Casino capitalism : how the financial crisis came about and what needs to be done now / Hans-Werner Sinn.

Format:

Book

Author/Creator:

Sinn, Hans-Werner.

Language:

English

Subjects (All):

Global Financial Crisis, 2008-2009.

Banks and banking--Government policy.

Banks and banking.

Physical Description:

1 online resource (401 pages)

Edition:

1st ed.

Place of Publication:

Oxford ; New York : Oxford University Press, 2010.

Summary:

In Casino Capitalism Hans-Werner Sinn examines the causes of the banking crisis, points out the flaws in the economic rescue packages, and presents a master plan for the reform of financial markets. Sinn argues that the crisis came about because limited liability induced both Wall Street and Main Street to gamble with real estate properties. He meticulously describes the process of lending to American homeowners and criticizes both the process ofsecuritizing and selling mortgage claims to the world, as well as the poor job rating agencies did in providing transparency. He argues that the American Dream has ended because the world now realizes that this dream was built on loans that are never likely to be repaid.Sinn also asserts that the banking crisis has not yet been resolved, because the necessary write-offs of toxic assets have largely been swept under the carpet. Comparing actual worldwide write-offs with those estimated by the IMF estimates, he concludes that substantial parts, if not most, of the true losses have yet to be revealed and that the banking systems of many countries are on the brink of insolvency.In view of this, he directs sharp criticism at the various economic rescue packages, arguing that the plans assume that banks have a liquidity problem while, in fact, they suffer from a solvency crisis. Sinn points out that the conflict between the goals of rescuing banks in the short term and inducing more prudent behaviour in the long term requires the government to help the banks, but not their shareholders, by becoming a temporary co-owner. In addition, he calls for higher equityrequirements, a worldwide return to more cautious accounting methods, a ban on extremely speculative short selling, and strict regulations on conduits, hedge funds and credit default swaps.This authoritative account provides an invaluable overview for academics, students, policymakers, politicians, and all those with an interest in the unprecedented 2008 banking crisis.

Contents:

Intro

Contents

List of Figures

List of Tables

1. The World in Crisis

A near meltdown

Recession or depression?

Lags

Shock producers and shock absorbers

2. Life on Credit

America has been living beyond its means

The financiers of the world capital markets

Depreciation of the dollar

Stock price collapse

Savings glut or glut of toxic assets?

The housing crisis

Was monetary policy to blame?

3. Bank Failures

Record number of failures

The German Landesbanken

The next victims

Lehman Brothers and the collapse of interbank operations

And still more victims

Nationalization as a last resort

4. Why Wall Street Became a Gambling Casino

Blind gambling instinct?

Limited liability as capitalism's secret of success

Undercapitalized investment banks

Mark to market

Investment bankers as soldiers of fortune: the role of the Bloos Rule

Why sustainability was lost sight of

Puppets on a string

Lemon trade

5. Main Street also Gambled

Non-recourse loans

How Mr Jones became a gambler ...

... and lived beyond his means

The banks as gambling partners

The right to play the lottery: Clinton's law

6. Hot Potatoes

The securitization trick

Fannie and Freddie

The securitization cascade

The trick with honorariums and cash-back credits

The failure of the rating agencies

People's Republic of America

7. Policy Failure

Henry Paulson and the SEC

Madoff, Spitzeder, Ponzi, et al.

Basel also failed

The trick in calculating the capital ratio

The pro-cyclical effects of the mark-to-market method

Dynamic company valuation is also pro-cyclical

Special purpose vehicles and hedge funds

The competition in laxity

The selection principle and neoliberalism

8. The Extent of the Damage

Bank losses to date: US banks at the centre.

UK, Germany, and France

Switzerland, the Netherlands, Belgium, and Austria

How stable are the banks?

Hidden write-offs

The credit-card problem

Graveyard insurance

9. Rescue Attempts

Bank rescue

The US package

The Geithner Plan

Germany

The British way

Monetary policy

The credit crunch

Gaining weight

The Keynesian recovery packages

Why governments should not bail out GM and Opel

Scrapping the scrap premium

10. Will the West Retain its Stability?

The new top debtors

Europe at risk

Will Greece and Italy have to be bailed out?

Eurobonds

Americans may travel to Italy, Europeans to Japan

11. Ways to a Better Banking System

Fire protection in the jungle

Liquidity, solvency, and equity gifts

Bad banks and bad ideas

The bank hospital

Too big to fail, too small for prudence to prevail

Building a common supervisory system

Basel III and the accounting rules

Credible regulation

Executive pay

Eliminating the pro-cyclicality of the supervisory system

Taming the special purpose vehicles and hedge funds

Reinstating the Glass-Steagall Act?

Banning short sales

A new business model for the rating agencies

Stop signs for non-recourse claims

Burying graveyard insurance

Appendix: Chronology of the Financial Crisis

Subject Index

A

B

C

D

E

F

G

H

I

J

K

L

M

N

O

P

R

S

T

U

V

W

Person and Company Index

Y

Z

Author Index

Q

Z.

Notes:

Includes bibliographical references and indexes.

Description based on publisher supplied metadata and other sources.

ISBN:

0191613010

9780191613012

9786613348401

1-283-34840-3

0-19-161301-0

0-19-965988-5

OCLC:

756484831