Preventing the Next Financial Crisis
The collapse of Lehman Brothers, the oldest and fourth-largest US investment bank, in September 2008 precipitated the global financial crisis. This deepened the contraction in economic activity that had already started in December 2007 and has become known as the Great Recession. Following a sluggish and uneven period of recovery, levels of private debt have recently been on the rise again making another financial crisis almost inevitable. This book answers the key question: can anything be done to prevent a new financial crisis or minimize its impact?
The book opens with an analysis of the main elements responsible for the 2007/2009 financial crisis and assesses the extent to which they are still present in today´s financial system. The responses to the financial crises - particularly the Dodd-Frank Act, the establishment of the Financial Stability Board, and attempts to regulate shadow banking – are evaluated for their effectiveness. It is found that there is a high risk of a new bubble developing, there remains a lack of transparency in the financial industry, and risk-taking continues to be incentivised among bankers and investors. Proposals are put forward to ameliorate the risks, arguing for the need for an international lender of last resort, recalling Keynes’ idea for an International Clearing Union.
This book will be of significant interest to scholars and students of financial crises, financial stability, and alternative approaches to finance and economics.
Table of Contents
Chapter 1. Introduction
Chapter 2. Key Elements In The 2007/2009 Financial Meltdown
Chapter 3. What Has Been Done During And After The Crisis
Chapter 4. The Shadow Banking System And The Post-2007-2009 Regulatory Reform7.
Chapter 5. Systemic Risk And Run Vulnerability
Chapter 6. How To Prevent A New Financial Crisis
Chapter 7. Micro And Macro-Prudential Regulation
Chapter 8. The Reform Of The International Monetary Regime
Chapter 9. Financial Crises And Economic Theory
Epilogue. The Response To The COVID-19 Crisis
Appendix. Financialization and the 2007/2009 Crisis
Victor A. Beker is Professor of Economics at the University of Belgrano and the University of Buenos Aires, both in Argentina. He has been Director of the Economics Department at the University of Belgrano and of the Economics Programme at the University of Buenos Aires. He was awarded several prizes for his works in Economics. Former Associate Editor of the Journal of Economic Behaviour and Organization. Author of several Economics books and papers. He is co-author of Modern Financial Crisis, Springer, 2016, co-editor of the European Crisis, WEA Books, 2016 and editor of Alternative Approaches to Economic Theory, Routledge, 2020.
"[T]his is a very useful book, especially for the non-specialist reader, since it defines the many financial concepts and institutions that were involved in the greatest financial meltdown in modern times in a way that is easily understandable. Furthermore, it analyses the issues related to the evolution and handling of the crisis by the authorities in light of recent developments in economic theory by referring to a vast amount of economic and financial literature."
Guillermo J. Escudé, European Journal of Economics and Economic Policies