, union organizing, very high income, War on Poverty, winner-take-all economy, women in the workforce

When Citigroup formed in 1998, one of the top bankers involved joked at the celebratory press conference that any antitrust concerns could be dealt with easily: “Sandy will call up his friend, the President.”70 Within a few months, the financial industry had mounted a successful campaign to repeal the Glass-Steagall Act, which since the 1930s had prohibited powerful financial conglomerates of the sort Weill now headed on the grounds that they created conflicts of interest and impaired financial transparency and accountability. Leading the charge against Glass-Steagall was, yes, Sanford Weill. The truth is that most people have missed the visible hand of government because they’ve been looking in the wrong place.

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A decade later, having switched parties and legislative chambers, Gramm had become an ever more zealous and increasingly powerful advocate of tax cuts for the wealthy and full-throttle deregulation. By 1995, he was the Republican chair of the Senate Banking Committee. This lofty perch gave him enormous power to shape legislation that Wall Street favored and to block initiatives it opposed. Among his legislative triumphs was the 1999 repeal of the Glass-Steagall Act, the Depression-era law that erected boundaries between investment and commercial banking to limit systemic risk and conflicts of interest. Even more impressive was his successful effort, in the waning days of the 2000 legislative session, to insert the Commodity Futures Modernization Act within a must-pass budget bill.

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Even as the DSCC vastly expanded its fund-raising, the share of DSCC funds coming from Wall Street tripled over the course of a decade.8 Observers of banking and finance, as well as lobbyists, have regularly identified Schumer as a “go-to” guy on Capitol Hill—not unlike Phil Gramm. Indeed, while their voting records on most issues could not have been further apart, Schumer often teamed with Gramm in advancing positions favorable to Wall Street. Schumer was a supporter of Gramm-Leach-Bliley, the bill that finally repealed the Glass-Steagall Act. In 2001, the two senators launched a successful bipartisan effort to sharply reduce the fees Wall Street paid the federal government to finance regulatory activity, cutting the financial sector’s anticipated costs by $14 billion over the coming decade. They achieved this success at a time when the SEC and other agencies were scrambling (and, it soon became clear, failing) to keep up with the rapidly expanding speed, complexity, and volume of Wall Street activity.

Dirty Secrets How Tax Havens Destroy the Economy by Richard Murphy

"Friedman doctrine" OR "shareholder theory", banking crisis, barriers to entry, Bernie Sanders, centre right, corporate governance, Donald Trump, Double Irish / Dutch Sandwich, en.wikipedia.org, Glass-Steagall Act, Global Witness, high net worth, income inequality, intangible asset, Leo Hollis, light touch regulation, moral hazard, Occupy movement, offshore financial centre, race to the bottom, Social Responsibility of Business Is to Increase Its Profits, Suez canal 1869, Suez crisis 1956, The Wealth of Nations by Adam Smith, transfer pricing, Washington Consensus

This started with the Thatcher and Reagan administrations in the UK and United States. From there, the spread of such policies was not limited to parties of the right; it is fair to suggest, for example, that the Clinton administration of 1992–2000 endorsed many of the same ideas. Indeed, its abolition of the Glass–Steagall Act, which deregulated much of the US banking sector, was influenced by the philosophy of the Washington Consensus. Tony Blair’s New Labour governments in the UK were equally neoliberal in their outlook. The results have been unsurprising. Over the recent period, social democracy has very largely ceased to be either social or democratic, under the influence of such economic thinking.

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See also trusts France 18, 24–5 free markets market conditions 29–30 tax havens effect on 30–2 and trust 37 free riders 11, 12, 164 Friedman, Milton 41, 42 FTSE 100 companies 25–6 G8 summit, 2013 26, 46–7 G20 summit, London, April 2009 9–10, 19–20 gambling 3, 77–8 GDP 172 General Electric 74, 76 Germany 68, 69, 97–8 Gibraltar 77–8 Glass–Steagall Act (US) 45 global financial architecture 10–11 global financial crisis, 2008 9, 74–5, 90, 125 Global Forum on Transparency and Exchange of Information (OECD) 19–20 globalisation 71–2, 84, 137–8, 161 Google 26, 46, 57, 78 governance 36 government post–tax haven 166–9 role of 42–3 greed 84 Green, Lady Christina 141 Greenland 18 growth 3 Guernsey 14–15, 53, 77, 90, 93–4 harmful tax competition 11–14 Harrington, Brooke 5, 90–1 headline tax rates 75–6 Henry, James 40, 109–11 Heritage Foundation 20–1 Hidden Wealth of Nations, The (Zucman) 112–14, 113 history and development 5, 54–6, 84–5 holding structures 34–8 Hong Kong 77, 100 hot money 74–6, 172 House of Commons Public Accounts Committee (UK) 26, 73, 78 House of Commons Treasury Select Committee (UK) 22 HSBC 60, 103 human rights 144 Iceland 46 India 18 inequality 2, 177 information exchange 12, 15, 17, 32–3, 125–6, 152, 157, 175, 177 inheritance and inheritance tax 3, 64–5 Institute of Economic Affairs 41–2 intent 56 International Consortium of Investigative Journalists 101 International Monetary Fund (IMF) 2, 4, 44, 114, 115, 116–17 investment markets 165–6 Ireland 56, 57, 71, 75 Isle of Man 15, 53, 102, 175–6 Israel 158 Japan 68, 97 Jersey 14–15, 16, 19, 20, 21, 53–4, 54, 57, 58–9, 62–3, 69, 71, 83, 86–7, 92, 93–4, 102, 126, 134, 135, 170, 173 Jersey Finance 86 Juncker, Jean-Claude 16 Keen, Michael 114 knock-on effects 116–17 KPMG 25–6, 73, 75, 87, 152 Labour Party (UK) 46 land-value taxation 177 lawyers 89, 154–5 Le Pen, Marine 45 Levin, Carl 22 Liberia 87 Liberian shipping register 77 limited companies 35, 38, 39–40 limited liability 145 abuse of 36–40 literature 21 locations 8, 68–9, 78, 87–8 London 171 Anti-Corruption Summit, 2016 7, 11, 28, 48, 87 G20 summit, April 2009 9–10, 19–20 Lord Mayor of London 52 Luxembourg 15–16, 57, 94, 97, 124, 134, 135 Macau 101 McLaughlin, Alden 86 macro-economic control 167 Malta 56–7, 77, 93–4 Maples and Calder 89 market efficiency 30–1, 118, 120, 165–6 markets 162–3 conditions 29–30 success criteria 3 supremacy 84 tax havens effect on 30–2 trends 137 and trust 37 Marshall Islands 77 Marshall Plan 51–2 Mauritius 57 Meacher, Michael 145 Meluah, Katy 66 Microsoft 74 Mitchell, Dan 40–1 mixed economies 2–3, 162, 164–5 Monaco 8 money laundering 60 money transfers 58–9 Monte Carlo casino 8 Montserrat 87 Mooij, Ruud De 114 Mossack Fonseca 25, 66, 89, 101–2 motivations 60 Multilateral Convention on Mutual Administrative Assistance in Tax Matters (MCMAA) 158 multinational corporations 147, 150 Mutual Assistance Agreement (OECD) 49 neoliberalism 43–4, 84, 161 Netherlands, the 45, 57, 156, 171 New Jersey 55 New York 171 New Zealand 171 Niue 94 non-dom rule (UK) 54–5 non-residents, tax benefits 13 non-trading companies 143 Obama, Barack 17, 89, 125 Occupy movement 25 offshore 8 definition 21, 51 emergence 51–4 offshore bank accounts 59 offshore companies 79–81 numbers 7, 101–2 offshore economy, size 105–15, 113 O’Neil, Paul 13 onshore companies 81 onshore trusts 81–2 opacity 3, 27, 28, 31, 48 Organisation for Economic Cooperation and Development (OECD) 2, 4, 47, 71, 95, 114 Base Erosion and Profits Shifting programme 73, 126–7, 146–7, 148 blacklisting scheme 17–18, 157–8 country-by-country reporting 129, 129–32, 133, 134–8 Double Tax Agreements 18 Global Forum on Transparency and Exchange of Information 19–20, 157 Mutual Assistance Agreement 49 report on Harmful Tax Competition 9, 11–13, 14 revenue loss estimates 107–8 tax haven initiatives 17–21, 23, 24, 26, 27–8, 48, 123–4, 125–6, 126–8, 157–8 Tax Information Exchange Agreements (TIEAs) 18–19, 20 unitary taxation formula 149 Osborne, George 60 ownership disclosure 140–2 Oxfam 111–12 ‘Tax Havens: Releasing the Hidden Billions for Poverty Eradication’ 105–6, 107 Oxford Centre for Business Taxation 108 Pak, Simon 108 Palan, Ronen 5, 10, 21, 23, 51–2, 59 Panama 77, 93–4, 99 Panama Papers 5, 7, 8, 25, 28, 35, 46, 66, 89, 101, 102, 162 Parmalat 39 patent box schemes 76 peer reviews 20 penalty regimes 154–5 Pfizer 74 Picciotto, Sol 21, 106 political stability, threat to 2 political stereotype 8 political will 155–9, 175–6 politicians and politics, role of 84–6 practices 12–13 Price of Offshore, The (Tax Justice Network) 107 ‘Price of Offshore Revisited, The’ (Tax Justice Network) 109–11 PricewaterhouseCoopers 25–6, 73, 87, 152 privacy 32–5, 66–7, 144, 162 Private Eye (magazine) 25 products 79–84 profit determination 13 profit shifting 70–1, 148 property 3, 59–60 prices 174 rights 179 prosecutions 103 Public and Commercial Services Union 25 public and private partnerships 165 public opinion 103, 145, 175 purposes 1 Reagan, Ronald 44 reforms 4, 145–51, 176–8 regulation 3, 29 revenue loss 2, 105–15, 113 implications 115–21 scale 40 risk 10, 36–7, 38, 135–7, 164 rule of law 3, 161, 178–9 sales patterns 136–7 Sanders, Bernie 45, 117 San Marino–Andorra TIEA 18 Savings Tax Directive (EU) 9, 15–17, 48, 94 secrecy 10, 12, 49, 58, 70–1, 161 assessment 93–103 banking 24, 55–6 becomes key issue 25, 27 British challenge to 46–8 collective denial of 28 comparison with privacy 32–5 definition 34 effects on free markets 30–2 financial costs 40 implications 117–21, 138 importance of 22, 23 and risk 36–7, 38 secrecy jurisdictions 29, 44, 87, 178–9 definition 22–3, 57 layering 23–5 pernicious role 23 post–tax haven 171 secrecy laws 36–7 secrecy space 23–4 separateness, supposed 10–11 service industry 84–93 Sharman, Jason 142 Shaxson, Nicholas 5, 52 shipping registrations 77 side letters 82 Sikka, Prem 21, 87 silence, conspiracy of 43 Singapore 77, 100 Smith, Adam 38–9 social impacts, post–tax haven 176–80 social media 65 Society of Trusts and Estate Practitioners 83, 91–2 South Africa 94 Spain 18 special purpose vehicles 80–1 specific jurisdictions 23 Starbucks 26, 46, 163 STAR trust legislation, Cayman Islands 83, 91–2 states, sovereign rights 151 status 10 Suez Crisis, 1956 51–2 Sweden 32, 156 Switzerland 55–6, 57, 68, 100, 112 tax abuse 2 tax administrations 156–7 tax advisers 63 tax avoidance 41–2, 69, 120 definition 61–2 developing countries 28 personal liability 154–5 schemes 62–7, 76 United Kingdom 26 tax benefits, non-residents 13 tax competition 11–14, 43–9, 74–6, 85, 92, 93, 123, 167, 179 tax compliance 61, 63, 119–20, 144–5, 167 tax evasion 61–2, 103, 109, 113 tax gaps 2, 113, 155–6 tax haven companies 67 tax haven investments 59 tax havens activities 58–60 definition 54, 123 ‘Tax Havens: Releasing the Hidden Billions for Poverty Eradication’ (Oxfam) 105–6, 107 tax incentives 13 Tax Information Exchange Agreements (TIEAs) (OECD) 18–19, 20 tax justice activists 7 Tax Justice Network 21–2, 25, 40, 92, 105, 106, 142, 158, 171 Financial Secrecy Index 22–4, 57, 87, 93–6, 96–103, 184–9, 191–2, 193–7 The Price of Offshore 107 ‘The Price of Offshore Revisited’ 109–11 tax law 3, 154–5 tax-neutral regimes 86 tax obligations 34, 41 tax rates corporate 71, 75, 94 headline 75–6 reform 176–8 tax reform 176–7 tax risk 135–7 tax transparency 19 tax war 179 tax withholding, European Union 16 terrorist financing 14 Thatcher, Margaret 44 threat 1–2, 4, 7, 9 Tonga 94 Trade Union Congress 25, 25–6 transfer pricing 71–4 transparency 12, 13, 39, 48, 127, 161–2, 163, 166 Trump, Donald 45, 46, 117 trust 37, 119, 164–5 trust laws 83 trusts 35, 81–4, 139–40, 176 Turkey 158 Turks and Caicos Islands 93, 96 Uncut movement 25 unitary taxation 147–9 United Kingdom 24–5, 68 100 largest companies 69 Barclays data 134, 135 Brexit vote 117 challenge to tax haven secrecy 46–8 companies documentation 38 company growth 102 corporate tax 75 Crown Dependencies 14–15, 48, 53, 96, 124 Department for International Development 108–9 disclosure regime 153 domicile rule 54 draft legislation, 2013 145 hot money 75 House of Commons Public Accounts Committee 26, 73, 78 House of Commons Treasury Select Committee 22 Labour Party 46 non-trading companies 143 Overseas Territories 15, 48, 56, 96 penalty regime 154–5 prosecutions 103 revenue loss 115, 120 secrecy score 96–7, 193, 196 tax administration 157 tax avoidance 26 tax gap 113, 156 tax haven activity cost 113 tax havens 14–15, 16, 48, 53–4, 54, 56, 84, 86–7, 96, 170, 171 Tax Information Exchange Agreements (TIEAs) 19 tax resident people 55 Uncut movement 25 and unitary taxation 149 United States of America 9, 24–5, 60, 68, 69 corporate tax rates 71 corporate tax system 74 corporation tax 40 disclosure regimes 142, 167 failure 13 Federal Trade Commission 29–30 Foreign Accounts Tax Compliance Act (FATCA) 17, 99, 126, 158 Glass–Steagall Act 45 headline tax rates 75–6 hot money 74–5 hypocrisy 158 Internal Revenue Service 156 Occupy movement 25 secrecy score 97, 98–9, 193, 196 tax gap estimates 156 tax havens 8, 17, 55, 142, 171 Vanuatu 87 Verizon 76 virtual world, the 21–2 VISTA trust 24 Vodafone 26 voter participation, decline in 3 Washington Consensus, the 43–5, 46 Watson, Emma 66 wealth concentration of ownership 3, 111, 117, 161, 167–9, 176 under-taxation of 178 wealth-management professionals 84, 90–2, 155 wealth taxes 177 World Bank 2, 44, 108–9, 109 Zucman, Gabriel 40, 102 The Hidden Wealth of Nations 112–14, 113

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See also trusts France 18, 24–5 free markets market conditions 29–30 tax havens effect on 30–2 and trust 37 free riders 11, 12, 164 Friedman, Milton 41, 42 FTSE 100 companies 25–6 G8 summit, 2013 26, 46–7 G20 summit, London, April 2009 9–10, 19–20 gambling 3, 77–8 GDP 172 General Electric 74, 76 Germany 68, 69, 97–8 Gibraltar 77–8 Glass–Steagall Act (US) 45 global financial architecture 10–11 global financial crisis, 2008 9, 74–5, 90, 125 Global Forum on Transparency and Exchange of Information (OECD) 19–20 globalisation 71–2, 84, 137–8, 161 Google 26, 46, 57, 78 governance 36 government post–tax haven 166–9 role of 42–3 greed 84 Green, Lady Christina 141 Greenland 18 growth 3 Guernsey 14–15, 53, 77, 90, 93–4 harmful tax competition 11–14 Harrington, Brooke 5, 90–1 headline tax rates 75–6 Henry, James 40, 109–11 Heritage Foundation 20–1 Hidden Wealth of Nations, The (Zucman) 112–14, 113 history and development 5, 54–6, 84–5 holding structures 34–8 Hong Kong 77, 100 hot money 74–6, 172 House of Commons Public Accounts Committee (UK) 26, 73, 78 House of Commons Treasury Select Committee (UK) 22 HSBC 60, 103 human rights 144 Iceland 46 India 18 inequality 2, 177 information exchange 12, 15, 17, 32–3, 125–6, 152, 157, 175, 177 inheritance and inheritance tax 3, 64–5 Institute of Economic Affairs 41–2 intent 56 International Consortium of Investigative Journalists 101 International Monetary Fund (IMF) 2, 4, 44, 114, 115, 116–17 investment markets 165–6 Ireland 56, 57, 71, 75 Isle of Man 15, 53, 102, 175–6 Israel 158 Japan 68, 97 Jersey 14–15, 16, 19, 20, 21, 53–4, 54, 57, 58–9, 62–3, 69, 71, 83, 86–7, 92, 93–4, 102, 126, 134, 135, 170, 173 Jersey Finance 86 Juncker, Jean-Claude 16 Keen, Michael 114 knock-on effects 116–17 KPMG 25–6, 73, 75, 87, 152 Labour Party (UK) 46 land-value taxation 177 lawyers 89, 154–5 Le Pen, Marine 45 Levin, Carl 22 Liberia 87 Liberian shipping register 77 limited companies 35, 38, 39–40 limited liability 145 abuse of 36–40 literature 21 locations 8, 68–9, 78, 87–8 London 171 Anti-Corruption Summit, 2016 7, 11, 28, 48, 87 G20 summit, April 2009 9–10, 19–20 Lord Mayor of London 52 Luxembourg 15–16, 57, 94, 97, 124, 134, 135 Macau 101 McLaughlin, Alden 86 macro-economic control 167 Malta 56–7, 77, 93–4 Maples and Calder 89 market efficiency 30–1, 118, 120, 165–6 markets 162–3 conditions 29–30 success criteria 3 supremacy 84 tax havens effect on 30–2 trends 137 and trust 37 Marshall Islands 77 Marshall Plan 51–2 Mauritius 57 Meacher, Michael 145 Meluah, Katy 66 Microsoft 74 Mitchell, Dan 40–1 mixed economies 2–3, 162, 164–5 Monaco 8 money laundering 60 money transfers 58–9 Monte Carlo casino 8 Montserrat 87 Mooij, Ruud De 114 Mossack Fonseca 25, 66, 89, 101–2 motivations 60 Multilateral Convention on Mutual Administrative Assistance in Tax Matters (MCMAA) 158 multinational corporations 147, 150 Mutual Assistance Agreement (OECD) 49 neoliberalism 43–4, 84, 161 Netherlands, the 45, 57, 156, 171 New Jersey 55 New York 171 New Zealand 171 Niue 94 non-dom rule (UK) 54–5 non-residents, tax benefits 13 non-trading companies 143 Obama, Barack 17, 89, 125 Occupy movement 25 offshore 8 definition 21, 51 emergence 51–4 offshore bank accounts 59 offshore companies 79–81 numbers 7, 101–2 offshore economy, size 105–15, 113 O’Neil, Paul 13 onshore companies 81 onshore trusts 81–2 opacity 3, 27, 28, 31, 48 Organisation for Economic Cooperation and Development (OECD) 2, 4, 47, 71, 95, 114 Base Erosion and Profits Shifting programme 73, 126–7, 146–7, 148 blacklisting scheme 17–18, 157–8 country-by-country reporting 129, 129–32, 133, 134–8 Double Tax Agreements 18 Global Forum on Transparency and Exchange of Information 19–20, 157 Mutual Assistance Agreement 49 report on Harmful Tax Competition 9, 11–13, 14 revenue loss estimates 107–8 tax haven initiatives 17–21, 23, 24, 26, 27–8, 48, 123–4, 125–6, 126–8, 157–8 Tax Information Exchange Agreements (TIEAs) 18–19, 20 unitary taxation formula 149 Osborne, George 60 ownership disclosure 140–2 Oxfam 111–12 ‘Tax Havens: Releasing the Hidden Billions for Poverty Eradication’ 105–6, 107 Oxford Centre for Business Taxation 108 Pak, Simon 108 Palan, Ronen 5, 10, 21, 23, 51–2, 59 Panama 77, 93–4, 99 Panama Papers 5, 7, 8, 25, 28, 35, 46, 66, 89, 101, 102, 162 Parmalat 39 patent box schemes 76 peer reviews 20 penalty regimes 154–5 Pfizer 74 Picciotto, Sol 21, 106 political stability, threat to 2 political stereotype 8 political will 155–9, 175–6 politicians and politics, role of 84–6 practices 12–13 Price of Offshore, The (Tax Justice Network) 107 ‘Price of Offshore Revisited, The’ (Tax Justice Network) 109–11 PricewaterhouseCoopers 25–6, 73, 87, 152 privacy 32–5, 66–7, 144, 162 Private Eye (magazine) 25 products 79–84 profit determination 13 profit shifting 70–1, 148 property 3, 59–60 prices 174 rights 179 prosecutions 103 Public and Commercial Services Union 25 public and private partnerships 165 public opinion 103, 145, 175 purposes 1 Reagan, Ronald 44 reforms 4, 145–51, 176–8 regulation 3, 29 revenue loss 2, 105–15, 113 implications 115–21 scale 40 risk 10, 36–7, 38, 135–7, 164 rule of law 3, 161, 178–9 sales patterns 136–7 Sanders, Bernie 45, 117 San Marino–Andorra TIEA 18 Savings Tax Directive (EU) 9, 15–17, 48, 94 secrecy 10, 12, 49, 58, 70–1, 161 assessment 93–103 banking 24, 55–6 becomes key issue 25, 27 British challenge to 46–8 collective denial of 28 comparison with privacy 32–5 definition 34 effects on free markets 30–2 financial costs 40 implications 117–21, 138 importance of 22, 23 and risk 36–7, 38 secrecy jurisdictions 29, 44, 87, 178–9 definition 22–3, 57 layering 23–5 pernicious role 23 post–tax haven 171 secrecy laws 36–7 secrecy space 23–4 separateness, supposed 10–11 service industry 84–93 Sharman, Jason 142 Shaxson, Nicholas 5, 52 shipping registrations 77 side letters 82 Sikka, Prem 21, 87 silence, conspiracy of 43 Singapore 77, 100 Smith, Adam 38–9 social impacts, post–tax haven 176–80 social media 65 Society of Trusts and Estate Practitioners 83, 91–2 South Africa 94 Spain 18 special purpose vehicles 80–1 specific jurisdictions 23 Starbucks 26, 46, 163 STAR trust legislation, Cayman Islands 83, 91–2 states, sovereign rights 151 status 10 Suez Crisis, 1956 51–2 Sweden 32, 156 Switzerland 55–6, 57, 68, 100, 112 tax abuse 2 tax administrations 156–7 tax advisers 63 tax avoidance 41–2, 69, 120 definition 61–2 developing countries 28 personal liability 154–5 schemes 62–7, 76 United Kingdom 26 tax benefits, non-residents 13 tax competition 11–14, 43–9, 74–6, 85, 92, 93, 123, 167, 179 tax compliance 61, 63, 119–20, 144–5, 167 tax evasion 61–2, 103, 109, 113 tax gaps 2, 113, 155–6 tax haven companies 67 tax haven investments 59 tax havens activities 58–60 definition 54, 123 ‘Tax Havens: Releasing the Hidden Billions for Poverty Eradication’ (Oxfam) 105–6, 107 tax incentives 13 Tax Information Exchange Agreements (TIEAs) (OECD) 18–19, 20 tax justice activists 7 Tax Justice Network 21–2, 25, 40, 92, 105, 106, 142, 158, 171 Financial Secrecy Index 22–4, 57, 87, 93–6, 96–103, 184–9, 191–2, 193–7 The Price of Offshore 107 ‘The Price of Offshore Revisited’ 109–11 tax law 3, 154–5 tax-neutral regimes 86 tax obligations 34, 41 tax rates corporate 71, 75, 94 headline 75–6 reform 176–8 tax reform 176–7 tax risk 135–7 tax transparency 19 tax war 179 tax withholding, European Union 16 terrorist financing 14 Thatcher, Margaret 44 threat 1–2, 4, 7, 9 Tonga 94 Trade Union Congress 25, 25–6 transfer pricing 71–4 transparency 12, 13, 39, 48, 127, 161–2, 163, 166 Trump, Donald 45, 46, 117 trust 37, 119, 164–5 trust laws 83 trusts 35, 81–4, 139–40, 176 Turkey 158 Turks and Caicos Islands 93, 96 Uncut movement 25 unitary taxation 147–9 United Kingdom 24–5, 68 100 largest companies 69 Barclays data 134, 135 Brexit vote 117 challenge to tax haven secrecy 46–8 companies documentation 38 company growth 102 corporate tax 75 Crown Dependencies 14–15, 48, 53, 96, 124 Department for International Development 108–9 disclosure regime 153 domicile rule 54 draft legislation, 2013 145 hot money 75 House of Commons Public Accounts Committee 26, 73, 78 House of Commons Treasury Select Committee 22 Labour Party 46 non-trading companies 143 Overseas Territories 15, 48, 56, 96 penalty regime 154–5 prosecutions 103 revenue loss 115, 120 secrecy score 96–7, 193, 196 tax administration 157 tax avoidance 26 tax gap 113, 156 tax haven activity cost 113 tax havens 14–15, 16, 48, 53–4, 54, 56, 84, 86–7, 96, 170, 171 Tax Information Exchange Agreements (TIEAs) 19 tax resident people 55 Uncut movement 25 and unitary taxation 149 United States of America 9, 24–5, 60, 68, 69 corporate tax rates 71 corporate tax system 74 corporation tax 40 disclosure regimes 142, 167 failure 13 Federal Trade Commission 29–30 Foreign Accounts Tax Compliance Act (FATCA) 17, 99, 126, 158 Glass–Steagall Act 45 headline tax rates 75–6 hot money 74–5 hypocrisy 158 Internal Revenue Service 156 Occupy movement 25 secrecy score 97, 98–9, 193, 196 tax gap estimates 156 tax havens 8, 17, 55, 142, 171 Vanuatu 87 Verizon 76 virtual world, the 21–2 VISTA trust 24 Vodafone 26 voter participation, decline in 3 Washington Consensus, the 43–5, 46 Watson, Emma 66 wealth concentration of ownership 3, 111, 117, 161, 167–9, 176 under-taxation of 178 wealth-management professionals 84, 90–2, 155 wealth taxes 177 World Bank 2, 44, 108–9, 109 Zucman, Gabriel 40, 102 The Hidden Wealth of Nations 112–14, 113

A Colossal Failure of Common Sense: The Inside Story of the Collapse of Lehman Brothers by Lawrence G. Mcdonald, Patrick Robinson

"World Economic Forum" Davos, Alan Greenspan, AOL-Time Warner, asset-backed security, bank run, Bear Stearns, Black Monday: stock market crash in 1987, book value, business cycle, Carl Icahn, collateralized debt obligation, corporate raider, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, cuban missile crisis, diversification, fixed income, Glass-Steagall Act, high net worth, hiring and firing, if you build it, they will come, it's over 9,000, junk bonds, London Interbank Offered Rate, Long Term Capital Management, margin call, money market fund, moral hazard, mortgage debt, naked short selling, negative equity, new economy, Ronald Reagan, Savings and loan crisis, short selling, sovereign wealth fund, value at risk

For most people, victims or not of this worldwide collapse of the financial markets, it will be, in time, just water over the dam. But it will never be that for me, and my long background as a trader and researcher has prompted me many times to burrow down further to the bedrock, the cause of the crash of 2008. I refer to the repeal of the Glass-Steagall Act in 1999. If only President Clinton had never signed the bill repealing Glass-Steagall. Personally, I never thought he much wanted to sign it, but to understand the ramifications it is necessary to delve deeper, and before I begin my story, I will present you with some critical background information, without which your grasp might be incomplete.

…

President Clinton wanted to stay focused with the concerns of the bankers, many of whom were seriously upset by Achtenberg’s pressure to provide shaky mortgages. And right before the president’s eyes there was a related situation, one that had the deepest possible roots in the American financial community. This was the fabled Glass-Steagall Act of 1933, the post–Wall Street crash legislation that prevented commercial banks from merging with investment banks, thus eliminating the opportunity for the high-rolling investment guys to get their hands on limitless supplies of depositors’ money. Glass-Steagall was nothing short of a barrier, and it stayed in place for more than sixty years, but the major U.S. banks wanted it abolished.

…

It would take another four years for this Depression-era legislation to come once more under attack. President Clinton understood the ramifications, and he was wary of the reform, wary of seeming to be allied with the power brokers of the biggest banks in the country. He understood the complexities of the Glass-Steagall Act, its origins, and its purposes—principally to prevent some diabolical investment house from plunging in big on a corporation like Enron and going down with a zillion dollars of small depositors’ cash. No part of that did President Bill need. On one hand was the belief of the main U.S. clearing banks that such mergers would strengthen the whole financial industry by increasing opportunities for hefty profits.

The Butterfly Defect: How Globalization Creates Systemic Risks, and What to Do About It by Ian Goldin, Mike Mariathasan

air freight, air traffic controllers' union, Andrei Shleifer, Asian financial crisis, asset-backed security, bank run, barriers to entry, Basel III, Bear Stearns, behavioural economics, Berlin Wall, biodiversity loss, Bretton Woods, BRICs, business cycle, butterfly effect, carbon tax, clean water, collapse of Lehman Brothers, collateralized debt obligation, complexity theory, connected car, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, David Ricardo: comparative advantage, deglobalization, Deng Xiaoping, digital divide, discovery of penicillin, diversification, diversified portfolio, Douglas Engelbart, Douglas Engelbart, Edward Lorenz: Chaos theory, energy security, eurozone crisis, Eyjafjallajökull, failed state, Fairchild Semiconductor, Fellow of the Royal Society, financial deregulation, financial innovation, financial intermediation, fixed income, Gini coefficient, Glass-Steagall Act, global pandemic, global supply chain, global value chain, global village, high-speed rail, income inequality, information asymmetry, Jean Tirole, John Snow's cholera map, Kenneth Rogoff, light touch regulation, Long Term Capital Management, market bubble, mass immigration, megacity, moral hazard, Occupy movement, offshore financial centre, open economy, precautionary principle, profit maximization, purchasing power parity, race to the bottom, RAND corporation, regulatory arbitrage, reshoring, risk free rate, Robert Solow, scientific management, Silicon Valley, six sigma, social contagion, social distancing, Stuxnet, supply-chain management, systems thinking, tail risk, TED Talk, The Great Moderation, too big to fail, Toyota Production System, trade liberalization, Tragedy of the Commons, transaction costs, uranium enrichment, vertical integration

Our power was limited to that of publishing reports and preaching sermons.”32 The culture of deregulation became entrenched worldwide despite the efforts of groups such as the Basel Committee on Banking Supervision and warnings of a number of the world’s foremost economists.33 At the height of subprime lending in the United States, the attorneys general of all 50 states were seeking to investigate these risky practices but were “blocked by a coalition of major banks and the Bush administration,” which used the archaic National Banking Act of 1863 to prevent state-level action.34 In the United States, the world’s largest national financial market, legislation such as the Glass-Steagall Act had aimed to foster financial stability since the Great Depression. Commercial and investment banking activities were separated, reducing speculation and risk taking by stopping banks from “gambling” with savings. In the decades after Glass-Steagall’s ratification, however, administrations convinced of the merits of uncontrolled capital flow began to undermine such efforts. The repeal of the Glass-Steagall Act by the Gramm-Leach-Bliley Act in 1999 constituted the final removal of the divide between commercial and investment banking.

…

In the short term this provided more financial activity, higher revenues, more taxes, and more growth and explains why so many policy makers argued that their domestic financial system had to become “more competitive,” which they took to mean bound by less regulation. Referring to the so-called Glass-Steagall Act of 1933 (which limited the possible interaction between commercial banking and securities firms), Senator Phil Gramm, chairman of the Senate Committee on Banking, promoted the Gramm-Leach-Bliley Act of 1999, stating: “We are here today to repeal Glass-Steagall because we have learned that government is not the answer.

…

See General Agreement on Tariffs and Trade Geisel, Theo, 24 General Agreement on Tariffs and Trade (GATT), Uruguay Round, 12, 73 General Motors, 78 genetic disorders, 159–60 geographical risks, 28–30 geographic concentration: of economic activity, 212–13; in financial sector, 29, 30, 204, 213; of infrastructure, 212; of manufacturing, 29–30, 81, 84, 96, 98, 131; reduction of, 122, 205, 212–14; systemic risks and, 29–30, 212–13; of transportation nodes, 101–2, 103–4, 212. See also urban areas Germany: exports of, 74, 74f; inequality in, 170; political extremism in, 192 Glass-Steagall Act of 1933, 48, 49, 52–53b global financial governance, 60–62, 65, 68. See also financial regulation global governance: accountability of, 201; collective action in, 3–4; contingency plans, 217–18; coordination with national institutions, 205; costs and benefits of, 205; data requirements of, 121–22; environmental, 142–43; flexibility of, 207; limiting, 202; national interests and, 211; need for reforms of, 34, 199, 201, 203, 206–9; policy recommendations for, 209–10, 212–20; scope of, 202; transparency of, 195–97, 199, 201, 207, 208–9, 214–15 globalization: benefits of, xiv, 30, 31–32, 219, 220; butterfly effect and, xiii–xiv; critics of, 30, 185–86, 198; definition of, 1, 10; effects of, 1–2, 9–10, 198–99; environmental effects of, 123, 126, 133–39; inclusive, 168–69, 182, 195–96, 199; management of, 1, 192, 195–96, 199, 200–202, 219; political backlash against, xiv, 4, 186, 187, 200; reversal attempts, xiv, 169, 182, 187, 190; seen as threat, xiv, 4, 188–89, 196; sustainable, 3–4, 31, 168–69, 182, 199, 208, 212.

Fool's Gold: How the Bold Dream of a Small Tribe at J.P. Morgan Was Corrupted by Wall Street Greed and Unleashed a Catastrophe by Gillian Tett

"World Economic Forum" Davos, accounting loophole / creative accounting, Alan Greenspan, asset-backed security, bank run, banking crisis, Bear Stearns, Black-Scholes formula, Blythe Masters, book value, break the buck, Bretton Woods, business climate, business cycle, buy and hold, collateralized debt obligation, commoditize, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, diversification, easy for humans, difficult for computers, financial engineering, financial innovation, fixed income, Glass-Steagall Act, housing crisis, interest rate derivative, interest rate swap, inverted yield curve, junk bonds, Kickstarter, locking in a profit, Long Term Capital Management, low interest rates, McMansion, Michael Milken, money market fund, mortgage debt, North Sea oil, Northern Rock, Plato's cave, proprietary trading, Renaissance Technologies, risk free rate, risk tolerance, Robert Shiller, Satyajit Das, Savings and loan crisis, short selling, sovereign wealth fund, statistical model, tail risk, The Great Moderation, too big to fail, value at risk, yield curve

In the Panic of 1907, when the New York Stock Exchange plunged to half of its value, Morgan put up vast sums of his personal fortune and rallied other leading bankers to do the same, shoring up the banking system. In the years after the Second World War, the bank lost some of its preeminence. After the crash of 1929, a populist backlash against Wall Street led to the introduction of the Glass-Steagall Act, which forced banks to split off their capital markets operations—the trading of debt and equity securities—from their commercial banking businesses. The J.P. Morgan empire was required to fragment into separate entities, including Morgan Stanley, the US brokerage; Morgan Grenfell, a British brokerage; and J.P.

…

In practice, during the twentieth century both American and European governments resolved the dilemma by keeping banking private but swaddling it in rules to ward against excesses. During the course of the century, those rules had expanded into what felt to bankers like a straitjacket of regulation. Some of the laws were national in nature, such as the Glass-Steagall Act in the United States, which separated commercial banking from investment banking. The Federal Reserve also imposed rules specifically on American commercial banks—with investment banks left outside its purview—including the stipulation that the total size of their liabilities could not exceed twenty times the size of their equity.

…

Sandy Weill, the freewheeling financier, embarked on a bold plan to merge Citibank with financial services powerhouse Travelers Group, which had previously bought the hard-charging brokerage Salomon Brothers, to create a financial behemoth called Citigroup. The brokerage Morgan Stanley acquired Dean Witter, creating a merged retail and institutional securities giant. By the late 1990s, the last remaining pieces of the Glass-Steagall Act looked like quaint relics, and Wall Street successfully lobbied for their final demise. On November 12, 1999, President Bill Clinton signed a bill repealing the last of the Depression-era rules. The repeal of Glass-Steagall legitimized the concept of combining commercial and investment banking to construct “one-stop shopping” empires, and many more mergers quickly followed, not just across different sectors of finance but across national borders, too.

Why Aren't They Shouting?: A Banker’s Tale of Change, Computers and Perpetual Crisis by Kevin Rodgers

Alan Greenspan, algorithmic trading, bank run, banking crisis, Basel III, Bear Stearns, Berlin Wall, Big bang: deregulation of the City of London, bitcoin, Black Monday: stock market crash in 1987, Black-Scholes formula, buy and hold, buy low sell high, call centre, capital asset pricing model, collapse of Lehman Brothers, Credit Default Swap, currency peg, currency risk, diversification, Fall of the Berlin Wall, financial innovation, Financial Instability Hypothesis, fixed income, Flash crash, Francis Fukuyama: the end of history, Glass-Steagall Act, Hyman Minsky, implied volatility, index fund, interest rate derivative, interest rate swap, invisible hand, John Meriwether, latency arbitrage, law of one price, light touch regulation, London Interbank Offered Rate, Long Term Capital Management, Minsky moment, money market fund, Myron Scholes, Northern Rock, Panopticon Jeremy Bentham, Ponzi scheme, prisoner's dilemma, proprietary trading, quantitative easing, race to the bottom, risk tolerance, risk-adjusted returns, Silicon Valley, systems thinking, technology bubble, The Myth of the Rational Market, The Wisdom of Crowds, Tobin tax, too big to fail, value at risk, vertical integration, Y2K, zero-coupon bond, zero-sum game

The Riegle–Neal Interstate Banking and Branching Efficiency Act of 1994 permitted bank holding companies to acquire banks in any state and allowed interstate bank mergers from 1997. The Gramm–Leach–Bliley Act of 1999 allowed banks to engage in non-banking financial activities such as insurance – in effect repealing the Glass–Steagall Act of 1933 which had, in the aftermath of the crash of 1929 and subsequent Depression, forcibly separated commercial and investment banking. But regulatory change explains why mergers were no longer impossible, not why they were done. Looking through the press releases of some of the mergers that occurred in the 1990s and 2000s, two dominant publicly expressed motivations keep recurring: the idea of the one-stop shop and the idea of efficiency gains.

…

., 197–8 dividends, 91, 147, 212 Dodd–Frank Act (2010), 209, 230 Dostoyevsky, Fyodor, 30 dot-com boom (1997–2000), 37, 146, 207 double knockouts, 107 Dow Jones, 79, 138, 147 Dresdner Bank, 20, 48 drive-bys, 17, 20, 68, 132 E e-trading, 55, 57, 67–73, 75, 84, 122 efficiency improvements, 169–70 efficient market theory, 203 Electronic Broking Services (EBS), 24–8, 31, 32–3, 42, 45, 46, 48, 50, 59–60, 63, 69–70, 71, 72, 73, 77, 83, 188 Electronic Communication Networks (ECNs), 59, 61, 66, 193 elephant deals, 38 email, 169, 191, 195, 197, 199 emerging markets, xi, 6, 29–30, 116–43, 147, 228 Empire State Building, New York, 130 ‘Engine’, 127–31, 135, 139, 157, 167, 169 engineering, x–xi, 10 Enron, 156 equities, viii, 23, 50, 66, 71, 74, 80, 89, 95, 146, 193, 207, 211, 235 circuit breakers, 80 colocation, 71 sales-traders, 50, 78 euro, 22, 28, 31, 37, 53, 69, 80, 81–3, 189 Euromoney, 36, 41, 47, 51–2, 54, 55, 56, 57, 64, 66–8, 70, 77, 81, 233 Europe, Middle Eastern and African (EMEA) markets, 117–18 European Union (EU), 102, 196, 201, 203, 207, 210, 212, 230 Exchange Rate Mechanism (ERM), xi, 22, 102–3, 106, 123, 130, 136, 207, 224 Liikanen Report (2012), 230 Maastricht Treaty (1992), 102 Market Infrastructure Regulation (EMIR), 209 ‘Every Day I Write the Book’ (Elvis Costello), 140 Excel, 107, 221 exchange rates, 9, 11–13, 14, 17, 32, 100 exotic derivatives, 105–11, 127 F ‘F9 monkeys’, 221 Fannie Mae, 90 Federal Reserve, xii, 90, 109, 143, 187, 202–6, 212 Federal Reserve Bank of Chicago, 193 fibre-optic cables, 77, 84 FIFA (Fédération Internationale de Football Association), 167 Financial Conduct Authority (FCA), 190 Financial Services Act (2013), 210 Financial Stability Board (FSB), 212, 214, 216 Financial Times, 116, 187 financial transactions tax, 216 fines, 181, 190, 196 First Chicago, 168 Fitch, 155 fixings, 181, 187–92, 198 Flannery, Mark, 215 Flash Crash (2010), 79–80, 193 Florence, Italy, 78 Florida, United States, 116 football, 10–11, 43, 83, 117, 167, 195 Forbes, 234 foreign direct investment (FDI), 136 foreign exchange (FX), viii, xi, xii, xiv, 3–28, 29–55, 56–84, 89, 90–1, 95–114, 115–44, 145, 158–9, 165, 174, 175, 180, 181–94, 196–7, 210, 213, 222–3, 224, 225, 233 aggressive prices, 14–15 Application Program Interfaces (APIs), 59–60, 66, 71, 78 Autobahn, 48–51, 53, 64, 68, 69–70, 78, 225 Automated Risk Manager (ARM), 53–5, 56–9, 64, 67, 70–1, 72, 73, 76, 79, 101, 129, 169 banging the close, 190 BARX, 64, 65 bidirectional flows, 69 calls, 19–21, 23, 27, 51, 53, 98, 99 carry trade, 108–10 Clackatron, 32–3, 54, 91 colocation, 71 complex risk, 159, 222 corporations, 9, 36, 61, 76, 96, 109–10 costs, 42 currency pairs, 9, 12, 14, 46, 53, 75, 80 decimalisation, 63–6, 67, 73, 77 drive-bys, 17, 20, 68, 132 Electronic Broking Services (EBS), 24–8, 31, 32–3, 42, 45, 46, 48, 50, 59–60, 63, 69–70, 71, 72, 73, 77, 83, 188 Electronic Communication Networks (ECNs), 59, 61, 66, 193 elephant deals, 38 emerging markets, xi, 6, 29–30, 116–43 Engine, 127–31, 135, 139, 157, 167, 169 fixings, 181, 187–92, 198 forwards trades, 10, 52, 77, 92, 121 hedge funds, 9, 29, 36, 57, 61, 66, 69–74, 77, 81, 120, 123, 131–5, 141–3 hedging, 97, 108, 117–18, 190, 225 high frequency trading (HFT), 57, 63, 73, 74, 75, 76, 77, 80, 84, 180, 194 LIBOR scandal (2012), 181–7, 188, 189, 190, 197, 198 liquidity, 18–19, 21, 27, 80–1, 83, 233 making rates, 13–21, 27, 38–9, 50, 96 market makers, 18–19, 21, 83 market shares, 41, 48, 51–2, 54, 55, 65, 66–8, 70, 77, 81, 169 ‘mine-and-yours’, 15–16, 18, 19, 192 Monte Carlo pricing, 111–14 off system trades, 111 OPTICS, 101, 103, 131, 153, 170 options trade, 10, 13, 20, 23, 27, 33–4, 38, 43–7, 49, 77, 95–114, 222–3 over-the-counter (OTC) market, 96, 209 passive v. active strategies, 17–19 pay, 43 pension funds, 9, 61, 76, 96 pips, 13, 18, 41, 65, 73, 77 Piranha, 48 pre-deal services, 8 prime brokerage (PB), 61–3, 66, 120, 209 production credits, 49–50 proprietary trading, 22, 31, 39, 46–7, 125 relative value trades, 72–3 retail trade, retail aggregators, 21, 61, 66, 74, 75, 79, 82–3 Reuters Dealing machines, 23, 25–8, 31, 32, 50, 59, 73 Revolutionary Application Program Interface Development (RAPID), 56–9, 77, 101 risk, 15, 16, 19, 20–1, 24, 29, 31, 38, 39, 40, 44–5, 49, 51, 53, 62, 77, 95, 96, 98, 99, 101–8, 110–14, 121–31, 135, 192 risk management systems, 24, 40, 44–5, 53–5, 56–9, 64, 67, 70–1, 72, 73, 76, 77, 79, 99, 101–8, 110–14, 121–31, 135 rogue systems, 79–80 salespeople, 8–9, 11, 13–15, 20, 24, 28, 29, 33, 35, 37, 46, 47–52, 68, 96, 120 settlements, 5, 24, 40, 44, 51, 61, 101, 209 screen scraping, 32–3, 50, 59 skewed prices, 18, 19, 73, 96, 98 slippage, 188–9 speculation, 21, 31, 102–14 spot, 3–28, 33–4, 42–4, 46, 48–55, 67, 76, 77, 91, 96, 97, 98–9, 108, 111, 118, 122, 159, 165, 169, 188, 189, 199, 201, 222 spread, 12, 14–15, 16, 18, 19, 31, 41–2, 44, 45, 53, 55, 61, 64, 68, 69, 75, 80, 96, 225 traders, 3–28, 33, 35, 38, 41, 43, 46, 50, 52–4, 67, 73, 76, 78, 96, 99, 122, 189 Triangle arbitrage, 31–2, 42, 54, 91, 122 two-way pricing, 11–21, 23, 99 volatility, 14, 26, 46–7, 74–5, 80, 98, 137 wallet, 40 window, 118, 137, 188 WM/R, 187–8 zero coupon bonds, 118–32, 134, 138–43, 149, 152, 158, 159, 173 forward rate agreements (FRAs), 182 forwards trades, 10, 52, 77, 92, 121 Four Seasons, The, 3–5, 9 France, 6–7, 35, 37, 41, 46, 55, 64, 65, 77, 102, 140, 159, 207 Freddie Mac, 90 free market economics, 202–6 FTSE 100, 147 Fuld, Dick, 226 FX All, 59, 78 FX-fixing scandal (2013), 181, 187–92, 198 FXCM, 82–3 G G20 nations, 209, 212, 216 gambling, 31, 102–14 gamma, 97–8, 100 Gaussian copula, 158 geekiness, x, 10, 43, 223 geopolitics, 229 Germany, vii–x, xii, xiii, 16, 28, 36, 44, 54, 75, 144–5, 159, 167, 180, 200, 204 mark, 9, 96, 97, 99, 100, 104 Gibson Greetings, 109 GKOs (rouble-denominated bonds), 118–32, 134, 138–43, 149, 152, 158, 159, 173 Glass–Steagall Act (1933), 168, 201, 230 globally systemically important banks (G-SIBs), 216 Goldman Sachs, 23, 146, 198, 216, 230 Commodity Index (GSCI), 148 Google, 78, 234 GQ, 141 Gramm–Leach–Bliley Act (1999), 168, 201 Great Depression (1929–39), 168 Great Financial Crisis (2007–8), xiii, xiv–xv, 74–5, 87–90, 114, 124, 163, 172–5, 179–80, 196, 204–6, 207, 217, 219, 220, 223, 227–8 Greece, 82, 92, 181 Greeks, 98, 99, 101, 105, 107, 110, 111, 112, 114, 127, 129, 150, 157, 158, 182, 219 Greenspan, Alan, 202–6 GSA, 233 Gulf War (1990–1), xi, 22, 95 Gulliver, Stuart, 231 H ‘haircuts’, 132 Haldane, Andrew, 173 hand signals, 16 Hang Seng, 137 Harrison, William, 168 Harrow School, London, 149 Harvard University, 166 La Haye Sainte, Belgium, 10 hedge funds, xi, 9, 29, 36, 57, 61, 66, 69–74, 77, 81, 97, 114, 116, 122, 123, 131–5, 141–2, 164, 171, 172, 201, 229, 233 hedging, 94, 95, 97, 108, 117–18, 144, 145–6, 157, 190, 225, 226 delta hedging, 97 Hellwig, Martin, 211 Henry, John, 28 Herrhausen, Alfred, 226 high frequency trading (HFT), 57, 63, 73, 74, 75, 76, 77, 80, 84, 180, 194 Hodgkin, Howard, 195 Holder, Noddy, 232 Hong Kong, 137 Hotspot, 59 Hounslow, London, 193 HSBC, 216, 229, 231 Hussein, Saddam, 22, 95 I ICAP, 73 Iceland, 167, 174 identity theft insurance, 231 Immendorff, Jörg, 56 indexes, 147–50, 153–4, 157, 163, 190 India, 149 Indonesia, 135, 137, 139 IndyMac, 90 initial margin, 120, 132 insurance, 93, 151, 164, 168, 172, 174, 229 Intelligent Flow Monster, 146 interest rates, viii, 7, 10, 92, 108–10, 135, 225 carry trade, 108–10 derivatives, 104, 132, 182–6, 214 futures, 182 LIBOR (London Interbank Offered Rate), 109, 181–7, 188, 189, 190, 197, 198 swaps, 8, 92, 182–4 International Monetary Fund (IMF), 132, 135, 140, 211, 214, 230 International Swap Dealers Association (ISDA), 152, 153 Internet, xii, 5, 42, 76, 78, 169, 191–2, 195, 197, 199, 228, 233–5 investment banking, 36, 87, 110, 133, 145–6, 151, 158, 165–8, 229–30 iPhone, 5, 228 Iran, 181–2 Iraq, xi, 22, 95 Israel, 29, 138 Italy, 10, 13, 22, 78, 115–16, 141 lira, 22, 102–3, 123 iTraxx, 153 J Jagger, Mick, 87 Japan, 61, 72, 79, 159 yen, 9, 14, 17, 28, 71–2, 75, 79, 80, 136, 184 JPMorgan Chase, 131, 150, 158, 163, 168, 182, 197, 216, 229, 231, 23 J.

…

(Frankie Valli and the Four Seasons), 3–5, 9 oil, 139, 148, 149–50, 220 Oktoberfest, 144–5 one-stop shop, 145, 160, 168, 230 online banking, 233–4 OPTICS, 101, 103, 131, 153, 170 option-based recapitalisation charge (OBRC), 217–18 options, 10, 13, 20, 23, 27, 33–4, 38, 43–7, 49, 77, 91–114, 121, 128, 134, 137, 140, 141, 149, 150, 218, 222–3 Asian options, 106 barrier products, 104, 107, 108 carry trade, 108–10 commoditisation, 110–11 delta hedging, 97 double knockouts, 107 exotics, 105–11, 127 foreign exchange, 10, 13, 20, 23, 27, 33–4, 38, 43–7, 49, 77, 95–114, 222–3 gamma, 97–8, 100 Greeks, 98, 99, 101, 105, 107, 110, 111, 112, 114, 127, 129, 150, 157, 158, 182, 219 lattice methods, 112 lookbacks, 107 over-the-counter (OTC) market, 96, 209 power options, 107 pricing of, 91–5, 107, 111–14, 128, 133, 150 range trades, 107, 108 rho, 98 risk-weighted assets (RWA), 124–31, 134, 166, 211 spoofing, 99, 192–3 strike price, 94, 95, 104, 113, 218 theta, 98, 140 time decay, 98 tree approach, 112–14 vega, 98 volatility, 94, 98, 128–9 Organisation for Economic Co-operation and Development (OECD), 124–5, 139, 207 over-the-counter (OTC) market, 96, 209 P Panopticon, 199 Patton, George Smith, 84 pay, 43, 161–3, 210, 216 PayPal, 233 peer-to-peer, 234 pension funds, 9, 61, 76, 96 Philippines, 137 ‘pipes’, 71, 72 ‘pips’, 13, 18, 41, 65, 73, 77 Piranha, 48 Pittsburgh, Pennsylvania, 209 Plankton Strategy, 38, 40, 55, 58 Poland, 117, 167 Ponzi schemes, 205–6 Portugal, 173 power options, 107 Prebon Yamane, 28 Precision Pricing, 65 prime brokerage (PB), 61–3, 66, 120, 209 principal model, 7–8 principles-based regulation (PBR), 201–2 Prisoners’ Dilemma, 84, 186, 197, 201 Procter and Gamble, 109, 136, 155 production credits, 49, 50 proprietary trading, 22, 31, 39, 46–7, 125 Prosper, 234 Pushkin, Alexander, 30 Q quadratic equations, 105–6 quantitative analysis, xiv, 100–1, 103–8, 110–14, 126, 150, 158 quantitative easing, 82 R Rand, Ayn, 202 range trades, 107 ratings agencies, 155–8, 208, 219 rational markets, 202–6 recapitalisation, 217 recovery value, 151, 157, 160 regulation, 73, 80, 131, 148, 152, 168, 174, 180, 186–7, 191–6, 198–9, 200–18, 229, 231, 232 BaFin, 200, 202 bank tax, 216 Basel Accords, 124, 125, 130, 166, 207–9, 211, 217, 231 Big Bang (1986), 201 Central Counterparties (CCPs), 209, 213–15, 229 Commodity Futures Trading Commission (CFTC), 202 computers, 209, 213 ‘cops on the beat’, 215 Dodd–Frank Act (2010), 209, 230 European Banking Authority (EBA), 211–12 Financial Services (Banking Reform) Act (2013), 210 Financial Stability Board (FSB), 212, 214, 216 Glass–Steagall Act (1933), 168, 201, 230 Gramm–Leach–Bliley Act (1999), 168, 201 option-based recapitalisation charge (OBRC), 217–18 principles-based regulation (PBR), 201–2 rational markets, 6, 202–6 Riegle–Neal Act (1994), 168 shadow banking, 214–15 surveillance, 110, 190, 195–9 trade repositories, 209–10 relative value trades, 72–3 repo markets, 171 request for quote (RFQ), 50, 51 retail banking, 169, 229–30, 233 retail FX, retail aggregators, 21, 61, 66, 74, 75, 79, 82–3 Reuters, 9, 22–3, 188 Reuters Dealing machines, 23, 25–8, 31, 32, 50, 59, 73 Revolutionary Application Program Interface Development (RAPID), 56–9, 77, 101 rho, 98 Riegle–Neal Act (1994), 168 risk, risk management, 15, 16, 19, 20–1, 24, 29, 31, 38–9, 40, 44–5, 53–5, 56–9, 64, 67, 70–1, 72, 73, 76, 77, 79, 99, 101–8, 110–14, 121–31, 135–6, 139, 142, 144, 150, 152, 157–63, 166– 7, 169–70, 172, 174, 200–1, 206–7, 209, 213, 219, 221, 224–7, 233 agency-like approach, 119, 127 Automated Risk Manager (ARM), 53–5, 56–9, 64, 67, 70–1, 72, 73, 76, 79, 101, 129, 169 BTAnalytics, 107, 108, 112, 134, 150 collateralised debt obligations (CDOs), 154, 156, 158–63 complex risk, 159 concentration, 213 counterparty credit risk, 141–2, 172, 201, 202–3, 209 credit default swaps (CDSs), 151–3, 157, 158, 164, 225 credit risk, 7, 8, 62–3, 123, 125–6, 130, 141, 151, 209 DBAnalytics, 150, 153 foreign exchange, 15, 16, 19, 20–1, 24, 29, 31, 38, 39, 40, 44–5, 49, 51, 53, 62, 77, 192 market risk, 7, 62, 123, 126, 130, 167 model dopes, 221–2 OPTICS, 101, 103, 131, 153, 170 perception gap, 220, 224 quantitative analysis, xiv, 100–1, 103–8, 110–14, 126, 150, 158 Revolutionary Application Program Interface Development (RAPID), 56–9, 77, 101 risk-adjusted return on capital (RAROC), 126–7, 131, 144, 219 risk-weighted assets (RWA), 124–31, 134, 166, 208, 211 shares, 92 Spreadsheet Solutions Framework (SSF), 111, 121, 138, 153 value at risk (VaR), 127–31, 135–6, 139, 142, 157, 158, 169, 170, 172, 174, 204, 207, 219, 226, 227 RiskMetrics, 131 rogue systems, 79–80 Rolling Stones, 87, 89, 151, 171, 172 Royal Bank of Scotland (RBS), 48, 217, 233 ‘Rule 575 – Disruptive Practices Prohibited’, 193 Russia, 30, 33, 38, 76, 114–32, 137–42, 146, 148, 150, 151, 152, 163, 172, 175, 199, 202, 204, 207, 221, 224, 228 Financial Crisis (1998), xi–xii, 29, 114, 115–16, 118–22, 124, 137–43, 146, 163, 172, 175, 202, 207, 221, 224, 228 rouble, 115–16, 118–22, 131, 137, 138, 139 rouble-denominated bonds (GKOs), 118–32, 134, 138–43, 149, 152, 158, 159, 173 S sales-traders, 50, 78 salespeople, 8–9, 11, 13–15, 20, 24, 28, 29, 33, 35, 37, 46, 47–52, 68, 96, 120 Salomon Brothers, 122, 133–4 Sanford, Charlie, 35, 126 Sarao, Navinder Singh, 193 Scholes, Myron, 94–5, 97 screen scraping, 32–3, 50, 59 Securities and Exchange Commission, 215 securities, 91, 145, 155 September 11 attacks (2001), 52, 146, 147 settlements, 5, 24, 40, 44, 51, 61, 101, 209 shadow banking, 214–15 shareholders, 25, 35, 47, 73, 84, 90, 124, 169, 172, 205 shares, 50, 60, 91, 113, 128, 212, 217 forward trades, 91–4, 133, 152 recapitalisation, 217 tree approach, 113 volatility, 94, 128–9 short-dated deposits, 8 Silicon Valley, 234 Singapore, 37, 137, 211 skewed prices, 18, 19, 73, 96, 98 slippage, 188–9 smartphones, 233 Soros, George, 24 South Africa, xvi Soviet Union (1922–91), 22, 64, 199, 204 Spain 87–9, 151, 159, 171, 172 ‘special purpose vehicle’, 154 spoofing, 99, 192–3 spot, 3–28, 33–4, 42–4, 46, 48–55, 67, 76, 77, 91, 96, 97, 98–9, 108, 111, 118, 122, 159, 165, 169, 188, 189, 199, 201, 222 automation, 23–8, 31–3, 42, 48–55, 56–84, 111, 199, 201 brokers, 3–28, 33, 43, 63, 192 traders, 3–31, 33, 35, 38, 41, 43, 46, 50, 52–4, 67–8, 73, 76, 78, 96, 99, 122, 189 voice traders, 54, 67, 76, 122 spread, 12, 14–15, 16, 18, 19, 31, 41–2, 44, 45, 53, 55, 61, 64, 68, 69, 75, 80, 96, 225 spread crossing, 18, 19 Spreadsheet Solutions Framework (SSF), 111, 121, 138, 153 spreadsheets, 33, 38, 40, 107, 111, 219 Standard and Poor’s (S&P), 155, 157, 160 Stanford University, 211 stocks, 50, 60, 79, 89, 117, 129, 133, 136, 138, 147–8, 203–4 indexes, 147–8 streamlining, 230–2 Stress VaR, 207, 211 strike price, 94, 95, 104, 113, 218 structured products, 44 structuring, 153, 219 student loans, 155, 231 sub-prime mortgages, 74, 88–90, 159–61, 170–2, 207, 227 suits, 132, 140–1, 149 surveillance, 110, 190, 195–9 swaps, 8, 92, 119–20, 121, 125, 126, 132, 134, 136, 141, 148, 149, 152, 173 Sweden, 148, 167 SWIFT, 23 Switzerland, 10, 81–3, 120, 211 franc, 9, 20, 31, 81–3 Swiss National Bank, 81–3 T Telerate, 9 ‘ten sigma event’, 135 Thailand, 135, 136, 139 theta, 98 ‘Things Can Only Get Better’ (D:Ream), 120, 121 time decay, 98 Tobin Tax, 216 Tokyo, Japan, 72 Tolstoy, Leo, 30 ‘too big to fail’, 90, 217 total return swaps (TRSs), 119–20, 136, 152 tracker funds, 147–8 trade repositories, 209–10 tranches, 154–9, 161, 174, 208 transparency, 141, 143, 151, 170, 212, 219 ‘tree approach’, 112–14 ‘trial by meeting’, 45, 52 triangle arbitrage, 31–2, 42, 54, 91, 122 Triangle Man, 31–2, 42, 54, 91, 122 Triple I High Risk Opportunities Fund, 116, 141 Troubled Asset Relief Program (TARP), 174, 175 Truth and Reconciliation, xvi Turkey, 231 Tuscany, Italy, 78, 115–16, 141 two-way pricing, 11–21, 23, 99 U UBS, 48, 52, 55, 59, 65, 68, 167, 197, 227 Ulster Bank, 233 United Kingdom, 22, 48, 89, 117, 120, 145, 163, 190, 200, 201–2, 203, 210, 233–4 Big Bang (1986), 201 Exchange Rate Mechanism Crisis (1992), xi, 22, 102–3 Financial Services Act (2013), 210 Flash Crash (2010), 79–80, 193 FX-fixing scandal (2013), 190 general election (1997), 120 LIBOR scandal (2012), 181–7, 188, 189, 190, 197, 198 London, England, vii–x, xi, 3, 9, 15, 35, 69, 72, 76, 79, 91, 120, 121, 137, 140, 193, 199, 202, 209 Northern Rock crisis (2007), 89, 163 pound, 9, 13, 28, 53, 184 principles-based regulation (PBR), 201–2 RBS recapitalisation (2008), 217 RBS/Ulster Bank system failure (2012), 233 Vickers Report (2013), 211, 230 United States, vii, xi, 9, 52, 56, 64, 69, 72, 74, 88–90, 108, 120, 143, 159–60, 168, 170–2, 196, 200, 203–6, 207, 209, 210, 212 Black Monday (1987), 108, 138, 204, 207 Comprehensive Capital Analysis and Review (CCAR), 212 Congress, 202, 205 Dodd–Frank Act (2010), 209, 230 dollar, 9, 12, 14, 17–18, 23, 28, 31, 53, 69, 71–2, 73, 79, 88, 96, 97, 99, 100, 104, 118, 119, 135, 136, 140, 184–6, 189 Federal Reserve, xii, 90, 109, 143, 187, 202–6, 212 Flash Crash (2010), 79–80, 193 Glass–Steagall Act (1933), 168, 201, 230 Gramm–Leach–Bliley Act (1999), 168, 201 Lehman Brothers bankruptcy (2008), 75, 89, 172–4, 179, 180, 217, 226, 230, 232 New York, 9, 35, 71, 72, 79, 88, 109, 169, 202 Riegle–Neal Act (1994), 168 September 11 attacks (2001), 52, 146, 147 Subprime Crisis (2007), 74, 88–90, 160–1, 170–2, 207, 227 Treasury bills, 119, 129, 133, 147 Vietnam War (1955–75), 181 Wall Street Crash (1929), 168 universal banking model, 230 V Valli, Frankie, 3–5, 9 value at risk (VaR), 127–31, 135–6, 139, 142, 157, 158, 169, 170, 172, 174, 204, 207, 219, 226, 227 Stress VaR, 207, 211 variation margin, 120, 141 vega, 98 Vickers Report (2013), 211, 230 voice traders, 54, 67, 76, 122 volatility, 14, 26, 46–7, 74–5, 80, 94, 98, 128–9, 137 Volker, Paul, 230 W Wall Street Crash (1929), 168 ‘Watanabe, Mrs’, 61, 75, 79, 82 weather derivatives, 144–5, 146 Wendt, Froukelien, 214 West Texas Intermediate, 139 Wheatley Report (2012), 184, 188 ‘window, the’ 118, 137, 188 ‘wisdom of crowds’, 204 WM/R, 187–8 World Cup 1998 France, 140 2014 Brazil, 195 World War I (1914–18), 207 X XTX, 233 Y Yale University, 110 ‘yours-and-mine’, 15–16, 18, 19, 192 Z zero coupon bonds, 118–32, 134, 138–43, 149, 152, 158, 159, 173 Zombanakis, Minos, 181–2 Zopa, 234 This ebook is copyright material and must not be copied, reproduced, transferred, distributed, leased, licensed or publicly performed or used in any way except as specifically permitted in writing by the publishers, as allowed under the terms and conditions under which it was purchased or as strictly permitted by applicable copyright law.

The Clash of the Cultures by John C. Bogle

Alan Greenspan, asset allocation, buy and hold, collateralized debt obligation, commoditize, compensation consultant, corporate governance, corporate social responsibility, Credit Default Swap, credit default swaps / collateralized debt obligations, diversification, diversified portfolio, estate planning, Eugene Fama: efficient market hypothesis, financial engineering, financial innovation, financial intermediation, fixed income, Flash crash, Glass-Steagall Act, Hyman Minsky, income inequality, index fund, interest rate swap, invention of the wheel, John Bogle, junk bonds, low interest rates, market bubble, market clearing, military-industrial complex, money market fund, mortgage debt, new economy, Occupy movement, passive investing, Paul Samuelson, Paul Volcker talking about ATMs, Ponzi scheme, post-work, principal–agent problem, profit motive, proprietary trading, prudent man rule, random walk, rent-seeking, risk tolerance, risk-adjusted returns, Robert Shiller, seminal paper, shareholder value, short selling, South Sea Bubble, statistical arbitrage, stock buybacks, survivorship bias, The Wealth of Nations by Adam Smith, transaction costs, two and twenty, Vanguard fund, William of Occam, zero-sum game

But after all the horse trading between Democrats and Republicans—and reformers, bankers, and lobbyists—I fear that its complex, obtuse regulations (some 170 separate rules are still being developed) involved in limiting proprietary trading by banks makes me wish we’d taken the simple step of restoring the separation of deposit taking banks from investment banks. The Glass-Steagall Act of 1933 worked well until it was gradually eroded and finally repealed in 1999. We’ve had too much crime and not enough punishment in our financial sector. I’d like to see far harsher penalties for white-collar criminals who abuse their clients’ trust. But, I salute the federal authorities for bringing wire-tapping into play in their prosecutions of insider trading, earning tough victories over highly placed executives who thought they could get away with breaking the law.

…

Let’s briefly look at the role that our major gatekeepers—10 in all—have played in abetting the new culture of speculation, particularly in the period leading up to the Great Crash of 2007–2009 and its aftermath. 1. Congress Congress, asleep at the switch during the 1990–2000 period, ignored the growing problems or even made them worse; for example, by repealing the Glass-Steagall Act, and by allowing stock option costs to be omitted from firms’ expense statements. Then, alarmed by the shocking scandals that came to light in 2001 at some of the nation’s largest corporations, our elected officials stepped up to the plate with the Sarbanes-Oxley Act of 2004. While much maligned by industry, what is commonly known as SOX required the implementation of many prudent and reasonable reforms.

…

With so many implementation rules still pending, the ultimate effectiveness of this blunderbuss of an Act remains to be seen. My own view is that the Act, while it is well-motivated, contains many flaws that will come back to haunt us. Yes, the Volcker Rule is now a necessity, but bringing back the Glass-Steagall Act—which in 1933 separated deposit banking and investment banking, but was repealed by Congress in 1999—would have been far simpler and more effective. And, yes, I approve of the idea of the new Consumer Financial Protection Bureau (CFPB), but the bitter frost of Washington politics is almost certain to spoil its implementation.

How the City Really Works: The Definitive Guide to Money and Investing in London's Square Mile by Alexander Davidson

accounting loophole / creative accounting, algorithmic trading, asset allocation, asset-backed security, bank run, banking crisis, barriers to entry, Bear Stearns, Big bang: deregulation of the City of London, buy and hold, capital asset pricing model, central bank independence, corporate governance, Credit Default Swap, currency risk, dematerialisation, discounted cash flows, diversified portfolio, double entry bookkeeping, Edward Lloyd's coffeehouse, Elliott wave, equity risk premium, Exxon Valdez, foreign exchange controls, forensic accounting, Glass-Steagall Act, global reserve currency, high net worth, index fund, inflation targeting, information security, intangible asset, interest rate derivative, interest rate swap, inverted yield curve, John Meriwether, junk bonds, London Interbank Offered Rate, Long Term Capital Management, low interest rates, margin call, market fundamentalism, Nick Leeson, North Sea oil, Northern Rock, pension reform, Piper Alpha, price stability, proprietary trading, purchasing power parity, Real Time Gross Settlement, reserve currency, Right to Buy, risk free rate, shareholder value, short selling, The Wealth of Nations by Adam Smith, transaction costs, value at risk, yield curve, zero-coupon bond

In came broker dealers, whose role merged the previous responsibilities of the jobber and broker, and market makers. Overseas securities firms could for the first time become members of the LSE, and trading on the floor of the Exchange was replaced with the screen-based Stock Exchange Automated Quotations (SEAQ) system. At around the time of Big Bang, US banks were coming to London because the Glass–Steagall Act prevented them from conducting retail and investment banking business simultaneously. The popular perception of the City had been as a club of florid-faced ex-public school chaps with a penchant for long liquid lunches. With Big Bang, a new type of City worker, competitive and egalitarian, was stepping into key roles.

…

Today, investment banks cover not just investment banking (see Chapter 7) but also activities traditionally associated with commercial banking, including fund management, trade finance, leasing and factoring, venture capital, project finance, syndicated loans and foreign exchange. Convergence between the two types of banking has often been uneasy, and US politicians and financiers blamed it for the great crash of 1929. To prevent a recurrence, the US Congress passed the Banking Act of 1933, the Glass–Steagall Act, which separated the two types of banking. Recent opinion has been that securities trading need not harm commercial banking and, in 1999, Congress passed the Financial Services Modernisation Act, which eliminated the separation between the two types of bank. Culturally, the entrepreneurial spirit of investment banking has sometimes been an uneasy bedfellow for the cautious commercial banking ethos.

…

Index 419 fraud 204 9/11 terrorist attacks 31, 218, 242, 243, 254, 257 Abbey National 22 ABN AMRO 103 accounting and governance 232–38 scandals 232 Accounting Standards Board (ASB) 236 administration 17 Allianz 207 Alternative Investment Market (AIM) 44–45, 131, 183, 238 Amaranth Advisors 170 analysts 172–78 fundamental 172–74 others 177–78 Spitzer impact 174–75 technical 175–77 anti-fraud agencies Assets Recovery Agency 211–13 City of London Police 209 Financial Services Authority 208 Financial Crime and Intelligence Division 208 Insurance Fraud Bureau 209 Insurance Fraud Investigators Group 209 International Association of Insurance Fraud Agencies 207, 210, 218 National Criminal Intelligence Service 210 Serious Fraud Office 213–15 Serious Organised Crime Agency 210–11 asset finance 24–25 Association of Investment Companies 167 backwardation 101 bad debt, collection of 26–28 Banco Santander Central Hispano 22 Bank for International Settlements (BIS) 17, 27, 85, 98, 114 bank guarantee 23 Bank of Credit and Commerce International (BCCI) 10, 214 Bank of England 6, 10–17 Court of the 11 credit risk warning 98 framework for sterling money markets 81 Governor 11, 13, 14 history 10, 15–16 Inflation Report 14 inflation targeting 12–13 interest rates and 12 international liaison 17 lender of last resort 15–17 Market Abuse Directive (MAD) 16 monetary policy and 12–15 Monetary Policy Committee (MPC) 13–14 Open-market operations 15, 82 repo rate 12, 15 role 11–12 RTGS (Real Time Gross Settlement) 143 statutory immunity 11 supervisory role 11 Bank of England Act 1988 11, 12 Bank of England Quarterly Model (BEQM) 14 Banking Act 1933 see Glass-Steagall Act banks commercial 5 investment 5 Barclays Bank 20 Barings 11, 15, 68, 186, 299 Barlow Clowes case 214 Barron’s 99 base rate see repo rate Basel Committee for Banking Supervision (BCBS) 27–28 ____________________________________________________ INDEX 303 Basel I 27 Basel II 27–28, 56 Bear Stearns 95, 97 BearingPoint 97 bill of exchange 26 Bingham, Lord Justice 10–11 Blue Arrow trial 214 BNP Paribas 145, 150 bond issues see credit products book runners 51, 92 Borsa Italiana 8, 139 bps 90 British Bankers’ Association 20, 96, 97 building societies 22–23 demutualisation 22 Building Societies Association 22 Capital Asset Pricing Model (CAPM) see discounted cash flow analysis capital gains tax 73, 75, 163, 168 capital raising markets 42–46 mergers and acquisitions (M&A) 56–58 see also flotation, bond issues Capital Requirements Directive 28, 94 central securities depository (CSD) 145 international (ICSD) 145 Central Warrants Trading Service 73 Chancellor of the Exchequer 12, 13, 229 Chicago Mercantile Exchange 65 Citigroup 136, 145, 150 City of London 4–9 Big Bang 7 definition 4 employment in 8–9 financial markets 5 geography 4–5 history 6–7 services offered 4 world leader 5–6 clearing 140, 141–42 Clearing House Automated Payment System (CHAPS) 143 Clearstream Banking Luxembourg 92, 145 commercial banking 5, 18–28 bad loans and capital adequacy 26–28 banking cards 21 building societies 22–23 credit collection 25–26 finance raising 23–25 history 18–19 overdrafts 23 role today 19–21 commodities market 99–109 exchange-traded commodities 101  fluctuations 100 futures 100 hard commodities energy 102 non-ferrous metals 102–04 precious metal 104–06 soft commodities cocoa 107 coffee 106 sugar 107 Companies Act 2006 204, 223, 236 conflict of interests 7 consolidation 138–39 Consumer Price Index (CPI) 13 contango 101 Continuous Linked Settlement (CLS) 119 corporate governance 223–38 best practice 231 Cadbury Code 224 Combined Code 43, 225 compliance 230 definition 223 Directors’ Remuneration Report Regulations 226 EU developments 230 European auditing rules 234–35 Greenbury Committee 224–25 Higgs and Smith reports 227 International Financial Reporting Standards (IFRS) 237–38 Listing Rules 228–29 Model Code 229 Myners Report 229 OECD Principles 226 operating and financial review (OFR) 235– 36 revised Combined Code 227–28 Sarbanes–Oxley Act 233–34 Turnbull Report 225 credit cards 21 zero-per-cent cards 21 credit collection 25–26 factoring and invoice discounting 26 trade finance 25–26 credit derivatives 96–97 back office issues 97 credit default swap (CDS) 96–97 credit products asset-backed securities 94 bonds 90–91 collateralised debt obligations 94–95 collateralised loan obligation 95 covered bonds 93 equity convertibles 93 international debt securities 92–93  304 INDEX ____________________________________________________ junk bonds 91 zero-coupon bonds 93 credit rating agencies 91 Credit Suisse 5, 136, 193 CREST system 141, 142–44 dark liquidity pools 138 Debt Management Office 82, 86 Department of Trade and Industry (DTI) 235, 251, 282 derivatives 60–77 asset classes 60 bilateral settlement 66 cash and 60–61 central counterparty clearing 65–66 contracts for difference 76–77, 129 covered warrants 72–73 futures 71–72 hedging and speculation 67 on-exchange vs OTC derivatives 63–65 options 69–71 Black-Scholes model 70 call option 70 equity option 70–71 index options 71 put option 70 problems and fraud 67–68 retail investors and 69–77 spread betting 73–75 transactions forward (future) 61–62 option 62 spot 61 swap 62–63 useful websites 75 Deutsche Bank 136 Deutsche Börse 64, 138 discounted cash flow analysis (DCF) 39 dividend 29 domestic financial services complaint and compensation 279–80 financial advisors 277–78 Insurance Mediation Directive 278–79 investments with life insurance 275–76 life insurance term 275 whole-of-life 274–75 NEWICOB 279 property and mortgages 273–74 protection products 275 savings products 276–77 Dow theory 175 easyJet 67 EDX London 66 Egg 20, 21 Elliott Wave Theory 176 Enron 67, 114, 186, 232, 233 enterprise investment schemes 167–68 Equiduct 133–34, 137 Equitable Life 282 equities 29–35 market indices 32–33 market influencers 40–41 nominee accounts 31 shares 29–32 stockbrokers 33–34 valuation 35–41 equity transparency 64 Eurex 64, 65 Euro Overnight Index Average (EURONIA) 85 euro, the 17, 115 Eurobond 6, 92 Euroclear Bank 92, 146, 148–49 Euronext.liffe 5, 60, 65, 71 European Central Bank (ECB) 16, 17, 84, 148 European Central Counterparty (EuroCCP) 136 European Code of Conduct 146–47, 150 European Exchange Rate Mechanism 114 European Harmonised Index of Consumer Prices 13 European Union Capital Requirements Directive 199 Market Abuse Directive (MAD) 16, 196 Market in Financial Instruments Directive (MiFID) 64, 197–99 Money Laundering Directive 219 Prospectus Directive 196–97 Transparency Directive 197 exchange controls 6 expectation theory 172 Exxon Valdez 250 factoring see credit collection Factors and Discounters Association 26 Fair & Clear Group 145–46 Federal Deposit Insurance Corporation 17 Federation of European Securities Exchanges 137 Fighting Fraud Together 200–01 finance, raising 23–25 asset 24–25 committed 23 project finance 24 recourse loan 24 syndicated loan 23–24 uncommitted 23 Financial Action Task Force on Money Laundering (FATF) 217–18 financial communications 179–89 ____________________________________________________ INDEX 305 advertising 189 corporate information flow 185 primary information providers (PIPs) 185 investor relations 183–84 journalists 185–89 public relations 179–183 black PR’ 182–83 tipsters 187–89 City Slickers case 188–89 Financial Ombudsman Service (FOS) 165, 279–80 financial ratios 36–39 dividend cover 37 earnings per share (EPS) 36 EBITDA 38 enterprise multiple 38 gearing 38 net asset value (NAV) 38 price/earnings (P/E) 37 price-to-sales ratio 37 return on capital employed (ROCE) 38 see also discounted cash flow analysis Financial Reporting Council (FRC) 224, 228, 234, 236 Financial Services Act 1986 191–92 Financial Services Action Plan 8, 195 Financial Services and Markets Act 2001 192 Financial Services and Markets Tribunal 94 Financial Services Authority (FSA) 5, 8, 31, 44, 67, 94, 97, 103, 171, 189, 192–99 competition review 132 insurance industry 240 money laundering and 219 objectives 192 regulatory role 192–95 powers 193 principles-based 194–95 Financial Services Compensation Scheme (FSCS) 17, 165, 280 Financial Services Modernisation Act 19 financial services regulation 190–99 see also Financial Services Authority Financial Times 9, 298 First Direct 20 flipping 53 flotation beauty parade 51 book build 52 early secondary market trading 53 grey market 52, 74 initial public offering (IPO) 47–53 pre-marketing 51–52 pricing 52–53 specialist types of share issue accelerated book build 54  bought deal 54 deeply discounted rights issue 55 introduction 55 placing 55 placing and open offer 55 rights issues 54–55 underwriting 52 foreign exchange 109–120 brokers 113 dealers 113 default risk 119 electronic trading 117 exchange rate 115 ICAP Knowledge Centre 120 investors 113–14 transaction types derivatives 116–17 spot market 115–16 Foreign Exchange Joint Standing Committee 112 forward rate agreement 85 fraud 200–15 advanced fee frauds 204–05 boiler rooms 201–04 Regulation S 202 future regulation 215 identity theft 205–06 insurance fraud 206–08 see also anti-fraud agencies Fraud Act 2006 200 FTSE 100 32, 36, 58, 122, 189, 227, 233 FTSE 250 32, 122 FTSE All-Share Index 32, 122 FTSE Group 131 FTSE SmallCap Index 32 FTSE Sterling Corporate Bond Index 33 Futures and Options Association 131 Generally Accepted Accounting Principles (GAAP) 237, 257 gilts 33, 86–88 Giovanni Group 146 Glass-Steagall Act 7, 19 Global Bond Market Forum 64 Goldman Sachs 136 government bonds see gilts Guinness case 214 Halifax Bank 20 hedge funds 8, 77, 97, 156–57 derivatives-based arbitrage 156 fixed-income arbitrage 157 Hemscott 35 HM Revenue and Customs 55, 211 HSBC 20, 103 Hurricane Hugo 250  306 INDEX ____________________________________________________ Hurricane Katrina 2, 67, 242 ICE Futures 5, 66, 102 Individual Capital Adequacy Standards (ICAS) 244 inflation 12–14 cost-push 12 definition 12 demand-pull 12 quarterly Inflation Report 14 initial public offering (IPO) 47–53 institutional investors 155–58 fund managers 155–56 hedge fund managers 156–57 insurance companies 157 pension funds 158 insurance industry London and 240 market 239–40 protection and indemnity associations 241 reform 245 regulation 243 contingent commissions 243 contract certainty 243 ICAS and Solvency II 244–45 types 240–41 underwriting process 241–42 see also Lloyd’s of London, reinsurance Intercontinental Exchange 5 interest equalisation tax 6 interest rate products debt securities 82–83, 92–93 bill of exchange 83 certificate of deposit 83 debt instrument 83 euro bill 82 floating rate note 83 local authority bill 83 T-bills 82 derivatives 85 forward rate agreements (FRAs) 85–86 government bonds (gilts) 86–89 money markets 81–82 repos 84 International Financial Reporting Standards (IFRS) 58, 86, 173, 237–38 International Financial Services London (IFSL) 5, 64, 86, 92, 112 International Monetary Fund 17 International Securities Exchange 138 International Swap Dealers Association 63 International Swaps and Derivatives Association 63 International Underwriting Association (IUA) 240 investment banking 5, 47–59 mergers and acquisitions (M&A) 56–58 see also capital raising investment companies 164–69 real estate 169 split capital 166–67 venture capital 167–68 investment funds 159–64 charges 163 investment strategy 164 fund of funds scheme 164 manager-of-managers scheme 164 open-ended investment companies (OEICs) 159 selection criteria 163 total expense ratio (TER) 164 unit trusts 159 Investment Management Association 156 Investment Management Regulatory Organisation 11 Johnson Matthey Bankers Limited 15–16 Joint Money Laundering Steering Group 221 KAS Bank 145 LCH.Clearnet Limited 66, 140 letter of credit (LOC) 23, 25–26 liability-driven investment 158 Listing Rules 43, 167, 173, 225, 228–29 Lloyd’s of London 8, 246–59 capital backing 249 chain of security 252–255 Central Fund 253 Corporation of Lloyd’s 248–49, 253 Equitas Reinsurance Ltd 251, 252, 255–56 Franchise Performance Directorate 256 future 258–59 Hardship Committee 251 history 246–47, 250–52 international licenses 258 Lioncover 252, 256 Member’s Agent Pooling Arrangement (MAPA) 249, 251 Names 248, one-year accounting 257 regulation 257 solvency ratio 255 syndicate capacity 249–50 syndicates 27 loans 23–24 recourse loan 24 syndicated loan 23–24 London Interbank Offered Rate (LIBOR) 74, 76 ____________________________________________________ INDEX 307 London Stock Exchange (LSE) 7, 8, 22, 29, 32, 64 Alternative Investment Market (AIM) 32 Main Market 42–43, 55 statistics 41 trading facilities 122–27 market makers 125–27 SETSmm 122, 123, 124 SETSqx 124 Stock Exchange Electronic Trading Service (SETS) 122–25 TradElect 124–25 users 127–29 Louvre Accord 114 Markets in Financial Instruments Directive (MiFID) 64, 121, 124, 125, 130, 144, 197–99, 277 best execution policy 130–31 Maxwell, Robert 186, 214, 282 mergers and acquisitions 56–58 current speculation 57–58 disclosure and regulation 58–59 Panel on Takeovers and Mergers 57 ‘white knight’ 57 ‘white squire’ 57 Merrill Lynch 136, 174, 186, 254 money laundering 216–22 Egmont Group 218 hawala system 217 know your client (KYC) 217, 218 size of the problem 222 three stages of laundering 216 Morgan Stanley 5, 136 multilateral trading facilities Chi-X 134–35, 141 Project Turquoise 136, 141 Munich Re 207 Nasdaq 124, 138 National Strategy for Financial Capability 269 National Westminster Bank 20 Nationwide Building Society 221 net operating cash flow (NOCF) see discounted cash flow analysis New York Federal Reserve Bank (Fed) 16 Nomads 45 normal market share (NMS) 132–33 Northern Rock 16 Nymex Europe 102 NYSE Euronext 124, 138, 145 options see derivatives Oxera 52  Parmalat 67, 232 pensions alternatively secured pension 290 annuities 288–89 occupational pension final salary scheme 285–86 money purchase scheme 286 personal account 287 personal pension self-invested personal pension 288 stakeholder pension 288 state pension 283 unsecured pension 289–90 Pensions Act 2007 283 phishing 200 Piper Alpha oil disaster 250 PLUS Markets Group 32, 45–46 as alternative to LSE 45–46, 131–33 deal with OMX 132 relationship to Ofex 46 pooled investments exchange-traded funds (ETF) 169 hedge funds 169–71 see also investment companies, investment funds post-trade services 140–50 clearing 140, 141–42 safekeeping and custody 143–44 registrar services 144 settlement 140, 142–43 real-time process 142 Proceeds of Crime Act 2003 (POCA) 211, 219, 220–21 Professional Securities Market 43–44 Prudential 20 purchasing power parity 118–19 reinsurance 260–68 cat bonds 264–65 dispute resolution 268 doctrines 263 financial reinsurance 263–64 incurred but not reported (IBNR) claims insurance securitisation 265 non-proportional 261 offshore requirements 267 proportional 261 Reinsurance Directive 266–67 retrocession 262 types of contract facultative 262 treaty 262 retail banking 20 retail investors 151–155 Retail Prices Index (RPI) 13, 87 264  308 INDEX ____________________________________________________ Retail Service Provider (RSP) network Reuters 35 Royal Bank of Scotland 20, 79, 221 73 Sarbanes–Oxley Act 233–34 securities 5, 29 Securities and Futures Authority 11 self-regulatory organisations (SROs) 192 Serious Crime Bill 213 settlement 11, 31, 140, 142–43 shareholder, rights of 29 shares investment in 29–32 nominee accounts 31 valuation 35–39 ratios 36–39 see also flotation short selling 31–32, 73, 100, 157 Society for Worldwide Interbank Financial Telecommunications (SWIFT) 119 Solvency II 244–245 Soros, George 114, 115 Specialist Fund Market 44 ‘square mile’ 4 stamp duty 72, 75, 166 Sterling Overnight Index Average (SONIA) 85 Stock Exchange Automated Quotation System (SEAQ) 7, 121, 126 Stock Exchange Electronic Trading Service (SETS) see Lloyd’s of London stock market 29–33 stockbrokers 33–34 advisory 33 discretionary 33–34 execution-only 34 stocks see shares sub-prime mortgage crisis 16, 89, 94, 274 superequivalence 43 suspicious activity reports (SARs) 212, 219–22 swaps market 7 interest rates 56 swaptions 68 systematic internalisers (SI) 137–38 Target2-Securities 147–48, 150 The Times 35, 53, 291 share price tables 36–37, 40 tip sheets 33 trading platforms, electronic 80, 97, 113, 117 tranche trading 123 Treasury Select Committee 14 trend theory 175–76 UBS Warburg 103, 136 UK Listing Authority 44 Undertakings for Collective Investments in Transferable Securities (UCITS) 156 United Capital Asset Management 95 value at risk (VAR) virtual banks 20 virt-x 140 67–68 weighted-average cost of capital (WACC) see discounted cash flow analysis wholesale banking 20 wholesale markets 78–80 banks 78–79 interdealer brokers 79–80 investors 79 Woolwich Bank 20 WorldCom 67, 232 Index of Advertisers Aberdeen Asset Management PLC xiii–xv Birkbeck University of London xl–xlii BPP xliv–xlvi Brewin Dolphin Investment Banking 48–50 Cass Business School xxi–xxiv Cater Allen Private Bank 180–81 CB Richard Ellis Ltd 270–71 CDP xlviii–l Charles Schwab UK Ltd lvi–lviii City Jet Ltd x–xii The City of London inside front cover EBS Dealing Resource International 110–11 Edelman xx ESCP-EAP European School of Management vi ICAS (The Inst. of Chartered Accountants of Scotland) xxx JP Morgan Asset Management 160–62 London Business School xvi–xviii London City Airport vii–viii Morgan Lewis xxix Securities & Investments Institute ii The Share Centre 30, 152–54 Smithfield Bar and Grill lii–liv TD Waterhouse xxxii–xxxiv University of East London xxxvi–xxxviii

The Reckoning: Financial Accountability and the Rise and Fall of Nations by Jacob Soll

accounting loophole / creative accounting, bank run, Bear Stearns, Bonfire of the Vanities, British Empire, collapse of Lehman Brothers, computer age, corporate governance, creative destruction, Credit Default Swap, delayed gratification, demand response, discounted cash flows, double entry bookkeeping, financial independence, Frederick Winslow Taylor, Glass-Steagall Act, God and Mammon, High speed trading, Honoré de Balzac, inventory management, invisible hand, Isaac Newton, James Watt: steam engine, joint-stock company, Joseph Schumpeter, new economy, New Urbanism, Nick Leeson, Plato's cave, Ponzi scheme, Ralph Waldo Emerson, scientific management, Scientific racism, South Sea Bubble, The Wealth of Nations by Adam Smith, Thomas Malthus, too big to fail, trade route

Months after the crash began, Wall Street traders knew perfectly well that the stock they were selling was worthless. “If there must be madness,” the economist John Kenneth Galbraith lamented, “something may be said for having it on a heroic scale.” Those in the soup lines, however, would not have agreed.6 In response to the crash, in 1933 Congress enacted the Glass-Steagall Act to separate the activities of investment and commercial banking and prevent investment banks from putting depositors at risk by making risky and often difficult to regulate trades. It would also facilitate the auditing of their assets and liabilities. Spurred by the reforming zeal of the former New York District Attorney Ferdinand Pecora (1882–1971), who had unearthed J.

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Corporate clients were clearly less interested in audits than they were in consultants promising ever-greater profits. The consulting business boomed. And the worst was yet to come.23 In the 1999, with little public or investor protest, the U.S. government, in the name of economic freedom, replaced the Glass-Steagall Act with the Gramm-Leach-Bliley Act, which allowed the consolidation of commercial banks, investment banks, securities firms, and insurance companies. It enabled banks to take deposits and make loans, as well as underwrite and sell securities (such as pools of mortgages). Signing the act into law on November 12, President Clinton recognized that it made “the most important legislative changes to the structure of the U.S. financial system since the 1930s.”

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See debt bailouts Balance sheets, 171, 186, 193 Balanced books, concept of, xvi Balzac, Honoré de, 178–179 Bank of England, 108, 111, 165 Bank of the United States (first National), 163 Banker (or Moneylender) and His Wife, The (art) (Matsys), 58 Banking development of, 9 Dutch, 72–73 Glass-Steagall Act and, 192, 200 Gramm-Leach-Bliley Act and, 200 laws of the church and, 20–22 Medici family and, 30, 33–34 papacy and, 16–17, 33 Bankruptcy Act of 1831 (England), 172–173 Banque Générale, 134 Baring Brothers bank, 123 Barlaeus, Caspar, 79 Basilica of San Lorenzo, 35 Bastille, 144 Bear Stearns, 202–203 Beaumarchais, Pierre-Augustin de, 154 Beeckman, Isaac, 74 Benci, Giovanni di Amerigo, 37–38 Benson, Sir Henry, 194 Bentham, Jeremy, 117, 130, 167 Bentley, Richard, 120 Bentley, Thomas, 122, 125 Bernardino of Siena, 27 Bevis, Herman, 197 Bewindhebbers, 79, 81–82 Bill of Rights of 1689 (England), 103 Black Death, 25 Blunt, John, 106 Boccaccio, Giovanni, 25 Book of Revelation (Bible), 24 Book-keeper, The, 165, 176 Book-keeping methodiz’d (Mair), 118, 150 Borgia, Cesare, 56 Boston & Worcester Railroad, 169 Botticelli, 39 Boulton, Matthew, 124 Boulton and Watt (firm), 124 Bowring, John, 167–168 Braams, Daniël, 84 British Enlightenment Protestantism, 119–122 Brodrick, Thomas, 109 Brown, Obadiah, 150 Brown University, 150 Brunelleschi, 35 Bubbles French Mississippi scheme as, 106, 107 risky mortgages and, 202–203 South Sea Company, 107–112 Bureau of Accountability (France), 145 Burgundy, Duke of (Charles the Bold), 44–45 Bush, George W., 201, 202, 239n28 Business Education and Accountancy (Haskins), 176 Byzantium, 9–10, 12 Caligula (emperor), 6 Calonne, Vicomte de, Charles Alexandre, 142–143 Calvinists.

An Empire of Wealth: Rise of American Economy Power 1607-2000 by John Steele Gordon

accounting loophole / creative accounting, Alan Greenspan, bank run, banking crisis, Bretton Woods, British Empire, business cycle, buttonwood tree, California gold rush, Charles Babbage, clean water, collective bargaining, Corn Laws, Cornelius Vanderbilt, corporate governance, cotton gin, cuban missile crisis, disintermediation, double entry bookkeeping, failed state, Fairchild Semiconductor, financial independence, flying shuttle, Ford Model T, Frederick Winslow Taylor, full employment, Glass-Steagall Act, global village, Ida Tarbell, imperial preference, industrial research laboratory, informal economy, interchangeable parts, invisible hand, Isaac Newton, it's over 9,000, Jacquard loom, James Hargreaves, James Watt: steam engine, joint-stock company, joint-stock limited liability company, junk bonds, lone genius, Louis Pasteur, low interest rates, margin call, Marshall McLuhan, means of production, megaproject, Menlo Park, Mikhail Gorbachev, Money creation, money market fund, money: store of value / unit of account / medium of exchange, moral hazard, new economy, New Urbanism, postindustrial economy, price mechanism, Ralph Waldo Emerson, RAND corporation, rent control, rent-seeking, reserve currency, rolodex, Ronald Reagan, Savings and loan crisis, spinning jenny, Suez canal 1869, The Wealth of Nations by Adam Smith, three-masted sailing ship, trade route, transaction costs, transcontinental railway, undersea cable, vertical integration, Yom Kippur War

Employment Service to work with state employment agencies to help the unemployed find jobs. June 13. Roosevelt signed the Home Owners Refinancing Act establishing the Home Owners Loan Corporation, which was empowered to issue $2 billion in bonds to help nonfarm home owners keep their properties. June 16. Roosevelt signed the Banking Act of 1933, usually known as the Glass-Steagall Act after its congressional sponsors. It revolutionized American banking. June 16. Roosevelt also signed the Farm Credit Act to help refinance farm mortgages. June 16. Roosevelt also signed the Emergency Railroad Transportation Act to increase federal regulation of railroads and railroad holding companies.

…

The number of people receiving high school diplomas almost doubled in the 1930s, while those receiving college degrees increased by 50 percent. In 1940 some 8.1 percent of twenty-three-year-olds received bachelor’s degrees.) NOWHERE DID THE EARLY NEW DEAL have a greater effect on the American economy than in banking, the one sector that had come closest to utter destruction as the depression had deepened. The Glass-Steagall Act greatly strengthened the Federal Reserve’s control over the nation’s banking system, making many more banks, such as savings banks, eligible for membership. It also gave the Federal Reserve the power to control speculation on Wall Street by setting margin requirements. In 1935 the Federal Reserve Act further increased and centralized the powers of the Federal Reserve.

…

For the first time in ninety-nine years, since President Andrew Jackson had destroyed the Second Bank of the United States, the country had a fully functioning and empowered central bank. The country had paid dearly for the lack of one in those years, not least because the country had been unable to develop much expertise in the arcane specialty of central banking. The Glass-Steagall Act also established the Federal Bank Deposit Insurance Corporation (FDIC), which guaranteed the deposits of banks that joined the system (only banks that were members of the Federal Reserve were required to join) up to $5,000 per account. At a stroke, the bank run, a recurring nightmare in the American economy since the first one in 1809, became a thing of the past.

Hubris: Why Economists Failed to Predict the Crisis and How to Avoid the Next One by Meghnad Desai

3D printing, Alan Greenspan, bank run, banking crisis, Bear Stearns, Berlin Wall, Big bang: deregulation of the City of London, Bretton Woods, BRICs, British Empire, business cycle, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, collapse of Lehman Brothers, collateralized debt obligation, correlation coefficient, correlation does not imply causation, creative destruction, Credit Default Swap, credit default swaps / collateralized debt obligations, David Ricardo: comparative advantage, deindustrialization, demographic dividend, Eugene Fama: efficient market hypothesis, eurozone crisis, experimental economics, Fall of the Berlin Wall, financial innovation, Financial Instability Hypothesis, floating exchange rates, full employment, German hyperinflation, Glass-Steagall Act, Gunnar Myrdal, Home mortgage interest deduction, imperial preference, income inequality, inflation targeting, invisible hand, Isaac Newton, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, laissez-faire capitalism, liquidity trap, Long Term Capital Management, low interest rates, market bubble, market clearing, means of production, Meghnad Desai, Mexican peso crisis / tequila crisis, mortgage debt, Myron Scholes, negative equity, Northern Rock, oil shale / tar sands, oil shock, open economy, Paul Samuelson, Phillips curve, Post-Keynesian economics, price stability, purchasing power parity, pushing on a string, quantitative easing, reserve currency, rising living standards, risk/return, Robert Shiller, Robert Solow, Ronald Reagan, savings glut, secular stagnation, seigniorage, Silicon Valley, Simon Kuznets, subprime mortgage crisis, 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, Tobin tax, too big to fail, women in the workforce

But there was also pressure on mutually owned institutions – the building societies in the UK, for example – to become mainstream profit-making companies, whose equities could be held by anyone. Demutualization proceeded apace during the 1980s and 1990s. Through the course of the 1990s there was a huge push to deregulate banking in the US. The Glass–Steagall Act passed during the New Deal had regulated the commercial banks which took retail deposits about the sort of investment activities they could engage in. The new complaint of the US banks was that Glass-Steagall restricted competition. Retail deposit-taking is profitable, not so much for itself but because it can provide a large source of idle funds for a bank to invest on its own account and make profits.

…

Retail deposit-taking is profitable, not so much for itself but because it can provide a large source of idle funds for a bank to invest on its own account and make profits. Investment banks could make such profits. The demand was for retail deposit-taking banks to be allowed to combine with investment banks. To this effect, certain provisions of the Glass-Steagall Act were repealed. Now banks were able to merge the different activities and became much larger. Most developed countries had some regulatory institutions for financial and commodity markets. But the pace of innovation in the financial markets was fast. There was also the ideological pressure to leave markets alone as they were held to be working perfectly based on the efficient market hypothesis and rational expectations.

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(i) Elizabeth II (i) emerging economies (i) benefits of capital flows (i) capital inflows (i) saving and investment (i) empires, end of (i) empirical analysis of asset prices (i) employment and fiscal policy (i) role of government spending (i) energy-intensive technology (i) Engels, Friedrich (i) The Communist Manifesto (with Karl Marx) (i) The Condition of the Working Class in England (i) entrepreneurs (i) equation of exchange (i) equilibrium (i) assuming (i) flow (i) Keynesian (i) market economy (i) as naturally determined (i), (ii) possible states of (i) rabbits and foxes game (i) theory of (i), (ii), (iii) Walras’ view of (i) see also flow equilibrium; general equilibrium theory; partial equilibrium theory; disequilibrium, stock equilibrium tradition (i) equities (i) equity bundles (i) Essay on Population (Malthus) (i) Europe, political upheaval (i) European Central Bank (ECB) (i), (ii) European Economic Community (EEC) (i) European Monetary System (i) Eurozone (i), (ii) crisis (i) excess credit (i) Exchange Rate Mechanism (ERM) (i) exchange rate policy, role of (i) exchange rates Bretton Woods system (i) fixed (i) flexibility (i), (ii) setting level of (i) expectation of distribution (i) expectations adaptive (i), (ii) rational (i), (ii), (iii) role of (i) statistical definition (i) exploration, effects of (i) externality (i) fallacy of aggregation (i) Fama, Eugene (i), (ii), (iii) Fannie Mae (i) Federal Reserve, reaction to Great Depression (i) feudalism (i) financial crisis, definition (i) financial innovations (i) financial instruments (i), (ii), (iii) financial markets (i), (ii), (iii), (iv) financial revolution (i) financial service providers, insolvency and illiquidity (i) Financial Services Authority, UK, regulatory approach (i) financial services, availability (i) First Socialist International (i) fiscal crisis (i) fiscal policy (i), (ii) Fisher, Irving (i) fixed costs (i) flexible exchange rates (i) food prices (i) foreign aid (i) foreign exchange Asian countries (i) dealing (i), (ii) levels of transactions (i) theory of rates (i) foreign investment, liquidation (i) forward trading (i) France Keynesian experiment (i) occupation of Germany (i) FRB-MIT-PENN model (i) Freddie Mac (i) free movement, capital and labor (i) free trade (i), (ii) French Revolution (i) Friedman, Milton (i), (ii), (iii), (iv) A Monetary History of the United States (with Anna Schwartz) (i) A Theory of the Consumption Function (i) Frisch, Ragnar (i), (ii) full employment (i), (ii), (iii) future developments, optimism/pessimism (i) Gaitskell, Hugh (i) Galbraith, John Kenneth (i) The Affluent Society (i) Garicano, Luis (i) Gates, Bill (i) Geddes Axe (i) Geithner, Timothy (i), (ii), (iii) general equilibrium theory (i), (ii) Germany, post-World War I (i), (ii) Glass-Steagall Act (i) global economy, growth poles (i) global imbalances (i) global interdependence (i) globalization (i) acceleration (i) effect on interest rates (i) effects of (i) events (i) inapplicability of Keynesian models (i) market economy (i) nineteenth-century (i) glut, possibility of (i) Glyn, Andrew (i), (ii) God, as clockmaker (i) Godwin, William (i) An Enquiry Concerning Political Justice and Its Influence on General Virtue and Happiness (i) gold flows (i) Gold Standard (i), (ii), (iii), (iv), (v) Bretton Woods system (i) leadership of (i) return to (i), (ii), (iii) suspension (i), (ii), (iii) UK exit (i), (ii) Goldberger, Arthur (i) goodness of fit (i) goods, production and supply (i) Goodwin, Richard (i) Goodwin cycle (i) rabbits and foxes game (i) government debt, grading (i) government spending attitudes to (i) benefit (i) post-World War I (i) governments influence over behavior (i) interference and corruption (i) role of (i) Grapes of Wrath, The (John Steinbeck) (i) Great Depression (i), (ii), (iii) monetary policy (i) reactions of economists (i) role of Keynesian model in recovery (i) Great Moderation (i), (ii), (iii), (iv), (v) Great Recession banks (i) as economic crisis or crisis of economics (i) effects of (i) events of (i) failure to anticipate (i) overview (i) prospect of recovery (i) responses to (i), (ii) Great War see World War I Greece, Great Recession (i) Greenspan, Alan (i), (ii), (iii), (iv) The Age of Turbulence (i) gross domestic product (GDP) (i) growth poles, proliferation (i) Hamilton, Alexander (i) Hansen, Alvin (i), (ii) Hansen, Lars Peter (i) Harris, Seymour (i) Harrod, Roy (i) Harvey, William (i) Hatry, Clarence (i) Hayek, Friedrich (i), (ii), (iii) development from Wicksell (i) return to favor (i) heterodoxies (i) heterogeneity, of total output (i) Hicks, John (i) high yields (i) home ownership (i) house prices (i), (ii) household debt, rise in (i) houses as appreciating assets (i) depreciation (i) Hume, David (i), (ii) A Treatise on Human Nature (i) hydraulic analogue model (i) hyperinflation, Germany (i) ideological capture (i) ideological pressure (i) immigrants, scapegoating of (i) imperfect competition (i) theory of (i) imperialism (i) income (i) growth: Harrod’s theory (i); long boom (i) inequality (i) levels (i); influence of money supply (i); new classical model (i); per capita (i) incomes policies (i) indentured labor (i) India (i) individual volition, within overall pattern (i) Industrial Revolution (i), (ii) industrial unrest (i) industrialization effects of (i) less-developed countries (i) industry, working conditions (i) inequality income and wealth (i) long-run trends (i) inflation determining factors (i) eighteenth century (i) house prices (i) Hume’s theory (i) Keynesian models (i) Locke’s theory (i) and manufacturing supply (i) as permanent (i) post-World War I (i) and price rises (i) as priority (i) Smith’s theory (i) as target of public policy (i) and unemployment (i) inflation rates, developed countries (i) information, as public (i) infrastructure development (i) initiative, opportunities for (i) injecting liquidity (i), (ii), (iii) see also quantitative easing innovations clusters (i), (ii), (iii) need for (i) role in boom and bust (i) Institute for Konjunktur (i) interconnectedness (i), (ii) interdependence (i), (ii), (iii) interest attitudes to (i) long-/short-run rates (i) market rate vs. natural rate (i) vs. profit (i) regulation (i) interest rates effect on recovery (i) global effects (i) Keynes’ view (i) rise in (i) setting (i) US (i) interference and corruption (i) interlinking, developed and emerging economies (i) international economics, interdependence (i) International Gold Standard (i) International Monetary Fund (IMF) purpose (i) warnings of crisis (i) international trade (i), (ii), (iii) invention, and globalization (i) investment and aggregate effective demand (i) and bank credit (i) in business (i) expectations (i) as future-oriented (i) high yields (i) theory of (Keynes) (i) invisible hand (i), (ii), (iii), (iv) involuntary unemployment (i) iron law of wages (Ricardo) (i), (ii) irrational exuberance (i), (ii) IS-LM model (i), (ii), (iii) Is the Business Cycle Obsolete?

Empire of Illusion: The End of Literacy and the Triumph of Spectacle by Chris Hedges

Albert Einstein, AOL-Time Warner, Ayatollah Khomeini, Bear Stearns, Cal Newport, clean water, collective bargaining, corporate governance, creative destruction, Credit Default Swap, Glass-Steagall Act, haute couture, Herbert Marcuse, Honoré de Balzac, Howard Zinn, illegal immigration, income inequality, Joseph Schumpeter, Naomi Klein, offshore financial centre, Plato's cave, power law, Ralph Nader, Ronald Reagan, scientific management, Seymour Hersh, single-payer health, social intelligence, statistical model, uranium enrichment

This has effectively decapitated the leadership in the inner cities, where African Americans have traditionally had to react more quickly to confront social injustices. The Clinton administration, led by Lawrence Summers, signed into law the Financial Services Modernization Act of 1999, which ripped down the firewalls that had been established by the 1933 Glass-Steagall Act. Designed to prevent the kind of meltdown we are now experiencing, Glass-Steagall established the Federal Deposit Insurance Corporation. It set in place banking reforms to stop speculators from hijacking the financial system. With Glass-Steagall demolished, and the passage of NAFTA, the Democrats, led by Clinton, tumbled gleefully into bed with corporations and Wall Street speculators.

…

Augustine, Saint Austro-Hungarian Empire Authentic Happiness: Using the New Positive Psychology to Realize Your Potential for Lasting Fulfillment (Seligman) Authorization for Use of Military Force (congressional resolution) Bacevich, Andrew Bakan, Joel Balkans Balzac, Honoré Banks bailing out collapse of faltering and Glass-Steagall Act insolvent leaders of and looting of financial system nationalizing and poor and Stewart Banks, Russell Barry (porn producer) Batista (wrestler) Bear Stearns Bearer, Paul Bellah, Robert N. Ben-Shahar, Tal D. Benjamin, Walter Bernanke, Ben Berry, Wendell Bewitched (television show) Biden, Joe Big Brother (television show) Big Show (wrestler) Bigg Boss (television show) Blackwater/Xe Blade, Barrett Blair, Dennis Blanc, Mel Blankfein, Lloyd Blue, Ashley Bluebird Films Boeing Boileau, Jay Boorstin, Daniel Born to Be Good: The Science of the Meaningful Life (Keltner) Botton, Alain de Bradbury, Ray Bradley, Betty Bradley, James Bradley, John Brave New World (Huxley) Brint, Steven British Petroleum (BP) Brownmiller, Susan Budden, Jackiey Buddha Bureau of Labor Statistics, U.S.

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William Fuld, Richard (Dick) Gabler, Neal Gag Factor (movie) Gagnon, Rene Gaza Geithner, Timothy General Electric General Motors Getting Off: Pornography and the End of Masculinity (Jensen) Geyman, John The Girls Next Door (television show) Giroux, Henry Glass-Steagall Act (1933) Global warming Globalization Golden, Daniel Goldman Sachs González, Roberto Goodman, Amy Goody, Jade Gordon, Michael Gore, Al Gossip Girl (television show) Graceland Graham, Elyse Great Depression The Great Transformation (Polanyi) The Greater Good (magazine) Greenberg, Maurice R.

Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism by Kevin Phillips

"World Economic Forum" Davos, Alan Greenspan, algorithmic trading, asset-backed security, bank run, banking crisis, Bear Stearns, Bernie Madoff, Black Swan, Bretton Woods, BRICs, British Empire, business cycle, buy and hold, collateralized debt obligation, computer age, corporate raider, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, currency peg, diversification, Doha Development Round, energy security, financial deregulation, financial engineering, financial innovation, fixed income, Francis Fukuyama: the end of history, George Gilder, Glass-Steagall Act, housing crisis, Hyman Minsky, imperial preference, income inequality, index arbitrage, index fund, interest rate derivative, interest rate swap, Joseph Schumpeter, junk bonds, Kenneth Rogoff, large denomination, Long Term Capital Management, low interest rates, market bubble, Martin Wolf, Menlo Park, Michael Milken, military-industrial complex, Minsky moment, mobile money, money market fund, Monroe Doctrine, moral hazard, mortgage debt, Myron Scholes, new economy, oil shale / tar sands, oil shock, old-boy network, peak oil, plutocrats, Ponzi scheme, profit maximization, prosperity theology / prosperity gospel / gospel of success, Renaissance Technologies, reserve currency, risk tolerance, risk/return, Robert Shiller, Ronald Reagan, Satyajit Das, Savings and loan crisis, shareholder value, short selling, sovereign wealth fund, stock buybacks, subprime mortgage crisis, The Chicago School, Thomas Malthus, too big to fail, trade route

Bush’s approval rating, but debt had already become one of America’s giant industries. Paper Entrepreneurialism: Mergers, Acquisitions, and Buyouts Comparable growth opportunities for the financial sector came from a trio of frenetic, debt-enabled merger and acquisition waves. Until the 1990s, financial services purveyors were constrained by an old New Deal statute—the Glass-Steagall Act of 1933—that kept commercial banks, mortgage finance, insurers, and securities firms apart and unable to collude with each other in the unsafe and speculative practices they had indulged in the 1920s. But cracks were expanding. In 1984, the Bank Holding Company Act was relaxed somewhat, and in 1997, banks were permitted to buy securities firms; in 1998, even before Congress had repealed Glass-Steagall, the Fed had on its own supposed authority approved a merger between Citigroup and Travelers, a leading insurance company.

…

They’d say ‘The way to solve the problems is more deregulation,’ and by the way, deregulation means fewer examiners” (see p. 41). Even one bank lawyer looked back with dismay on the 1996 Supreme Court ruling deregulating credit-card fees. Duncan MacDonald, a lawyer for Citibank, commented that “I didn’t imagine that some day we might have ended up creating a Frankenstein.”21 The 1999 repeal of the Glass-Steagall act and its restraints on financial mergers, pushed by Democratic President Clinton and his treasury secretary, Robert Rubin, as well as by Congressional Republicans, wound up creating the regulatory equivalent of the Cumberland Gap. Nomi Prins, a former managing director at Goldman Sachs, described the crippling result this way: “Another festering problem created by the Financial Services Modernization Act was so-called functional regulation.

…

Some of this stemmed from Bill Clinton’s embrace of the bull market and participation in Wall Street’s summer circuits on Martha’s Vineyard and in the Hamptons; further satisfaction came from Rubin’s handling of global financial crises and from White House support of the sector’s much-desired repeal of the Glass-Steagall Act, the 1930s legislation that blocked common ownership of banks, investment firms, and insurance companies. Besides Glass-Steagall repeal, other 1990s deregulation and court holdings permitted new holding companies, loosened structure in the telecommunications and energy industries, and unleashed credit card operators.

Planet Ponzi by Mitch Feierstein

Affordable Care Act / Obamacare, Alan Greenspan, Albert Einstein, Asian financial crisis, asset-backed security, bank run, banking crisis, barriers to entry, Bear Stearns, Bernie Madoff, book value, break the buck, centre right, collapse of Lehman Brothers, collateralized debt obligation, commoditize, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, Daniel Kahneman / Amos Tversky, disintermediation, diversification, Donald Trump, energy security, eurozone crisis, financial innovation, financial intermediation, fixed income, Flash crash, floating exchange rates, frictionless, frictionless market, Future Shock, Glass-Steagall Act, government statistician, high net worth, High speed trading, illegal immigration, income inequality, interest rate swap, invention of agriculture, junk bonds, light touch regulation, Long Term Capital Management, low earth orbit, low interest rates, mega-rich, money market fund, moral hazard, mortgage debt, negative equity, Neil Armstrong, Northern Rock, obamacare, offshore financial centre, oil shock, pensions crisis, plutocrats, Ponzi scheme, price anchoring, price stability, proprietary trading, purchasing power parity, quantitative easing, risk tolerance, Robert Shiller, Ronald Reagan, tail risk, too big to fail, trickle-down economics, value at risk, yield curve

And yes, the landmark deal of the era, the takeover of RJR Nabisco by KKR, a leveraged buyout outfit, was unwound after little more than ten years in a haze of cost and disappointment. But all this time Wall Street was booming. The growth of the securities market was enthusiastically assisted by the regulators. In 1999 Congress and President Bill Clinton repealed the Glass–Steagall Act, which had, for seventy years, maintained barriers between lending banks and securities houses. Although there had been a small but growing market in credit-based derivative products in the 1990s, the rule changes of 1999 laid the groundwork for massive growth in that market. To regulators this looked like another win: furious innovation, big fees on Wall Street, new products for investors and corporations alike.

…

Consumer banking and banking for small and medium-sized companies will be housed within the ring-fence around retail banking. Those ‘fenced-in’ banking operations will be closely regulated and required to hold plenty of capital against possible losses. And so on. In effect, it’s like a British Glass–Steagall Act fitted to the needs of the twenty-first century.9 If rules like these had been in place in the US in 2008, the crisis would have wrecked Wall Street but left Main Street largely untouched. There are other good things in the pipeline too. The set of zoning rules which governs new construction developments has been cut down from over 1,000 pages of regulations to just 52.10 Red tape, more generally, is to be cut.

…

Some banks would have gone bust, which would have reminded bank boards and shareholders that their job is to ensure their charge is properly managed. Those outcomes would have been painful but good‌—‌a phrase in the lexicon of every true leader, but one that has slipped from use today. In the United States, it’s hard even to single out individuals for blame. Do I cite Bill Clinton for abolishing the Glass–Steagall Act and systematically opposing any real constraint on Wall Street’s power to destroy trillions of dollars’ worth of value? Or George W. Bush for his countless fiscal follies? Or Barack Obama for his changeless change, his stimulus plans that have stimulated little but the flow of red ink? Or Nancy Pelosi for her refusal to contemplate entitlement cuts of any kind?

Mastering the Market Cycle: Getting the Odds on Your Side by Howard Marks

activist fund / activist shareholder / activist investor, Alan Greenspan, Albert Einstein, behavioural economics, business cycle, collateralized debt obligation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, financial engineering, financial innovation, fixed income, Glass-Steagall Act, if you build it, they will come, income inequality, Isaac Newton, job automation, junk bonds, Long Term Capital Management, low interest rates, margin call, Michael Milken, money market fund, moral hazard, new economy, profit motive, quantitative easing, race to the bottom, Richard Feynman, Richard Thaler, risk tolerance, risk-adjusted returns, risk/return, Robert Shiller, secular stagnation, short selling, South Sea Bubble, stocks for the long run, superstar cities, The Chicago School, The Great Moderation, transaction costs, uptick rule, VA Linux, Y2K, yield curve

Here’s a partial list: Government policies supported an expansion of home ownership—which by definition meant the inclusion of people who historically couldn’t afford to buy homes—at a time when home prices were soaring; The Fed pushed interest rates down, causing the demand for higher-yielding instruments such as structured/levered mortgage securities to increase; There was a rising trend among banks to make mortgage loans, package them and sell them onward (as opposed to retaining them); Decisions to lend, structure, assign credit ratings and invest were made on the basis of unquestioning extrapolation of low historic mortgage default rates; The above four points resulted in an increased eagerness to extend mortgage loans, with an accompanying decline in lending standards; Novel and untested mortgage backed securities were developed that promised high returns with low risk, something that has great appeal in non-skeptical times; Protective laws and regulations were relaxed, such as the Glass-Steagall Act (which prohibited the creation of financial conglomerates), the uptick rule (which prevented traders who had bet against stocks from forcing them down through non-stop short selling), and the rules that limited banks’ leverage, permitting it to nearly triple; Finally, the media ran articles stating that risk had been eliminated by the combination of: the adroit Fed, which could be counted on to inject stimulus whenever economic sluggishness developed, confidence that the excess liquidity flowing to China for its exports and to oil producers would never fail to be recycled back into our markets, buoying asset prices, and the new Wall Street innovations, which “sliced and diced” risk so finely, spread it so widely and placed it with those best suited to bear it.

…

Levered mortgage backed securities (and financial derivatives, most of which contain high levels of built-in leverage) generally switched from being return-enhancing tools to weapons of financial mass destruction, as levered funds and securities breached loan covenants, and issuers ultimately proved unable to service their debt. Of course, the new financial products demonstrated—as usual—that financial innovations promising high returns with low risk rarely keep that promise. As for the relaxed regulations, the financial conglomerates permitted by revocation of the Glass-Steagall Act had extensive problems; the repeal of the uptick rule allowed the stocks of financial institutions to be driven down relentlessly; and several banks proved unable to survive under the high levels of leverage that had been allowed. Because of everything that had gone before, the consequences included massive mortgage defaults and home repossessions; downgradings and failures on the part of mortgage backed securities; collapsing home prices and the inability to sell existing homes; collapsing stock and corporate bond markets and the disappearance of liquidity; a total drying up of credit availability; and failures, bailouts and bankruptcies at a number of banks.

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See Global Financial Crisis of 2007–08 Crutchley, John- Paul, 124 cycles, 3 causation and progression, 30–32, 283, 297–98 cessation of, 178, 180, 285–88, 290 cycle of success, 270–71 definitions of, 40–41 elements of, 18–19, 25–27, 208–10 excess and corrections, 29, 85–86, 293, 299, 307–9 interaction of, 32–33, 167, 186–89, 199–201 listening to, 3–5, 309 major cycles, 267 midpoint and aberrations, 24–29, 266, 296–97 regularity and irregularity, 40–42, 172, 217, 244–45 timing and extent, 24, 39, 145, 282, 295–96 understanding, 17, 22–24, 118, 239, 314–15 See also credit cycle “Death of Equities, The,” 49, 277–78 D Demosthenes, 222, 227, 284 Dimson, Elroy, 13–14, 239 distressed debt investments, 161–62 credit crunch and, 164–66 role of high yield bonds, 163–64 understanding opportunities, 163, 166–67, 241–42, 282 Dow 36,000 (Glassman & Hassett), 219 Dowd, Timothy, 255 Drexel Burnham, 165 Drunkard’s Walk, The (Mlodinow), 42 E economic cycles, 46–47, 64–66, 167 long and short term, 29–30 repetition and fluctuation, 24–25, 97, 135 short-term, 47, 58, 61 economic forecasts, 61–63, 208 Economics and Portfolio Strategy, 13 Economist, The, 141 Eichholtz, Piet, 182 Einstein, Albert, 36 Ellis, Charlie, 5 emotion/psychology, 3, 31, 34, 37, 167 “bubble” and “crash,” 196–98 contrarianism, 133, 135, 142, 234, 244, 301–4 credulousness and skepticism, 90–91, 133, 227 definition of insanity, 36 effect on economic cycles, 83–86, 97–99, 211, 228, 289–92, 298–299 emotionalism or objectivity, 95–96 euphoria and depression, 89, 94, 99, 125, 211, 222, 305, 312 extremes, 113–16, 265 fear, effect on consumption, 59 fear and/or greed, 87–89, 92–93, 114, 221–22, 233–35, 303 humility and confidence, 271–73 investment psychology, 40–42, 93–94, 186–88, 190–91, 214–15, 244 optimism and pessimism, 89–90, 133, 299–301, 302–3 “silver bullet,” 227 F falling knives, 8, 156, 202, 235–36 Federal Reserve Bank, 68, 119, 180, 231 Feynman, Richard, 289 Financial Times, 122, 124 Frank, Barney, 151 Friedman, Milton, 62 fundamentals, 185–87, 189, 209 valuation metrics, 211 future prediction macro prediction, 10 opinions and likelihood, 15, 102, 208, 263–65 qualitative awareness, 214–15 South Sea Bubble, 195–96 G Galbraith, John Kenneth, 5, 34, 63, 125, 178–79, 222 Geithner, Timothy, 155, 239, 287 Glass-Steagall Act, 120, 128 Global Financial Crisis of 2007–08, 36, 59, 119–22, 127–32, 147–57, 180, 233 bear market stages, 193–94 effect on real estate market, 177 lessons from, 239–40 Treasury guarantee of commercial paper, 139–40, 155, 233 Goldman, William, 43 Goldman Sachs, 155 government deficits and national debt, 71–73 economic management tools, 71–73 Graduate School of Business, University of Chicago, 103 Graham, Ben, 189 Greenblatt, Joel, 5 Greenspan, Alan, 217 gross domestic product (GDP) consumption, 59–60 definition of, 47 recession (negative growth), 48 See also productivity H high yield bonds, 44, 106, 108, 131–32, 157, 281–82 history and memory, 34, 42, 178 Arab oil embargo, 292 blue chips or small-capitalization, 274 brevity of, 222 convertible arbitrage, 275 growth and tech stocks, 274 mortgage defaults, 229 one house in Amsterdam, 181–82 permanent prosperity, 288–89 poor performance of stocks, 276–77 projections of the future, 286–87, 311–12 History of the Peloponnesian War (Thucydides), 37–38 Hoover, Herbert, 287 I intrinsic value, 11, 92, 133, 194, 200, 205 when to buy, 237 investing aggressive or defensive, 248, 250–53, 259–60, 295 asset selection, 248, 255–59 bargains or popularity, 273–78 capitulation, 34–35, 194–95 cycle positioning, 248, 250, 252, 254–55, 312–14 definition of, 101–2, 262 fluctuation in, 186–87 growth stocks, 197–98 long or short securities sales, 8 market cycle, return, 204–6 overpayment, 144, 169, 179 philosophy, 4–5, 197, 207 security analysis and value investing, 11 skill or luck, 249, 253–54, 258–59, 272–73 “weighing machine,” 189 See also fundamentals; psychology investment indices, 232t, 238t “it’s different this time,” 37, 197–99 J Jain, Ajit, 5, 276 Janjigian, Jahan, 280 junk bonds.

Rethinking Money: How New Currencies Turn Scarcity Into Prosperity by Bernard Lietaer, Jacqui Dunne

3D printing, 90 percent rule, agricultural Revolution, Albert Einstein, Asian financial crisis, banking crisis, Berlin Wall, BRICs, business climate, business cycle, business process, butterfly effect, carbon credits, carbon footprint, Carmen Reinhart, clockwork universe, collapse of Lehman Brothers, complexity theory, conceptual framework, credit crunch, different worldview, discounted cash flows, en.wikipedia.org, Fall of the Berlin Wall, fear of failure, fiat currency, financial innovation, Fractional reserve banking, full employment, German hyperinflation, Glass-Steagall Act, happiness index / gross national happiness, holacracy, job satisfaction, John Perry Barlow, liberation theology, low interest rates, Marshall McLuhan, microcredit, mobile money, Money creation, money: store of value / unit of account / medium of exchange, more computing power than Apollo, new economy, Occupy movement, price stability, reserve currency, Silicon Valley, systems thinking, the payments system, too big to fail, transaction costs, trickle-down economics, urban decay, War on Poverty, working poor

SOLUTIONS INSIDE THE BOX The fragility of the conventional system has been a concern for quite a while now. Following the 1929 crash, two banking reforms were proposed in the United States to ensure that such a disaster would never happen again. One was the Banking Act of 1933, also known as the Glass-Steagall Act. It strictly separated banking activities between Wall Street investment banks and commercial banks. However, the most prominent academics of the time favored another proposal known as the Chicago Plan.15 The quickest way to explain the Chicago Plan is that bank-debt money would be made illegal.

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The government would itself issue a currency to be used in payment of all debts, public and private.16 Banks 70 PROSPERITY thereby would become simple intermediaries. They would be forbidden to lend out more than the deposits they collected. Said another way, banks would have to apply a 100 percent compulsory reserves rule, and since no bank-debt money could be created at all, banks would de facto be limited to the role of money brokers.17 The Glass-Steagall Act was repealed with the Gramm-Leach-Bliley Act, signed by President Clinton. Since then, this repeal has been blamed for triggering the subprime crisis and the collapse of Lehman Brothers in September 2008, which in turn precipitated the global banking scramble, leaving so many governments overindebted.

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Kung culture, 47; time currency and, 80– 81, 84– 85 Favela, 141 Fear, 4 Federalism, 69 Federal Reserve Act of 1913, 25–26 FEMA, 170–171 Fiat money, 26–28; creditos as, 184–185; inflation and, 91; as social construct, 58 Finite world, 42, 44, 192–193 Fisher equation, 63– 64 Flow network, 32– 33, 61– 63 Fomentos, 105 Food chain, 61 Food stamp, 12 Forgery, 184–185 Fractional reserve banking, 25–26, 39– 40, 228n1, 228n4 Fractional reserve multiplier, 40, 228n1 Fraud, 146–147, 194; counterfeiting, 184–185; emergency currencies and, 170–171; fraudulent currency initiatives, 192 Free clinic, 162–165 Free Lakota Bank, 113–114 Free market, 28, 31– 32, 35, 217 Free money, 176–178 Freigelt, 176–178 Frequent flyer miles: computers enabling, 60– 61; as cooperative currency, 59, 74; inflation and, 92; in multicurrency world, 55 Friendly Favors (FF), 132–133, 183–184 Fuel, 126–128 Functional currency, 199, 201 Fureai kippu, 166–169 Futility, 20 Game, 156–157 Garbage. See Trash Garden, 151, 161 Geuro, 149 GI Bill, 153 Gift, 47– 49, 82 Glass-Steagall Act, 69–70 Globalization, 86, 221 Global Trading Network, 182–183 Golden ghetto, 19 Gold standard, 24–26; Free Lakota Bank and, 113; homogeneity and, 65– 66; as reference currency, 140; Terra and, 135; in Utah, 201; in Weimar Republic, 236n10 INDEX Goodwill: in Friendly Favors, 132–133; TimeBank and, 82 Google, 200 Google Wallet, 115–116 Government Accountability Office (GAO), 170–171 Government debt, 42– 43, 70, 145–147, 227n21 Gramm-Leach-Bliley Act, 70 Great Depression, 24, 175, 180–181; GDP and, 35; GNP and, 33– 34; WIR and, 99, 102 Greece, 149 Greed, 4 Green products, 152, 186 Greenwashing, 198 Gross domestic product (GDP), 34– 35, 131, 146 Gross National Happiness, 131 Gross national product (GNP), 33– 35 Growth pressure, 2, 42– 43, 52– 53 Happy Futures Global Challenge, 131 Hate group, 182 Health care, 14, 16; free clinic, 162–165; in Mae Hong Son, 205 Helplessness, 17 High-powered money, 40 Hitler, Adolf, 180, 236n10 Holacracy, 191 Homogeneity, 65– 66, 86 Honey, 130–131 HOURS, 162–165, 163 Housing: buying, 110–111, 142–143; improvised, 141 Hubbee, 130–131 Hub Network, 130–131 Human construct, 2, 13, 217 Human right, 49 Human Right, A, 165–166 Hyperinflation, 70, 176, 178–179 ICCO, 105 Identity, 19 Immediacy.

The End of Growth by Jeff Rubin

Alan Greenspan, Anthropocene, Ayatollah Khomeini, Bakken shale, banking crisis, Bear Stearns, Berlin Wall, British Empire, business cycle, call centre, carbon credits, carbon footprint, carbon tax, collateralized debt obligation, collective bargaining, Credit Default Swap, credit default swaps / collateralized debt obligations, deal flow, decarbonisation, deglobalization, Easter island, energy security, eurozone crisis, Exxon Valdez, Eyjafjallajökull, Fall of the Berlin Wall, fiat currency, flex fuel, Ford Model T, full employment, ghettoisation, Glass-Steagall Act, global supply chain, Hans Island, happiness index / gross national happiness, housing crisis, hydraulic fracturing, illegal immigration, income per capita, Intergovernmental Panel on Climate Change (IPCC), Jane Jacobs, Jevons paradox, Kickstarter, low interest rates, McMansion, megaproject, Monroe Doctrine, moral hazard, new economy, Occupy movement, oil shale / tar sands, oil shock, peak oil, Ponzi scheme, proprietary trading, quantitative easing, race to the bottom, reserve currency, rolling blackouts, Ronald Reagan, South China Sea, sovereign wealth fund, subprime mortgage crisis, The Chicago School, The Death and Life of Great American Cities, Thomas Malthus, Thorstein Veblen, too big to fail, traumatic brain injury, uranium enrichment, urban planning, urban sprawl, women in the workforce, working poor, Yom Kippur War, zero-sum game

But what if they’re simply the most vocal representation of a deeper current of dissatisfaction among citizens? Could other changes be on the way? The financial industry is overdue for a deep structural overhaul that will help to eliminate some of the conflicts of interest that led to the 2008 financial crisis. During the Great Depression, for instance, US lawmakers adopted the Glass-Steagall Act, legislation that separated the different parts of a bank’s business. Under the act, a bank’s traditional deposit-taking business was walled off from the proprietary trading desks that make huge leveraged bets in stock, bond and currency markets. Separating bankers lending money from traders investing money, the thinking went, would help to mitigate the type of rampant speculation that led to the stock market crash of 1929.

…

If access to public money wasn’t enough to supersize Wall Street deals, American regulators also contributed to the trend, easing the rules limiting the amount of money investment banks could borrow, allowing banks to pile up debt that dwarfed their equity. At the same time, the Clinton administration made a quiet but profound decision to leave the financial derivatives market largely unregulated. This followed the repeal of the Glass-Steagall Act, which had maintained walls between the pillars of the financial services industry in the United States since the 1930s. At the same time, former executives from Goldman Sachs, such as Robert Rubin and Hank Paulson, were now running the Treasury Department. Not surprisingly, Wall Street got nearly anything it wanted in those days.

…

But Wall Street has held similar sway in Washington before only to see changing economic circumstances curb its influence. In the Roaring Twenties, Wall Street dined out on largely unregulated markets. Fraud and corruption were systemic. That all changed when the Depression struck. An epidemic of bank failures compelled Washington to pass the Glass-Steagall Act that I mentioned above, to erect barriers between deposit-taking institutions and investment banks. Under the act’s regulatory yoke, the United States enjoyed a remarkably stable financial system for the better part of five decades. That era ended with the push toward deregulation advocated by Reaganomics in the 1980s.

What's the Matter with White People by Joan Walsh

affirmative action, Affordable Care Act / Obamacare, air traffic controllers' union, banking crisis, clean water, collective bargaining, David Brooks, desegregation, Donald Trump, Edward Glaeser, full employment, General Motors Futurama, Glass-Steagall Act, global village, Golden Gate Park, hiring and firing, impulse control, income inequality, invisible hand, It's morning again in America, knowledge worker, labor-force participation, mass immigration, new economy, obamacare, Occupy movement, plutocrats, Ralph Nader, Ronald Reagan, Savings and loan crisis, Triangle Shirtwaist Factory, upwardly mobile, urban decay, W. E. B. Du Bois, War on Poverty, We are the 99%, white flight, women in the workforce, zero-sum game

See Irish Catholic Americans Catholic University CBS News Chait, Jonathan Cheney, Dick Chicago Democratic Convention (1968) race relations in 1960s Washington as mayor of Chicago Defender Child Health Insurance Program Chinese Americans Christian, Harriet Christian Brothers Church, Frank civilian review board (New York City) Civil Rights Act civil rights movement black-Irish Catholic relations and Occupy Wall Street compared to See also individual names of civil rights leaders Civil War Draft Riots (1863) class conflict Carter administration and Hard Hat Riot (1970) income disparity Irish Catholic Americans and New York City in 1960s/1970s Occupy Wall Street Republican Party and white working class (present-day) 2008 general election 2008 primaries See also labor unions; police; race relations Cleaver, Emanuel Clinton, Bill on “big government” on Bush v. Gore detractors DLC and earned income tax credit economic policy Glass-Steagall Act and impeachment 1992 election of Obama and poverty during administration of 2008 election and 2000 primaries and welfare reform white vote and Clinton, Hillary on Iraq War 2008 primaries on “vast right-wing conspiracy” Clyburn, Jim CNN Coates, Ta-Nehisi Coburn, Tom Coles, Robert college education of African Americans economic status and of Irish Americans Colored Orphan Asylum Colson, Chuck Coming Apart: The State of White America 1960–2010 (Murray) communism Congressional Black Caucus contraception Catholic Church on Fluke on Limbaugh on Coughlin, Father Charles crime rates Croly, David Cromwell, Oliver Culinary Workers Union “cultural recognition” strategy Cuomo, Mario Daley, Richard Dallek, Robert D’Amato, Al Dean, Howard Dean, John debt-ceiling battle Declining Significance of Race, The (Wilson) De La Salle, Jean Baptiste DeMint, Jim Demmons, Bob Democratic Party “Blue Dog” Democrats Democratic Convention (1948) Democratic Convention (1968) Democratic Convention (1984) Democratic Leadership Council (DLC) and labor’s declining influence with (1970s) (See also labor unions) 1960s activism and “Reagan Democrats” Smith and 2008 general election 2008 primaries See also individual names of Democratic presidents and leaders Democratic Senatorial Campaign Committee (DSCC) DeVries, Robert Dickens, Charles Digby (blogger) “Dividing the Democrats” memo Dodd, Chris “dog whistle politics” Douglass, Frederick Douthat, Ross Dowd, Maureen Draft Riots (1863) Dreams from My Father (Obama) DuBois, W.

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Dukakis, Michael “dump Johnson” movement Dunham, Ann Dunham, Madelyn Dutton, Fred earned income tax credit (EITC) Ebony economic crisis of 2008 ecumenicism Edelman, Peter Edwards, John Ehrenreich, Barbara Ehrlichman, John Eisenhower, Dwight Emanuel, Rahm Emerging Republican Majority, The (Phillips) empathy, need for Empire State Building e pluribus unum, defined Epton, Bernie Eskew, Carter “Even Critics of Safety Net Depend On It” (New York Times) Falwell, Jerry Family and Medical Leave Act Fassnacht, Robert Federal Hall Federal Reserve Felix, Brother Feminine Mystique, The (Friedan) feminism Ferraro, Geraldine Fighting Poverty in the U.S. and Europe: A World of Difference (Alesina, Glaeser) finance sector banking deregulation and Reagan Democratic Party and economic crisis of 2008 economic stimulus and Federal Reserve FIRE sector (finance, insurance, real estate) Glass-Steagall Act and Great Depression recession of 1982 TARP Fitzwater, Marlin Five Points by Gaslight (Foster) Five Points (New York City) Fletcher, Bill Fluke, Sandra food stamps Ford, Gerald Fortune Foster, George Foster, Vince Fox News Freedman, Samuel G. Freedom Summer (Mississippi) FreedomWorks free market economic policy Friedan, Betty Friedman, Milton From, Al Futurama 2 (General Motors) Ganz, Marshall garment industry (New York City) Gates, Henry Louis Geithner, Tim General Motors Gibbs, Robert Giffords, Gabrielle Gingrich, Newt Gitlin, Todd Glaeser, Edward Glass-Steagall Act Glazer, Nathan Glover, Ann Glover, Danny Goldman Sachs Gore, Al Grand Army of the Republic Grassley, Chuck Great Depression income inequality and Roosevelt and 1932 election Great Society Greeley, Horace Greenberg, Stanley Grijalva, Raul Groppi, Father James gun issue Hacker, Jacob Haldeman, H.

…

Freedom Summer (Mississippi) FreedomWorks free market economic policy Friedan, Betty Friedman, Milton From, Al Futurama 2 (General Motors) Ganz, Marshall garment industry (New York City) Gates, Henry Louis Geithner, Tim General Motors Gibbs, Robert Giffords, Gabrielle Gingrich, Newt Gitlin, Todd Glaeser, Edward Glass-Steagall Act Glazer, Nathan Glover, Ann Glover, Danny Goldman Sachs Gore, Al Grand Army of the Republic Grassley, Chuck Great Depression income inequality and Roosevelt and 1932 election Great Society Greeley, Horace Greenberg, Stanley Grijalva, Raul Groppi, Father James gun issue Hacker, Jacob Haldeman, H.

Other People's Money: Masters of the Universe or Servants of the People? by John Kay

Affordable Care Act / Obamacare, Alan Greenspan, asset-backed security, bank run, banking crisis, Basel III, Bear Stearns, behavioural economics, Bernie Madoff, Big bang: deregulation of the City of London, bitcoin, Black Monday: stock market crash in 1987, Black Swan, Bonfire of the Vanities, bonus culture, book value, Bretton Woods, buy and hold, call centre, capital asset pricing model, Capital in the Twenty-First Century by Thomas Piketty, cognitive dissonance, Cornelius Vanderbilt, corporate governance, Credit Default Swap, cross-subsidies, currency risk, dematerialisation, disinformation, disruptive innovation, diversification, diversified portfolio, Edward Lloyd's coffeehouse, Elon Musk, Eugene Fama: efficient market hypothesis, eurozone crisis, financial engineering, financial innovation, financial intermediation, financial thriller, fixed income, Flash crash, forward guidance, Fractional reserve banking, full employment, George Akerlof, German hyperinflation, Glass-Steagall Act, Goldman Sachs: Vampire Squid, Greenspan put, Growth in a Time of Debt, Ida Tarbell, income inequality, index fund, inflation targeting, information asymmetry, intangible asset, interest rate derivative, interest rate swap, invention of the wheel, Irish property bubble, Isaac Newton, it is difficult to get a man to understand something, when his salary depends on his not understanding it, James Carville said: "I would like to be reincarnated as the bond market. You can intimidate everybody.", Jim Simons, John Meriwether, junk bonds, light touch regulation, London Whale, Long Term Capital Management, loose coupling, low cost airline, M-Pesa, market design, Mary Meeker, megaproject, Michael Milken, millennium bug, mittelstand, Money creation, money market fund, moral hazard, mortgage debt, Myron Scholes, NetJets, new economy, Nick Leeson, Northern Rock, obamacare, Occupy movement, offshore financial centre, oil shock, passive investing, Paul Samuelson, Paul Volcker talking about ATMs, peer-to-peer lending, performance metric, Peter Thiel, Piper Alpha, Ponzi scheme, price mechanism, proprietary trading, purchasing power parity, quantitative easing, quantitative trading / quantitative finance, railway mania, Ralph Waldo Emerson, random walk, reality distortion field, regulatory arbitrage, Renaissance Technologies, rent control, risk free rate, risk tolerance, road to serfdom, Robert Shiller, Ronald Reagan, Schrödinger's Cat, seminal paper, shareholder value, Silicon Valley, Simon Kuznets, South Sea Bubble, sovereign wealth fund, Spread Networks laid a new fibre optics cable between New York and Chicago, Steve Jobs, Steve Wozniak, 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, The Wisdom of Crowds, Tobin tax, too big to fail, transaction costs, tulip mania, Upton Sinclair, Vanguard fund, vertical integration, Washington Consensus, We are the 99%, Yom Kippur War

The events of 1929–33, in which a financial crisis became an industrial depression, threatened not just economic prosperity but political stability. A Senate inquiry into these events was led by a brilliant chief counsel, Ferdinand Pecora, who single-handedly destroyed the reputations of many Wall Street institutions and Wall Street figures. The Glass–Steagall Act of 1933 imposed the separation of commercial and investment banking. The House of Morgan was divided into J.P. Morgan, the commercial banking arm, and Morgan Stanley, an investment bank. The Federal Deposit Insurance Corporation (FDIC) would in future insure depositors against losses from bank runs or bank failures.

…

The American finance sector, which had been publicly humiliated in 1933, became a more and more powerful lobby. That lobby secured steady relaxation of the restrictions that had been imposed on the industry fifty years earlier. The separation of investment from commercial banking – the principle that had become synonymous in the public mind with the Glass–Steagall Act – was steadily weakened, although not finally repealed until 1999. In Britain, the trigger for change was the ‘Big Bang’ – the deregulation of finance in 1986 – which swept away a mass of restrictions, including most obstacles to the creation of financial conglomerates. The large British commercial banks, with the enormous capital strength derived from their retail deposit base, were immediate diversifiers.

…

Crédit Lyonnais, bailed out in 1993 by the French state (which already owned a majority of the shares), was the first global diversified bank to fail in the modern era, after a farcical expansion in which the bank actually became owner of the Hollywood film studio MGM. In the USA the archetypal deal-maker was Sandy Weill, architect of Citigroup. The Glass–Steagall Act was repealed for the more or less explicit purpose of allowing Weill’s Travelers Group to merge with Citicorp, after which Weill rapidly moved to eject his co-CEO, the urbane retail banker John Reed. Citicorp became Citigroup, the world’s largest financial institution, absorbing investment bank Salomon, broker Smith Barney and insurer Travelers, providing virtually every financial product available.

The End of Wall Street by Roger Lowenstein

"World Economic Forum" Davos, Alan Greenspan, Asian financial crisis, asset-backed security, bank run, banking crisis, Bear Stearns, benefit corporation, Berlin Wall, Bernie Madoff, Black Monday: stock market crash in 1987, Black Swan, break the buck, Brownian motion, Carmen Reinhart, collateralized debt obligation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, diversified portfolio, eurozone crisis, Fall of the Berlin Wall, fear of failure, financial deregulation, financial engineering, fixed income, geopolitical risk, Glass-Steagall Act, Greenspan put, high net worth, Hyman Minsky, interest rate derivative, invisible hand, junk bonds, Ken Thompson, Kenneth Rogoff, London Interbank Offered Rate, Long Term Capital Management, low interest rates, margin call, market bubble, Martin Wolf, Michael Milken, money market fund, moral hazard, mortgage debt, negative equity, Northern Rock, Ponzi scheme, profit motive, race to the bottom, risk tolerance, Ronald Reagan, Rubik’s Cube, Savings and loan crisis, savings glut, short selling, sovereign wealth fund, statistical model, the payments system, too big to fail, tulip mania, Y2K

California Callan, Erin capitalism Carroll, David Cassano, Joseph Cayne, James (Jimmy) CDOs. See collateralized debt obligations (CDOs) Cerenzie, Michael Chase Manhattan China China Investment Corporation Chrysler Citigroup acquisitions by n bailouts of capital raised by CDOs and corporate loans of dissent at Timothy Geithner and Glass-Steagall act repeal and history of mortgage bond insurance of international portfolio of job losses at leadership change at leverage of losses mortgage bubble and New York Federal Reserve and nonregulated subsidiaries of Hank Paulson and risk at annual letters to shareholders of stock price of subprime mortgages and Wachovia and Clinton, Bill Clinton, Hillary CNBC Cohen, H.

…

See home foreclosure(s) foreign investors France Frank, Barney Freddie Mac and Fannie Mae accounting problems of affordable housing and Alternative-A loans bailout of Ben Bernanke and capital raised by competitive threats to Congress and Countrywide Financial and Democrats and Federal Reserve and foreign investment in Alan Greenspan and as guarantor history of lack of regulation of leadership changes leverage losses mortgage bubble and as mortgage traders Hank Paulson and politics and predatory lending and reasons for failures of relocation to private sector Robert Rodriguez and shareholders solving financial crisis through statistical models of stock price of Treasury Department and free market Freidheim, Scott Friedman, Milton Fuld, Richard compensation of failure to pull back from mortgage-backed securities identification with Lehman Brothers Lehman Brothers’ bankruptcy and Lehman Brothers’ last days and long tenure of Hank Paulson and personality and character of Gamble, James (Jamie) GDP Geithner, Timothy AIG and bank debt guarantees and Bear Stearns bailout and career of China and Citigroup and financial crisis, response to Lehman Brothers and money markets and Morgan Stanley and in Obama administration Hank Paulson and TARP and Gelband, Michael General Electric General Motors Germany Glass-Steagall Act Glauber, Robert Golden West Savings and Loan Goldman Sachs AIG and as bank holding company Warren Buffett investment in capital raised by capital sought by compensation at credit default swaps and hedge funds and insurance (credit default swap) premiums of job losses at leverage of Merrill Lynch and Stanley O’Neal’s obsession with Hank Paulson and pull back from mortgage-backed securities short selling against stock price of Wachovia and Gorton, Gary government, U.S.

…

In his 2003 book [published after the events described above] Rubin advocated “comprehensive” margin requirements for derivatives, and in pronouncements throughout his career, Rubin was generally a proponent of sensible, if moderate, regulation. In practice, he was often a deregulator. Simultaneous to his opposition to Born, he advocated repeal of the Glass-Steagall act—a cause championed by Citigroup, which Rubin would shortly join. Summers, probably the most liberal of the group, was generally open to the case for regulation. Yet when Born proposed some market supervision, Summers, too, tried to bully her into submission. j Basel II, a multilateral pact to create an international banking standard, published in 2004 and yet to be fully adopted, aimed to ensure that capital allocation was “more risk sensitive.”

The Economics Anti-Textbook: A Critical Thinker's Guide to Microeconomics by Rod Hill, Anthony Myatt

American ideology, Andrei Shleifer, Asian financial crisis, bank run, barriers to entry, behavioural economics, Bernie Madoff, biodiversity loss, business cycle, cognitive dissonance, collateralized debt obligation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, David Ricardo: comparative advantage, different worldview, electricity market, endogenous growth, equal pay for equal work, Eugene Fama: efficient market hypothesis, experimental economics, failed state, financial innovation, full employment, gender pay gap, Gini coefficient, Glass-Steagall Act, Gunnar Myrdal, happiness index / gross national happiness, Home mortgage interest deduction, Howard Zinn, income inequality, indoor plumbing, information asymmetry, Intergovernmental Panel on Climate Change (IPCC), invisible hand, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Kenneth Arrow, liberal capitalism, low interest rates, low skilled workers, market bubble, market clearing, market fundamentalism, Martin Wolf, medical malpractice, military-industrial complex, minimum wage unemployment, moral hazard, Paradox of Choice, Pareto efficiency, Paul Samuelson, Peter Singer: altruism, positional goods, prediction markets, price discrimination, price elasticity of demand, principal–agent problem, profit maximization, profit motive, publication bias, purchasing power parity, race to the bottom, Ralph Nader, random walk, rent control, rent-seeking, Richard Thaler, Ronald Reagan, search costs, shareholder value, sugar pill, The Myth of the Rational Market, the payments system, The Spirit Level, The Wealth of Nations by Adam Smith, Thorstein Veblen, ultimatum game, union organizing, working-age population, World Values Survey, Yogi Berra

In the early 1930s the Roosevelt administration enacted three key pieces of legislation in an effort to avoid a repeat of the Great Depression. The system worked well for about fifty years. Roosevelt’s first piece of legislation was the Glass-Steagall Act (1933), which prevented commercial banks (which take deposits and grant loans to both households and business) from acting as investment banks (which issue stocks and shares, and organize huge business deals such as mergers). Investment banking is inherently more risky than commercial banking, and the Glass-Steagall Act kept the two separate. The second key piece of legislation was the Federal Housing Administration Act (1934), which regulated the terms of mortgages and insured them against default.

…

.: 522) show that by 1988, a scant two years after the tax code was changed, 68 per cent of home equity loans were used to fund things other than home improvements, compared with just 35 per cent in 1984. Running parallel to this growth was the growth in small consumer finance companies. In 1977, these little consumer finance companies owned a mere 0.5 per cent of the home equity loan market. But by the end of the 1980s, they had 32 per cent. The repeal of Glass-Steagall in 1999 The Glass-Steagall Act prohibited commercial banks from owning other financial companies such as investment banks or insurance companies.4 It was this feature which was abolished in 1999 by the Gramm-Leach-Bliley Bank Deregulation Bill. The consolidation of commercial and investment banks was supposed to ­allow the resulting ‘full-service’ banks to better compete and to enjoy economies of scale.5 Instead, it enhanced the scope for conflicts of interest and perverse incentives.

…

., 115, 142, 166, 169 Galbraith, John Kenneth, 18–20, 115, 194; The Affluent Society, 79, 87 game theory, 129 gasoline: oligopolistic industry, 61; prices of, 73 gender pay gap, 189 General Agreement on Tariffs and Trade (GATT), 224 George, David, 42, 204 Gini coefficient, 200–1 Gintis, Herb, 1 Glass-Steagal Act, 259; repeal of, 260–1 global trading system, agreements, 224 global warming, evidence of, 156 globalization, 229–31; analysis of, 219–42 Gomory, R. E., 229 Goodwin, N., 74, 218 government: and determination of market outcomes, 13; and equity, 13–14; and externalities, 154; bias against, habit formation, 12 happiness, 246; maximization of, 10, 12; measurement of, 88–9 see also wellbeing and utility Harberger, A.

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

Everyone from voters to Wall Street traders to congressmen to the president wanted to believe the financial system could be left in the hands of the Fed. The highly respected Paul Volcker gave way to the “maestro,” Alan Greenspan, who was equally revered, until he wasn’t. In 1999, we turned a blind eye to the repeal of the Glass-Steagall Act, which had barred the merging of commercial and investment banks ever since the Depression, and so blessed the emerging banking behemoths to hijack every lever of power. When the system blew up in their faces, they pulled their last lever: taxpayer-funded bailouts. Six years on, we are still a long way from fixing this system.

…

It would combine the global commercial-banking reach of Citicorp with the investment-banking prowess of Travelers’ Salomon Smith Barney, as well as the latter’s comprehensive insurance offerings. One problem: the deal was essentially illegal. By any reading it ran afoul of the Depression-era Glass-Steagall Act, which decreed that commercial banks and investment banks must remain separate. The law’s intent was that commercial depositors’ funds should not be put at risk by an investment bank that could use them to finance speculative investments rather than the more reliable residential or commercial loans that commercial banks pursued.

…

Abed, Gabriel Abridello, Mike accelerators Accel Partners Adams, Douglas Afghan Citadel Afghanistan Africa A-Grade Investments Ahmadi, Parisa AIG Airbnb Akimbo Alamgir, Nadia Alcoholics Anonymous Aleph Alibaba Alipay Alisie, Mihai Allaire, Jeremy al-Qaeda altcoins dogecoin litecoin Realcoin Alyattes, King Alydian Amazon Amazon Cloud American Express AME Ventures Amidi, Saeed Andolfatto, David Andreessen, Marc Andreessen Horowitz Andresen, Gavin Android angel investors anonymity anonymous remailers AntMinter Antonopoulos, Andreas ANX Apache tribe APIs (application programming interfaces) Apple Argentina exchange houses in trust problem in Aristotle Armstrong, Brian ASIC (application specific integrated circuit) chips Assange, Julian assassination AstroPay AT&T Atlas ATS Australia Austrian school of economics automobile loan payments Avalon Average Is Over (Cowen) Babylonians Back, Adam Bacon, Francis Bagehot, Walter Banco Popular Banga, Ajay Bank of America Bank of England (BOE) bankruptcy banks, banking central fees of fractional reserve Glass-Steagall Act and ledger and Medici modern payment system centered around people excluded from system of shadow system of tellers in too-big-to-fail Baran, Paul Barbados Barbie, Johann Barclays Barrett, John barter Beckstrom, Rod Bel Bruno, Joe Bell, Jim Bernanke, Ben Betamax BitAngels BitCarbon bitcoin(s): addresses in artwork and songs about balance in blockchain ledger in boom in brand of carbon footprint of as commodity community around creation of; see also Nakamoto, Satoshi crime and cryptography mailing list and culture of as currency defined as deflationary currency dollar and double-spending of early adopters of encryption in evangelists of exchange rate of fraud and future of Genesis Block in imitators of, see altcoins issuance of meetups for mining, see bitcoin mining and miners merchants accepting as movement as payments protocol as property regulation of, see regulation release of reward program in security and software for symbols of as technology thefts of traceability of transaction confirmation in transaction fees and transaction malleability bug and transaction volumes of trust and value of volatility of wallets for wealth concentration and Wild West phase of work in Bitcoin 2.0 (Blockchain 2.0) bitcoin barons bitcoin.com Bitcoin Decentral Bitcoin Faucet Bitcoin Forum Bitcoin Foundation Bitcoinica Bitcoin Magazine Bitcoin Market bitcoin mining and miners ASICs in cloud at data centers Dr.

Competition Overdose: How Free Market Mythology Transformed Us From Citizen Kings to Market Servants by Maurice E. Stucke, Ariel Ezrachi

"Friedman doctrine" OR "shareholder theory", affirmative action, Airbnb, Alan Greenspan, Albert Einstein, Andrei Shleifer, behavioural economics, Bernie Sanders, Boeing 737 MAX, Cambridge Analytica, Cass Sunstein, choice architecture, cloud computing, commoditize, corporate governance, Corrections Corporation of America, Credit Default Swap, crony capitalism, delayed gratification, disinformation, Donald Trump, en.wikipedia.org, fake news, Garrett Hardin, George Akerlof, gig economy, Glass-Steagall Act, Goldman Sachs: Vampire Squid, Google Chrome, greed is good, hedonic treadmill, incognito mode, income inequality, income per capita, independent contractor, information asymmetry, invisible hand, job satisfaction, labor-force participation, late fees, loss aversion, low skilled workers, Lyft, mandatory minimum, Mark Zuckerberg, market fundamentalism, mass incarceration, Menlo Park, meta-analysis, Milgram experiment, military-industrial complex, mortgage debt, Network effects, out of africa, Paradox of Choice, payday loans, Ponzi scheme, precariat, price anchoring, price discrimination, profit maximization, profit motive, race to the bottom, Richard Thaler, ride hailing / ride sharing, Robert Bork, Robert Shiller, Ronald Reagan, search costs, shareholder value, Sheryl Sandberg, Shoshana Zuboff, Silicon Valley, Snapchat, Social Responsibility of Business Is to Increase Its Profits, Stanford prison experiment, Stephen Hawking, sunk-cost fallacy, surveillance capitalism, techlash, The Chicago School, The Market for Lemons, The Myth of the Rational Market, The Theory of the Leisure Class by Thorstein Veblen, The Wealth of Nations by Adam Smith, Thomas Davenport, Thorstein Veblen, Tim Cook: Apple, too big to fail, Tragedy of the Commons, transaction costs, Uber and Lyft, uber lyft, ultimatum game, Vanguard fund, vertical integration, winner-take-all economy, Yochai Benkler

Bush asking his Council on Competitiveness “to put an end to what he has called ‘regulatory creep’ in the federal government.”9 Sounds doubtful? Well, let’s consider the financial sector. The US Supreme Court in 1963 characterized the banking regulations as one of the most, if not the most, successful systems of economic regulation.10 Commercial banking, as a result of federal laws, like the Glass-Steagall Act of 1933 and Bank Holding Company Act of 1956, as well as state laws, was diffused through many independent, local banks, rather than concentrated in a few nationwide banks, as in England and Germany. With this federal and state regulatory framework for commercial banking, the Court noted the “virtual disappearance of bank failures from the American economic scene.”

…

Pushing the reductivist narrative, the industry argued that if competition is viewed as inherently organic and good, then regulation must be seen as inherently artificial, intrusive, and bad—something that interferes with natural market forces. Interest groups, businesses, lobbyists, and politicians repeated the magical formula. One victim in the late 1990s was the Glass-Steagall Act, which was meant to prevent banks from becoming too-big-and-integrated-to-fail, by hampering affiliations between the commercial banking and securities industries. The financial industry was calling the law “an anticompetitive anachronism.”11 The act was hobbled, and then eventually cut down to pave the way for the $70 billion merger of Travelers Group Inc. and Citicorp, which created the largest commercial banking organization in the world, with total consolidated assets of approximately $751 billion.

…

See Federal Trade Commission fuel shortage incidents on airlines, 56–58, 61 Fun Kid Racing app (Tiny Lab), 194–95, 199, 202–3 Gallup, 277 Gamemakers, 192–224 overview, xiii, 192, 195–96 addictive qualities built into apps, 196–203 advertisers bidding on targets, 208–9 attracting bidders, 207–9 benefits of their technology, 221 business models, 198, 220 children’s data gleaned for advertisers, 193–95 controlling what we see or don’t see, 218–22 creating an illusion of choice and control, 211–15 extracting our personal data, 203–7 Google and FB dominance, 208, 210, 213–15 identifying consumers’ weaknesses for advertisers, 199–201 lack of transparency, 209–10 media and traffic from Google and FB, 210 offering developers a helping hand, 198, 204 payment for free services, 216–18 privacy assurance and policies, 194, 206–7, 211, 212, 217–18 profit from auctions, 209–11 surveillance capitalism, 195 targeting consumers, 204–5 toxic competition, 192–93, 203, 206–7, 220–22, 223 tracking software, 204–7, 217, 222 See also Facebook; Google gaming disorder, 202 Gates, Dominic, 265 gazelles with trackers metaphor, 92–93 General Data Protection Regulation, Europe, 287 General Mills, 64 GEO Group, 167, 172, 173, 175, 176 German printing industry, 244 Germany’s antitrust authority and Facebook, 222 Glass-Steagall Act (1933), 127–28 global economic crisis, causes of, 130 Goldberg, Shmuli, 103–4 Goldman Sachs, 274–76 Google auction of user data to advertisers, 208–9 Fun Kid Racing app, 193–95, 199 initial creation of, 282–83 Location History feature, 212–13 time spent on, 196 YouTube, 196, 208–9, 210, 215 See also Gamemakers Google Books Ngram Viewer, 131, 131–32, 132 government’s role in promoting healthy competition, 260–72 failure of, leading to financial crisis of 2008, 261–64 preventing exploitation of human weaknesses, 267–69 providing a safety net, 269–72 regulation of the market, 260 regulatory guides for the competition machine, 264–67 See also policy makers greed-inspired competition, 235–36, 237, 240.

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

For the previous three decades, freeing financial markets from “onerous” regulations had been an article of faith among conservatives. It also became public policy. From the 1980s onward, tight regulations of the financial system instituted during the Great Depression were phased out or eliminated. The most notable casualty was the Glass-Steagall Act of 1933. Part of that landmark legislation had created a firewall between commercial banks (which took deposits and made loans) and investment banks (which underwrote, bought, and sold securities). Those provisions suffered death by a thousand cuts. Beginning in the late 1980s, the Federal Reserve Board permitted commercial banks to buy and sell a range of securities.

…

In the United States, the panic of 1907 left many lawmakers concerned about the nation’s lack of a central bank, and prompted the formation of the Federal Reserve a few years later. The mother of all financial crises—the chain of disasters known as the Great Depression—sparked radical reforms of financial systems internationally. In the United States, the Glass-Steagall Act of 1933 created federal deposit insurance and established a firewall between commercial and investment banking; subsequent legislation gave the Federal Reserve the power to regulate bank reserves. The government brought the stock market to heel as well: the Securities Act of 1933 required issuers of securities to register them and to publish a prospectus, and it made the investment banks that underwrote the sale criminally liable for any errors or misleading statements in the prospectus.

…

Throughout the nineteenth and early twentieth centuries, crippling panics and depressions hit the nation again and again. Financial crises disappeared only after the Great Depression, a period that coincided with the rise of the United States as a global superpower. At the same time the U.S. government reined in financial institutions with legislation like the Glass-Steagall Act and shored them up by creating agencies like the SEC and FDIC. The dollar became the ballast of an extraordinarily stable international monetary system, and crises came to seem like things of the past. Though serious cracks started to appear in the facade after the 1970s, economists in developed nations kept the faith, worshipping at the altar of the Great Moderation.

Griftopia: Bubble Machines, Vampire Squids, and the Long Con That Is Breaking America by Matt Taibbi

addicted to oil, affirmative action, Affordable Care Act / Obamacare, Alan Greenspan, Bear Stearns, Bernie Sanders, Bretton Woods, buy and hold, carried interest, classic study, clean water, collateralized debt obligation, collective bargaining, computerized trading, creative destruction, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, David Brooks, desegregation, diversification, diversified portfolio, Donald Trump, financial innovation, Glass-Steagall Act, Goldman Sachs: Vampire Squid, Gordon Gekko, greed is good, Greenspan put, illegal immigration, interest rate swap, laissez-faire capitalism, London Interbank Offered Rate, Long Term Capital Management, margin call, market bubble, medical malpractice, military-industrial complex, money market fund, moral hazard, mortgage debt, Nixon triggered the end of the Bretton Woods system, obamacare, passive investing, Ponzi scheme, prediction markets, proprietary trading, prudent man rule, quantitative easing, reserve currency, Ronald Reagan, Savings and loan crisis, Sergey Aleynikov, short selling, sovereign wealth fund, too big to fail, trickle-down economics, Y2K, Yom Kippur War

“I always tell people, rule of thumb, once the project is approved, you’re still two years away from the first shovel hitting the ground,” he says. “It just takes that long to get all the permits and the paperwork done.” I ask him if experiences like that would color his opinion on, say, the deregulation of the financial services industry in the late nineties. “Absolutely,” he says. When I bring up the repeal of the Glass-Steagall Act (which prevented the mergers of insurance, investment banking, and commercial banking companies) and the 2000 law that deregulated the derivatives industry, Bock demurs. I’m not sure he knows what I’m talking about, but then he plunges forward anyway. In his opinion, he says, the deregulation of Wall Street was the right move, but it was just implemented too quickly.

…

He wanted a government that was utterly powerless to interfere in the workings of private business, leaving just one tool in its toolbox—the ability to funnel giant sums of money to the banks. He turned the Fed into a Santa Claus who was legally barred from distributing lumps of coal to naughty kids. Greenspan’s reigning achievement in this area was his shrewd undermining of the Glass-Steagall Act, a Depression-era law that barred insurance companies, investment banks, and commercial banks from merging. In 1998, the law was put to the test when then–Citibank chairman Sandy Weill orchestrated the merger of his bank with Travelers Insurance and the investment banking giant Salomon Smith Barney.

…

In short, the value added of derivatives themselves derives from their ability to enhance the process of wealth creation. Translating that into English: I recognize that derivatives are making everyone shitloads of money, so I’ll leave them alone. It was in the immediate wake of all these historically disastrous moves—printing 1.7 trillion new dollars in the middle of a massive stock bubble, dismantling the Glass-Steagall Act, deregulating the derivatives market, blowing off his regulatory authority in the middle of an era of rampant fraud—that Greenspan was upheld by the mainstream financial and political press as a hero of almost Caesarian stature. In February 1999, Time magazine even put him on the cover, flanked by Clinton officials Bob Rubin and Larry Summers, next to the preposterous headline “The Committee to Save the World: The inside story of how the Three Marketeers have prevented a global economic meltdown—so far.”

A History of the World in Seven Cheap Things: A Guide to Capitalism, Nature, and the Future of the Planet by Raj Patel, Jason W. Moore

"World Economic Forum" Davos, agricultural Revolution, Anthropocene, Bartolomé de las Casas, biodiversity loss, British Empire, business cycle, call centre, Capital in the Twenty-First Century by Thomas Piketty, carbon credits, carbon footprint, classic study, clean water, collateralized debt obligation, colonial exploitation, colonial rule, company town, complexity theory, creative destruction, credit crunch, Donald Trump, double entry bookkeeping, energy transition, European colonialism, feminist movement, financial engineering, Food sovereignty, Ford Model T, Frederick Winslow Taylor, full employment, future of work, Glass-Steagall Act, global supply chain, Haber-Bosch Process, interchangeable parts, Intergovernmental Panel on Climate Change (IPCC), Joseph Schumpeter, land reform, Lewis Mumford, liberal capitalism, low interest rates, means of production, Medieval Warm Period, megacity, Mercator projection, meta-analysis, microcredit, Naomi Klein, Nixon shock, Occupy movement, peak oil, precariat, scientific management, Scientific racism, seminal paper, sexual politics, sharing economy, source of truth, South Sea Bubble, spinning jenny, strikebreaker, surplus humans, The Theory of the Leisure Class by Thorstein Veblen, too big to fail, trade route, transatlantic slave trade, union organizing, Upton Sinclair, wages for housework, World Values Survey, Yom Kippur War

A wan environmentalism is unlikely to make change if its principal theory rests on the historically bankrupt idea of immutable human separation from nature. Unfortunately, many of today’s politics take as given the transformation of the world into cheap things. Recall the last financial crisis, made possible by the tearing down of the boundary between retail and commercial banking in the United States. The Great Depression’s Glass-Steagall Act put that barrier in place to prevent future dealing of the kind that was understood to have knocked the global economy into a tailspin in the 1930s. American socialists and communists had been agitating for bank nationalization, and Franklin Roosevelt’s New Dealers offered the act as a compromise safeguard.119 When twenty-first-century liberal protestors demanded the return of Glass-Steagall, they were asking for a compromise, not for what had been surrendered to cheap finance: housing.

…

See also Feudalism; Genoese banking; specific nations extrahuman natures: appropriation of, 63, 95; care work and, 110, 117; redistribution and, 210; temporal relationship with, 98; threats to, 226n44; value and, 101; work of, 24–25, 119, 164 Fair Labor Standards Act of 1938, 136 Félix, Georges, 212 Ferdinand V, King of Spain, 65, 66, 74 feudalism: decline of, 49, 59, 72, 96–97; in Europe, 9–13, 100, 163; Little Ice Age and, 48 finance: accumulation, 88–89; debt repayment, 39; double-entry bookkeeping, 223n45; financialization, 68–70, 87, 125–28; financier advancement, 28; Glass-Steagall Act, 40; Greece debt crisis, 89–90; interest rates, 70, 77, 222n30; International Monetary Fund (IMF), 87, 89, 131, 136; investment returns, 27, 28; low interest, 68; microfinance, 224n92; monetary systems, 71–74; women’s inheritance rights, 125–28. See also bankers/banking; Cheap Money Florence, 71, 74 food systems: animal food consumption, 153, 155; consumption strategies, 33; food prices, 152–53, 154 fig. 5; food/trash balance, 23; Green Revolution, 149–153, 155; in India, 152 fig. 4; industrialization and, 141–155; labor organizing, 104–5; Little Ice Age and, 48–49; “plants of civilization”, 139, 144, 160, 231n8; transformations of, 140; urban discontent and, 140–41; worker control and, 104–5.

…

See also Genoese banking Genoese banking: American silver and, 79; Centurione family, 35, 65–66, 79, 221n2; Charles V (Carlos I) King of Spain and, 79–80; cheap money and, 74–77; currency shortage, 71; global silver trade and, 82; merchant class and, 65, 75, 76; Pinelo, Francisco, 65–66, 79; Reconquista and, 65–66; relationships to, 26; war financing and, 79–81 German Peasants’ War of 1525, 73, 74, 82, 163, 175 Germany: banking in, 15–16; fiscal hegemony of, 89; Fugger family, 72; German Peasants’ War of 1525, 73, 74, 82, 163, 175; technologies of, 148 Glass-Steagall Act, 40 Glenn, Evelyn Nakano, 136 Global North: animal food industry, 174; care professionals, 134; defined, 25; GDP growth in, 28; investment returns in, 28 Global South: care professionals, 134; defined, 25; Green Revolution, 155; nationalism in, 197–98; nutritionism in, 157; petroloans, 177; in sexual politics, 131 gold standard, 146, 176 governments: alternative nationalisms, 199–200; and bankers, 28, 66, 85–88; commercial power and, 28; and norms, 39.

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

As his campaign unfolded, Sanders unveiled a set of radical reforms that would, among other things, entail government reassuming control over the private market. He proposed Medicare for all (which would remove private insurance as a middleman and guarantee health insurance as a right), free tuition to public colleges financed by a transaction tax on Wall Street speculation, a carbon tax to reduce carbon emissions, the reinstatement of the Glass-Steagall Act separating commercial and investment banking, and public campaign financing. Sanders’s critics among Democrats argued that his proposals were impractical because they would never get through a Republican congress. A column in New York magazine was entitled, “What Bernie Sanders Doesn’t Understand About American Politics.”

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Neither candidate mentioned deficits in their speeches nor pledged to reduce what neoliberals have called “entitlements”; both pledged to be vigilant about trade deals and runaway shops; both committed themselves to regulating Wall Street. In the primaries, Sanders had been the only candidate to call for reviving the Glass-Steagall Act, but both party platforms called for reviving some version of the act. How much this shift in debate will be reflected after the November election remains unclear. If Trump is soundly defeated, as seems likely at this writing, the Republican congressional and business leadership will argue that his defeat was due not only to his intemperate and amateurish campaigning, but to his populism.

Democracy at Work: A Cure for Capitalism by Richard D. Wolff

asset-backed security, Bear Stearns, Bernie Madoff, business cycle, collective bargaining, Credit Default Swap, declining real wages, feminist movement, financial intermediation, Glass-Steagall Act, green new deal, Howard Zinn, income inequality, John Maynard Keynes: technological unemployment, laissez-faire capitalism, means of production, military-industrial complex, moral hazard, mortgage debt, Occupy movement, Ponzi scheme, profit maximization, quantitative easing, race to the bottom, Ronald Reagan, too big to fail, trickle-down economics, wage slave, women in the workforce, Works Progress Administration

They systematically evaded, then weakened, the taxes and regulations of the New Deal, and eventually, when politically possible, eliminated them altogether. Business profits funded the parties, politicians, public relations campaigns, and professional think tanks that together shaped the real social effects and historical decline of government economic regulation. Examples include the destruction of the Glass-Steagall Act, the current assault on Social Security, the shift in the federal tax burden from business to individuals and from upper- to middle-income individuals, and so on. Unions, the left, and the progressive wing of the Democratic Party—even when in power—proved unable or unwilling to secure the federal government’s commitment to New Deal policies.

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That happened historically as a consequence of profound social dissatisfaction with how the profit-driven strategies of private banks contributed to economic crises, with intolerable social costs. In the United States, the Great Depression provoked congressional hearings that revealed extensive conflicts of interest and fraud committed by banks and their investment subsidiaries. The resulting Emergency Banking Relief Act of 1933 (the Glass-Steagall Act) gave the Federal Reserve the power to regulate savings accounts interest rates and also prohibited bank-holding companies from owning other kinds of financial enterprises in order to stop banks from using their depositors’ funds for risky investments. Such controls of what private capitalists could charge and do were steps toward—even as they stopped short of—a full nationalization of banking.

Risk Management in Trading by Davis Edwards

Abraham Maslow, asset allocation, asset-backed security, backtesting, Bear Stearns, Black-Scholes formula, Brownian motion, business cycle, computerized trading, correlation coefficient, Credit Default Swap, discrete time, diversified portfolio, financial engineering, fixed income, Glass-Steagall Act, global macro, implied volatility, intangible asset, interest rate swap, iterative process, John Meriwether, junk bonds, London Whale, Long Term Capital Management, low interest rates, margin call, Myron Scholes, Nick Leeson, p-value, paper trading, pattern recognition, proprietary trading, random walk, risk free rate, risk tolerance, risk/return, selection bias, shareholder value, Sharpe ratio, short selling, statistical arbitrage, statistical model, stochastic process, systematic trading, time value of money, transaction costs, value at risk, Wiener process, zero-coupon bond

From 22 RISK MANAGEMENT IN TRADING the time of the Great Depression in the 1930s until the late 1990s, banks in the United States were divided into commercial banks and investment banks by the Glass‐Steagall Act (the U.S. Banking Act of 1933). This act prevented financial institutions that take deposits from customers (commercial banks) from engaging in many financial activities involving financial markets. Under the Glass‐Steagall Act, deposit‐taking institutions were prevented from: ■ ■ ■ ■ ■ Buying or selling securities for customers Investing in securities on their own behalf Underwriting or distributing securities Owning or affiliating with companies involved in securities activities Sharing employees with securities firms.

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Coinciding with the growth of the derivatives market in the mid‐1970s, U.S. commercial banks started creating subsidiaries to enter securities markets in a limited manner. Demonstration of sound risk management practices convinced banking regulators to allow the use of these loopholes. Over time, these exemptions grew. By the time the Glass‐Steagall Act was finally repealed in 1999, it was mostly a symbolic action—large financial conglomerates handling both commercial and investment banking already existed. The risk management concepts pioneered by banks were soon adopted by hedge funds. This helped hedge funds improve their profitability and attract more investors.

SUPERHUBS: How the Financial Elite and Their Networks Rule Our World by Sandra Navidi

"World Economic Forum" Davos, activist fund / activist shareholder / activist investor, Alan Greenspan, Anthropocene, assortative mating, bank run, barriers to entry, Bear Stearns, Bernie Sanders, Black Swan, Blythe Masters, Bretton Woods, butterfly effect, Capital in the Twenty-First Century by Thomas Piketty, Carmen Reinhart, central bank independence, cognitive bias, collapse of Lehman Brothers, collateralized debt obligation, commoditize, conceptual framework, corporate governance, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, digital divide, diversification, Dunbar number, East Village, eat what you kill, Elon Musk, eurozone crisis, fake it until you make it, family office, financial engineering, financial repression, Gini coefficient, glass ceiling, Glass-Steagall Act, Goldman Sachs: Vampire Squid, Google bus, Gordon Gekko, haute cuisine, high net worth, hindsight bias, income inequality, index fund, intangible asset, Jaron Lanier, Jim Simons, John Meriwether, junk bonds, Kenneth Arrow, Kenneth Rogoff, Kevin Roose, knowledge economy, London Whale, Long Term Capital Management, longitudinal study, Mark Zuckerberg, mass immigration, McMansion, mittelstand, Money creation, money market fund, Myron Scholes, NetJets, Network effects, no-fly zone, offshore financial centre, old-boy network, Parag Khanna, Paul Samuelson, peer-to-peer, performance metric, Peter Thiel, plutocrats, Ponzi scheme, power law, public intellectual, quantitative easing, Renaissance Technologies, rent-seeking, reserve currency, risk tolerance, Robert Gordon, Robert Shiller, rolodex, Satyajit Das, search costs, shareholder value, Sheryl Sandberg, Silicon Valley, social intelligence, sovereign wealth fund, Stephen Hawking, Steve Jobs, subprime mortgage crisis, systems thinking, tech billionaire, The Future of Employment, The Predators' Ball, The Rise and Fall of American Growth, too big to fail, Tyler Cowen, women in the workforce, young professional

Two years later, the former Goldman Sachs luminary became the seventieth secretary of the treasury. He is widely credited with “Rubinomics,” a policy that achieved a balanced budget by way of tax increases and spending cuts. Clinton praised him as the most admired U.S. treasury secretary since Alexander Hamilton. But Rubin had also presided over the repeal of the Glass-Steagall Act, which separated investment and commercial banking activities and is now considered to have been one of the main causes of the crisis. After Rubin left the White House, Sandy Weill, the architect of the Citi conglomerate, worried about losing Rubin to a competitor and made him an offer that was very concrete in terms of remuneration—$15 million a year—but vague when it came to obligations.

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Summers wanted the position badly, and although he had a tight web of powerful supporters including President Obama, countless others inside and outside the Beltway voiced opposition. Critics pointed to the fact that Summers had driven the deregulation that resulted in the repeal of parts of the Glass-Steagall Act, separating investment from commercial banking and insurance activities. Since Summers had also opposed regulation of complex derivatives, they argued, he had significantly contributed to the crisis. Some pointed out that he lacked relevant monetary policy experience, especially when compared to his main competitor for the job, Janet Yellen, who at the time was the vice chair of the Federal Reserve under Ben Bernanke.

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See Wealth gaps Gates, Bill, 4, 70, 128 Geithner, Timothy AIG and, 183 appointment as U.S. treasury secretary, 188 background on, 45–46 at Bilderberg conference, 121 CEO relationships with, 174 Jamie Dimon and, 57 Larry Fink and, 30–31 in Lehman Brothers collapse, 172–173 Nouriel Roubini and, 47 personal relationships and, 11, 172 in public and private sectors, 165 relationship with Bernanke and Paulson, 11 Robert Rubin and, 168 Gekko, Gordon, 191, 210 Gender discrimination, 201 Gender gap, 147, 158–161 Genentech, 199 Generosity, 105 Geneva, Switzerland, 93 Gergiev, Valery, 116 Germany, 37, 39, 84, 116, 141–142, 174, 178, 190 Gini coefficient, 211 Give and Take, 104 “Givers,” 104–105 “Giving Pledge,” 70, 126 “Glass cliff,” 154 Glass-Steagall Act, 167, 188 Glencore, 171, 205 Global Competitiveness Report, 96 “Global corporate citizenship,” 63, 95 Global corporations, 178–179 Global Risk Report, 212 Globalization, xxvi, 8, 95, 97, 211, 213, 220 Goethe, 76 Goethe University Frankfurt, 142 Goldman Sachs, 23, 36, 44, 52, 76, 84, 88, 91, 121, 136, 151, 156, 165–166, 168, 184, 189, 217 Goodbye Gordon Gekko, 24 Google, 40, 114, 199 Gorbachev, Mikhail, 16 Gordon, Robert, 220 Gorman, James, 89 Grant, Adam M., 104 Great Britain, 9 Great Depression, 34, 36, 186, 219 Greece, 27, 110, 132, 177, 194 Greed, 220–221 Green, Michael, 128 Greenspan, Alan, 35–36, 42, 44, 220 Gregory, Joe, 182 Griffin, Kenneth, 76, 82, 87, 121 Grill Room, 124 Grímsson, Olafur Ragnar, 9 Gross, Bill, 53, 65–69 Gross domestic product debt versus, 210 finance as, 12 Group of Thirty, 105, 118, 222–224 Groupthink, 51 Guanxi, 103 Guardian, 87, 160 Guare, John, 18 H Haakon, Prince of Norway, 114 Haines, Stephen, 218 Haldane, Andrew, 214 “Halo effect,” 23 Hamilton, Alexander, 167 Hamilton Project, 168–169 Hamptons, 91 Hanauer, Nick, 13, 212 “Hard power,” 225 Harvard Business Review, 87, 152 Harvard Business School, 41, 57, 61, 199 Harvard Club, 195 Harvard Corporation, 168 Harvard Gay & Lesbian Caucus, 200 Harvard Kennedy School of Government, 96 Harvard Law School, 23, 199 Harvard University, 36, 47, 81–82, 153, 166, 174, 185, 187, 198 Hawking, Stephen, xxvi Hedge fund(s), 23–24, 27, 63, 70–71, 75, 82, 86–87, 111, 188 Hedge fund managers earnings by, 87–88 residences of, 90 women as, 149 Heffernan, Margret, 224 Henry Crown Fellowship Program, 200 Herrhausen, Alfred, 136 Heterophily, 147 Hierarchy creditworthiness and, 51 opposition to change by, 227 purposes of, 225 social, 22 status and, 22 at World Economic Forum, 114 Highbridge Capital Management, 90 “High-Level Conference on the International Monetary System,” 38 Hildebrand, Philipp, 30, 39, 43, 121 Homogeneity description of, 78–79 familiarity and, 102 hegemony of, 79–92 Homophily, 75–92 description of, 41 mentoring based on, 155 shared background and, 79 in spouse selection, 79–80 Hotel De Bilderberg, 120 Hubs definition of, 19 in financial system, 19 links to, 19 network efficiency affected by, 20 system failures caused by failure of, 20 Human capital, 26, 80 Human networks formation of, 98 homophily influences on, 76 position of individuals in, 21 social capital in, 25 Human relationships description of, 7–8, 105 links in, 19 Human thinking, 50, 218 Humor, 102 Hyperconnectivity, 214 I Iceland, 27 Ideologies, 63–64 IGWEL.

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 century ago there were virtually no regulations to restrain banks’ creativity and speculative urges. They could invest where they wanted, deploy depositors’ money as they saw fit. After the Great Depression, President Roosevelt set up a plethora of restrictions to avoid a repeat of the financial bubble that crashed in 1929. Interstate banking had been limited since 1927. In 1933, the Glass-Steagall Act forbade commercial banks and investment banks from getting into each other’s business—separating deposit taking and lending from playing the markets. Interest-rate ceilings were also imposed that year. The move to regulate bankers continued in 1959 under President Eisenhower, who forbade mixing banks with insurance companies.

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Barred from applying the full extent of their wits toward maximizing their incomes, many of the nation’s best and brightest who had flocked to make money in banking left for other industries. Then, in the 1980s, the Reagan administration unleashed an unstoppable surge of deregulation that continued for thirty years. By 1999, the Glass-Steagall Act lay repealed. Banks could commingle with insurance companies at will. Ceilings on interest rates had vanished. Banks could open branches anywhere. Unsurprisingly, the most highly educated returned to finance to make money. By 2005, the share of workers in the finance industry with a college education exceeded that of other industries by nearly 20 percent.

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electricity elephant-seal cows Elías, Julio Jorge e-mail, spam and Emergency Highway Energy Conservation Act (1974) Empire State Stem Cell Board encyclopedias, free energy engagement rings engineers England environment see also climate change; pollution Environmental Protection Agency (EPA) Epson ESP printers Essay on the Principle of Population, An (Malthus) Ethiopia Ethnographic Atlas (Murdock) eToys Eurobarometer surveys Europe Catholic Church in decline of polygamy in happiness in lack of sprawl in U.S. compared with work hours in see also Western Europe European Climate Exchange European Union evangelical Christianity executive pay ExxonMobil faith benefits of cheap cost of Fallaci, Oriana families changes to culture and income of of 9/11 victims size of Fanning, Shawn (the Napster) Federal Communications Commission Federal Food, Drug, and Cosmetic Act, Delaney Clause to (1958) Federal Reserve Federal Trade Commission (FTC) “Feeding the Illusion of Growth and Happiness” (Easterlin) Feinberg, Kenneth fertility decline in female file sharing film financial crises financial services fines fire departments fishing floors Florence foeticide food culture and faith and preparation of price increases for surpluses of Food and Agriculture Organization Food Quality Protection Act (1996) Ford Ford, Henry Foreign Corrupt Practices Act Fourier, Charles France happiness in work hours in Frank, Robert Free (Anderson) Freedom Communications free lunch, use of term free rider problem free things broadcast TV and movies music and Napstering the world and profiting from ideas freeware Freud, Sigmund fuel see also gas Fundamentalist Church of Jesus Christ of Latter-day Saints future ethics of mispricing nature and price of Gabaix, Xavier Gallup polls Gandhi garbage gas price of General Motors (GM) General Social Survey General Theory of Employment, Interest and Money, The (Keynes) genetics, genes Germany happiness in Germany, Nazi Gershom ben Judah Ghosts I-IV (album) gifts Glass-Steagall Act (1933) GlaxoSmithKline globalization global warming Goa God Goldin, Claudia goods Google Google News Gore, Al Gorton, Mark government hostility toward intervention of resource allocation of Great Britain bubbles in gas prices in happiness in politics in Great Depression Greece, ancient green revolution (1960s and 1970s) Greenspan, Alan gross national happiness (GNH) index Haiti Hammurabi Hanna, Mark happiness faith and genetics and life-cycle curve of loss aversion and money and problems with defining of right-left gap in U.S. trade-off and Hare Krishna Society Harvard University Haryana health health care health insurance Health Ministry, New Zealand Healthway Heinrich, Armin Hindus, Hinduism HIV homeland security, U.S.

Keeping at It: The Quest for Sound Money and Good Government by Paul Volcker, Christine Harper

Alan Greenspan, anti-communist, Ayatollah Khomeini, banking crisis, Bear Stearns, behavioural economics, Black Monday: stock market crash in 1987, Bretton Woods, business cycle, central bank independence, corporate governance, Credit Default Swap, Donald Trump, fiat currency, financial engineering, financial innovation, fixed income, floating exchange rates, forensic accounting, full employment, Glass-Steagall Act, global reserve currency, income per capita, inflation targeting, liquidationism / Banker’s doctrine / the Treasury view, low interest rates, margin call, money market fund, Nixon shock, oil-for-food scandal, Paul Samuelson, price stability, proprietary trading, quantitative easing, reserve currency, Right to Buy, risk-adjusted returns, Ronald Reagan, Rosa Parks, Savings and loan crisis, secular stagnation, Sharpe ratio, Silicon Valley, special drawing rights, too big to fail, traveling salesman, urban planning

Weak financial analysis wasn’t sustainable for a bank that saw itself as an intellectual as well as a business leader. In those days, commercial banks were still tied down by laws and regulations imposed after the financial debacle of the early 1930s. Interest rates on deposits were capped (at zero for demand deposits). The Banking Act of 1933, known as the Glass-Steagall Act for the senator and congressman who sponsored it, forbid banks from underwriting and trading corporate stocks and bonds (effectively separating “deposit-taking” banks from engaging in “investment banking”). Foreign operations were subject to restraints. Branching across state lines was prohibited by federal law and had long been limited within most states, even in New York State.

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See also Volcker, Barbara Bahnson, Bishop, 43 Baker, Howard, xiv, 149 Baker, Jim balanced budget and, 144 exchange rates and, 143–144 Latin American debt crisis and, 135 Reagan’s request to Fed/Volcker and, xiii, 118–119 as Treasury secretary, xiii, 139–141, 143–144 Volcker/Federal Reserve and, xiii, xiv, 118–119, 135, 149–150, 228 “Baker Plan,” xiv, 135 Ball, George, 51 Bank for International Settlements (BIS), 72, 134, 146, 146n Bank Holding Company Act (1956), 43 Bank of America, 93 Bank of England, 19, 27, 29, 134, 145, 147, 234 Bankers Trust, xv, 93, 166, 168 Bankhaus Herstatt, Germany shutdown (1974), 121 Banking Act/1933 (Glass-Steagall Act/1933), 41, 120, 149, 150, 203, 205 banks commerce separation and, 204–205 “correspondent” banks, 57, 57n “deposit-taking banks” vs. investment banks, 41 overlapping agencies and, 230–231, 233 regulations (early 1930s to 1950s), 41 too-big-to-fail debate, 128 See also specific banks; specific regulators/regulation Barre, Raymond, 78 Barros, Robert, 91 “Basel Agreement,” 148 Basel Committee, 146–148 Bear Stearns/rescue, 208, 209 Beaver Lake, New Jersey, 11, 12 Before the Fall: An Inside View of the Pre-Watergate White House (Safire), 72–73 Belgium and fixed exchange rate, 63 Bennett, Jack, 80 “Bergier Commission,” 177, 179, 180 Bernanke, Ben, 156–157, 208, 231 Best Way to Rob a Bank Is to Own One, The: How Corporate Executives and Politicians Looted the S&L Industry (Black), 130 Biden, Joe, 217 Black, William, 130 Bliley, Tom, 205 Blumenthal, Michael, xi, 101, 102, 160 boards, 167–168, 169–172 Bocuse, Paul, 27 Bolton, Emily, 246 bonds (government), 20, 37 bonuses, 43, 171 Bowen, Bill, 152, 160 Bowsher, Chuck, 198 Bradfield, Michael, 70, 73, 132, 180–181, 240–242, 245 Bradley, Bill, 210 Brady, Nicholas (“Nick”), 135, 209, 242 Brady Plan, 135–136 Brash, Donald, 225 Brazil, 137 Bretton Woods system, ix, 24, 67.

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See also specific individuals Frank, Barney, 213 Franklin National Bank, New York failure (1974), 121 Fraser, Doug, 122 Freddie Mac, 89, 89n, 90 Freeman, Brian, 123 Friedman, Milton, 32, 33, 42, 63, 106, 109, 112, 117–118 Full Employment and Balanced Growth Act/1978 (“Humphrey-Hawkins Act”/1978), 100 G-5 (“Group of Five”), xiii, xiv, 83n, 140–141, 144 G-10 (“Group of Ten”), x, xi, 49, 62, 62n, 76–79, 83, 146 G-30 (“Group of Thirty”), xvi, 169–171, 206–207 Garfield, James assassination, 238 Garn, “Jake,” 130 Gaviria, Gustavo, 190 GDP, 207, 237 Gehrig, Lou, 11 Geithner, Tim Obama administration/Treasury and, 211, 212, 213, 231 Volcker and, 208, 212 General Electric, 205 General Electric Capital, 205 General Motors, 213 generally accepted accounting principles (GAAP), 194, 196 George, Eddie, 145 Germany, 42, 62, 64, 65, 69, 77, 79, 80–81, 138, 139 Githongo, John, 190 Glasgall, Bill, 246 Glass-Steagall Act/1933 (Banking Act/1933), 41, 120, 149, 150, 203, 205 Gleacher & Company, 166 GNP (gross national product), 32, 32n, 206 Goheen, Robert, 158–159 gold standard. See fixed exchange rates Golden, Ray, 154 Goldman Sachs, 121n, 149 Goldsmith, Lord, 184 Goldstein, Jeffrey, 154 Goldstone, Richard, 182 Goolsbee, Austan, 210, 245 Gore, Al, 175, 210, 238 Gotlieb, Allan, 183 governance of other countries, 157–158, 240 governance of United States challenges overview, 2–3, 221, 237–240 Hamilton on, 236–237 polarization and, 2 presidential views/examples, 238 Reagan on, 172, 235, 236 strengthening, 172–174, 237–240 trust problems, 2–3, 145, 221, 235–236 Volcker Alliance and, 235–236, 239 Volcker’s mother on, 240 wealth concentration and, 2 See also specific components; specific individuals Government Accountability Office (GAO) Federal Reserve audit and, 229, 230 importance, 193 Graham, Frank, 18–19 Gramm-Leach-Bliley law/1999 (Financial Services Modernization Act/1999), xv, 205 Gramm, Phil, 205 Gray, Edwin, 129–130 Great Depression, 5, 20, 23, 24, 31, 37, 38, 120, 129, 220, 230 Great Recession (2008) bank capital and, 148 derivatives and, 170, 206, 209 Dodd-Frank legislation following, 128, 213, 214–216, 217, 230 Federal Reserve/Treasury efforts and, 39, 49–50 Great Depression comparisons, 20 missed signs, 203–209, 232 too-big-to-fail issue and, 128, 213–214 Volcker’s warnings, 207–208 See also Dodd-Frank legislation; Obama, Barack Great Recession (2008) aftermath financial regulation/reform, 2, 148, 170, 209, 213 stress tests and, 213 Volcker and, 207, 209, 210–212, 213–214, 215–218 Greenspan, Alan, 149 consulting career beginnings, 31 Federal Reserve, xiv, 150, 157, 225 on price stability, 225 wife, 150 Gyohten, Toyoo, 156 Haberkern, Roy, 42–43 Haberler, Gottfried, 23–24 Hamilton, Alexander, 2, 40, 59, 227–228, 236–237 Hansen, Alvin, 22–24, 31 Harvard/Volcker economics and, 22–24, 25–26 Harvard Graduate School of Public Affairs, ix, 22, 40 Hayek, Friedrich, 17 Hayes, Alfred, 39, 93–94 Heath, Edward, 76 Heimann, John, 98 Heineman, Ben, 189 Hiroshima atom bomb, 9 holding companies, 43, 58 Holmes, Alan, 96 Hoover, Herbert, 238 hubris and US, 3 Hume, David, 117 “Humphrey-Hawkins Act”/1978 (Full Employment and Balanced Growth Act/1978), 100 Hunt brothers/loans and silver market, xii, 124–125 Hunt, Nelson “Bunker,” 124 Hurricane Katrina response, 175, 236 Hydoski, Frank, 193 I-Houses, 169 Iacocca, Lee, 123 ICI (British chemical manufacturer), 152 Independent Advisory Council, 174 Independent Panel Review of the World Bank Group Department of Institutional Integrity, 189–192 Indonesia, 137n inflation Carter administration/Fed, 105–106, 108, 110, 111–112 fighting significance, 150–151 fighting strategy (Fed/Volcker as chairman), xii, xiii, 33, 55, 87, 105–106, 108, 110–116, 117–118 importance of fighting, 222 “money illusion” and, 13 Nixon administration and, 61, 87 problem in late 1960s/1970s, 69, 87 “stagflation,” 99, 223 World War II/Korean War and, 23 See also price stability Inter-American Bank financing, 136 Inter-American Development Bank, Washington, 191 interest equalization tax, 50 Internal Revenue Service (IRS), 50 International Accounting Standards Board, xv, 194, 195 International Accounting Standards Committee Foundation, London, 194, 195 International Banking Conference (Munich/1971), x, 69–70 International Financial Reporting Standards, 196 International House, New York, 168–169 International Monetary Fund Belgrade meeting, 106, 107 Camp David meetings (1971) and, 73 creation, ix exchange-rate system and, 25, 73 international monetary reform and, 83–86 Latin American debt crisis and, xiii, 131, 133, 134, 135, 136 Volcker/Per Jacobsson Lecture (1990), xv, 8n, 151 international monetary reform conflicting triad with, 86–87 International Monetary Fund and, 83–86 Volcker and, 83–86 international organizations, importance of, 181.

Secrets of Sand Hill Road: Venture Capital and How to Get It by Scott Kupor

activist fund / activist shareholder / activist investor, Airbnb, Amazon Web Services, asset allocation, barriers to entry, Ben Horowitz, Benchmark Capital, Big Tech, Blue Bottle Coffee, carried interest, cloud computing, compensation consultant, corporate governance, cryptocurrency, discounted cash flows, diversification, diversified portfolio, estate planning, family office, fixed income, Glass-Steagall Act, high net worth, index fund, information asymmetry, initial coin offering, Lean Startup, low cost airline, Lyft, Marc Andreessen, Myron Scholes, Network effects, Paul Graham, pets.com, power law, price stability, prudent man rule, ride hailing / ride sharing, rolodex, Salesforce, Sand Hill Road, seminal paper, shareholder value, Silicon Valley, software as a service, sovereign wealth fund, Startup school, the long tail, Travis Kalanick, uber lyft, VA Linux, Y Combinator, zero-sum game

Rumor has it that not only did Morgan’s house almost burn down from some of the early wiring mishaps, but his neighbors also threatened him as a result of the loud noise emanating from the generators required to sustain the illumination. Banks would continue to play a significant role in the direct financing of many startup businesses until the 1930s passage of the Glass-Steagall Act restricted these activities. Today, VC firms exist by the grace of limited partners who invest some of their own funds into specific VC funds. Limited partners do this because, as part of their desire to maintain a diversified portfolio, venture capital is intended to produce what investment managers refer to as alpha—excess returns relative to a specific market index.

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“I knew nothing about airlines”: “Herb Kelleher: Father of Low-Cost Airline Travel Dies at 87,” BBC News, January 4, 2019, https://www.bbc.com/news/world-us-canada-46755080. Chapter Four: What Are LPs and Why Should You Care? Financing a whaling venture: Tom Nicholas and Jonas Peter Akins, “Whaling Ventures,” Harvard Business School Case Study 9-813086, October 2012 (revised December 9, 2013). the 1930s passage of the Glass-Steagall Act: Kurt Jaros, “The Men Who Built America: J. P. Morgan,” Values & Capitalism,” http://www.valuesandcapitalism.com/the-men-who-built-america-j-p-morgan. the endowment tops $25 billion: Josh Lerner, “Yale University Investments Office: February 2015,” Harvard Business School Case Study 9-815-124, April 2015; Yale Investments Office, 2016 Yale Endowment.

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., 11 fiduciary duties and Bloodhound case, 236–239 to debt holders, 246 in difficult financing scenarios, 232, 236, 237 dual fiduciaries, 201–202, 212 duty of candor, 215 duty of care, 211–212, 215, 217 duty of confidentiality, 212–215 duty of loyalty, 212, 215, 218 and winding down the company, 246 financial crisis of 2008, 59 financial forecasts, 150–151 fixed income, 63 foreign equities, 62 foundations, 55, 57 founders adaptability of, 49 and board of directors, 97–98, 171–172 and capitalization tables, 190–191 and common stock, 93 and company vs. product-first companies, 44–45 departure of cofounders, 94–95, 96–100 egomania in, 47–48 and evaluation of early-stage companies, 43, 44, 49 founder-market fit, 45–47, 131–133 and information asymmetry, 5, 140, 275 and intellectual property, 101–103 leadership abilities of, 47–48 and product development, 49 and stock restrictions in term sheets, 181 and storytelling skills, 134 and taxation, 71 and vesting, 95–97, 99–101, 183, 186–187, 205–206 409A opinions, 205 fraud, accusations of, 218 Freenome, 128 full ratchet, 166 funds of funds, 56 general partners (GPs) and board seats, 179, 214–215 and carried interest, 74–77 and choosing a corporate structure, 93–94 and clawbacks, 80–81 co-investments of, 86–87 compensation of, 73–77 as dual fiduciaries, 202 and equity partners agreement, 88–89 and exit of VC after IPO, 267 and indemnification, 89–90 investments as domain of, 85–86 and LP–GP relationship, 70–71, 85–88 and management fee, 72–74 and managing conflicts, 214–215 obligations of, 87 and state of fund, 84 suspension of, 87–88 and vesting, 89 See also limited partnership agreement Glass-Steagall Act, 54 going to market, 135–138 good corporate governance, 206–207 Google, 10, 25, 41 Gornall, Will, 3 go-shop provisions, 239, 255 governance terms in term sheets, 196–198 Graham, Paul, 20 green shoe, 265 growth assets, 57–58, 61–63 HA Angel Fund (Horowitz Andreessen Angel Fund), 19 The Hard Thing about Hard Things (Horowitz), 18 hedge funds, 57–58, 62 Hewlett-Packard, 18–19 Hindawi, David, 46 Hindawi, Orion, 46 Horowitz, Ben and Andreessen Horowitz, 21–22, 270 angel investing, 19 aspirin/vitamin analogy of, 50 on founders’ leadership capabilities, 47 The Hard Thing about Hard Things, 18 interview with, 12–13, 14 “hurdle rates,” 83 illiquid assets, 64 incentive stock options (ISOs), 104–105, 185 indemnification, 89–90, 183, 253 inflation, 56–57, 61 inflation hedges, 58, 63 information asymmetry, 5, 140, 275 information rights, 282 initial coin offerings (ICOs), 274 initial public offerings (IPOs), 257–268 and alternative forms of financing, 108–109 and conversion to common shares, 160–161 costs involved in, 107 declining number of, 106–109, 160–161, 249 and dot.com boom/bust, 9–10, 15 effects of efficiency rules on, 107–108 and emerging growth companies (EGCs), 261–263 and exit of VC, 2, 266–267 and the green shoe, 265 and initial filing range, 17 and liquidity, 258–260, 265 and lockup agreements, 265–266 mutual funds’ impact on, 108 percentage of venture backed, 3 and pressure on public companies, 109 pricing, 263–265 process of, 260–268 and prospectus, 261, 263 and reasons to go public, 257–260 and road shows, 263 and secondary offering of shares, 267–268 time frame for, 10 Instacart, 45 Instagram, 45, 130 institutional investors, 29–30, 40–41 insurance companies, 56, 57 intellectual property, 101–103 invention and assignment agreements, 101 investment banks, 260–261 investors’ role in venture capital, 29.

Bezonomics: How Amazon Is Changing Our Lives and What the World's Best Companies Are Learning From It by Brian Dumaine

activist fund / activist shareholder / activist investor, AI winter, Airbnb, Amazon Robotics, Amazon Web Services, Atul Gawande, autonomous vehicles, basic income, Bernie Sanders, Big Tech, Black Swan, call centre, Cambridge Analytica, carbon tax, Carl Icahn, Chris Urmson, cloud computing, corporate raider, creative destruction, Danny Hillis, data science, deep learning, Donald Trump, Elon Musk, Erik Brynjolfsson, Fairchild Semiconductor, fake news, fulfillment center, future of work, gig economy, Glass-Steagall Act, Google Glasses, Google X / Alphabet X, income inequality, independent contractor, industrial robot, Internet of things, Jeff Bezos, job automation, Joseph Schumpeter, Kevin Kelly, Kevin Roose, Lyft, Marc Andreessen, Mark Zuckerberg, military-industrial complex, money market fund, natural language processing, no-fly zone, Ocado, pets.com, plutocrats, race to the bottom, ride hailing / ride sharing, Salesforce, Sand Hill Road, self-driving car, shareholder value, Sheryl Sandberg, Silicon Valley, Silicon Valley startup, Snapchat, speech recognition, Steve Jobs, Stewart Brand, supply-chain management, TED Talk, Tim Cook: Apple, too big to fail, Travis Kalanick, two-pizza team, Uber and Lyft, uber lyft, universal basic income, warehouse automation, warehouse robotics, wealth creators, web application, Whole Earth Catalog, work culture

Trump wasn’t alone in his dislike for the Seattle company. A growing chorus of critics believed that Amazon had gotten too big and too powerful. Former Walmart U.S. CEO Bill Simon said that Amazon should be dismantled. Senator Elizabeth Warren argued that Amazon needs its own version of the Depression-era Glass-Steagall Act, which split consumer and investment banks. In her scenario, the government would break Amazon into two parts, separating Amazon’s website from its direct retail business. The company’s platform sells products not only from third-party sellers but also from Amazon itself. Warren said that Amazon had an unfair advantage by competing with merchants who use its e-commerce platform.

…

Chapter 15: The Rise of Hipster Antitrust A little more than a year later, Treasury secretary Steven Mnuchin: Maggie Fitzgerald, “Amazon Has ‘Destroyed the Retail Industry’ So US Should Look into Its Practices, Mnuchin Says,” CNBC, July 24, 2019. “Pick one business or the other”: James Langford, “Amazon Needs a Glass-Steagall Act, Elizabeth Warren Suggests,” Washington Examiner, September 13, 2018. Committee chairman Jerrold Nadler said: Ryan Tracy, “House Committee Requests Tech Executives’ Emails in Antitrust Probe,” Wall Street Journal, September 13, 2019. Khan, who works at the Open Markets Institute: Meyer Robinson, “How to Fight Amazon (Before You Turn 29),” The Atlantic, July/August 2018.

…

See warehouses Furman, Jason, 261 Gao, Wei, 52 Gates, Bill, 58, 241 Gawande, Atul, 27, 227 Geneen, Harold, 216 General Mills, 267 Gen Zers, 15–16, 19 Germany, 22, 119, 154, 189, 237 Gianaris, Michael, 254 Gibson, William, 102 Gilboa, David, 211, 212 Gilded Age, 264–65, 266 Gillespie, Jane, 179 Gise, Lawrence Preston, 31–32, 33–34, 36–37, 42 Gise, Mattie, 36 Gizmodo, 93 Glass-Steagall Act, 257 Goldman Sachs, 8, 235 Good to Great (Collins), 5, 78, 83 Google AI-driven flywheel at, 88–89, 90 Amazon’s shopping searches versus searches on, 221 Android operating system of, 14, 64, 225 Best Buy marketing of electronics from, 205 Bezos’s investment in, 217 brand value of, 16 corporate campus of, 75 digital advertising and, 220, 221 facial recognition and, 35 health-care innovation by, 90, 225 identification with founder, 53 public perception of founder of, 57, 58 search engine of, 88–89, 117, 123 shopping assistants of, 116, 117 smart home devices from, 116 Voice Search app from, 108 Google Assistant voice system, 111, 113, 117, 191 Google Glass initiative, 224 Google Home device, 114, 117 Google Pay, 235 Google Shopping website, 117 Gordon, Bing, 96 Gorelick, Jamie, 66 government facial recognition contracts, controversy over, 35–36 Graham Don, 68 grocery stores.

Firefighting by Ben S. Bernanke, Timothy F. Geithner, Henry M. Paulson, Jr.

Asian financial crisis, asset-backed security, bank run, Basel III, Bear Stearns, break the buck, Build a better mousetrap, business cycle, Carmen Reinhart, collapse of Lehman Brothers, collateralized debt obligation, creative destruction, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, Doomsday Book, financial deregulation, financial engineering, financial innovation, Glass-Steagall Act, housing crisis, Hyman Minsky, income inequality, invisible hand, Kenneth Rogoff, labor-force participation, light touch regulation, London Interbank Offered Rate, Long Term Capital Management, low interest rates, margin call, money market fund, moral hazard, mortgage debt, negative equity, Northern Rock, opioid epidemic / opioid crisis, pets.com, price stability, quantitative easing, regulatory arbitrage, Robert Shiller, Savings and loan crisis, savings glut, short selling, sovereign wealth fund, special drawing rights, tail risk, The Great Moderation, too big to fail

But so far, virtually all of the core Dodd-Frank reforms remain in place, and while some critics initially attacked them as a massive overreach that would cripple the financial system, the system has proved strong enough to support a sustained economic expansion. Other critics attacked the Dodd-Frank reforms for preserving too much of the status quo instead of breaking up big banks immediately and reinstating the Depression-era Glass-Steagall Act rules that separated commercial banking from more speculative investment banking. Those more radical measures would have been heavy lifts in Congress, but that’s not why we didn’t pursue them. We simply didn’t believe they would address the root causes of the crisis or limit the risk of future crises.

…

and arsenal for dealing with future crises, 118, 120 background, 13 and Bear Stearns rescue, 48, 50–51, 54 and Countrywide sale, 39 and early stages of financial crises, 33 and expansion of emergency authorities, 80–81 “Geithner put” condition, 101 and Lehman failure, 63, 65, 66, 67 and merger efforts, 77 and onset of financial crisis, 1, 30–31 and policy responses to crisis, 96, 97–101, 105, 106–7 and post-crisis reforms, 112, 116 and shortcomings of U.S. regulatory regime, 28 and spark of crisis, 16 and TARP, 93 and Term Securities Lending Facility, 44 and theoretical approaches to financial crises, 35 General Electric, 69 General Motors, 95, 97, 105, 208 Glass-Steagall Act, 115 global impact of financial crisis, 16, 129, 195–98 “global savings glut,” 16 GMAC, 22, 102, 180, 208 Goldman Sachs and Bear Stearns rescue, 51, 53 collateral Treasuries held by, 20–21 and expansion of crisis, 75, 77–78, 157 government investment in, 176 and Lehman failure, 64, 69 and merger efforts, 77 and Paulson’s background, 13 private capital raised during crisis, 175, 181 Goldstone, Larry, 44 Gorton, Gary, 31 Government Accountability Office (GAO), 115 government-sponsored enterprises (GSEs) and acceleration of crisis, 23 and Fannie Mae/Freddie Mac conservatorship, 56–57 and migration of risk outside regulatory system, 150 and onset of financial crisis, 155, 156 and recovery from crisis, 210 refinancing and loan modification programs, 194 and shortcomings of U.S. regulatory regime, 27–28 and taxpayer profit from rescue, 208 See also Fannie Mae; Freddie Mac Gramm-Leach-Bliley Act, 27 Great Depression Bernanke’s scholarship on, 13, 109 and federal intervention in financial system, 60 and Fed policies, 35 financial crisis compared to, 1, 5–6, 110, 200 and history of financial crises, 33 and model for stress tests, 101, 180 and small bank failures, 115 and U.S. regulatory regime, 29–30 “Great Moderation,” 146 guarantee programs, 164 “haircuts,” 74, 81–82, 87–88, 90, 93, 100, 127 hedge funds, 13, 31, 63, 71 herd mentality, 15–16, 117 Hiring Incentives to Restore Employment Act, 187 history of prior financial crises, 11–12 Home Affordable Modification Program (HAMP), 105–6, 163, 190, 192, 194 Home Affordable Refinance Program (HARP), 105–6, 163, 190, 193, 194 Hope Now, 190, 194 House Financial Services Committee, 54 household debt levels, 16 household wealth, 200, 216n Housing and Economic Recovery Act, 58–59, 185 housing market and causes of financial crisis, 4 and Fannie Mae/Freddie Mac conservatorship, 54–60 and fiscal stimulus efforts, 103 homeowner relief efforts, 80, 92, 97, 107 home ownership ideal, 29 home prices, 4, 108, 148, 154, 190, 200, 204, 216n and legacy of financial crisis, 123 and onset of financial crisis, 30 and policy responses to crisis, 105, 161, 189–94 and post-crisis reforms, 112 and resolution of financial crisis, 110 and spark of crisis, 18 See also mortgage market hyperinflation, 6, 109 income inequality, 12, 125, 143 IndyMac Bank, 54, 69, 71, 81, 190 inflation, 35–36, 147 insurance and acceleration of crisis, 22 and AIG rescue, 71, 72 and expansion of crisis, 76, 77 insured deposits, 22–23 and Lehman failure, 69 and models for future crisis management, 127 and TARP, 102 See also Federal Deposit Insurance Corporation (FDIC) interbank lending, 84–85 interest rates coordinated interest rate cuts, 197 and legacy of financial crisis, 123–24 long-term trends, 147 and policy responses to crisis, 97, 105–6, 163 and role of central banks, 34 and stimulus programs, 43 and vulnerability of financial system, 14 International Monetary Fund (IMF), 102, 198 investment banks, 4, 22, 47–48, 69, 77 It’s a Wonderful Life (film), 14 James, Bill, 76 JPMorgan Chase and Bear Stearns rescue, 49–50, 53–54 and expansion of crisis, 47 and expansion of emergency authorities, 81 government investment in, 176 and Lehman failure, 62 and onset of financial crisis, 155 and post-crisis reforms, 115 private capital raised during crisis, 175, 181 Keynesian stimulus, 44, 111–12, 123 Kindleberger, Charles, 11–12 King, Mervyn, 35, 89 labor force, 12, 141, 142 Lacker, Jeffrey, 36 Latin American debt crisis, 37 layoffs, 95, 108 Lazear, Edward, 70 Lehman Brothers and acceleration of crisis, 22 Archstone-Smith acquisition, 40 and arsenal for dealing with future crises, 121 and Bear Stearns rescue, 47–48, 51, 53 and causes of financial crisis, 4 and expansion of crisis, 75, 157 failure and rescue efforts, 61–62, 62–71 and Fannie Mae/Freddie Mac conservatorship, 60 management firings, 73 and policy responses to crisis, 168, 169, 176 and politics of crisis management, 9 and post-crisis reforms, 115 and spark of crisis, 18 lending practices, 17, 29, 40, 56 Lenin, Vladimir, 5 leverage and acceleration of crisis, 20–25 and Bear Stearns rescue, 47 and causes of financial crisis, 3 and current state of financial system, 6, 7 and Lehman failure, 63 and politics of crisis management, 126–27 and post-crisis reforms, 112, 117–18 and prevention of financial crises, 110–11 and recovery from crisis, 210 and roots of financial crisis, 12 and shortcomings of U.S. regulatory regime, 25–26, 28–29 and spark of crisis, 16, 19 “liar” loans, 17 Libor-OIS spread, 153, 155, 201 liquidity and Bear Stearns rescue, 48, 53 and Countrywide sale, 38–39 and current state of financial system, 6 and expansion of crisis, 75, 76, 158 Fed programs promoting, 42 and Lehman failure, 69 and onset of financial crisis, 32 and overleverage in financial system, 21 and policy responses to crisis, 161, 164, 166 and post-crisis reforms, 112–13 and recovery from crisis, 202 and regulation shortcomings, 26 and roots of financial crisis, 13 and TARP, 87, 90 and Term Securities Lending Facility, 44–45 and theoretical approaches to financial crises, 35, 36–37 loan loss rates, 145 loan modification programs, 105–7, 192, 193, 194 loan originators, 17–18 loan-servicing industry, 106 lobbying, 27 local budgets, 188 Lombard Street (Bagehot), 34 Long-Term Capital Management, 13, 40, 64 low-income borrowers, 17 Mack, John, 77 Maiden Lane, 50, 179, 208, 217n manias, 111, 112 margin requirements, 4, 22, 114, 126 maturity transformation, 14, 16, 23, 117 McCain, John, 80, 82 McCarthy, Callum, 67 McConnell, Meg, 118 media coverage of financial crisis, 65, 98 memory of financial crises, 3, 4, 125–26 mergers, 67, 77, 114 Merrill Lynch and Bear Stearns rescue, 51, 53 and causes of financial crisis, 4 and expansion of crisis, 75, 157 and foreign investment, 41 government investment in, 176 and instability of financial system, 84 and Lehman failure, 61, 64, 66–67 management firings, 73 and post-crisis reforms, 115 private capital raised during crisis, 175, 181 and TARP, 95, 96 and write-down of troubled assets, 40–41 Mexico, 37 middle-class insecurity, 125 Middle-Class Tax Relief and Job Creation Act, 187 Minsky, Hyman, 13 Mitsubishi, 78 monetary policy and legacy of financial crisis, 123–24 and onset of financial crisis, 43–44 and policy responses to crisis, 161, 163, 183–88 and prevention of financial crises, 111–12 and TARP, 89 money market funds and acceleration of crisis, 22 and expansion of crisis, 76–77 and migration of risk outside regulatory system, 150 and policy responses to crisis, 163, 171 and stress tests, 102 and TARP, 87 and taxpayer profit from rescue, 208 monoline insurers, 44 moral hazard and AIG rescue, 74 and Bear Stearns rescue, 51, 52 and current state of financial system, 8 and early stages of financial crises, 33 and Fannie Mae/Freddie Mac conservatorship, 56 and Federal Deposit Insurance Corporation (FDIC) Deposit Insurance Fund, 81–82 and shortcomings of U.S. regulatory regime, 28 and theoretical approaches to financial crises, 36, 37–38 Morgan Stanley and Bear Stearns rescue, 51, 53 credit default swaps, 75 and expansion of crisis, 77, 78, 157 and Fannie Mae/Freddie Mac conservatorship, 59 and foreign investment, 41 government investment in, 176 and Lehman failure, 64, 69 and onset of financial crisis, 156 private capital raised during crisis, 175, 181 mortgage-backed securities (MBS) and causes of financial crisis, 4 and legacy of financial crisis, 123 and policy responses to crisis, 106, 163, 190, 191 and roots of financial crisis, 12 and spark of crisis, 17 mortgage market and Bear Stearns rescue, 53 and causes of financial crisis, 3–4 and Fannie Mae/Freddie Mac conservatorship, 55–60 and instability of financial system, 85 loan modification programs, 105–7, 192, 193, 194 and long-term interest rates, 147 mortgage-related assets, 21 and policy responses to crisis, 103–7, 169, 189–94 and quantitative easing, 103–4 and recovery from crisis, 203 and shortcomings of U.S. regulatory regime, 27, 29 and spark of crisis, 16–20 See also housing market; mortgage-backed securities Mozilo, Angelo, 38–39 National Bureau of Economic Research, 43 nationalization of financial institutions, 54–60, 86, 91, 98, 100, 107, 182 negotiation of relief efforts, 65 Nevada housing market, 19 New York Fed, 26, 28, 64, 66, 118 New York Times, 70 “NINJA” loans, 17 no-documentation loans, 29 nonbanks and acceleration of crisis, 22–24 and AIG rescue, 72 and arsenal for dealing with future crises, 118–20 and bank holding companies, 216n and Bear Stearns rescue, 47, 48–50, 52, 53–54 and Countrywide sale, 39 and expansion of crisis, 76 and Lehman failure, 61, 63 and migration of risk outside regulatory system, 150 and policy responses to crisis, 162, 173 and post-crisis reforms, 113–14, 115 and shortcomings of U.S. regulatory regime, 26–27, 211 and Term Securities Lending Facility, 44–45 See also specific institutions Northern Rock, 155 Obama, Barack and arsenal for dealing with future crises, 120, 124 election, 93 and government response to crisis, 80, 82, 93, 103–7 and legacy of financial crisis, 124 and onset of financial crisis, 1 and policy responses to crisis, 163 and politics of crisis management, 9 and post-crisis reforms, 113 and TARP, 96–98, 100, 105, 107 Office of the Comptroller of the Currency (OCC), 23, 59 Office of Thrift Supervision (OTS), 23, 71, 116 optimism, 18, 117 “orderly liquidation authority,” 121 “originate-to-distribute” mortgage model, 17–18 overconfidence, 12–13, 125–26 overnight funding, 24 panics and Bear Stearns rescue, 49 causes of, 3 contagion effect of, 37, 111 inherent vulnerability to, 13–16 and Lehman failure, 70 and onset of financial crisis, 2, 31–32 and post-crisis reforms, 112 and prevention of financial crises, 111 and TARP, 87 and toxic mortgage assets, 41 Paulson, Henry M., Jr.

Crisis and Leviathan: Critical Episodes in the Growth of American Government by Robert Higgs, Arthur A. Ekirch, Jr.

Alistair Cooke, American ideology, business cycle, clean water, collective bargaining, creative destruction, credit crunch, declining real wages, endowment effect, fiat currency, fixed income, foreign exchange controls, full employment, Glass-Steagall Act, guns versus butter model, hiring and firing, Ida Tarbell, income per capita, Jones Act, Joseph Schumpeter, laissez-faire capitalism, land bank, manufacturing employment, means of production, military-industrial complex, minimum wage unemployment, plutocrats, post-industrial society, power law, price discrimination, profit motive, rent control, rent-seeking, Richard Thaler, road to serfdom, Ronald Reagan, Sam Peltzman, Savings and loan crisis, Simon Kuznets, strikebreaker, The Wealth of Nations by Adam Smith, total factor productivity, transaction costs, transcontinental railway, union organizing, Upton Sinclair, War on Poverty, Works Progress Administration

/Feb. 1972): 186-191; Albert Rees, "Real Wages and Inflation: Rejoinder," ibid., p. 192. 12. Hoover, Memoirs, pp.47-48, 88, 114, 143-144, 156, 162-163; Herbert Stein, The Fiscal Revolution in America (Chicago: University of Chicago Press, 1969), pp. 6-24. The Glass-Steagall Act of 1932 should not be confused with the better remembered Glass-Steagall Act of 1933. The latter, also known as the Banking Act of 1933, mandated inter alia the separation of investment and commercial banking and the establishment of the Federal Deposit Insurance Corporation. 13. Hoover, Memoirs, pp. 140-141, 118 (also pp. 258-259).

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Unfortunately, as Lester Chandler has observed, the President "seems to have paid little attention to wage rates as a determinant of costs of production." 11 Hoover backed various measures to stimulate federal spending and extensions of the government's credit, including increased appropriations for public works and the Federal Land Banks, creation of the Agricultural Credit Banks and the Home Loan Banks, liberalization of the Federal Reserve Banks' lending authority by the Glass-Steagall Act of 1932, and passage of the Emergency Relief and Construction Act of 1932, which allowed the federal government to give (officially, to lend) the state governments funds to use for relief of the unemployed. Hoover also used his discretionary authority to reduce immigration-he supposed that an immigrant would either become a public charge or displace someone else from a job.

…

., 138 Garrity, John, 170 Gary, Elbert H., 115 Gas lines, 254 Geertz, Clifford, 48-49, 55 General Electric, 214 General Maximum Price Regulation, 208209 General Motors, 214 George, Henry, 79 George, Walter F., 200 Gerber, Larry, 190 GI Bill of Rights, 229, 236 Gifford, Walter S., 128, 130 Gillam, Richard, 229, 241 Glass-Steagall Act, 164 Glazer, Nathan, 193 Godfrey, Hollis, 128, 130 Godkin, E. L., 77 Gold Reserve Act, 174 Gold standard, 78,87-91, 168, 174, 194 Gold Standard Act, 90 Gold-clause cases, 185-187, 189 Gompers, Samuel, 86, 143 Gore, Thomas P., 174 Gorman, Arthur P., 97 Gouldner, Alvin, 47, 51 Granger Laws, 82 Great Contraction, 161-162 Great Depression, 85, 159-195,260 Great Northern Railway, 93 Great Society, 256, 261 Greenbackers, 82, 97 Hancock, John M., 218 Hansen, John Mark, 69 Hardin, Russell, 42 Harding, Warren, 150 Harlan, John M., 102 Harris, Seymour E., 211 Harrer, M.

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 theoretical and ideological justification for tight controls over finance was provided by Keynes’s damning verdict on financial excess in the General Theory, calling for the ‘the euthanasia of the rentier’ as a valid aim of monetary and financial policy that would strengthen the role of productive capitalists.1 The regulation of finance was an integral part of the dominant Keynesianism of the period, summed up as ‘financial repression’.2 The system of financial repression had its roots in the great crisis of the 1930s which ushered in major regulatory changes with the aim of placing finance under control. The major institutional and legal change of the era took place in the US with the introduction of the Glass–Steagall Act in 1933, which separated commercial from investment banking as well as setting administrative limits on bank interest rates (under the so-called Regulation Q) and limits on the volume of bank lending against securities.3 The Glass–Steagall Act encapsulated the dominant approach to financial regulation until the gradual emergence of financialization had signalled the second great wave of financial ascendancy. Financial repression was also spurred by the vast accumulation of public debt by mature countries in the course of the Second World War.

…

It relied, on the one hand, on the role of the dollar as world money under the Bretton Woods Agreement and, on the other, on administrative controls on prices, quantities and functions within the domestic financial system. Three elements characterized financial regulation generally across mature capitalist countries, although the distinction between market-based (Anglo-Saxon) versus bank-based (German–Japanese) financial systems never ceased to apply. In spite of the prominent role played by the Glass–Steagall Act, these elements were most vividly apparent in Japan, a late developer that finally joined the ranks of mature capitalist countries in the three decades after the Second World War.4 First, there were controls on interest rates, received by and paid to, financial institutions. Rates on assets were frequently determined administratively, based on the lending rate of the central bank, and were kept deliberately low in nominal terms with the (spoken or unspoken) aim of supporting productive capitalists.

…

This aspect of financial repression again varied according to the historical and institutional trajectory of particular countries, but several features were in common across both mature and developing countries. Commercial banking was generally kept separate from investment banking through legislation – the Glass–Steagall Act in the US and its equivalent, Article 65, in Japan – or through monopoly practices and informal ‘clubbing’ exclusivity (as in the UK and elsewhere). Banks that provided long-term investment funds were also generally kept separate from other banks, through special privileges in obtaining liabilities (for instance, issuing long-term bonds) or even through direct state ownership.

The Rise and Fall of the Neoliberal Order: America and the World in the Free Market Era by Gary Gerstle

2021 United States Capitol attack, A Declaration of the Independence of Cyberspace, affirmative action, Affordable Care Act / Obamacare, air traffic controllers' union, Airbnb, Alan Greenspan, Alvin Toffler, anti-communist, AOL-Time Warner, Bear Stearns, behavioural economics, Bernie Sanders, Big Tech, Black Lives Matter, blue-collar work, borderless world, Boris Johnson, Brexit referendum, British Empire, Broken windows theory, business cycle, Capital in the Twenty-First Century by Thomas Piketty, Cass Sunstein, collective bargaining, Cornelius Vanderbilt, coronavirus, COVID-19, creative destruction, crony capitalism, cuban missile crisis, David Brooks, David Graeber, death from overwork, defund the police, deindustrialization, democratizing finance, Deng Xiaoping, desegregation, Dissolution of the Soviet Union, Donald Trump, Electric Kool-Aid Acid Test, European colonialism, Ferguson, Missouri, financial deregulation, financial engineering, Francis Fukuyama: the end of history, Frederick Winslow Taylor, full employment, future of work, Future Shock, George Floyd, George Gilder, gig economy, Glass-Steagall Act, global supply chain, green new deal, Greenspan put, guns versus butter model, Haight Ashbury, Henry Ford's grandson gave labor union leader Walter Reuther a tour of the company’s new, automated factory…, Ida Tarbell, immigration reform, informal economy, invention of the printing press, invisible hand, It's morning again in America, Jeff Bezos, John Perry Barlow, Kevin Kelly, Kitchen Debate, low interest rates, Lyft, manufacturing employment, market fundamentalism, Martin Wolf, mass incarceration, Menlo Park, microaggression, Mikhail Gorbachev, military-industrial complex, millennium bug, Modern Monetary Theory, money market fund, Mont Pelerin Society, mortgage debt, mutually assured destruction, Naomi Klein, neoliberal agenda, new economy, New Journalism, Northern Rock, obamacare, Occupy movement, oil shock, open borders, Peter Thiel, Philip Mirowski, Powell Memorandum, precariat, price stability, public intellectual, Ralph Nader, Robert Bork, Ronald Reagan, scientific management, Seymour Hersh, sharing economy, Silicon Valley, Silicon Valley ideology, Silicon Valley startup, social distancing, Steve Bannon, Steve Jobs, Stewart Brand, Strategic Defense Initiative, super pumped, technoutopianism, Telecommunications Act of 1996, The Bell Curve by Richard Herrnstein and Charles Murray, The Chicago School, The Rise and Fall of American Growth, The Wealth of Nations by Adam Smith, Thomas L Friedman, too big to fail, Uber and Lyft, uber lyft, union organizing, urban decay, urban renewal, War on Poverty, Washington Consensus, We are all Keynesians now, We are the 99%, white flight, Whole Earth Catalog, WikiLeaks, women in the workforce, Works Progress Administration, Y2K, Yom Kippur War

Everyone knew that the construction of this pageant, and the celebration of America that it implied, was the work of the New Deal.5 As part of its campaign to assume new powers, the federal government placed extensive new controls on the country’s financial system. In 1933, Congress passed the Glass-Steagall Act separating commercial from investment banking and establishing the Federal Deposit Insurance Corporation to assure depositors that the federal government would guarantee their savings. The Securities Act of 1933 and the Securities Exchange Act of 1934 reined in buying stocks on margin (i.e., with borrowed money to be paid back from the proceeds of expected increases in stock value) and established the Securities and Exchange Commission to enforce the new kind of financial regulation that the New Deal was imposing.

…

In 1996, Clinton, working with Congress, deregulated the exploding telecommunication industry, now including not just phones and television but the cable and satellite sub-industries so important to the new information economy. Soon after, he did the same with the electrical generation industry that sustained (literally) the new economy. And then, in 1999, he supported Congress’s repeal of the Glass-Steagall Act, the New Deal law that had done more than any other to end speculation, corruption, and the boom-bust cycle in America’s financial sector.35 Clinton had come to regard markets as something akin to natural law. Upon signing NAFTA in December 1993, he remarked that the United States really had no choice in the matter.

…

During the Clinton years, this unshackling went under the name of “financial modernization.”76 As with the media industry, the finance industry was seen by groups on both sides of the political aisle as hobbled by an outdated regulatory regime, this one also established during the halcyon early days of the New Deal order. The relevant legislation in this case was the Glass-Steagall Act of 1933, which had imposed a regime of regulation on Wall Street in order to prevent a recurrence of the wild speculation and trades that had sparked the Great Crash of 1929. Separating investment and commercial banking stood at the heart of Glass-Steagall. Investment banks were to underwrite loans to corporations looking to expand their business, handle stock offerings, trade securities, and process mergers and acquisitions.

The New Depression: The Breakdown of the Paper Money Economy by Richard Duncan

Alan Greenspan, asset-backed security, bank run, banking crisis, banks create money, Bear Stearns, Ben Bernanke: helicopter money, Bretton Woods, business cycle, currency manipulation / currency intervention, debt deflation, deindustrialization, diversification, diversified portfolio, fiat currency, financial innovation, Flash crash, Fractional reserve banking, Glass-Steagall Act, income inequality, inflation targeting, It's morning again in America, Joseph Schumpeter, laissez-faire capitalism, liquidity trap, low interest rates, market bubble, market fundamentalism, mass immigration, megaproject, Mexican peso crisis / tequila crisis, Money creation, money market fund, money: store of value / unit of account / medium of exchange, mortgage debt, Nixon triggered the end of the Bretton Woods system, private sector deleveraging, quantitative easing, reserve currency, risk free rate, Ronald Reagan, savings glut, special drawing rights, The Great Moderation, too big to fail, trade liberalization

If the reserve requirement had been 10 percent, the banking system would have ended up with $1,000 of deposits, or 10 times the amount of gold initially deposited, and $900 of new credit. In that case the money multiplier would be 10. Now consider the reduction of the reserve requirements of the commercial banks. Commercial Banks Commercial banking was a straightforward business after the passage of the Glass–Steagall Act separated commercial banking from investment banking in 1933. Banks took deposits and used them to make loans; and the banks were required to hold reserves with the central bank to ensure they would have sufficient liquidity to repay deposits to their customers upon demand. In 1945, deposits supplied 98 percent of the banks’ funding.

…

See Balance of payments Fortune magazine Fractional reserve banking, money creation through Freddie Mac: conservatorship of credit creation and decline in liquidity reserves quantitative easing and U.S. debt guarantees and Friedman, Milton General equilibrium, theory of Germany Glass–Steagall Act Globalization Global savings glut theory, of Bernanke Goldman Sachs Gold reserve requirement, end of and creation of fiat money Government Accountability Office report Government sector: inflation and deflation’s effects on percentage of total credit market debt rational investment option for results of spending cuts in Government-sponsored entities (GSEs): credit supply and GSE-backed mortgage pools inflation and deflation’s effects on quantitative easing and U.S. debt guarantees and Great Depression economic conditions during Friedman’s conclusions about Greece Greenspan, Alan Gross domestic product (GDP): change in value added, by industry debt as percentage of driven by credit equation of exchange and during Great Depression ratio of credit growth to GSE-backed mortgage pools History of Economic Analysis (Schumpeter) Hoover, Herbert Household sector: debt and inflation and deflation’s effects on Human Action (von Mises) Hyperinflation Inflation and deflation credit and inflation derivative regulation and effects on asset classes Fisher’s theory of debt-deflation inflation in 2011 inflation likely in 2012 inflation likely without additional quantitative easing and fiscal stimulus New Great Depression scenarios and protectionism and wealth preservation during Innovation, in Mitchell’s theory of business cycles Interest rates, in U.S.: bond sales and cut by Federal Reserve to encourage credit expansion money supply and quantitative easing and trade balances and International Monetary Fund Ireland Jackson, Andrew Japan Johnson, Lyndon JP Morgan JPMorgan Chase Keynes, John Maynard Korea Labor market, changes in marginal cost of wages in.

Tower of Basel: The Shadowy History of the Secret Bank That Runs the World by Adam Lebor

Alan Greenspan, banking crisis, Basel III, Bear Stearns, Berlin Wall, Big bang: deregulation of the City of London, Bretton Woods, British Empire, business climate, central bank independence, corporate governance, corporate social responsibility, deindustrialization, eurozone crisis, fiat currency, financial independence, financial innovation, foreign exchange controls, forensic accounting, Glass-Steagall Act, Goldman Sachs: Vampire Squid, haute cuisine, IBM and the Holocaust, Kickstarter, low interest rates, Occupy movement, offshore financial centre, Ponzi scheme, power law, price stability, quantitative easing, reserve currency, special drawing rights

Until the Big Bang, the Square Mile had been still a clubby, comfortable place of old school tie connections and long lunches, where Montagu Norman would have felt at home. That world vanished almost overnight. Wall Street investment banks poured into the Square Mile, bringing aggressive new tactics. The 1933 Glass-Steagall Act, which separated investment banking and deposit taking, was still in force in the United States. London, newly unburdened from cumbersome regulations, offered fabulous opportunities, heightened by the rapid growth of computer technology, which accelerated trading. The BIS gave the Big Bang a cautious welcome.

…

The Asian debt crisis was an accident waiting to happen.”2 Knowing there was a problem, however, did not mean the bank could always persuade policymakers to take preventative or remedial measures. Just a few years later, in the early 2000s, the United States was also facing a similar potential financial meltdown. The repeal in 1999 of the Glass-Steagall Act that separated banks’ deposit taking and broking activities had helped fuel a credit boom and asset bubble. Glass-Steagall had been passed in 1933 during the Great Depression. The warnings of those who said that repealing the act would trigger another cycle of boom, bust, and depression were ignored.

…

., 101 industrialists, postwar fate of, 157–163 modern economy, 223 Nazi party, postwar strategy of, 156–157, 220–224 Nazi relationship with BIS, xviii–xx, 33, 51, 78–79, 84–87, 114–115, 123, 125–127, 258 Poland, invasion of, 71 post–World War I conditions in, 6 postwar financial continuity in, 152–156 repatriation of gold reserves by, 263–264 SS (Schutzstaffel), financial empire of, 154–155 Treaty of Rome (1957), signing of, 219 See also Reichsbank; reparation payments Gewirtz, Paul, 107 Gilbert, Seymour Parker, 10 Gisevius, Hans Bernd, 160–161 Glass-Steagall Act (1933), 225, 238 Global Economy Meetings, xii, 247 Globke, Hans, 182 Goering, Hermann, 105, 183 Gold Baltic gold, management of by BIS, 79–80 Bank of Greece’s missing gold, 23 Belgian gold reserves, fate of, 85–86 Czechoslovak gold affair, 59–63 gold exchange standard, 42 gold standard, 42 London Gold Pool (LGP), xvi, 188–189 looted, xix, 53, 61, 78, 85, 87–88, 132, 262–266 new emphasis on, 264 repatriation of German gold, 263 reserves of, xxii, 55–56 storage of in Switzerland, 115 Swiss-German gold-for-coal arrangement, 87 Gold Discount Bank, 9, 106 Goldman Sachs, 257 Governors’ Meeting, xii–xiii, 49–50, 256 Graffman, J.

Fault Lines: How Hidden Fractures Still Threaten the World Economy by Raghuram Rajan

"World Economic Forum" Davos, accounting loophole / creative accounting, Alan Greenspan, Andrei Shleifer, Asian financial crisis, asset-backed security, assortative mating, bank run, barriers to entry, Bear Stearns, behavioural economics, Bernie Madoff, Bretton Woods, business climate, business cycle, carbon tax, Clayton Christensen, clean water, collapse of Lehman Brothers, collateralized debt obligation, colonial rule, corporate governance, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, currency manipulation / currency intervention, currency risk, diversification, Edward Glaeser, financial innovation, fixed income, floating exchange rates, full employment, Glass-Steagall Act, global supply chain, Goldman Sachs: Vampire Squid, Greenspan put, illegal immigration, implied volatility, income inequality, index fund, interest rate swap, Joseph Schumpeter, Kaizen: continuous improvement, Kenneth Rogoff, knowledge worker, labor-force participation, Long Term Capital Management, longitudinal study, low interest rates, machine readable, market bubble, Martin Wolf, medical malpractice, microcredit, money market fund, moral hazard, new economy, Northern Rock, offshore financial centre, open economy, Phillips curve, price stability, profit motive, proprietary trading, Real Time Gross Settlement, Richard Florida, Richard Thaler, risk tolerance, Robert Shiller, Ronald Reagan, Savings and loan crisis, school vouchers, seminal paper, short selling, sovereign wealth fund, tail risk, The Great Moderation, the payments system, The Wealth of Nations by Adam Smith, too big to fail, upwardly mobile, Vanguard fund, women in the workforce, World Values Survey

The government has repeatedly intervened to limit the power of banks—as in Andrew Jackson’s fight to close the Second Bank of the United States (after he accused it of political meddling), the creation of the Federal Reserve in 1913 so that banks had an alternative to J. P. Morgan as the lender of last resort, and the Glass-Steagall Act of 1933, which broke up the most powerful banks. Similarly, through antitrust investigations, most famously against John D. Rockefeller’s Standard Oil and Bill Gates’s Microsoft, the government has sought to rein in the power of big business. But with the exception of some episodes—for example, during the Great Depression—the government and the public have not been strongly predisposed toward punitive taxation of the rich to achieve a more equitable distribution of income.

…

Although there are always concerns about whether regulators will use these sorts of powers arbitrarily, they are no more difficult for legislators and courts to oversee than are powers based on anticompetitive considerations. Turning to proposals to limit activities by insured banks through some modern version of the Glass-Steagall Act of 1933, these again seem less attractive on further reflection. Obviously, some activities of a large bank add considerably to risk and opacity. To the extent possible, these should be clearly separated in legal entities that are not affected by the bank’s failure. For instance, banks should not attempt to use client assets that are pledged to them in their prime brokerage units (units that lend securities, offer loans, and undertake asset-management functions for clients, typically hedge funds) in further transactions.11 The commingling of client assets with the bank’s own funding activities reduces transparency, increases risk, and was an important reason why many investment banks experienced runs in the current crisis, as clients tried to withdraw their assets before they got entangled in the bank’s bankruptcy.

…

See Fannie Mae food prices foreign debt: of developing countries fickleness of financers, in foreign currencies, Mexican crisis (1994) reducing short-term foreign exchange reserves: of China of developing countries foreign investment: in developing countries in East Asia in mortgage-backed securities in U.S. government bonds Formosa Plastics Group France: annuities sold by monarchy automobile industry in energy consumption in health care costs in social welfare spending in state-owned enterprises in unemployment benefits in Franklin, Benjamin fraud Freddie Mac (Federal Home Loan Mortgage Corporation): establishment of foreign investors in government takeover of lending to support housing prices losses of mandate of mortgage-backed securities issued by reforms of role in subprime crisis free-enterprise capitalism French, Ken French Revolution Frieden, Jeffry Fuld, Richard G-7 (Group of) G-20 (Group of) Gelband, Michael Gender, Robert General Motors Germany: banks in energy consumption in export-led growth strategy of health care costs in Landesbanks in social welfare spending in unemployment benefits in Weimar Republic Ginnie Mae (Government National Mortgage Association) Glass-Steagall Act of global economic governance reforms GNMA (Government National Mortgage Association). See Ginnie Mae Goldin, Claudia Goldman Sachs government bonds: foreign investors in, risk premium on government intervention: attitudes toward corruption and in credit markets in early developers expectations of in financial systems in housing market in India limitations of managed capitalism strategy in market economies private sector influence on reducing risk taking and role in financial crisis state-owned enterprises unintended consequences of, See also exchange-rate policies; exportled growth strategies; regulation Government National Mortgage Association.

Bean Counters: The Triumph of the Accountants and How They Broke Capitalism by Richard Brooks

"World Economic Forum" Davos, accounting loophole / creative accounting, Alan Greenspan, asset-backed security, banking crisis, Bear Stearns, Big bang: deregulation of the City of London, blockchain, BRICs, British Empire, business process, Charles Babbage, cloud computing, collapse of Lehman Brothers, collateralized debt obligation, corporate governance, corporate raider, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, David Strachan, Deng Xiaoping, Donald Trump, double entry bookkeeping, Double Irish / Dutch Sandwich, energy security, Etonian, eurozone crisis, financial deregulation, financial engineering, Ford Model T, forensic accounting, Frederick Winslow Taylor, G4S, Glass-Steagall Act, high-speed rail, information security, intangible asset, Internet of things, James Watt: steam engine, Jeremy Corbyn, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, junk bonds, light touch regulation, Long Term Capital Management, low cost airline, new economy, Northern Rock, offshore financial centre, oil shale / tar sands, On the Economy of Machinery and Manufactures, Ponzi scheme, post-oil, principal–agent problem, profit motive, race to the bottom, railway mania, regulatory arbitrage, risk/return, Ronald Reagan, Savings and loan crisis, savings glut, scientific management, short selling, Silicon Valley, South Sea Bubble, statistical model, supply-chain management, The Chicago School, too big to fail, transaction costs, transfer pricing, Upton Sinclair, WikiLeaks

The theory went that one company would buy another (which following a 1950 anti-trust law had to be in a different sector), impose superior management, cost accounting and reorganization, and then reap the rewards. It was a seductive picture painted by accountants who had taken over the job of advising on investment decisions from the banks. The same post-Great Crash legislation that had split investment and commercial banks, the 1933 Glass–Steagall Act, had also barred them from advising on deals from which they would earn banking fees. But with the accountancy firms also responsible for auditing the companies and standing to earn more fees advising on the many accounting issues thrown up by mergers, the result was simply to create another, arguably more harmful, conflict of interest.

…

(Jennings), 224 Foxley, Ian, 214, 216 France, 31, 46, 89, 127, 171–7, 204, 205 Franklin, Benjamin, 53 Friedman, Milton, 84 FTSE100 Index, 5, 14, 90, 125 FTSE350 Index, 259 Fuld, Richard ‘Dick’, 132 Future Strategic Tanker Aircraft, 189 G4S, 148, 201 Galbraith, John Kenneth, 14, 57, 263 Galbraith, Thomas, 2nd Baron Strathclyde, 208 Galilei, Galileo, 22 Gap, 163 Gauke, David, 179 Gazprom, 236, 237 GCHQ (Government Communications Headquarters), 272 General Electric, 5–6, 55, 78, 154 General Electric Company (GEC), 66 General Motors, 57 General Survey Outline, 75 generally accepted accounting principles (GAAP), 109 Geneva, Switzerland, 27, 29, 178 geometry, 21, 33 Germany, 220, 233–4, 235, 240, 247, 251 Gilbert, William Schwenck, 52 Gilby, Nicholas, 215 Gladstone, William, 45, 47, 50 Glasgow, Scotland, 45, 48 City of Glasgow Bank, 51, 147 Institute of Accountants and Actuaries, 47 University of Glasgow, 136 Glass–Steagall Act (1933), 60 GlaxoSmithKline, 163, 167, 169 Glickauf, Joseph, 77–8 ‘Go-Go’ years (1960s), 59, 62, 65, 67 Goerdeler, Reinhard, ix, 235, 240 von Goethe, Johann Wolfgang, 235 Gol, 242–3 Goldman Sachs, 121, 134–5, 139, 148, 157 Goldsmith, James, 66, 86 goodwill, 60–61 Goodwin, Fred, 136, 137, 139 Google, 164, 165, 178, 271 Gordhan, Pravin, 250 Gordon Riots (1780), 38 Gordon, Andrew, 218 Gosling, Richard, 202 GPT, 214–19 Gramegna, Pierre, 170 Great Crash and Depression (1929–39), 14, 57–8, 59–60, 66, 73, 75, 80, 118 Great Northern Railway, 46 Great Western Railway, 46 Green, Philip, 260 Greenspan, Alan, 122 Greenwich Capital Markets Inc., 136 Griffith-Jones, John, 146, 149, 150 Grigsby, John, 39, 40–41 Grondona, Julio, 225, 227 Grosvenor Street, Mayfair, ix–x, x, 277–8 Guardian, 170, 213 Gupta, Atul, 250 Haddrill, Stephen, 143, 209, 210 Halet, Raphaël, 171–7, 176, 181 Halet, Sophie, 172, 173 Halifax, 140 Hamersley, Michael, 161 Hamilton, Lewis, 7 Hamilton, Robert, 70 Hanson, Walter, 64 Harley, Robert, 39 Harris, Steven, 264 Hartnett, David, 166, 207 Harvard University, 57, 75, 99 Haskins & Sells, 56, 58 Haskins, Charles Waldo, 56 Haughey, Charles, 163 Haute Comité de la Place Financière, 171 Havelange, João, 220, 221 HBOS, x, 13, 140–41, 142–3, 149, 150, 257 Healey, Denis, 184 HealthSouth, 109 hedge funds, 113, 115 hedging, 99 Heineken, 246 Heintz, Guy, 175 Her Majesty’s Revenue and Customs (HMRC), 179, 182 Hewitt, Patricia, 184 Hexham General Hospital, Northumbria, 191 HIH, 240 Hinchingbrooke hospital, Cambridgeshire, 193 Hinkley Point, Somerset, 204–6 Hippocratic oath, 276 Hodge, Margaret, 178 Hollinger, 154–5 Holocaust, 4 Holyland, William Hopkins, 49 Home Office, 201 Hong Kong, 240, 251–2 Hotel Baur au Lac, Zurich, 219, 224 House of Commons, 68 House of Lords, 68, 92, 93, 143, 146–7 Houston, Texas, 99–108 HS2, 197–9, 266 HSBC, 166, 215, 229–30, 231, 256 Hudson, George, 44–5 humanism, 28 Hungary, 213 hypothetical future value, 100 IBM, 82, 272 Iceland, 127 ICI, 69 IKEA, 166 Illinois, United States, 54, 72–4 Imperial College, London, 197 Imperial Tobacco, 202 income tax, 46, 67, 153 Income Tax Act (1842), 46 India, 233, 238, 242, 245, 249 Industrial Revolution, 18, 42–7 Inferno (Dante), 33 inflation, 85 Inglis, John, 78–9 Institute of Chartered Accountants in England and Wales (ICAEW), 49, 52, 93, 210 integrated reporting, 18 interest rates, 85 Internal Revenue Service (IRS), 159, 160 International Accounting Congress (1938), 234 International Accounting Standards Board, 123–5, 126, 127, 147 International Consortium of Investigative Journalists, 169, 230, 247 International Financial Services Centre, 163 International Fiscal Association, 245 International Integrated Reporting Council, 18 International Monetary Fund (IMF), 273 International Sport & Leisure (ISL), 220–21, 222 Internet, 95 Introduction to Merchandise (Hamilton), 70 Iran, 230 Iraq, 225, 240 Ireland, 127, 143–4, 163–5 Isle of Man, 247–8 Issuers’ and Investors’ Summit on CDOs/Credit Derivatives (2006), 121 Istace, Vinciane, 173 Italy, 3, 16, 21–2, 24–36, 37, 239 ITT Corporation, 59, 61 Ivy League, 68 J.

…

, 248 UK Uncut, 166 Ukraine, 238 United Kingdom, 2, 6, 39–41, 42–52, 55–6, 65–9 Bank of England, 38, 91, 126, 140, 273 Banking Act (1879), 51 Barlow Clowes collapse (1988), 89–90, 136, 209 Blair ministries (1997–2007), 114, 157, 179, 184–92, 194, 209, 213 Brexit, 195, 203–4, 273 British Home Stores collapse (2015–16), 260–61 Bubble Act (1720), 44 Cabinet Office, 200, 201 Cameron ministries (2010–16), 149, 182, 192, 194, 195, 203 chartered accountancy, 14, 16, 45, 47–8, 49, 53, 67 City of Glasgow Bank collapse (1878), 51, 147 Companies Acts, 51, 52, 58, 66, 93 credit crisis (1772), 43 Davey committee (1894), 52 Department for Business, 201 Department for Exiting the EU, 204 Department of Health, 188, 191, 192 Financial Conduct Authority, 140, 149, 281 financial crisis (2007–8), see under financial crisis Financial Reporting Council, 138, 142, 144, 149, 182, 209–10, 213–14, 259, 261 Financial Services Authority, 127, 128, 137, 138, 140 First World War (1914–18), 71 GCHQ (Government Communications Headquarters), 272 Gordon Riots (1780), 38 Her Majesty’s Revenue and Customs (HMRC), 179, 182 HBOS bailout (2008), x, 140–41, 142–3, 149, 257 Home Office, 201 HS2, 197–9, 266 Income Tax Act (1842), 46 Industrial Revolution, 18, 42–7 Institute of Chartered Accountants in England and Wales (ICAEW), 49, 52, 93, 210 IAS39 rules, 123, 125, 127, 147 Johnson Matthey collapse (1984), 91, 128 Joint Stock Companies Acts (1844, 1856), 47, 50 ‘light touch’ regulation, 114, 131, 209 limited liability, 92–5 May ministries (2016–), 203 Maxwell publishing empire, 66, 87–8, 91 mergers and acquisitions, 65–9 Ministry of Defence, 188–90, 202, 212, 215–19 National Audit Office, 187, 189, 206 National Crime Agency (NCA), 272 National Health Service (NHS), 183–4, 187, 190, 191–5, 266 Northern Rock collapse (2007), 125–9, 142–3, 148 Overend & Gurney collapse (1866), 51, 126 Paradise Papers scandal (2017), 7 private finance initiative (PFI), 185–91, 196, 203, 249 Public Accounts Committee, 281 railways, 44–7, 49, 115 Railway Regulation Act (1844), 45 regulation, see under regulation Royal Bank of Scotland bailout (2008), 47, 136–40, 142, 241 Saudi Arabia, relations with, 212–19 Secret Intelligence Service, 207, 272 Serious Fraud Office, 213, 216, 217, 218, 219 South Sea Company, 39–41, 42, 44 Tate, 16 taxation, 7, 46, 67, 94, 153, 155–9, 163–6, 177–82, 203, 247–8 Thatcher ministries (1979–90), 84, 184 Treasury, 39, 68, 146, 179, 180, 189, 201, 203 War of the Spanish Succession (1707–13), 38 Wilson ministry, first (1964–70), 66, 68 United Nations, 225, 245 United States, 2, 4, 52–8, 59–65, 66–9 American Institute of Certified Public Accountants, 61 American International Group bailout (2008), 133–5, 144, 145, 148 antitrust laws, 59, 61, 75 Bear Stearns bailout (2008), 139, 145 Big Bang (1986), 156 Big Four, 2, 6, 9, 10 Bush administration (2001–2009), 98, 114, 145, 253 Celler–Kefauver Act (1950), 59, 61 certified public accountants, 53 Civil Rights Movement, 64 class-action lawsuit law (1966), 64 Congress, 56, 57, 58, 68, 73, 79–80, 98, 145 consultancy, 70–83 Department of Justice, 144, 161, 223 Eisenhower administration (1953–61), 76 Enron scandal (2001), see under Enron Federal National Mortgage Association (‘Fannie Mae’), 118–19, 145, 257 Federal Reserve, 122, 133 Federal Trade Commission, 79 FIFA indictment (2015), 219, 223 financial crisis (1873), 53 financial crisis (2007–8), see under financial crisis Founding Fathers, 53 Gilded Age (c. 1870–1900), 48 Glass–Steagall Act (1933), 60 ‘Go-Go’ years (1960s), 59, 62, 65 Great Crash and Depression (1929–39), 14, 57–8, 59–60, 66, 73, 75, 80, 118 Internal Revenue Code (1954), 154 Internal Revenue Service (IRS), 159, 160 International Accounting Standards, 123 Ivy League, 68 Johnson administration (1963–9), 63 Lehman Brothers collapse (2008), 12, 13, 92, 131–3, 138, 145, 148–9 limited liability partnerships, 91–2 Long Term Capital Management collapse (1998), 113 mergers and acquisitions, 59–62, 71 National Aeronautics and Space Administration (NASA), 76 Navy, 77 New Century Financial Corporation collapse (2007), 115–18, 257 Penn Central Transport Company collapse (1970), 64 presidential election (2000), 98 Public Company Accounting and Oversight Board (PCAOB), 144–5, 242–3, 253, 261, 274 railroads, 51, 52, 53, 70, 73 Reagan administration (1981–9), 80, 84, 154, 184 Roosevelt, Franklin administration (1933–45), 58 Roosevelt, Theodore administration (1901–9), 56–7 Sarbanes–Oxley Act (2002), 114, 122 savings-and-loan mutuals, 84–7, 91, 99 Securities Act (1933), 58 Securities and Exchange Commission (SEC), see under Securities and Exchange Commission Sunbeam collapse (2001), 97 Tax Reform Act (1986), 154 taxation, 67, 153–5, 159–63, 178 Trump administration (2017–), 17, 161, 273, 274 Vietnam War (1955–75), 63 Wall Street, 54, 69, 96, 101, 120–21 Washington Mutual collapse (2008), 145 Watergate Scandal (1972–4), 212 Westec collapse (1966), 63 World Congress of Accountants (1904), 56 WorldCom scandal (2002), 6, 10, 109, 110, 130, 209, 264, 274 United States Steel Corporation, 55, 62, 233 universal automatic computer (UNIVAC), 77–8 University of Chicago, 75, 84 University of Pennsylvania, 77 Unleashing the Department Store (Bower), 75 usury, 24, 26 Utopia, Limited, 52 Valcke, Jérôme, 225 value-added tax (VAT), 7, 179, 247 Vandemeulebroeke, Marc, 172, 173 Varley, Steve, 16, 200, 256, 258 Vatican, 25 Veihmeyer, John, 250 Venice, Republic of (697–1797), 18, 21, 24, 26, 32–6 Victoria, queen of the United Kingdom, 47 Vietnam, 102 Vietnam War (1955–75), 63 Vincent, Janice, 86 Virgil, 33 Virley, Simon, 205, 206, 207 Vodafone, 165–6 W.

The Devil's Derivatives: The Untold Story of the Slick Traders and Hapless Regulators Who Almost Blew Up Wall Street . . . And Are Ready to Do It Again by Nicholas Dunbar

Alan Greenspan, asset-backed security, bank run, banking crisis, Basel III, Bear Stearns, behavioural economics, Black Swan, Black-Scholes formula, bonus culture, book value, break the buck, buy and hold, capital asset pricing model, Carmen Reinhart, Cass Sunstein, collateralized debt obligation, commoditize, Credit Default Swap, credit default swaps / collateralized debt obligations, currency risk, delayed gratification, diversification, Edmond Halley, facts on the ground, fear index, financial innovation, fixed income, George Akerlof, Glass-Steagall Act, Greenspan put, implied volatility, index fund, interest rate derivative, interest rate swap, Isaac Newton, John Meriwether, junk bonds, Kenneth Rogoff, Kickstarter, Long Term Capital Management, margin call, market bubble, money market fund, Myron Scholes, Nick Leeson, Northern Rock, offshore financial centre, Paul Samuelson, price mechanism, proprietary trading, regulatory arbitrage, rent-seeking, Richard Thaler, risk free rate, risk tolerance, risk/return, Ronald Reagan, Salesforce, Savings and loan crisis, seminal paper, shareholder value, short selling, statistical model, subprime mortgage crisis, The Chicago School, Thomas Bayes, time value of money, too big to fail, transaction costs, value at risk, Vanguard fund, yield curve, zero-sum game

Sixty years earlier, Congress tried to answer that question with the Glass-Steagall Act, which forbade banks from trading and issuing securities. But Senator Glass and Representative Steagall hadn’t anticipated that banks would get around this restriction by trading derivatives. Nor did they anticipate the growth of an offshore dollar market and how U.S. banks (at holding company level) could enter the securities business by setting up subsidiaries in Europe.1 These banks were tightly regulated because taxpayers were on the hook if they failed, but now that they had figured out how to legally circumvent the Glass-Steagall Act, they were taking more risks, sometimes huge ones.

…

One way around the problem was to make more loans but then immediately distribute them to investors in the form of bonds. As long as the bonds didn’t go bad immediately, the credit risk was now the investors’ problem, not the bank’s. This was the world of the securities firms: Goldman Sachs, Morgan Stanley, and Lehman Brothers. The Glass-Steagall Act, which kept commercial banks out of securities, was about to be abolished in 1999 and was becoming increasingly irrelevant anyway: by using new products like derivatives, or by basing subsidiaries outside the United States, American banks could do as much underwriting and trading as they liked.

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

The reforms were particularly widespread and far-reaching in the US, where the Depression was the greatest and lasted the longest. The so-called First New Deal programme (1933–4) under the new president, Franklin Delano Roosevelt, separated the commercial and investment arms of banks (the 1933 Glass-Steagall Act), set up the bank deposit insurance system to protect small savers against bank failures, tightened stock market regulation (the 1933 Federal Securities Act), expanded and strengthened the farm credit system, provided a minimum farm price guarantee and developed infrastructure (such as the Hoover Dam – that’s the one you see in the 1978 Superman movie, starring the late Christopher Reeve), and so on.

…

All was not well with the new global economy. The false dawn: from the dot.com boom to the Great Moderation When these crises were brought under control, talk of global financial reform receded. In the US, a major push in the other direction came in the form of the 1999 repeal of the iconic New Deal legislation, the 1933 Glass-Steagall Act, which structurally separated commercial banking from investment banking. There was another moment of panic in 2000, when the so-called dot.com bubble – in which internet-based companies with no prospect of generating any profit in the foreseeable future had their shares valued at absurdly high levels – burst in the US.

…

Most of us have heard of them – especially Goldman Sachs, who have been infamously likened to a ‘vampire squid’ by the journalist Matt Taibbi – but don’t fully understand what they do. Investment banks have existed since the nineteenth century – sometimes as independent entities but often as parts of universal banks that perform both types of banking. German banks, such as Deutsche Bank or Commerzbank, are the quintessential examples. In the US, due to the Glass-Steagall Act, the combination of investment banking and commercial banking in a single entity was not allowed between 1933 and 1999. Since the 1980s, these banks have played the leading role in reshaping the financial system on a global scale. Investment banks’ key role is (or used to be) to facilitate the creation and the trading of shares and bonds Investment banks are so called because they help companies raise money from investors – at least that was their original purpose.

Trillions: How a Band of Wall Street Renegades Invented the Index Fund and Changed Finance Forever by Robin Wigglesworth

Albert Einstein, algorithmic trading, asset allocation, Bear Stearns, behavioural economics, Benoit Mandelbrot, Big Tech, Black Monday: stock market crash in 1987, Blitzscaling, Brownian motion, buy and hold, California gold rush, capital asset pricing model, Carl Icahn, cloud computing, commoditize, coronavirus, corporate governance, corporate raider, COVID-19, data science, diversification, diversified portfolio, Donald Trump, Elon Musk, Eugene Fama: efficient market hypothesis, fear index, financial engineering, fixed income, Glass-Steagall Act, Henri Poincaré, index fund, industrial robot, invention of the wheel, Japanese asset price bubble, Jeff Bezos, Johannes Kepler, John Bogle, John von Neumann, Kenneth Arrow, lockdown, Louis Bachelier, machine readable, money market fund, Myron Scholes, New Journalism, passive investing, Paul Samuelson, Paul Volcker talking about ATMs, Performance of Mutual Funds in the Period, Peter Thiel, pre–internet, RAND corporation, random walk, risk-adjusted returns, road to serfdom, Robert Shiller, rolodex, seminal paper, Sharpe ratio, short selling, Silicon Valley, sovereign wealth fund, subprime mortgage crisis, the scientific method, transaction costs, uptick rule, Upton Sinclair, Vanguard fund

He eventually triumphed in the heated internal debate, to the consternation of the normally phlegmatic Black, who stormed out of the pivotal meeting in a rare fit of anger.17 As it turns out, the Stagecoach Fund was eventually killed anyway by the fallout from a 1971 Supreme Court ruling that the Depression-era Glass-Steagall Act prevented commercial banks like Wells Fargo from marketing mutual funds to ordinary investors. Wells Fargo’s trust department had already secured commitments from the pension funds of Greyhound and Illinois Bell. But given that the hope of also attracting retail investors alongside them was now stymied, and otherwise tepid interest from institutional investors, the Stagecoach Fund initiative wound down.

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It reached the $1 billion milestone in 1988, ranking 41st among 1,048 funds.7 By then, a smattering of rivals had launched similar index funds for ordinary investors, but they were either shut down or struggled for traction.8 Investment groups that could have competed more aggressively with Vanguard—Wells Fargo Investment Advisors, State Street, and Bankers Trust, whose index strategies were all growing strongly among institutional investors like pension funds—were precluded from entering the retail arena. The Depression-era Glass-Steagall Act still banned bank-owned money managers from selling products to ordinary investors, and due to this regulatory quirk, and the reluctance of retail-oriented investment groups to cannibalize their own traditional funds, Vanguard for a long time enjoyed an unimpeded run selling index funds to ordinary investors.

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See Dimensional Fund Advisors DFA Way, 163–64, 165 Diamond, Bob, 198, 202, 203–5 Dimensional Fund Advisors (DFA), 144–51, 159–65 board of directors, 146–47 Butler at, 137–39, 144–48 conferences of, 138, 163–64 factor investing approach of, 156, 159–60, 163, 191 Financial Advisor Services, 163 first fund (9-10 Fund), 148, 150, 151 founding of, 144–46 investment funds, 154, 156, 159–60, 162–64 Klotz’s departure, 156–59 Schroders’ investment, 145, 160 Wheeler at, 138, 161, 162–64 direct indexing, 249–50 diversification, 7, 40–41, 138, 142–43 dividend yield, 263 Donaldson, Lufkin & Jenrette, 35, 109 Doran, Robert, 94–96, 97–99, 102, 116–17, 118, 131, 133 dot-com bubble, 51, 154, 156, 197, 214, 215, 246 Dow, Charles, 27, 29, 152 Dow Jones Industrial Average, 7, 29, 34, 252 Dow Theory, 27, 151–52 Duffield, Jeremy, 94, 124, 125, 129, 130, 134 Dunn, Patricia, xiii, 192–95 background of, 193–94 at BGI, 192–95, 196–99, 201–2, 215, 232 cancer of, 201–2, 215 at Hewlett-Packard, 193, 202 at WFIA, 185–86, 192–95 Dunn, Ruth, 193 Eastman Kodak, 5–6 Eastwood, Clint, 189 École Polytechnique, 23 “Economic Role of the Investment Company, The” (Bogle), 91–92 Eendragt Maakt Magt, 300–301 “Efficient Capital Markets: A Review of Theory and Empirical Work” (Fama), 50 Efficient Frontiersmen, 82 efficient-markets hypothesis, 48–52, 63, 64, 65, 67, 106–7, 152–55, 160, 165, 268, 280 Einstein, Albert, 25 Eisenreich, Gary, 180, 181 Elhauge, Einer, 296–97 Elliott Management, 19, 287–88 Ellis, Charles, “The Loser’s Game,” 35, 109, 186, 276 emerging markets, 257, 258 employee stock options, 194–95 Engel, Louis, 30–31 environmental, social, and governance (ESG), 290–94 “equal-weighted” indices, 76–77 ETFMG Prime Cyber Security ETF (HACK), 241 Evercore, 219 exchange-traded funds (ETFs), 17, 239–46, 262–64 actively managed, 244–46 Amex and Most, 166–68, 173–76, 178–79 BGI and, 196–201, 233–34 biblical, 236–39 bond, 248, 271–73 sustainability-focused, 291–92 thematic, 241–42, 246 exchange-traded products (ETPs), 247–48 executive compensation, 194–95, 289, 296 ExxonMobil, 269–70 Facebook, 255, 256 factor investing, 151, 155 154, 159–60, 191 Fair, Bill, 61n Fair, Isaac and Company, 61 Fama, Eugene, x, 37, 46–52 background of, 46–48 “The Behavior of Stock-Market Prices,” 48–50 at Chicago, 47–50, 140 at DFA, 146–47, 157, 159–60 efficient-markets hypothesis, 48–52, 63, 139, 152, 268, 280 three-factor model, 155–56, 159–60 Wells Fargo and, 70 Fama, Guy, 45–46 Fama, Sallyann Dimeco, 46–47 Fannie Mae, 219 “fat tails,” 49, 51 Federal Reserve, 115, 119, 270, 273 Federal Trade Commission (FTC), 294, 295–96 Feldstein, Paul, 34 Ferguson, Alex, 218 Fernandez, Henry, 259 Fernando, Elizabeth, 274–76, 278–79 Fichtner, Jan, 256–57 FICO (Fair, Isaac and Company), 61 Fidelity Investments, 18, 34, 114, 122, 223, 233, 244, 283 Fina, Philip, 117 Financial Analysts Journal, 34–35, 50, 86, 87–88, 109 financial crisis of 2007-2008, 51, 203–4, 219–21, 236, 275n Financial Times, 252 Fink, Larry, xiii, 206–12, 273 background of, 206–7 at BlackRock, 209–21, 234–35 BGI acquisition, 204–6, 215–16, 222–34, 235 financial crisis and, 219–21 founding, 209–12 IPO, 214–15 MLIM acquisition, 217–19 naming, 213–14 climate change and, 289–93 at First Boston, 207–9 on “Giant Three” scenario, 298–99 Icahn and, 271 Fink, Lori, 206–7, 291 fire insurance, 27–28 First Boston, 207–9 First Chicago Bank, 81, 141–42 Fisher, Lawrence, 32–33, 49, 52–53, 70 fixed commissions, 79, 111 Forbes (magazine), 91n, 105 Ford, Gerald, 115 Ford, Henry, 232–33 Fort Knox, 17 Fortran, 44, 66 Fort Riley, 63 Fortune (magazine), 10, 15, 91, 111–12, 151 401(k) retirement plans, 119, 120 Fouse, William, xi, 53, 72–74 background of, 72–73 on Goebbels, 85, 164 at Wells Fargo, 73–74, 75, 81, 184, 187, 189n, 194 fractional shares, 250 Francis, Glenn, 176 Franklin Custodian Funds, 94 Franklin Templeton, 234 Fraser-Jenkins, Inigo, 242–43, 279 Frater, Hugh, 210, 212, 219 free-rider problem, 279 French, Ken, 155–56 Freud, Sigmund, 31 Friedman, Milton, 24, 41, 141 frontier markets, 257 FTSE Russell, 111n, 252 FTSE 100, 7, 249, 256 Galbraith, John Kenneth, 26 Galbraith, Steven, 11–14 Gauss, Carl Friedrich, 49 Gaussian distribution, 49 General Electric, 115, 143, 220 Getz Bros., 169–70 “Giant Three” scenario, 297–99 Gibson, George Rutledge, 50 Girls Inc., 9, 16 Glass, Lewis & Co., 288–89 Glass-Steagall Act, 75, 122 Goddard, Bruce, 186, 193, 194 Goebbels, Joseph, 85, 164 Golden State Warriors, 56 gold funds, 17, 242, 262–63 Goldman Sachs, 189, 207, 234 Goldstein, Rob, 220–21 Golub, Ben, 209–12, 226 Google, 255, 256 Gore, Al, 293 Gormley, Todd, 290 Gould, Jack, 147 Graham, Benjamin, 7, 52, 83, 152, 154 Graham, Katharine “Kay,” 4, 6, 10, 36 Graham and Dodd Awards, 87 Grantham, Jeremy, 66–68 Grauer, Frederick “Fred,” xii–xiii, 186–93 background of, 186–87 BGI and BlackRock, 228–29, 232 at Merrill Lynch, 187–88 at WFIA, 188–93, 194 departure, 192–93 Great Crash of 1929, 27, 88, 89, 92, 225–26 Great Depression, 26, 30, 39, 40, 88, 122, 169, 214 “Great Man” theory, 57–58 Greece, 258 Green, Michael, 266–71, 281 “greenwashing,” 290 Greenwich Associates, 35, 109 Griffin, Ken, 2 Gross, Bill, 124, 261 Grossman, Blake, 185, 191, 196, 200, 225–26, 227 Grossman, Sanford, 280 Grossman-Stiglitz Paradox, 280 Gucci, 198 Hahnemann Hospital, 130–31 Hallac, Charlie, 211, 212, 219, 229 Hangzhou Hikvision, 259 Harvard Business School, 60, 65–66, 67, 128 Harvard Law School, 296–97, 298 Harvard University, 40, 47, 171, 223, 292 Hauptfuhrer, Barbara, 98n Haynes, Peter, 179n hedge funds, 2, 18, 283 Buffett-Seides wager, 1–2, 3–4, 6, 9–11, 15–17 Hedgehog and the Fox, 88 Heemskerk, Eelke, 256–57 Hellman & Friedman, 201 Herbst, Clarence, 278 Hewlett-Packard, 193, 202 Hirst, Scott, 298 Hogg, David, 285–86 Holland, Mary Onie, 83 Holmes, Douglas, 176 Honeywell, 150 How to Buy Stocks (Engel), 30 Hughes, John, 227 Hume, David, 39 Ibbotson, Roger, 64, 144, 147 IBM, 28, 43, 44, 56–57, 60, 83, 143 IBM Personal Computer, 145 IBM 305 RAMAC, 59 IBM 7090, 44, 56 Icahn, Carl, 271 Illinois Bell, 75, 77, 84 incremental investing, 269 Independent Adviser for Vanguard Investors, 121 indexes, 7, 29–30, 242–44, 251–62.

The Unwinding: An Inner History of the New America by George Packer

"World Economic Forum" Davos, Affordable Care Act / Obamacare, Alan Greenspan, Apple's 1984 Super Bowl advert, bank run, Bear Stearns, big-box store, citizen journalism, clean tech, collateralized debt obligation, collective bargaining, company town, corporate raider, Credit Default Swap, credit default swaps / collateralized debt obligations, DeepMind, deindustrialization, diversified portfolio, East Village, El Camino Real, electricity market, Elon Musk, Fairchild Semiconductor, family office, financial engineering, financial independence, financial innovation, fixed income, Flash crash, food desert, gentrification, Glass-Steagall Act, global macro, Henry Ford's grandson gave labor union leader Walter Reuther a tour of the company’s new, automated factory…, high-speed rail, housing crisis, income inequality, independent contractor, informal economy, intentional community, Jane Jacobs, Larry Ellison, life extension, Long Term Capital Management, low skilled workers, Marc Andreessen, margin call, Mark Zuckerberg, market bubble, market fundamentalism, Maui Hawaii, Max Levchin, Menlo Park, military-industrial complex, Neal Stephenson, Neil Kinnock, new economy, New Journalism, obamacare, Occupy movement, off-the-grid, oil shock, PalmPilot, Patri Friedman, paypal mafia, peak oil, Peter Thiel, Ponzi scheme, proprietary trading, public intellectual, Richard Florida, Robert Bork, Ronald Reagan, Ronald Reagan: Tear down this wall, Savings and loan crisis, shareholder value, side project, Silicon Valley, Silicon Valley billionaire, Silicon Valley startup, single-payer health, smart grid, Snow Crash, Steve Jobs, strikebreaker, tech worker, The Death and Life of Great American Cities, the scientific method, too big to fail, union organizing, uptick rule, urban planning, vertical integration, We are the 99%, We wanted flying cars, instead we got 140 characters, white flight, white picket fence, zero-sum game

President, you’ll have some cover when the financial and political elite come after you,” because the establishment was much bigger than any president. In his second term, Clinton would prove it by moving in the opposite direction, supporting the deregulation of banks, including the repeal of the Glass-Steagall Act, and preventing financial derivatives from being regulated. For now, though, he stood fast. The Senate passed the securities litigation bill in spite of the president’s objections. Clinton vetoed it, and Congress overrode the veto, one of only two times that happened to Clinton. Even Ted Kennedy changed his mind and joined Dodd in voting with the corporations.

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So fuck off with your sofa units and Strinne green stripe patterns … COUNTRYWIDE BEEFING UP SUBPRIME MORTGAGE LOANS … Today’s postfeminist era is also today’s postmodern era, in which supposedly everybody now knows everything about what’s really going on underneath all the semiotic codes and cultural conventions, and everybody supposedly knows what paradigms everybody … US BANKS UNLEASHED Imminent Death of Glass-Steagall Act Will Create Giant US Financial Firms … The United States seems keener than most countries to celebrate the new millennium in style: maybe the nation is wealthy and optimistic enough that big parties seem apropos.… COAST-TO-COAST FIREWORKS … “This is a unique moment for our country,” Clinton told a crowd assembled just off the National Mall, where a gala public celebration was scheduled for later Friday night.

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(By the time the Commodity Futures Modernization Act became law, Rubin was no longer in government, so he couldn’t be held responsible for any negative effects it might have had, as he would point out in later years.) The same was true of Gramm-Leach-Bliley, passed by Congress and signed by Clinton in 1999, which repealed the 1933 Glass-Steagall Act and allowed commercial and investment banking under one roof. (Yes, Rubin vocally supported Glass-Steagall’s repeal, mainly because the wall between commercial and investment banks had already eroded—a fait accompli that the most admired Treasury secretary since Alexander Hamilton was powerless to fix.)

The Global Money Markets by Frank J. Fabozzi, Steven V. Mann, Moorad Choudhry

asset allocation, asset-backed security, bank run, Bear Stearns, Bretton Woods, buy and hold, collateralized debt obligation, credit crunch, currency risk, discounted cash flows, discrete time, disintermediation, Dutch auction, financial engineering, fixed income, Glass-Steagall Act, high net worth, intangible asset, interest rate derivative, interest rate swap, land bank, large denomination, locking in a profit, London Interbank Offered Rate, Long Term Capital Management, margin call, market fundamentalism, money market fund, moral hazard, mortgage debt, paper trading, Right to Buy, short selling, stocks for the long run, time value of money, value at risk, Y2K, yield curve, zero-coupon bond, zero-sum game

Historically, the dealer market has been dominated by large investment banking firms because the Glass-Steagall Act prohibited commercial banks from underwriting commercial paper. In June 1987, however, the Federal Reserve granted subsidiaries of bank holding companies the power to underwrite commercial paper. Commercial banks began immediately making inroads into the dealer market that was once the exclusive province of investment banking firms. This process was further accelerated when the Gramm-Leach-Bliley Act was signed into law in November 1999. The reforms enacted in the Gramm-Leach-Bliley Act repealed the Glass-Steagall Act that mandated artificial barriers between commercial banks, investment banks, and insurance companies.

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., 34 GE Capital commercial paper, 73 maturity (time), 74 GE Capital Corporation, 82 GE Life and Annuity Assurance Co., 99 General American Life Insurance Co., 98 General collateral (GC), 130, 136 General Services Administration, 45 Gift taxes, 66 Gilt repo, 138 market. See United Kingdom gilt repo market users, 140 Gilt-edged Market Makers (GEMMs), 136 Glass-Steagall Act, 70 Global Debt Securities, 60 Global Master Repurchase Agreement, 123 321 Index Global money markets introduction, 1 LIBOR, importance, 36 overview, 3–6 Global MTNs, 98 Gold, recognition, 308 Goldman Sachs, 83. See also Universal Commercial Paper Government bond. See Maturity auctions, 130 securities, 308 dealers, 133 Government National Mortgage Association (GNMA), 45, 154–155, 160, 197 passthroughs, 162 Government sponsored enterprises (GSEs), 45–47, 53 creation, 57, 62, 64 status, 65 GovPX (venture), 34 Grace period, 204 Gramm-Leach-Bliley Act (1999), 70 Gree Tree Financial Corporation, 202 Grieves, Robin, 41, 42, 51 Gross portfolio yield, 196 Gross WAC, 182 Guarantee fee, 154 Haircut, 124, 308 inclusion, 125 Hard bullet (HB), 190 Health care receivables, 76 Hedging, 131, 259.

Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist by Kate Raworth

"Friedman doctrine" OR "shareholder theory", 3D printing, Alan Greenspan, Alvin Toffler, Anthropocene, Asian financial crisis, bank run, basic income, battle of ideas, behavioural economics, benefit corporation, Berlin Wall, biodiversity loss, bitcoin, blockchain, Branko Milanovic, Bretton Woods, Buckminster Fuller, business cycle, call centre, Capital in the Twenty-First Century by Thomas Piketty, carbon tax, Cass Sunstein, choice architecture, circular economy, clean water, cognitive bias, collapse of Lehman Brothers, complexity theory, creative destruction, crowdsourcing, cryptocurrency, Daniel Kahneman / Amos Tversky, David Ricardo: comparative advantage, degrowth, dematerialisation, disruptive innovation, Douglas Engelbart, Douglas Engelbart, Easter island, en.wikipedia.org, energy transition, Erik Brynjolfsson, Ethereum, ethereum blockchain, Eugene Fama: efficient market hypothesis, experimental economics, Exxon Valdez, Fall of the Berlin Wall, financial deregulation, Financial Instability Hypothesis, full employment, Future Shock, Garrett Hardin, Glass-Steagall Act, global supply chain, global village, Henri Poincaré, hiring and firing, Howard Zinn, Hyman Minsky, income inequality, Intergovernmental Panel on Climate Change (IPCC), invention of writing, invisible hand, Isaac Newton, it is difficult to get a man to understand something, when his salary depends on his not understanding it, John Maynard Keynes: Economic Possibilities for our Grandchildren, Joseph Schumpeter, Kenneth Arrow, Kenneth Rogoff, Kickstarter, land reform, land value tax, Landlord’s Game, loss aversion, low interest rates, low skilled workers, M-Pesa, Mahatma Gandhi, market fundamentalism, Martin Wolf, means of production, megacity, Minsky moment, mobile money, Money creation, Mont Pelerin Society, Myron Scholes, neoliberal agenda, Network effects, Occupy movement, ocean acidification, off grid, offshore financial centre, oil shale / tar sands, out of africa, Paul Samuelson, peer-to-peer, planetary scale, price mechanism, quantitative easing, randomized controlled trial, retail therapy, Richard Thaler, Robert Solow, Ronald Reagan, Second Machine Age, secular stagnation, shareholder value, sharing economy, Silicon Valley, Simon Kuznets, smart cities, smart meter, Social Responsibility of Business Is to Increase Its Profits, South Sea Bubble, statistical model, Steve Ballmer, systems thinking, TED Talk, The Chicago School, The Great Moderation, the map is not the territory, the market place, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, Thorstein Veblen, too big to fail, Torches of Freedom, Tragedy of the Commons, trickle-down economics, ultimatum game, universal basic income, Upton Sinclair, Vilfredo Pareto, wikimedia commons

Such credit creation is hardly new – it started several thousand years ago – and it can play a valuable role, but it has grown hugely in scale since the 1980s. That expansion was triggered by financial deregulation (think reregulation) – including the 1986 Big Bang in the UK and the 1999 repeal of the Glass–Steagall Act in the US – which ended the requirement for banks to keep customers’ savings and loans separate from their own speculative investments. Second, financial markets do not tend to promote economic stability, despite the claims that they do. Thanks to financial deregulation, said US Federal Reserve Chair Alan Greenspan in 2004, ‘not only have individual financial institutions become less vulnerable to shocks from underlying risk factors, but also the financial system as a whole has become more resilient.’45 Four years later, the financial crash disproved that claim in a fairly decisive way.

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Page numbers in italics denote illustrations A Aalborg, Denmark, 290 Abbott, Anthony ‘Tony’, 31 ABCD group, 148 Abramovitz, Moses, 262 absolute decoupling, 260–61 Acemoglu, Daron, 86 advertising, 58, 106–7, 112, 281 Agbodjinou, Sénamé, 231 agriculture, 5, 46, 72–3, 148, 155, 178, 181, 183 Alaska, 9 Alaska Permanent Fund, 194 Alperovitz, Gar, 177 alternative enterprise designs, 190–91 altruism, 100, 104 Amazon, 192, 196, 276 Amazon rainforest, 105–6, 253 American Economic Association, 3 American Enterprise Institute, 67 American Tobacco Corporation, 107 Andes, 54 animal spirits, 110 Anthropocene epoch, 48, 253 anthropocentrism, 115 Apertuso, 230 Apple, 85, 192 Archer Daniels Midland (ADM), 148 Arendt, Hannah, 115–16 Argentina, 55, 274 Aristotle, 32, 272 Arrow, Kenneth, 134 Articles of Association and Memoranda, 233 Arusha, Tanzania, 202 Asia Wage Floor Alliance, 177 Asian financial crisis (1997), 90 Asknature.org, 232 Athens, 57 austerity, 163 Australia, 31, 103, 177, 180, 211, 224–6, 255, 260 Austria, 263, 274 availability bias, 112 AXIOM, 230 Axtell, Robert, 150 Ayres, Robert, 263 B B Corp, 241 Babylon, 13 Baker, Josephine, 157 balancing feedback loops, 138–41, 155, 271 Ballmer, Steve, 231 Bangla Pesa, 185–6, 293 Bangladesh, 10, 226 Bank for International Settlements, 256 Bank of America, 149 Bank of England, 145, 147, 256 banking, see under finance Barnes, Peter, 201 Barroso, José Manuel, 41 Bartlett, Albert Allen ‘Al’, 247 basic income, 177, 194, 199–201 basic personal values, 107–9 Basle, Switzerland, 80 Bauwens, Michel, 197 Beckerman, Wilfred, 258 Beckham, David, 171 Beech-Nut Packing Company, 107 behavioural economics, 11, 111–14 behavioural psychology, 103, 128 Beinhocker, Eric, 158 Belgium, 236, 252 Bentham, Jeremy, 98 Benyus, Janine, 116, 218, 223–4, 227, 232, 237, 241 Berger, John, 12, 281 Berlin Wall, 141 Bermuda, 277 Bernanke, Ben, 146 Bernays, Edward, 107, 112, 281–3 Bhopal gas disaster (1984), 9 Bible, 19, 114, 151 Big Bang (1986), 87 billionaires, 171, 200, 289 biodiversity, 10, 46, 48–9, 52, 85, 115, 155, 208, 210, 242, 299 as common pool resource, 201 and land conversion, 49 and inequality, 172 and reforesting, 50 biomass, 73, 118, 210, 212, 221 biomimicry, 116, 218, 227, 229 bioplastic, 224, 293 Birmingham, West Midlands, 10 Black, Fischer, 100–101 Blair, Anthony ‘Tony’, 171 Blockchain, 187, 192 blood donation, 104, 118 Body Shop, The, 232–4 Bogotá, Colombia, 119 Bolivia, 54 Boston, Massachusetts, 3 Bowen, Alex, 261 Bowles, Sam, 104 Box, George, 22 Boyce, James, 209 Brasselberg, Jacob, 187 Brazil, 124, 226, 281, 290 bread riots, 89 Brisbane, Australia, 31 Brown, Gordon, 146 Brynjolfsson, Erik, 193, 194, 258 Buddhism, 54 buen vivir, 54 Bullitt Center, Seattle, 217 Bunge, 148 Burkina Faso, 89 Burmark, Lynell, 13 business, 36, 43, 68, 88–9 automation, 191–5, 237, 258, 278 boom and bust, 246 and circular economy, 212, 215–19, 220, 224, 227–30, 232–4, 292 and complementary currencies, 184–5, 292 and core economy, 80 and creative destruction, 142 and feedback loops, 148 and finance, 183, 184 and green growth, 261, 265, 269 and households, 63, 68 living metrics, 241 and market, 68, 88 micro-businesses, 9 and neoliberalism, 67, 87 ownership, 190–91 and political funding, 91–2, 171–2 and taxation, 23, 276–7 workers’ rights, 88, 91, 269 butterfly economy, 220–42 C C–ROADS (Climate Rapid Overview and Decision Support), 153 C40 network, 280 calculating man, 98 California, United States, 213, 224, 293 Cambodia, 254 Cameron, David, 41 Canada, 196, 255, 260, 281, 282 cancer, 124, 159, 196 Capital Institute, 236 carbon emissions, 49–50, 59, 75 and decoupling, 260, 266 and forests, 50, 52 and inequality, 58 reduction of, 184, 201, 213, 216–18, 223–7, 239–41, 260, 266 stock–flow dynamics, 152–4 taxation, 201, 213 Cargill, 148 Carney, Mark, 256 Caterpillar, 228 Catholic Church, 15, 19 Cato Institute, 67 Celts, 54 central banks, 6, 87, 145, 146, 147, 183, 184, 256 Chang, Ha-Joon, 82, 86, 90 Chaplin, Charlie, 157 Chiapas, Mexico, 121–2 Chicago Board Options Exchange (CBOE), 100–101 Chicago School, 34, 99 Chile, 7, 42 China, 1, 7, 48, 154, 289–90 automation, 193 billionaires, 200, 289 greenhouse gas emissions, 153 inequality, 164 Lake Erhai doughnut analysis, 56 open-source design, 196 poverty reduction, 151, 198 renewable energy, 239 tiered pricing, 213 Chinese Development Bank, 239 chrematistics, 32, 273 Christianity, 15, 19, 114, 151 cigarettes, 107, 124 circular economy, 220–42, 257 Circular Flow diagram, 19–20, 28, 62–7, 64, 70, 78, 87, 91, 92, 93, 262 Citigroup, 149 Citizen Reaction Study, 102 civil rights movement, 77 Cleveland, Ohio, 190 climate change, 1, 3, 5, 29, 41, 45–53, 63, 74, 75–6, 91, 141, 144, 201 circular economy, 239, 241–2 dynamics of, 152–5 and G20, 31 and GDP growth, 255, 256, 260, 280 and heuristics, 114 and human rights, 10 and values, 126 climate positive cities, 239 closed systems, 74 coffee, 221 cognitive bias, 112–14 Colander, David, 137 Colombia, 119 common-pool resources, 82–3, 181, 201–2 commons, 69, 82–4, 287 collaborative, 78, 83, 191, 195, 196, 264, 292 cultural, 83 digital, 82, 83, 192, 197, 281 and distribution, 164, 180, 181–2, 205, 267 Embedded Economy, 71, 73, 77–8, 82–4, 85, 92 knowledge, 197, 201–2, 204, 229, 231, 292 commons and money creation, see complementary currencies natural, 82, 83, 180, 181–2, 201, 265 and regeneration, 229, 242, 267, 292 and state, 85, 93, 197, 237 and systems, 160 tragedy of, 28, 62, 69, 82, 181 triumph of, 83 and values, 106, 108 Commons Trusts, 201 complementary currencies, 158, 182–8, 236, 292 complex systems, 28, 129–62 complexity science, 136–7 Consumer Reaction Study, 102 consumerism, 58, 102, 121, 280–84 cooking, 45, 80, 186 Coote, Anna, 278 Copenhagen, Denmark, 124 Copernicus, Nicolaus, 14–15 copyright, 195, 197, 204 core economy, 79–80 Corporate To Do List, 215–19 Costa Rica, 172 Council of Economic Advisers, US, 6, 37 Cox, Jo, 117 cradle to cradle, 224 creative destruction, 142 Cree, 282 Crompton, Tom, 125–6 cross-border flows, 89–90 crowdsourcing, 204 cuckoos, 32, 35, 36, 38, 40, 54, 60, 159, 244, 256, 271 currencies, 182–8, 236, 274, 292 D da Vinci, Leonardo, 13, 94–5 Dallas, Texas, 120 Daly, Herman, 74, 143, 271 Danish Nudging Network, 124 Darwin, Charles, 14 Debreu, Gerard, 134 debt, 37, 146–7, 172–3, 182–5, 247, 255, 269 decoupling, 193, 210, 258–62, 273 defeat device software, 216 deforestation, 49–50, 74, 208, 210 degenerative linear economy, 211–19, 222–3, 237 degrowth, 244 DeMartino, George, 161 democracy, 77, 171–2, 258 demurrage, 274 Denmark, 180, 275, 290 deregulation, 82, 87, 269 derivatives, 100–101, 149 Devas, Charles Stanton, 97 Dey, Suchitra, 178 Diamond, Jared, 154 diarrhoea, 5 differential calculus, 131, 132 digital revolution, 191–2, 264 diversify–select–amplify, 158 double spiral, 54 Doughnut model, 10–11, 11, 23–5, 44, 51 and aspiration, 58–9, 280–84 big picture, 28, 42, 61–93 distribution, 29, 52, 57, 58, 76, 93, 158, 163–205 ecological ceiling, 10, 11, 44, 45, 46, 49, 51, 218, 254, 295, 298 goal, 25–8, 31–60 and governance, 57, 59 growth agnosticism, 29–30, 243–85 human nature, 28–9, 94–128 and population, 57–8 regeneration, 29, 158, 206–42 social foundation, 10, 11, 44, 45, 49, 51, 58, 77, 174, 200, 254, 295–6 systems, 28, 129–62 and technology, 57, 59 Douglas, Margaret, 78–9 Dreyfus, Louis, 148 ‘Dumb and Dumber in Macroeconomics’ (Solow), 135 Durban, South Africa, 214 E Earning by Learning, 120 Earth-system science, 44–53, 115, 216, 288, 298 Easter Island, 154 Easterlin, Richard, 265–6 eBay, 105, 192 eco-literacy, 115 ecological ceiling, 10, 11, 44, 45, 46, 49, 51, 218, 254, 295, 298 Ecological Performance Standards, 241 Econ 101 course, 8, 77 Economics (Lewis), 114 Economics (Samuelson), 19–20, 63–7, 70, 74, 78, 86, 91, 92, 93, 262 Economy for the Common Good, 241 ecosystem services, 7, 116, 269 Ecuador, 54 education, 9, 43, 45, 50–52, 85, 169–70, 176, 200, 249, 279 economic, 8, 11, 18, 22, 24, 36, 287–93 environmental, 115, 239–40 girls’, 57, 124, 178, 198 online, 83, 197, 264, 290 pricing, 118–19 efficient market hypothesis, 28, 62, 68, 87 Egypt, 48, 89 Eisenstein, Charles, 116 electricity, 9, 45, 236, 240 and Bangla Pesa, 186 cars, 231 Ethereum, 187–8 and MONIAC, 75, 262 pricing, 118, 213 see also renewable energy Elizabeth II, Queen of the United Kingdom, 145 Ellen MacArthur Foundation, 220 Embedded Economy, 71–93, 263 business, 88–9 commons, 82–4 Earth, 72–6 economy, 77–8 finance, 86–8 household, 78–81 market, 81–2 power, 91–92 society, 76–7 state, 84–6 trade, 89–90 employment, 36, 37, 51, 142, 176 automation, 191–5, 237, 258, 278 labour ownership, 188–91 workers’ rights, 88, 90, 269 Empty World, 74 Engels, Friedrich, 88 environment and circular economy, 220–42, 257 conservation, 121–2 and degenerative linear economy, 211–19, 222–3 degradation, 5, 9, 10, 29, 44–53, 74, 154, 172, 196, 206–42 education on, 115, 239–40 externalities, 152 fair share, 216–17 and finance, 234–7 generosity, 218–19, 223–7 green growth, 41, 210, 243–85 nudging, 123–5 taxation and quotas, 213–14, 215 zero impact, 217–18, 238, 241 Environmental Dashboard, 240–41 environmental economics, 7, 11, 114–16 Environmental Kuznets Curve, 207–11, 241 environmental space, 54 Epstein, Joshua, 150 equilibrium theory, 134–62 Ethereum, 187–8 ethics, 160–62 Ethiopia, 9, 226, 254 Etsy, 105 Euclid, 13, 15 European Central Bank, 145, 275 European Commission, 41 European Union (EU), 92, 153, 210, 222, 255, 258 Evergreen Cooperatives, 190 Evergreen Direct Investing (EDI), 273 exogenous shocks, 141 exponential growth, 39, 246–85 externalities, 143, 152, 213 Exxon Valdez oil spill (1989), 9 F Facebook, 192 fair share, 216–17 Fama, Eugene, 68, 87 fascism, 234, 277 Federal Reserve, US, 87, 145, 146, 271, 282 feedback loops, 138–41, 143, 148, 155, 250, 271 feminist economics, 11, 78–81, 160 Ferguson, Thomas, 91–2 finance animal spirits, 110 bank runs, 139 Black–Scholes model, 100–101 boom and bust, 28–9, 110, 144–7 and Circular Flow, 63–4, 87 and complex systems, 134, 138, 139, 140, 141, 145–7 cross-border flows, 89 deregulation, 87 derivatives, 100–101, 149 and distribution, 169, 170, 173, 182–4, 198–9, 201 and efficient market hypothesis, 63, 68 and Embedded Economy, 71, 86–8 and financial-instability hypothesis, 87, 146 and GDP growth, 38 and media, 7–8 mobile banking, 199–200 and money creation, 87, 182–5 and regeneration, 227, 229, 234–7 in service to life, 159, 234–7 stakeholder finance, 190 and sustainability, 216, 235–6, 239 financial crisis (2008), 1–4, 5, 40, 63, 86, 141, 144, 278, 290 and efficient market hypothesis, 87 and equilibrium theory, 134, 145 and financial-instability hypothesis, 87 and inequality, 90, 170, 172, 175 and money creation, 182 and worker’s rights, 278 financial flows, 89 Financial Times, 183, 266, 289 financial-instability hypothesis, 87, 146 First Green Bank, 236 First World War (1914–18), 166, 170 Fisher, Irving, 183 fluid values, 102, 106–9 food, 3, 43, 45, 50, 54, 58, 59, 89, 198 food banks, 165 food price crisis (2007–8), 89, 90, 180 Ford, 277–8 foreign direct investment, 89 forest conservation, 121–2 fossil fuels, 59, 73, 75, 92, 212, 260, 263 Foundations of Economic Analysis (Samuelson), 17–18 Foxconn, 193 framing, 22–3 France, 43, 165, 196, 238, 254, 256, 281, 290 Frank, Robert, 100 free market, 33, 37, 67, 68, 70, 81–2, 86, 90 free open-source hardware (FOSH), 196–7 free open-source software (FOSS), 196 free trade, 70, 90 Freeman, Ralph, 18–19 freshwater cycle, 48–9 Freud, Sigmund, 107, 281 Friedman, Benjamin, 258 Friedman, Milton, 34, 62, 66–9, 84–5, 88, 99, 183, 232 Friends of the Earth, 54 Full World, 75 Fuller, Buckminster, 4 Fullerton, John, 234–6, 273 G G20, 31, 56, 276, 279–80 G77, 55 Gal, Orit, 141 Gandhi, Mohandas, 42, 293 Gangnam Style, 145 Gardens of Democracy, The (Liu & Hanauer), 158 gender equality, 45, 51–2, 57, 78–9, 85, 88, 118–19, 124, 171, 198 generosity, 218–19, 223–9 geometry, 13, 15 George, Henry, 149, 179 Georgescu-Roegen, Nicholas, 252 geothermal energy, 221 Gerhardt, Sue, 283 Germany, 2, 41, 100, 118, 165, 189, 211, 213, 254, 256, 260, 274 Gessel, Silvio, 274 Ghent, Belgium, 236 Gift Relationship, The (Titmuss), 118–19 Gigerenzer, Gerd, 112–14 Gintis, Herb, 104 GiveDirectly, 200 Glass–Steagall Act (1933), 87 Glennon, Roger, 214 Global Alliance for Tax Justice, 277 global material footprints, 210–11 Global Village Construction Set, 196 globalisation, 89 Goerner, Sally, 175–6 Goffmann, Erving, 22 Going for Growth, 255 golden rule, 91 Goldman Sachs, 149, 170 Gómez-Baggethun, Erik, 122 Goodall, Chris, 211 Goodwin, Neva, 79 Goody, Jade, 124 Google, 192 Gore, Albert ‘Al’, 172 Gorgons, 244, 256, 257, 266 graffiti, 15, 25, 287 Great Acceleration, 46, 253–4 Great Depression (1929–39), 37, 70, 170, 173, 183, 275, 277, 278 Great Moderation, 146 Greece, Ancient, 4, 13, 32, 48, 54, 56–7, 160, 244 green growth, 41, 210, 243–85 Greenham, Tony, 185 greenhouse gas emissions, 31, 46, 50, 75–6, 141, 152–4 and decoupling, 260, 266 and Environmental Kuznets Curve, 208, 210 and forests, 50, 52 and G20, 31 and inequality, 58 reduction of, 184, 201–2, 213, 216–18, 223–7, 239–41, 256, 259–60, 266, 298 stock–flow dynamics, 152–4 and taxation, 201, 213 Greenland, 141, 154 Greenpeace, 9 Greenspan, Alan, 87 Greenwich, London, 290 Grenoble, France, 281 Griffiths, Brian, 170 gross domestic product (GDP), 25, 31–2, 35–43, 57, 60, 84, 164 as cuckoo, 32, 35, 36, 38, 40, 54, 60, 159, 244, 256, 271 and Environmental Kuznets Curve, 207–11 and exponential growth, 39, 53, 246–85 and growth agnosticism, 29–30, 240, 243–85 and inequality, 173 and Kuznets Curve, 167, 173, 188–9 gross national product (GNP), 36–40 Gross World Product, 248 Grossman, Gene, 207–8, 210 ‘grow now, clean up later’, 207 Guatemala, 196 H Haifa, Israel, 120 Haldane, Andrew, 146 Han Dynasty, 154 Hanauer, Nick, 158 Hansen, Pelle, 124 Happy Planet Index, 280 Hardin, Garrett, 69, 83, 181 Harvard University, 2, 271, 290 von Hayek, Friedrich, 7–8, 62, 66, 67, 143, 156, 158 healthcare, 43, 50, 57, 85, 123, 125, 170, 176, 200, 269, 279 Heilbroner, Robert, 53 Henry VIII, King of England and Ireland, 180 Hepburn, Cameron, 261 Herbert Simon, 111 heuristics, 113–14, 118, 123 high-income countries growth, 30, 244–5, 254–72, 282 inequality, 165, 168, 169, 171 labour, 177, 188–9, 278 overseas development assistance (ODA), 198–9 resource intensive lifestyles, 46, 210–11 trade, 90 Hippocrates, 160 History of Economic Analysis (Schumpeter), 21 HIV/AIDS, 123 Holocene epoch, 46–8, 75, 115, 253 Homo economicus, 94–103, 109, 127–8 Homo sapiens, 38, 104, 130 Hong Kong, 180 household, 78 housing, 45, 59, 176, 182–3, 269 Howe, Geoffrey, 67 Hudson, Michael, 183 Human Development Index, 9, 279 human nature, 28 human rights, 10, 25, 45, 49, 50, 95, 214, 233 humanistic economics, 42 hydropower, 118, 260, 263 I Illinois, United States, 179–80 Imago Mundi, 13 immigration, 82, 199, 236, 266 In Defense of Economic Growth (Beckerman), 258 Inclusive Wealth Index, 280 income, 51, 79–80, 82, 88, 176–8, 188–91, 194, 199–201 India, 2, 9, 10, 42, 124, 164, 178, 196, 206–7, 242, 290 Indonesia, 90, 105–6, 164, 168, 200 Indus Valley civilisation, 48 inequality, 1, 5, 25, 41, 63, 81, 88, 91, 148–52, 209 and consumerism, 111 and democracy, 171 and digital revolution, 191–5 and distribution, 163–205 and environmental degradation, 172 and GDP growth, 173 and greenhouse gas emissions, 58 and intellectual property, 195–8 and Kuznets Curve, 29, 166–70, 173–4 and labour ownership, 188–91 and land ownership, 178–82 and money creation, 182–8 and social welfare, 171 Success to the Successful, 148, 149, 151, 166 inflation, 36, 248, 256, 275 insect pollination services, 7 Institute of Economic Affairs, 67 institutional economics, 11 intellectual property rights, 195–8, 204 interest, 36, 177, 182, 184, 275–6 Intergovernmental Panel on Climate Change, 25 International Monetary Fund (IMF), 170, 172, 173, 183, 255, 258, 271 Internet, 83–4, 89, 105, 192, 202, 264 Ireland, 277 Iroquois Onondaga Nation, 116 Israel, 100, 103, 120 Italy, 165, 196, 254 J Jackson, Tim, 58 Jakubowski, Marcin, 196 Jalisco, Mexico, 217 Japan, 168, 180, 211, 222, 254, 256, 263, 275 Jevons, William Stanley, 16, 97–8, 131, 132, 137, 142 John Lewis Partnership, 190 Johnson, Lyndon Baines, 37 Johnson, Mark, 38 Johnson, Todd, 191 JPMorgan Chase, 149, 234 K Kahneman, Daniel, 111 Kamkwamba, William, 202, 204 Kasser, Tim, 125–6 Keen, Steve, 146, 147 Kelly, Marjorie, 190–91, 233 Kennedy, John Fitzgerald, 37, 250 Kennedy, Paul, 279 Kenya, 118, 123, 180, 185–6, 199–200, 226, 292 Keynes, John Maynard, 7–8, 22, 66, 69, 134, 184, 251, 277–8, 284, 288 Kick It Over movement, 3, 289 Kingston, London, 290 Knight, Frank, 66, 99 knowledge commons, 202–4, 229, 292 Kokstad, South Africa, 56 Kondratieff waves, 246 Korzybski, Alfred, 22 Krueger, Alan, 207–8, 210 Kuhn, Thomas, 22 Kumhof, Michael, 172 Kuwait, 255 Kuznets, Simon, 29, 36, 39–40, 166–70, 173, 174, 175, 204, 207 KwaZulu Natal, South Africa, 56 L labour ownership, 188–91 Lake Erhai, Yunnan, 56 Lakoff, George, 23, 38, 276 Lamelara, Indonesia, 105–6 land conversion, 49, 52, 299 land ownership, 178–82 land-value tax, 73, 149, 180 Landesa, 178 Landlord’s Game, The, 149 law of demand, 16 laws of motion, 13, 16–17, 34, 129, 131 Lehman Brothers, 141 Leopold, Aldo, 115 Lesotho, 118, 199 leverage points, 159 Lewis, Fay, 178 Lewis, Justin, 102 Lewis, William Arthur, 114, 167 Lietaer, Bernard, 175, 236 Limits to Growth, 40, 154, 258 Linux, 231 Liu, Eric, 158 living metrics, 240–42 living purpose, 233–4 Lomé, Togo, 231 London School of Economics (LSE), 2, 34, 65, 290 London Underground, 12 loss aversion, 112 low-income countries, 90, 164–5, 168, 173, 180, 199, 201, 209, 226, 254, 259 Lucas, Robert, 171 Lula da Silva, Luiz Inácio, 124 Luxembourg, 277 Lyle, John Tillman, 214 Lyons, Oren, 116 M M–PESA, 199–200 MacDonald, Tim, 273 Machiguenga, 105–6 MacKenzie, Donald, 101 macroeconomics, 36, 62–6, 76, 80, 134–5, 145, 147, 150, 244, 280 Magie, Elizabeth, 149, 153 Malala effect, 124 malaria, 5 Malawi, 118, 202, 204 Malaysia, 168 Mali, Taylor, 243 Malthus, Thomas, 252 Mamsera Rural Cooperative, 190 Manhattan, New York, 9, 41 Mani, Muthukumara, 206 Manitoba, 282 Mankiw, Gregory, 2, 34 Mannheim, Karl, 22 Maoris, 54 market, 81–2 and business, 88 circular flow, 64 and commons, 83, 93, 181, 200–201 efficiency of, 28, 62, 68, 87, 148, 181 and equilibrium theory, 131–5, 137, 143–7, 155, 156 free market, 33, 37, 67–70, 90, 208 and households, 63, 69, 78, 79 and maxi-max rule, 161 and pricing, 117–23, 131, 160 and rational economic man, 96, 100–101, 103, 104 and reciprocity, 105, 106 reflexivity of, 144–7 and society, 69–70 and state, 84–6, 200, 281 Marshall, Alfred, 17, 98, 133, 165, 253, 282 Marx, Karl, 88, 142, 165, 272 Massachusetts Institute of Technology (MIT), 17–20, 152–5 massive open online courses (MOOCs), 290 Matthew Effect, 151 Max-Neef, Manfred, 42 maxi-max rule, 161 maximum wage, 177 Maya civilisation, 48, 154 Mazzucato, Mariana, 85, 195, 238 McAfee, Andrew, 194, 258 McDonough, William, 217 Meadows, Donella, 40, 141, 159, 271, 292 Medusa, 244, 257, 266 Merkel, Angela, 41 Messerli, Elspeth, 187 Metaphors We Live By (Lakoff & Johnson), 38 Mexico, 121–2, 217 Michaels, Flora S., 6 micro-businesses, 9, 173, 178 microeconomics, 132–4 microgrids, 187–8 Micronesia, 153 Microsoft, 231 middle class, 6, 46, 58 middle-income countries, 90, 164, 168, 173, 180, 226, 254 migration, 82, 89–90, 166, 195, 199, 236, 266, 286 Milanovic, Branko, 171 Mill, John Stuart, 33–4, 73, 97, 250, 251, 283, 284, 288 Millo, Yuval, 101 minimum wage, 82, 88, 176 Minsky, Hyman, 87, 146 Mises, Ludwig von, 66 mission zero, 217 mobile banking, 199–200 mobile phones, 222 Model T revolution, 277–8 Moldova, 199 Mombasa, Kenya, 185–6 Mona Lisa (da Vinci), 94 money creation, 87, 164, 177, 182–8, 205 MONIAC (Monetary National Income Analogue Computer), 64–5, 75, 142, 262 Monoculture (Michaels), 6 Monopoly, 149 Mont Pelerin Society, 67, 93 Moral Consequences of Economic Growth, The (Friedman), 258 moral vacancy, 41 Morgan, Mary, 99 Morogoro, Tanzania, 121 Moyo, Dambisa, 258 Muirhead, Sam, 230, 231 MultiCapital Scorecard, 241 Murphy, David, 264 Murphy, Richard, 185 musical tastes, 110 Myriad Genetics, 196 N national basic income, 177 Native Americans, 115, 116, 282 natural capital, 7, 116, 269 Natural Economic Order, The (Gessel), 274 Nedbank, 216 negative externalities, 213 negative interest rates, 275–6 neoclassical economics, 134, 135 neoliberalism, 7, 62–3, 67–70, 81, 83, 84, 88, 93, 143, 170, 176 Nepal, 181, 199 Nestlé, 217 Netherlands, 211, 235, 224, 226, 238, 277 networks, 110–11, 117, 118, 123, 124–6, 174–6 neuroscience, 12–13 New Deal, 37 New Economics Foundation, 278, 283 New Year’s Day, 124 New York, United States, 9, 41, 55 Newlight Technologies, 224, 226, 293 Newton, Isaac, 13, 15–17, 32–3, 95, 97, 129, 131, 135–7, 142, 145, 162 Nicaragua, 196 Nigeria, 164 nitrogen, 49, 52, 212–13, 216, 218, 221, 226, 298 ‘no pain, no gain’, 163, 167, 173, 204, 209 Nobel Prize, 6–7, 43, 83, 101, 167 Norway, 281 nudging, 112, 113, 114, 123–6 O Obama, Barack, 41, 92 Oberlin, Ohio, 239, 240–41 Occupy movement, 40, 91 ocean acidification, 45, 46, 52, 155, 242, 298 Ohio, United States, 190, 239 Okun, Arthur, 37 onwards and upwards, 53 Open Building Institute, 196 Open Source Circular Economy (OSCE), 229–32 open systems, 74 open-source design, 158, 196–8, 265 open-source licensing, 204 Organisation for Economic Co-operation and Development (OECD), 38, 210, 255–6, 258 Origin of Species, The (Darwin), 14 Ormerod, Paul, 110, 111 Orr, David, 239 Ostrom, Elinor, 83, 84, 158, 160, 181–2 Ostry, Jonathan, 173 OSVehicle, 231 overseas development assistance (ODA), 198–200 ownership of wealth, 177–82 Oxfam, 9, 44 Oxford University, 1, 36 ozone layer, 9, 50, 115 P Pachamama, 54, 55 Pakistan, 124 Pareto, Vilfredo, 165–6, 175 Paris, France, 290 Park 20|20, Netherlands, 224, 226 Parker Brothers, 149 Patagonia, 56 patents, 195–6, 197, 204 patient capital, 235 Paypal, 192 Pearce, Joshua, 197, 203–4 peer-to-peer networks, 187, 192, 198, 203, 292 People’s QE, 184–5 Perseus, 244 Persia, 13 Peru, 2, 105–6 Phillips, Adam, 283 Phillips, William ‘Bill’, 64–6, 75, 142, 262 phosphorus, 49, 52, 212–13, 218, 298 Physiocrats, 73 Pickett, Kate, 171 pictures, 12–25 Piketty, Thomas, 169 Playfair, William, 16 Poincaré, Henri, 109, 127–8 Polanyi, Karl, 82, 272 political economy, 33–4, 42 political funding, 91–2, 171–2 political voice, 43, 45, 51–2, 77, 117 pollution, 29, 45, 52, 85, 143, 155, 206–17, 226, 238, 242, 254, 298 population, 5, 46, 57, 155, 199, 250, 252, 254 Portugal, 211 post-growth society, 250 poverty, 5, 9, 37, 41, 50, 88, 118, 148, 151 emotional, 283 and inequality, 164–5, 168–9, 178 and overseas development assistance (ODA), 198–200 and taxation, 277 power, 91–92 pre-analytic vision, 21–2 prescription medicines, 123 price-takers, 132 prices, 81, 118–23, 131, 160 Principles of Economics (Mankiw), 34 Principles of Economics (Marshall), 17, 98 Principles of Political Economy (Mill), 288 ProComposto, 226 Propaganda (Bernays), 107 public relations, 107, 281 public spending v. investment, 276 public–private patents, 195 Putnam, Robert, 76–7 Q quantitative easing (QE), 184–5 Quebec, 281 Quesnay, François, 16, 73 R Rabot, Ghent, 236 Rancière, Romain, 172 rating and review systems, 105 rational economic man, 94–103, 109, 111, 112, 126, 282 Reagan, Ronald, 67 reciprocity, 103–6, 117, 118, 123 reflexivity of markets, 144 reinforcing feedback loops, 138–41, 148, 250, 271 relative decoupling, 259 renewable energy biomass energy, 118, 221 and circular economy, 221, 224, 226, 235, 238–9, 274 and commons, 83, 85, 185, 187–8, 192, 203, 264 geothermal energy, 221 and green growth, 257, 260, 263, 264, 267 hydropower, 118, 260, 263 pricing, 118 solar energy, see solar energy wave energy, 221 wind energy, 75, 118, 196, 202–3, 221, 233, 239, 260, 263 rentier sector, 180, 183, 184 reregulation, 82, 87, 269 resource flows, 175 resource-intensive lifestyles, 46 Rethinking Economics, 289 Reynebeau, Guy, 237 Ricardo, David, 67, 68, 73, 89, 250 Richardson, Katherine, 53 Rifkin, Jeremy, 83, 264–5 Rise and Fall of the Great Powers, The (Kennedy), 279 risk, 112, 113–14 Robbins, Lionel, 34 Robinson, James, 86 Robinson, Joan, 142 robots, 191–5, 237, 258, 278 Rockefeller Foundation, 135 Rockford, Illinois, 179–80 Rockström, Johan, 48, 55 Roddick, Anita, 232–4 Rogoff, Kenneth, 271, 280 Roman Catholic Church, 15, 19 Rombo, Tanzania, 190 Rome, Ancient, 13, 48, 154 Romney, Mitt, 92 Roosevelt, Franklin Delano, 37 rooted membership, 190 Rostow, Walt, 248–50, 254, 257, 267–70, 284 Ruddick, Will, 185 rule of thumb, 113–14 Ruskin, John, 42, 223 Russia, 200 rust belt, 90, 239 S S curve, 251–6 Sainsbury’s, 56 Samuelson, Paul, 17–21, 24–5, 38, 62–7, 70, 74, 84, 91, 92, 93, 262, 290–91 Sandel, Michael, 41, 120–21 Sanergy, 226 sanitation, 5, 51, 59 Santa Fe, California, 213 Santinagar, West Bengal, 178 São Paolo, Brazil, 281 Sarkozy, Nicolas, 43 Saumweder, Philipp, 226 Scharmer, Otto, 115 Scholes, Myron, 100–101 Schumacher, Ernst Friedrich, 42, 142 Schumpeter, Joseph, 21 Schwartz, Shalom, 107–9 Schwarzenegger, Arnold, 163, 167, 204 ‘Science and Complexity’ (Weaver), 136 Scotland, 57 Seaman, David, 187 Seattle, Washington, 217 second machine age, 258 Second World War (1939–45), 18, 37, 70, 170 secular stagnation, 256 self-interest, 28, 68, 96–7, 99–100, 102–3 Selfish Society, The (Gerhardt), 283 Sen, Amartya, 43 Shakespeare, William, 61–3, 67, 93 shale gas, 264, 269 Shang Dynasty, 48 shareholders, 82, 88, 189, 191, 227, 234, 273, 292 sharing economy, 264 Sheraton Hotel, Boston, 3 Siegen, Germany, 290 Silicon Valley, 231 Simon, Julian, 70 Sinclair, Upton, 255 Sismondi, Jean, 42 slavery, 33, 77, 161 Slovenia, 177 Small Is Beautiful (Schumacher), 42 smart phones, 85 Smith, Adam, 33, 57, 67, 68, 73, 78–9, 81, 96–7, 103–4, 128, 133, 160, 181, 250 social capital, 76–7, 122, 125, 172 social contract, 120, 125 social foundation, 10, 11, 44, 45, 49, 51, 58, 77, 174, 200, 254, 295–6 social media, 83, 281 Social Progress Index, 280 social pyramid, 166 society, 76–7 solar energy, 59, 75, 111, 118, 187–8, 190 circular economy, 221, 222, 223, 224, 226–7, 239 commons, 203 zero-energy buildings, 217 zero-marginal-cost revolution, 84 Solow, Robert, 135, 150, 262–3 Soros, George, 144 South Africa, 56, 177, 214, 216 South Korea, 90, 168 South Sea Bubble (1720), 145 Soviet Union (1922–91), 37, 67, 161, 279 Spain, 211, 238, 256 Spirit Level, The (Wilkinson & Pickett), 171 Sraffa, Piero, 148 St Gallen, Switzerland, 186 Stages of Economic Growth, The (Rostow), 248–50, 254 stakeholder finance, 190 Standish, Russell, 147 state, 28, 33, 69–70, 78, 82, 160, 176, 180, 182–4, 188 and commons, 85, 93, 197, 237 and market, 84–6, 200, 281 partner state, 197, 237–9 and robots, 195 stationary state, 250 Steffen, Will, 46, 48 Sterman, John, 66, 143, 152–4 Steuart, James, 33 Stiglitz, Joseph, 43, 111, 196 stocks and flows, 138–41, 143, 144, 152 sub-prime mortgages, 141 Success to the Successful, 148, 149, 151, 166 Sugarscape, 150–51 Summers, Larry, 256 Sumner, Andy, 165 Sundrop Farms, 224–6 Sunstein, Cass, 112 supply and demand, 28, 132–6, 143, 253 supply chains, 10 Sweden, 6, 255, 275, 281 swishing, 264 Switzerland, 42, 66, 80, 131, 186–7, 275 T Tableau économique (Quesnay), 16 tabula rasa, 20, 25, 63, 291 takarangi, 54 Tanzania, 121, 190, 202 tar sands, 264, 269 taxation, 78, 111, 165, 170, 176, 177, 237–8, 276–9 annual wealth tax, 200 environment, 213–14, 215 global carbon tax, 201 global financial transactions tax, 201, 235 land-value tax, 73, 149, 180 non-renewable resources, 193, 237–8, 278–9 People’s QE, 185 tax relief v. tax justice, 23, 276–7 TED (Technology, Entertainment, Design), 202, 258 Tempest, The (Shakespeare), 61, 63, 93 Texas, United States, 120 Thailand, 90, 200 Thaler, Richard, 112 Thatcher, Margaret, 67, 69, 76 Theory of Moral Sentiments (Smith), 96 Thompson, Edward Palmer, 180 3D printing, 83–4, 192, 198, 231, 264 thriving-in-balance, 54–7, 62 tiered pricing, 213–14 Tigray, Ethiopia, 226 time banking, 186 Titmuss, Richard, 118–19 Toffler, Alvin, 12, 80 Togo, 231, 292 Torekes, 236–7 Torras, Mariano, 209 Torvalds, Linus, 231 trade, 62, 68–9, 70, 89–90 trade unions, 82, 176, 189 trademarks, 195, 204 Transatlantic Trade and Investment Partnership (TTIP), 92 transport, 59 trickle-down economics, 111, 170 Triodos, 235 Turkey, 200 Tversky, Amos, 111 Twain, Mark, 178–9 U Uganda, 118, 125 Ulanowicz, Robert, 175 Ultimatum Game, 105, 117 unemployment, 36, 37, 276, 277–9 United Kingdom Big Bang (1986), 87 blood donation, 118 carbon dioxide emissions, 260 free trade, 90 global material footprints, 211 money creation, 182 MONIAC (Monetary National Income Analogue Computer), 64–5, 75, 142, 262 New Economics Foundation, 278, 283 poverty, 165, 166 prescription medicines, 123 wages, 188 United Nations, 55, 198, 204, 255, 258, 279 G77 bloc, 55 Human Development Index, 9, 279 Sustainable Development Goals, 24, 45 United States American Economic Association meeting (2015), 3 blood donation, 118 carbon dioxide emissions, 260 Congress, 36 Council of Economic Advisers, 6, 37 Earning by Learning, 120 Econ 101 course, 8, 77 Exxon Valdez oil spill (1989), 9 Federal Reserve, 87, 145, 146, 271, 282 free trade, 90 Glass–Steagall Act (1933), 87 greenhouse gas emissions, 153 global material footprint, 211 gross national product (GNP), 36–40 inequality, 170, 171 land-value tax, 73, 149, 180 political funding, 91–2, 171 poverty, 165, 166 productivity and employment, 193 rust belt, 90, 239 Transatlantic Trade and Investment Partnership (TTIP), 92 wages, 188 universal basic income, 200 University of Berkeley, 116 University of Denver, 160 urbanisation, 58–9 utility, 35, 98, 133 V values, 6, 23, 34, 35, 42, 117, 118, 121, 123–6 altruism, 100, 104 anthropocentric, 115 extrinsic, 115 fluid, 28, 102, 106–9 and networks, 110–11, 117, 118, 123, 124–6 and nudging, 112, 113, 114, 123–6 and pricing, 81, 120–23 Veblen, Thorstein, 82, 109, 111, 142 Venice, 195 verbal framing, 23 Verhulst, Pierre, 252 Victor, Peter, 270 Viner, Jacob, 34 virtuous cycles, 138, 148 visual framing, 23 Vitruvian Man, 13–14 Volkswagen, 215–16 W Wacharia, John, 186 Wall Street, 149, 234, 273 Wallich, Henry, 282 Walras, Léon, 131, 132, 133–4, 137 Ward, Barbara, 53 Warr, Benjamin, 263 water, 5, 9, 45, 46, 51, 54, 59, 79, 213–14 wave energy, 221 Ways of Seeing (Berger), 12, 281 Wealth of Nations, The (Smith), 74, 78, 96, 104 wealth ownership, 177–82 Weaver, Warren, 135–6 weightless economy, 261–2 WEIRD (Western, educated, industrialised, rich, democratic), 103–5, 110, 112, 115, 117, 282 West Bengal, India, 124, 178 West, Darrell, 171–2 wetlands, 7 whale hunting, 106 Wiedmann, Tommy, 210 Wikipedia, 82, 223 Wilkinson, Richard, 171 win–win trade, 62, 68, 89 wind energy, 75, 118, 196, 202–3, 221, 233, 239, 260, 263 Wizard of Oz, The, 241 Woelab, 231, 293 Wolf, Martin, 183, 266 women’s rights, 33, 57, 107, 160, 201 and core economy, 69, 79–81 education, 57, 124, 178, 198 and land ownership, 178 see also gender equality workers’ rights, 88, 91, 269 World 3 model, 154–5 World Bank, 6, 41, 119, 164, 168, 171, 206, 255, 258 World No Tobacco Day, 124 World Trade Organization, 6, 89 worldview, 22, 54, 115 X xenophobia, 266, 277, 286 Xenophon, 4, 32, 56–7, 160 Y Yandle, Bruce, 208 Yang, Yuan, 1–3, 289–90 yin yang, 54 Yousafzai, Malala, 124 YouTube, 192 Yunnan, China, 56 Z Zambia, 10 Zanzibar, 9 Zara, 276 Zeitvorsoge, 186–7 zero environmental impact, 217–18, 238, 241 zero-hour contracts, 88 zero-humans-required production, 192 zero-interest loans, 183 zero-marginal-cost revolution, 84, 191, 264 zero-waste manufacturing, 227 Zinn, Howard, 77 PICTURE ACKNOWLEDGEMENTS Illustrations are reproduced by kind permission of: archive.org

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., 6 micro-businesses, 9, 173, 178 microeconomics, 132–4 microgrids, 187–8 Micronesia, 153 Microsoft, 231 middle class, 6, 46, 58 middle-income countries, 90, 164, 168, 173, 180, 226, 254 migration, 82, 89–90, 166, 195, 199, 236, 266, 286 Milanovic, Branko, 171 Mill, John Stuart, 33–4, 73, 97, 250, 251, 283, 284, 288 Millo, Yuval, 101 minimum wage, 82, 88, 176 Minsky, Hyman, 87, 146 Mises, Ludwig von, 66 mission zero, 217 mobile banking, 199–200 mobile phones, 222 Model T revolution, 277–8 Moldova, 199 Mombasa, Kenya, 185–6 Mona Lisa (da Vinci), 94 money creation, 87, 164, 177, 182–8, 205 MONIAC (Monetary National Income Analogue Computer), 64–5, 75, 142, 262 Monoculture (Michaels), 6 Monopoly, 149 Mont Pelerin Society, 67, 93 Moral Consequences of Economic Growth, The (Friedman), 258 moral vacancy, 41 Morgan, Mary, 99 Morogoro, Tanzania, 121 Moyo, Dambisa, 258 Muirhead, Sam, 230, 231 MultiCapital Scorecard, 241 Murphy, David, 264 Murphy, Richard, 185 musical tastes, 110 Myriad Genetics, 196 N national basic income, 177 Native Americans, 115, 116, 282 natural capital, 7, 116, 269 Natural Economic Order, The (Gessel), 274 Nedbank, 216 negative externalities, 213 negative interest rates, 275–6 neoclassical economics, 134, 135 neoliberalism, 7, 62–3, 67–70, 81, 83, 84, 88, 93, 143, 170, 176 Nepal, 181, 199 Nestlé, 217 Netherlands, 211, 235, 224, 226, 238, 277 networks, 110–11, 117, 118, 123, 124–6, 174–6 neuroscience, 12–13 New Deal, 37 New Economics Foundation, 278, 283 New Year’s Day, 124 New York, United States, 9, 41, 55 Newlight Technologies, 224, 226, 293 Newton, Isaac, 13, 15–17, 32–3, 95, 97, 129, 131, 135–7, 142, 145, 162 Nicaragua, 196 Nigeria, 164 nitrogen, 49, 52, 212–13, 216, 218, 221, 226, 298 ‘no pain, no gain’, 163, 167, 173, 204, 209 Nobel Prize, 6–7, 43, 83, 101, 167 Norway, 281 nudging, 112, 113, 114, 123–6 O Obama, Barack, 41, 92 Oberlin, Ohio, 239, 240–41 Occupy movement, 40, 91 ocean acidification, 45, 46, 52, 155, 242, 298 Ohio, United States, 190, 239 Okun, Arthur, 37 onwards and upwards, 53 Open Building Institute, 196 Open Source Circular Economy (OSCE), 229–32 open systems, 74 open-source design, 158, 196–8, 265 open-source licensing, 204 Organisation for Economic Co-operation and Development (OECD), 38, 210, 255–6, 258 Origin of Species, The (Darwin), 14 Ormerod, Paul, 110, 111 Orr, David, 239 Ostrom, Elinor, 83, 84, 158, 160, 181–2 Ostry, Jonathan, 173 OSVehicle, 231 overseas development assistance (ODA), 198–200 ownership of wealth, 177–82 Oxfam, 9, 44 Oxford University, 1, 36 ozone layer, 9, 50, 115 P Pachamama, 54, 55 Pakistan, 124 Pareto, Vilfredo, 165–6, 175 Paris, France, 290 Park 20|20, Netherlands, 224, 226 Parker Brothers, 149 Patagonia, 56 patents, 195–6, 197, 204 patient capital, 235 Paypal, 192 Pearce, Joshua, 197, 203–4 peer-to-peer networks, 187, 192, 198, 203, 292 People’s QE, 184–5 Perseus, 244 Persia, 13 Peru, 2, 105–6 Phillips, Adam, 283 Phillips, William ‘Bill’, 64–6, 75, 142, 262 phosphorus, 49, 52, 212–13, 218, 298 Physiocrats, 73 Pickett, Kate, 171 pictures, 12–25 Piketty, Thomas, 169 Playfair, William, 16 Poincaré, Henri, 109, 127–8 Polanyi, Karl, 82, 272 political economy, 33–4, 42 political funding, 91–2, 171–2 political voice, 43, 45, 51–2, 77, 117 pollution, 29, 45, 52, 85, 143, 155, 206–17, 226, 238, 242, 254, 298 population, 5, 46, 57, 155, 199, 250, 252, 254 Portugal, 211 post-growth society, 250 poverty, 5, 9, 37, 41, 50, 88, 118, 148, 151 emotional, 283 and inequality, 164–5, 168–9, 178 and overseas development assistance (ODA), 198–200 and taxation, 277 power, 91–92 pre-analytic vision, 21–2 prescription medicines, 123 price-takers, 132 prices, 81, 118–23, 131, 160 Principles of Economics (Mankiw), 34 Principles of Economics (Marshall), 17, 98 Principles of Political Economy (Mill), 288 ProComposto, 226 Propaganda (Bernays), 107 public relations, 107, 281 public spending v. investment, 276 public–private patents, 195 Putnam, Robert, 76–7 Q quantitative easing (QE), 184–5 Quebec, 281 Quesnay, François, 16, 73 R Rabot, Ghent, 236 Rancière, Romain, 172 rating and review systems, 105 rational economic man, 94–103, 109, 111, 112, 126, 282 Reagan, Ronald, 67 reciprocity, 103–6, 117, 118, 123 reflexivity of markets, 144 reinforcing feedback loops, 138–41, 148, 250, 271 relative decoupling, 259 renewable energy biomass energy, 118, 221 and circular economy, 221, 224, 226, 235, 238–9, 274 and commons, 83, 85, 185, 187–8, 192, 203, 264 geothermal energy, 221 and green growth, 257, 260, 263, 264, 267 hydropower, 118, 260, 263 pricing, 118 solar energy, see solar energy wave energy, 221 wind energy, 75, 118, 196, 202–3, 221, 233, 239, 260, 263 rentier sector, 180, 183, 184 reregulation, 82, 87, 269 resource flows, 175 resource-intensive lifestyles, 46 Rethinking Economics, 289 Reynebeau, Guy, 237 Ricardo, David, 67, 68, 73, 89, 250 Richardson, Katherine, 53 Rifkin, Jeremy, 83, 264–5 Rise and Fall of the Great Powers, The (Kennedy), 279 risk, 112, 113–14 Robbins, Lionel, 34 Robinson, James, 86 Robinson, Joan, 142 robots, 191–5, 237, 258, 278 Rockefeller Foundation, 135 Rockford, Illinois, 179–80 Rockström, Johan, 48, 55 Roddick, Anita, 232–4 Rogoff, Kenneth, 271, 280 Roman Catholic Church, 15, 19 Rombo, Tanzania, 190 Rome, Ancient, 13, 48, 154 Romney, Mitt, 92 Roosevelt, Franklin Delano, 37 rooted membership, 190 Rostow, Walt, 248–50, 254, 257, 267–70, 284 Ruddick, Will, 185 rule of thumb, 113–14 Ruskin, John, 42, 223 Russia, 200 rust belt, 90, 239 S S curve, 251–6 Sainsbury’s, 56 Samuelson, Paul, 17–21, 24–5, 38, 62–7, 70, 74, 84, 91, 92, 93, 262, 290–91 Sandel, Michael, 41, 120–21 Sanergy, 226 sanitation, 5, 51, 59 Santa Fe, California, 213 Santinagar, West Bengal, 178 São Paolo, Brazil, 281 Sarkozy, Nicolas, 43 Saumweder, Philipp, 226 Scharmer, Otto, 115 Scholes, Myron, 100–101 Schumacher, Ernst Friedrich, 42, 142 Schumpeter, Joseph, 21 Schwartz, Shalom, 107–9 Schwarzenegger, Arnold, 163, 167, 204 ‘Science and Complexity’ (Weaver), 136 Scotland, 57 Seaman, David, 187 Seattle, Washington, 217 second machine age, 258 Second World War (1939–45), 18, 37, 70, 170 secular stagnation, 256 self-interest, 28, 68, 96–7, 99–100, 102–3 Selfish Society, The (Gerhardt), 283 Sen, Amartya, 43 Shakespeare, William, 61–3, 67, 93 shale gas, 264, 269 Shang Dynasty, 48 shareholders, 82, 88, 189, 191, 227, 234, 273, 292 sharing economy, 264 Sheraton Hotel, Boston, 3 Siegen, Germany, 290 Silicon Valley, 231 Simon, Julian, 70 Sinclair, Upton, 255 Sismondi, Jean, 42 slavery, 33, 77, 161 Slovenia, 177 Small Is Beautiful (Schumacher), 42 smart phones, 85 Smith, Adam, 33, 57, 67, 68, 73, 78–9, 81, 96–7, 103–4, 128, 133, 160, 181, 250 social capital, 76–7, 122, 125, 172 social contract, 120, 125 social foundation, 10, 11, 44, 45, 49, 51, 58, 77, 174, 200, 254, 295–6 social media, 83, 281 Social Progress Index, 280 social pyramid, 166 society, 76–7 solar energy, 59, 75, 111, 118, 187–8, 190 circular economy, 221, 222, 223, 224, 226–7, 239 commons, 203 zero-energy buildings, 217 zero-marginal-cost revolution, 84 Solow, Robert, 135, 150, 262–3 Soros, George, 144 South Africa, 56, 177, 214, 216 South Korea, 90, 168 South Sea Bubble (1720), 145 Soviet Union (1922–91), 37, 67, 161, 279 Spain, 211, 238, 256 Spirit Level, The (Wilkinson & Pickett), 171 Sraffa, Piero, 148 St Gallen, Switzerland, 186 Stages of Economic Growth, The (Rostow), 248–50, 254 stakeholder finance, 190 Standish, Russell, 147 state, 28, 33, 69–70, 78, 82, 160, 176, 180, 182–4, 188 and commons, 85, 93, 197, 237 and market, 84–6, 200, 281 partner state, 197, 237–9 and robots, 195 stationary state, 250 Steffen, Will, 46, 48 Sterman, John, 66, 143, 152–4 Steuart, James, 33 Stiglitz, Joseph, 43, 111, 196 stocks and flows, 138–41, 143, 144, 152 sub-prime mortgages, 141 Success to the Successful, 148, 149, 151, 166 Sugarscape, 150–51 Summers, Larry, 256 Sumner, Andy, 165 Sundrop Farms, 224–6 Sunstein, Cass, 112 supply and demand, 28, 132–6, 143, 253 supply chains, 10 Sweden, 6, 255, 275, 281 swishing, 264 Switzerland, 42, 66, 80, 131, 186–7, 275 T Tableau économique (Quesnay), 16 tabula rasa, 20, 25, 63, 291 takarangi, 54 Tanzania, 121, 190, 202 tar sands, 264, 269 taxation, 78, 111, 165, 170, 176, 177, 237–8, 276–9 annual wealth tax, 200 environment, 213–14, 215 global carbon tax, 201 global financial transactions tax, 201, 235 land-value tax, 73, 149, 180 non-renewable resources, 193, 237–8, 278–9 People’s QE, 185 tax relief v. tax justice, 23, 276–7 TED (Technology, Entertainment, Design), 202, 258 Tempest, The (Shakespeare), 61, 63, 93 Texas, United States, 120 Thailand, 90, 200 Thaler, Richard, 112 Thatcher, Margaret, 67, 69, 76 Theory of Moral Sentiments (Smith), 96 Thompson, Edward Palmer, 180 3D printing, 83–4, 192, 198, 231, 264 thriving-in-balance, 54–7, 62 tiered pricing, 213–14 Tigray, Ethiopia, 226 time banking, 186 Titmuss, Richard, 118–19 Toffler, Alvin, 12, 80 Togo, 231, 292 Torekes, 236–7 Torras, Mariano, 209 Torvalds, Linus, 231 trade, 62, 68–9, 70, 89–90 trade unions, 82, 176, 189 trademarks, 195, 204 Transatlantic Trade and Investment Partnership (TTIP), 92 transport, 59 trickle-down economics, 111, 170 Triodos, 235 Turkey, 200 Tversky, Amos, 111 Twain, Mark, 178–9 U Uganda, 118, 125 Ulanowicz, Robert, 175 Ultimatum Game, 105, 117 unemployment, 36, 37, 276, 277–9 United Kingdom Big Bang (1986), 87 blood donation, 118 carbon dioxide emissions, 260 free trade, 90 global material footprints, 211 money creation, 182 MONIAC (Monetary National Income Analogue Computer), 64–5, 75, 142, 262 New Economics Foundation, 278, 283 poverty, 165, 166 prescription medicines, 123 wages, 188 United Nations, 55, 198, 204, 255, 258, 279 G77 bloc, 55 Human Development Index, 9, 279 Sustainable Development Goals, 24, 45 United States American Economic Association meeting (2015), 3 blood donation, 118 carbon dioxide emissions, 260 Congress, 36 Council of Economic Advisers, 6, 37 Earning by Learning, 120 Econ 101 course, 8, 77 Exxon Valdez oil spill (1989), 9 Federal Reserve, 87, 145, 146, 271, 282 free trade, 90 Glass–Steagall Act (1933), 87 greenhouse gas emissions, 153 global material footprint, 211 gross national product (GNP), 36–40 inequality, 170, 171 land-value tax, 73, 149, 180 political funding, 91–2, 171 poverty, 165, 166 productivity and employment, 193 rust belt, 90, 239 Transatlantic Trade and Investment Partnership (TTIP), 92 wages, 188 universal basic income, 200 University of Berkeley, 116 University of Denver, 160 urbanisation, 58–9 utility, 35, 98, 133 V values, 6, 23, 34, 35, 42, 117, 118, 121, 123–6 altruism, 100, 104 anthropocentric, 115 extrinsic, 115 fluid, 28, 102, 106–9 and networks, 110–11, 117, 118, 123, 124–6 and nudging, 112, 113, 114, 123–6 and pricing, 81, 120–23 Veblen, Thorstein, 82, 109, 111, 142 Venice, 195 verbal framing, 23 Verhulst, Pierre, 252 Victor, Peter, 270 Viner, Jacob, 34 virtuous cycles, 138, 148 visual framing, 23 Vitruvian Man, 13–14 Volkswagen, 215–16 W Wacharia, John, 186 Wall Street, 149, 234, 273 Wallich, Henry, 282 Walras, Léon, 131, 132, 133–4, 137 Ward, Barbara, 53 Warr, Benjamin, 263 water, 5, 9, 45, 46, 51, 54, 59, 79, 213–14 wave energy, 221 Ways of Seeing (Berger), 12, 281 Wealth of Nations, The (Smith), 74, 78, 96, 104 wealth ownership, 177–82 Weaver, Warren, 135–6 weightless economy, 261–2 WEIRD (Western, educated, industrialised, rich, democratic), 103–5, 110, 112, 115, 117, 282 West Bengal, India, 124, 178 West, Darrell, 171–2 wetlands, 7 whale hunting, 106 Wiedmann, Tommy, 210 Wikipedia, 82, 223 Wilkinson, Richard, 171 win–win trade, 62, 68, 89 wind energy, 75, 118, 196, 202–3, 221, 233, 239, 260, 263 Wizard of Oz, The, 241 Woelab, 231, 293 Wolf, Martin, 183, 266 women’s rights, 33, 57, 107, 160, 201 and core economy, 69, 79–81 education, 57, 124, 178, 198 and land ownership, 178 see also gender equality workers’ rights, 88, 91, 269 World 3 model, 154–5 World Bank, 6, 41, 119, 164, 168, 171, 206, 255, 258 World No Tobacco Day, 124 World Trade Organization, 6, 89 worldview, 22, 54, 115 X xenophobia, 266, 277, 286 Xenophon, 4, 32, 56–7, 160 Y Yandle, Bruce, 208 Yang, Yuan, 1–3, 289–90 yin yang, 54 Yousafzai, Malala, 124 YouTube, 192 Yunnan, China, 56 Z Zambia, 10 Zanzibar, 9 Zara, 276 Zeitvorsoge, 186–7 zero environmental impact, 217–18, 238, 241 zero-hour contracts, 88 zero-humans-required production, 192 zero-interest loans, 183 zero-marginal-cost revolution, 84, 191, 264 zero-waste manufacturing, 227 Zinn, Howard, 77 PICTURE ACKNOWLEDGEMENTS Illustrations are reproduced by kind permission of: archive.org

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

Continuing to run through Obama’s appointments, his transition team was headed by John Podesta, Clinton’s chief of staff. The leading figures in his initial economic team were Robert Rubin and Lawrence Summers, both enthusiasts for the deregulation that was a major factor in the current financial crisis. As treasury secretary, Rubin worked hard to abolish the Glass-Steagall Act, which had separated commercial banks from financial institutions that incur high risks. Economist Tim Canova comments that Rubin had “a personal interest in the demise of Glass-Steagall.” Soon after leaving his position as treasury secretary, he became “chair of Citigroup, a financial-services conglomerate that was facing the possibility of having to sell off its insurance underwriting subsidiary…the Clinton administration never brought charges against him for his obvious violations of the Ethics in Government Act.”24 Not surprisingly, Citigroup was a leading beneficiary of the Bush-Paulson bailout.

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See “American exceptionalism” Fall, Bernard, 122 Fayyad, Salam, 253–54 Federal Reserve Board, 113 Feldman, Noah, 52 Felix, David, 71, 83, 107, 219 Ferguson, Thomas, 32, 108, 208 financial crises, 93, 107, 108, 207, 228 deregulation and, 219 financial liberalization and, 105, 108 recent and current, 63, 73, 109, 110, 212–13, 217, 221–22, 226 Savings & Loan crisis, 211 See also housing bubble financial institutions, 92, 107–11, 113, 209, 228 Charles Schumer and, 221 China as model for, 114 Glass-Steagall Act and, 219 globalization and, 35, 73 Haiti and, 10 recent bailouts of, 105, 219–21 Timothy Geithner and, 221 financial instruments, 220, 221 financial liberalization, 72, 93, 97–98, 105, 107, 108, 111, 114 financial sector, 93, 107, 110–11 financial liberalization and the power of, 212 Iran and, 174 Joe Biden and, 216 Obama and, 212, 228–29 Patriot Act and, 174 financialization of the economy, 34, 79, 93, 94, 97, 231 Fites, Donald, 218 Florida, 23, 24, 49, 51 Fourteen Points (Woodrow Wilson), 48 Framework Agreement of 1994, 138 France, 80 Franklin, Bruce, 56 Franks, Tommy, 57 Fraser, Doug, 218 free speech, corporate personhood and, 32–34 “free trade,” 6, 37, 78, 93 criticism of the term, 90 drug trade and, 78–79 “free circulation of labor” and, 29 vs. protectionism, 6, 76–78, 80, 81, 89, 211 Reagan and, 12 slavery and, 78, 79 See also neoliberalism “free trade agreements,” 31, 90–91, 93, 103–4 monopoly pricing rights in, 86 national security exemptions in, 86 See also North American Free Trade Agreement freedom of association, 208 Freeman, Chas, 171 French colonies, 7.

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-Israeli attacks in, 278 Gazans kidnapped by Israeli forces, 146, 257 as “protected persons,” 45, 155, 186 Geithner, Timothy, 220–21 “genocidal” policies, 129 Gerecht, Reuel Marc, 197–98 Gerges, Fawaz, 26 German Democratic Republic (GDR), 279. See also East Germany Germany, 86, 278 Gerson, Joseph, 66 Gerson, Michael, 223 Ging, John, 151 Glass-Steagall Act, 219, 229 global warming, 95, 111, 217, 232 “globalization,” vii, 35–38, 73 neoliberal, 94 true, 118 See also specific topics Golan, Avirama, 159 Goldberg, Jeffrey, 180 Gómez, Juan Vicente, 54 Gonzales, Alberto R., 266 Gorbachev, Mikhail S., 66, 269, 273, 278–80 Gordon, Michael, 133 Gottemoeller, Rose, 196 Grande, Rutilio, 274 Great Depression, 77, 98 Greater Jerusalem, 180, 181 Greenspan, Alan, 87, 108–9, 212 Guantánamo Bay detention camp, 31, 260, 263–66 Guatemala, 105 Guernier, Maurice, 175 Hague Convention of 1907, 155 Haiti, 7–12 Bill Clinton and, 11 democracy in, 10–11, 104, 213 France and, 7, 9, 12, 66, 104, 213 overthrow of elected government in, 7, 11–12, 66, 68, 104, 213 poverty and financial problems, 7–15 Reagan and, 10 takeover by U.S. corporations, 8–9 terrorism and, 11 U.S. dumping in, 12 Venezuela and, 14 Woodrow Wilson, State Department, and, 8, 47, 48 World Bank and, 9 Hale, Kenneth, 5–6 Halliday, Denis, 129 Halper, Jeff, 186 Hamas, 147, 148, 150–53 Gaza Strip and, 143, 147, 150, 151, 155, 156 Obama and, 233–34, 254 popularity and elections won by, 145, 147, 153 proposed two-state settlement, 255 as terrorist organization, 249, 254–55 Hamilton, Alexander, 77 Harbury, Jennifer, 260 Hasenfuss, Eugene, 264 Hass, Amira, 182 Havel, Vaclav, 274, 275 health care, 92, 226–28 for “illegal aliens,” 31 health care reform, 110, 112, 226–28, 230, 231 Hekmatyar, Gulbuddin, 243 Henríquez y Carvajal, Francisco, 48 Hernández, Gerardo, 51 Hersh, Seymour, 139 Herzog, Haim, 160 Hezbollah, 144–47, 249, 250 Hill, Christopher, 137 Hirohito, 48–49 Ho Chi Minh, 48 Hodgson, Geoffrey, 21 Holder, Eric, 225 Honduras, 58, 66–68, 117 Hoodbhoy, Pervez, 240, 241 Hoover Institution, 22 Horwitz, Morton, 30 housing bubble, 64, 108–9, 212–13 Huntington, Samuel, 40 idealism foreign policy and, 42–48, 52, 123, 143, 185 John Quincy Adams and, 23–24 Wilsonian, 8, 10, 23, 45, 47, 48, 54, 122 See also United States, political ideals Ignatius, David, 42–43 immigrants, undocumented, 31 imperialism, 3–4, 6, 14–15, 17–20, 22 culture of, 62, 134–35 “expansion is the path to security” doctrine, 27 “salt water fallacy,” 22–23 See also Spanish conquerors; specific topics import substitution industrialization, 77 India, 194–95 Indonesia, 224 Indonesia-Australia Timor Gap Treaty, 184–85 insurance industry, 110.

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

During the Reagan-Thatcher era, financial markets were liberated from a large number of restrictions. This action was repeated in the nineties under the Clinton-Blair era. While the Blair government handed over the responsibility of setting interest rates from the Chancellor of the Exchequer to the independent Bank of England in 1997, the repeal of the Glass-Steagall act in 1999 effectively matched the same gesture in the US. The enactment of the Volker rule, which restricts US banks from making certain kinds of speculative investments that do not benefit their customers, is a return to the older form of banking regulations when deposits were not used to trade on the bank’s own accounts.

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In 1998, Alan Greenspan stated that, “participants in financial markets are predominantly professionals that simply do not require the customer protections that may be needed by the general public.” A year later, the American Congress almost unanimously voted in favor of the Gramm-Leach-Bliley Financial Modernization Act that removed the specialization of banks by repealing the Glass-Steagall Act and ending the prohibitions against the intermingling of commercial and investment banking activities. As stated by the Republican Senator Phil Gramm (who spearheaded the Gramm- Leach-Bliley Act in 1999), “We have learned that government is not the answer. We have learned that freedom and competition is the answer” (Myers-Lipton, 2009).

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As the banks were given freer rein to grow within the economy, this also aided them in expanding across geographies. For most of the 20th century, they had been constrained in terms of geographies of growth because the McFadden Act of 1927 prohibited nationally chartered lenders from establishing branches outside of their states of incorporation. At the same time, the 1933 Glass-Steagall Act separated commercial from investment banking while the Bank Holding Company Act of 1956 extended the same prohibitions to bank holding companies, which had been developed to circumvent the restrictions against interstate banking (Maxfield, 2013). Beginning in 1994, the US government began to relax the regulations with the Riegle-Neal Interstate Banking and Branching Efficiency Act which ended the geographical limits on banking activity and thus the McFadden Act (Ansart & Monvoisin, 2015).

What Would the Great Economists Do?: How Twelve Brilliant Minds Would Solve Today's Biggest Problems by Linda Yueh

3D printing, additive manufacturing, Asian financial crisis, augmented reality, bank run, banking crisis, basic income, Bear Stearns, Ben Bernanke: helicopter money, Berlin Wall, Bernie Sanders, Big bang: deregulation of the City of London, bike sharing, bitcoin, Branko Milanovic, Bretton Woods, BRICs, business cycle, Capital in the Twenty-First Century by Thomas Piketty, clean water, collective bargaining, computer age, Corn Laws, creative destruction, credit crunch, Credit Default Swap, cryptocurrency, currency peg, dark matter, David Ricardo: comparative advantage, debt deflation, declining real wages, deindustrialization, Deng Xiaoping, Doha Development Round, Donald Trump, endogenous growth, everywhere but in the productivity statistics, export processing zone, Fall of the Berlin Wall, fear of failure, financial deregulation, financial engineering, financial innovation, Financial Instability Hypothesis, fixed income, forward guidance, full employment, general purpose technology, Gini coefficient, Glass-Steagall Act, global supply chain, Great Leap Forward, Gunnar Myrdal, Hyman Minsky, income inequality, index card, indoor plumbing, industrial robot, information asymmetry, intangible asset, invisible hand, job automation, John Maynard Keynes: Economic Possibilities for our Grandchildren, joint-stock company, Joseph Schumpeter, laissez-faire capitalism, land reform, lateral thinking, life extension, low interest rates, low-wage service sector, manufacturing employment, market bubble, means of production, middle-income trap, mittelstand, Money creation, Mont Pelerin Society, moral hazard, mortgage debt, negative equity, Nelson Mandela, non-tariff barriers, Northern Rock, Occupy movement, oil shale / tar sands, open economy, paradox of thrift, Paul Samuelson, price mechanism, price stability, Productivity paradox, purchasing power parity, quantitative easing, RAND corporation, rent control, rent-seeking, reserve currency, reshoring, road to serfdom, Robert Shiller, Robert Solow, Ronald Coase, Ronald Reagan, school vouchers, secular stagnation, Shenzhen was a fishing village, Silicon Valley, Simon Kuznets, special economic zone, Steve Jobs, technological determinism, The Chicago School, The Wealth of Nations by Adam Smith, Thomas Malthus, too big to fail, total factor productivity, trade liberalization, universal basic income, unorthodox policies, Washington Consensus, We are the 99%, women in the workforce, working-age population

The 1933 and 1935 Banking Acts introduced changes to the Federal Reserve System to enhance the ability of the Fed to stabilize the banking system. The measures included extending the ability of the Federal Reserve to more easily lend money based on receiving collateral, including to non-financial firms; the Glass–Steagall Act, resulting in the separation of commercial and investment banking functions; regulation of deposit interest rates; and strict limits on entry to the market. Also important was the creation of the Federal Deposit Insurance Corporation (FDIC) in 1933 to stem the problem of ruinous bank runs. The FDIC remains in place today and guarantees that depositors won’t lose their money (currently up to $250,000) if a bank goes under.

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Friedman and the 2008 financial crisis The global financial crisis occurred in 2008 with repercussions across the world economy. Financial deregulation since the 1980s meant that financial markets and global linkages across national borders became much more diverse. Then, in 1999, the Gramm–Leach–Bliley Act repealed the Glass–Steagall Act of 1933 that had previously separated retail from investment banking. More of the risks undertaken by investment banks could be transmitted to retail (deposit-holding) banks. In the 2008 crisis, we were at the cusp of the first potential systemic banking failure since the 1929 crash that had led to the passage of Glass–Steagall in the first place.

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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

In 1933, following the Wall Street Crash, the US had separated commercial banks (financial institutions which took deposits) from investment banks (financial firms raising money for companies through debt and equity issues, corporate mergers and acquisitions, and trading in securities for their own account) under the Glass-Steagall Act. The Act's regulations were in some respects strengthened by the Bretton Woods Agreement of 1944. In line with the so-called ‘Keynes Plan', the Bretton Woods system imposed tight curbs on international capital movements in order to preserve a system of fixed exchange rates - thereby ruling out most of the cross-border investments and currency trades which had previously been major sources of instability and speculative profits.

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But in the 1960s, as the idea of ‘light-touch' regulation became increasingly attractive, such measures were increasingly viewed on both sides of the Atlantic as an obstacle to circumvent. During this time, banks never ceased to lobby against the regulations that deprived them of significant markets, and others (like the Glass-Steagall Act) which restricted their scope to combine operations in different markets. As well as pushing for an end to regulations, banks proved adept at persuading politicians that restrictive regulations were unworkable, by finding ways to work around them. 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.

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So from the start, commercial bankers have sought to do more with the money they create - and the additional funds they take in from depositors - than just lend it to prospective borrowers. They’ve eyed the lucrative world of financial markets - dealing in shares and bonds, on behalf of clients and on their own account - as an additional source of profit. That’s why the Glass-Steagall Act and its counterparts elsewhere, forcing banks to choose between taking customer deposits or playing the markets, was so unpopular in banking circles, and why they celebrated its repeal at the turn of the twenty-first century. The move into investment banking was made more attractive by other aspects of financial deregulation.

Pity the Billionaire: The Unexpected Resurgence of the American Right by Thomas Frank

Affordable Care Act / Obamacare, Alan Greenspan, bank run, Bear Stearns, big-box store, bonus culture, business cycle, carbon tax, classic study, collateralized debt obligation, collective bargaining, commoditize, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, Deng Xiaoping, false flag, financial innovation, General Magic , Glass-Steagall Act, housing crisis, invisible hand, junk bonds, Kickstarter, low interest rates, money market fund, Naomi Klein, obamacare, Overton Window, payday loans, profit maximization, profit motive, road to serfdom, Robert Bork, Ronald Reagan, shareholder value, strikebreaker, The Chicago School, The Myth of the Rational Market, Thorstein Veblen, too big to fail, union organizing, Washington Consensus, white flight, Works Progress Administration

Instead, it was a sort of competitor, helping to organize the business structure of the nation independently of Wall Street’s dictation.6 While Jones’s RFC did these things, the Democrats of the day regulated investment banking with the Securities and Exchange Commission, broke up the big banks with the Glass-Steagall Act, and reorganized the Federal Reserve in a way that diminished the power of the New York banks. And they repeatedly told the nation why they were doing these things. Maybe the Roosevelt/Jesse Jones approach wouldn’t have helped this time around. After all, the antibailout leaders of the last few years object when a helping hand is extended to the little guy just as much as they do when it’s Wall Street that’s soaking up the tax dollars.

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See also capitalism Democrats and deification of effect of unregulated free trade Frum, David Fukuyama, Francis “Fundraising Secrets for Tea Party Leaders” (DVD) Galbraith, John Kenneth Galt, John (fictional character) Geithner, Tim General Electric (GE) General Motors “Get Back” flag Ghostbusters (film) Gingrich, Newt Give Us Liberty (Armey and Kibbe) Glass-Steagall Act (1933) Glenn Beck Program, The (TV show) “God Save the Queen” (Sex Pistols) Gohmert, Louie Goldman Sachs gold standard GOOOH Graham, Michael Gramm, Phil Grapes of Wrath, The (Steinbeck) Gray, Harold Great Britain Great Depression Atlas Shrugged and attack on “ruling class” and Beck and culture of, mimicked by Right hard-times scenario and Great Northern Railway Great Recession Greenberg, Stanley Greenspan, Alan Gregoire, Christine Guantánamo Guardian Weekly Gullett, Charly Guthrie, Woody Hannity, Sean Hanson, Stephen D.