An objective assessment of the growing risk of sovereign debt default–and its massive implications for the global economy. Investors now fear certain nations will be unable to pay their debts. These are not idle or academic concerns. Rising mortgage defaults and credit card delinquencies put many banks on the brink of bankruptcy in 2008, sending the global economy into a tailspin. Sovereign debt defaults could have even greater ramifications, endangering global recovery and causing geopolitical instability and social unrest.
is sovereign debt the new sub prime
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This book analyzes the post-subprime crisis world from the global, Asian and Chinese perspectives. It dispels some of the myths about the crisis's effects on Asia and China; and exposes the ugly truth of bailout policies and their distortion and hindering of the world's economic rebalancing effort in the post-subprime era.
Although banking and sovereign debt crises are not unusual, the crisis that has unfolded across the world since 2007 has been unique in both its scale and scope. It has also been unusual in being both triggered by, and mainly affecting, developed economies. Starting with the US subprime mortgage crisis, and the recession in 2007-2009, the problem soon erupted into financial crisis in Europe. A few of these countries came to the brink of bankruptcy, and were rescued by the EU and the IMF on the condition they adopt austerity measures. The detrimental social effects of the crisis in both the US and Europe are still emerging. Although there have been several studies published on the US crisis in particular, there has so far been an absence of an accessible comparative overview of both crises. This insightful text aims to fill this gap, offering a critical overview of causes, policy responses, effects and future implications. Starting with the historical context and mutation of the crisis, the book explores the policies, regulations, and governance reforms that have been implemented to cope with the US subprime mortgage crisis. A parallel analysis considers the causes of the European sovereign debt crisis and the responses of the European Union (EU), examining why the EU is as yet unable to resolve the crisis. This book is supported with eResources that include essay questions and class discussion questions in order to assist students in their understanding. This uniquely comprehensive and readable overview will be of interest and relevance to those studying financial crises, financial governance, international economics and international political economy.
The subprime mortgage crisis has already wreaked havoc on the lives of millions of people and now it threatens to derail the U.S. economy and economies around the world. In this trenchant book, best-selling economist Robert Shiller reveals the origins of this crisis and puts forward bold measures to solve it. He calls for an aggressive response--a restructuring of the institutional foundations of the financial system that will not only allow people once again to buy and sell homes with confidence, but will create the conditions for greater prosperity in America and throughout the deeply interconnected world economy. Shiller blames the subprime crisis on the irrational exuberance that drove the economy's two most recent bubbles--in stocks in the 1990s and in housing between 2000 and 2007. He shows how these bubbles led to the dangerous overextension of credit now resulting in foreclosures, bankruptcies, and write-offs, as well as a global credit crunch. To restore confidence in the markets, Shiller argues, bailouts are needed in the short run. But he insists that these bailouts must be targeted at low-income victims of subprime deals. In the longer term, the subprime solution will require leaders to revamp the financial framework by deploying an ambitious package of initiatives to inhibit the formation of bubbles and limit risks, including better financial information; simplified legal contracts and regulations; expanded markets for managing risks; home equity insurance policies; income-linked home loans; and new measures to protect consumers against hidden inflationary effects. This powerful book is essential reading for anyone who wants to understand how we got into the subprime mess--and how we can get out. In a new preface to this powerful book, Shiller discusses the development of the crisis in relation to the ideas presented in The Subprime Solution.
An intelligent analysis of the dangers, opportunities, and consequences of global sovereign debt Sovereign debt is growing internationally at a terrifying rate, as nations seek to prop up their collapsing economies. One only needs to look at the sovereign risk pressures faced by Greece, Spain, and Ireland to get an idea of how big this problem has become. Understanding this dilemma is now more important than ever, that's why Robert Kolb has compiled Sovereign Debt. With this book as your guide, you'll gain a better perspective on the essential issues surrounding sovereign debt and default through discussions of national defaults, systemic risk, associated costs, and much more. Historical studies are also included to provide a realistic framework of reference. Contains up-to-date research and analysis on sovereign debt from today's leading practitioners and academics Details the dangers of defaults and their associated systemic risks Explores the past, present, and future of sovereign debt The repercussions of a national default are all-encompassing as global markets are intricately interwoven in the modern world. Sovereign Debt examines what it will take to overcome the challenges of this market and how you can deal with the uncertainty surrounding it.
Jan A. Kregel is considered to be “the best all-round general economist alive” (G. C. Harcourt). This is the first collection of his essays dealing with a wide range of topics reflecting the incredible depth and breadth of Kregel’s work. These essays focus on the role of finance in development and growth. Kregel has expanded Minsky’s original postulate that in capitalist economies stability engenders instability in international economy, and this volume collect’s Kregel’s key works devoted to financial instability, its causes and effects. The volume also contains Kregel’s most recent discussions of the Great Recession beginning in 2008.
Restructuring the balance sheets of Western governments, banks and households is an important issue in the recovery after the recent crisis. Chorafas' latest book focuses on sovereign debt, sovereign risk and the developing economic and financial business climate and explains why the year of the big crisis may fall in the middle of this decade.
History has shown us the role that financial and banking crises have had in economic transformation. The last crisis in 2008 was particularly significant because of its extent and its effect worldwide. Two aspects hold equal importance. Firstly, governance is a key concept to be clearly defined and enforced, especially within the EU. Both entrepreneurial and financial players must measure the impact of their various actions (transparency in decision-making processes, strategic choices to achieve profit, etc.), maintaining their market position while preserving the social positioning of all partners. Secondly, from a more technical point of view, the relevance of mathematical and quantitative methods should be discussed in order to evaluate asset performance. Securitization has always been a tool used to increase financial institutions’ profit margins but it cannot become their primary goal. The error does not come from the use of this technique but from its misuse at international level. This book aims to provide the reader with a broad discussion of the financial impacts and consequences arising from the last subprime crisis. By means of an international and European analysis, the different contributors intend to stress the relevance of a multi-national solution guaranteeing the stability of the international financial and banking system.
A compelling argument for why stewardship of wealth and service to others should be our highest financial priority Stewardship is the journey of financial insider John Taft towards understanding and affirming the importance of stewardship—which he has come to define as "serving others"—as a core principle for the financial services industry, the global financial system, and society at large. By defining the attributes of authentic stewardship, this book presents a path forward by analyzing the success of Canadian banks in weathering the financial crisis; evaluates the effectiveness of global financial reform efforts in making the financial system safer, sounder, and more secure; offers wealth management prescriptions for individual investors; evaluates the potential of ESG (environmental, social, and governance) investment processes as a way to instill stewardship behaviors among corporate CEOs (particularly at financial services firms); and, ultimately, calls for a return to stewardship's core principles as the key to not only minimizing the scope and consequences of future failures, but also to addressing other societal challenges. Argues for a return towards stewardship, with financial services companies doing right by their customers Analyzes the response of Canadian banks to the financial crisis to provide meaningful advice for investors and businesses alike Inspired by Taft's experience running one of the largest wealth management firms in the country during the financial crisis and his direct participation in subsequent legislative and regulatory efforts to rewrite the rules under which the U.S. securities industry operates From the man who made the decision to reimburse clients affected by the collapse of a money market mutual fund comes a compelling look at why financial service companies should start doing what's right for their customers.
The global financial crisis saw many Eurozone countries bearing excessive public debt. This led the government bond yields of some peripheral countries to rise sharply, resulting in the outbreak of the European sovereign debt crisis. The debt crisis is characterized by its immediate spread from Greece, the country of origin, to its neighbouring countries and the connection between the Eurozone banking sector and the public sector debt. Addressing these interesting features, this book sheds light on the impacts of the crisis on various financial markets in Europe. This book is among the first to conduct a thorough empirical analysis of the European sovereign debt crisis. It analyses, using advanced econometric methodologies, why the crisis escalated so prominently, having significant impacts on a wide range of financial markets, and was not just limited to government bond markets. The book also allows one to understand the consequences and the overall impact of such a debt crisis, enabling investors and policymakers to formulate diversification strategies, and create suitable regulatory frameworks.