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Fleischmann is the central witness in one of the biggest cases of white-collar crime in American history, possessing secrets that JPMorgan Chase CEO Jamie Dimon late last year paid $9 billion (not $13 billion as regularly reported) to keep the public from hearing. Back in 2006, as a deal manager at the gigantic bank, Fleischmann first witnessed, then tried to stop, what she describes as “massive criminal securities fraud” in the bank’s mortgage operations. This past year she watched as Holder’s Justice Department struck a series of historic settlement deals with Chase, Citigroup and Bank of America. The root bargain in these deals was cash for secrecy. “I could be sued into bankruptcy,” she says. “I could lose my license to practice law. I could lose everything. But if we don’t start speaking up, then this really is all we’re going to get: the biggest financial cover-up in history.”
To prevent dangerous deflation, the ECB is discussing a massive program to purchase government bonds. Monetary watchdogs are divided over the measure, with some alleging that central bankers are being held hostage by politicians. Is it important that the ECB adhere to tried-and-true principles in the crisis, as Weidmann argues? Or can it resort to unusual measures in an emergency situation, as Draghi is demanding?
The gathering risks of climate change are so profound that they could stall or even reverse generations of progress against poverty and hunger if greenhouse emissions continue at a runaway pace, according to a major new United Nations report. In the starkest language the IPCC has ever used, the expert panel made clear how far society remains from having any serious policy to limit global warming.
Six years after the Lehman disaster, the industrialized world is suffering from Japan Syndrome. Growth is minimal, another crash may be brewing and the gulf between rich and poor continues to widen. Can the global economy reinvent itself?
So, there’s this widely used class of pesticides known as neonicotinoids that have emerged as a prime suspect in honeybee collapse, and may also be harming birds and water-borne critters. But at least they provide benefits to farmers, right? Well, not soybean farmers, according to a blunt economic assessment released Thursday by the Environmental Protection Agency.
The creditor-debtor relationship embodies no iron law of morality; rather, it is a social relationship that always must be negotiated. When quantitative precision and an unyielding approach to debt obligations are the rule, conflict and penury soon follow. We need to limit the supply of and demand for credit to what the economy is capable of producing.
Considered in its totality, Holder’s time as attorney general maintained the Bush administration’s legal philosophy on the largest issues, and in a style that Bush’s attorneys general must have admired. Trained to detect and amplify Washington’s marginal political differences, the press sometimes overlooks the obvious continuity of the permanent government.
How large-scale US surveillance is harming journalism, law, and American democracy. The 120-page report documents how national security journalists and lawyers are adopting elaborate steps or otherwise modifying their practices to keep communications, sources, and other confidential information secure in light of revelations of unprecedented US government surveillance of electronic communications and transactions.
It is well known that globalization has put strong downward pressure on wages and benefits of workers in wealthy countries, as companies have offshored and outsourced labor to lower-wage locations and justified wage cuts to try to stay competitive. But politicians and economists have yet to come to terms with the fact that in the rich world the income distribution system itself has broken down irretrievably.
Economic predictions depend on figuring out what generates economic activity. Since the turn of the 20th century, economists have struggled to grasp what drives various parts of the economy, from consumer goods to commodities to housing. Recent research suggests financial markets and economic growth are supported mainly by animal spirits, not rational calculation
The four founders of the Centre for the Study of Existential Risk, cosmologist Martin Rees, Skype co-founder Jaan Tallinn, economic theorist Sir Partha Desgupta and philosopher Huw Price, are in the business of “horizon scanning” – identifying low-probability-but-high-consequence events – and are concerned mainly with risks we have created ourselves – the consequences of being too clever for our own good. One prominent risk is that artificial intelligence (AI) will outcompete our own for predominance, ultimately allowing AI to relate to humans much as humans currently do to chimpanzees. There is also the risk of the deliberate or accidental release of a virus with a modified genome, the adoption of stratospheric aerosol geo-engineering, and the use of 3-D printers to create military-grade weapons.
For all their superhero powers, birds are in trouble. Globally, one in eight—more than 1,300 species—are threatened with extinction, and many others are in worrying decline, from the tropics to the poles. Much of their decline is driven by the loss of places to live and breed—their marshes, rivers, forests, and plains—or by diminished food supply. But more and more these days, the birds are telling us about new threats to the environment and potentially to human health in the coded language of biochemistry. Birds provide the starkest clues in the animal kingdom about whether humans, too, may be harmed by toxic substances. And they prophesy what might happen to us as the load of carbon-based, planet-warming gases in the atmosphere and oceans climbs ever higher.
Important information relating to economics, health and other things can be extracted from big data given the right tools. But exactly how this should be done accurately and reliably is still the subject of significant debate. Government agencies, companies and almost anyone willing to play with the numbers will be able to extract significant value from search query data in future. But considerable care is needed. Many an economic hangover has been caused by over-indulgence in unreliable data.
Financial crises may seem a familiar part of the economic cycle, but they rarely repeat themselves exactly. Now, some worry that the next crisis could occur in the asset-management industry. The industry manages $87 trillion, making it three-quarters the size of banks. In January the Financial Stability Board (FSB) published a consultation paper which asked whether fund managers might need to be designated “systemically important financial institutions” or SIFIs, a step that would involve heavier regulation.
Around the world, honeybee colonies are dying in huge numbers: About one-third of hives collapse each year, a pattern going back a decade. For bees and the plants they pollinate this is a catastrophe. But in the midst of crisis can come learning. Honeybee collapse has much to teach us about how humans can avoid a similar fate, brought on by the increasingly severe environmental perturbations that challenge modern society.
There are two leading views about the world’s financial system. The first, heard mostly from executives at leading global banks and their allies, is that the system is safer than it has ever been. According to this view, the events that led up to the global financial crisis that erupted in 2008 cannot happen again; the reform process has succeeded. By contrast, a growing group of current and former officials continues to express concern about current and potential future risks in the United States, Europe, and globally.
The OECD has a clear message for the world: for the rich countries, the best of capitalism is over. For the poor ones – now experiencing the glitter and haze of industrialisation – it will be over by 2060. If you want higher growth, says the OECD, you must accept higher inequality. And vice versa.
Piketty is right that our political economy favors the growth of inequality, and that inequality in turn poisons our politics. But while we should aspire to create a society that shares its prosperity, we need to address a much bigger gap than the one between rich and poor. We need to address the gap between what’s demanded by our planet and what’s demanded by our economy.
The White House has set up a taskforce to tackle the decline of honey bees. The Environmental Protection Agency (EPA) and the agriculture department will lead the effort, which includes $8m (£4.7m) for new honey bee habitats. Bee populations saw a 23% decline last winter, a trend blamed on the loss of genetic diversity, exposure to certain pesticides and other factors.
The UK government’s most senior security official, Charles Farr, detailed how searches on Google, Facebook, Twitter and YouTube, as well as emails to or from non-British citizens abroad, can be monitored by the security services because they are deemed to be “external communications”. It is the first time that the government has admitted that UK citizens, talking via supposedly private channels in social media such as Twitter direct messages, are deemed by the British government to be legitimate legal targets that do not require a warrant before intercepting.
With its virtual monopoly on search, Google has the power to flip the outcomes of close elections easily – and without anyone knowing. Over time, they could change the face of parliaments and congresses worldwide to suit their business needs – keeping regulators at bay, getting favorable tax deals and so on. And because their business is unregulated in most countries at this point, flipping elections in this way would be legal.
In another attempt to stem the economic threat of high student debt and win favor for his party before November’s election, President Obama on Monday signed an executive order that will limit federal student loan payments for 5 million more people.
While Attorney General Eric Holder recently pledged that under his watch, journalists will not go to jail, the administration has continued to use the judicial system to harass journalists into revealing their sources. Journalists and press freedom advocates say the administration’s war on journalists has chilled national security reporting, with potential sources afraid to speak to reporters for fear of being prosecuted.
Policy must assure the security of state authority and concentrations of domestic power, defending them from a frightening enemy: the domestic population. Information about the enemy makes a critical contribution to controlling it. Obama’s contributions have reached unprecedented levels.
Chemicals in common household products such as toothpaste, soap and plastic toys have a direct impact on human sperm which could help explain rising levels of male infertility, scientists have found. The findings will raise further concerns about the hidden toxicity of chemicals deemed safe by toxicology tests.
Stopping the government from holding onto of all Americans’ phone metadata would undoubtedly be a good thing for American privacy, but if you read between the legislative lines in the recent reform bills, the government might not be curtailing mass surveillance so much as permanently entrenching it in American law.
By 2020 there could be over 30 billion devices connected to the Internet. Once dumb, they will have smartened up thanks to sensors and other technologies embedded in them and, thanks to your machines, your life will quite literally have gone online. Techno-evangelists have a nice catchphrase for this future utopia of machines and the never-ending stream of information, known as Big Data, it produces: the Internet of Things. With the rise of the networked device, what people do in their homes, in their cars, in stores, and within their communities will be monitored and analyzed in ever more intrusive ways by corporations. Yes, imagine it. Welcome to a world where everything you do is collected, stored, analyzed, and, more often than not, packaged and sold to strangers — including government agencies.
The brilliance of “The Lego Movie” lies in providing every piece to the modern branding puzzle, including the surface-level subversion. In this way, “The Lego Movie” graduates to a new skill level in the game of branding, an approach that’s at once more grandiose and more pernicious than ever. It should probably be a red flag that the most memorable line from “The Lego Movie” is pretty much the central message of any great marketing campaign: This product will deliver you from averageness. But somehow it still works. In the movie’s final moments, big tears stream down my face. I am weeping over a 90-minute infomercial. With enough cleverness and induced vertigo, the mad geniuses of branding never have to be the bad guys again. All they have to say is: You are special.
The economics of international banking are straightforward enough: raise funds in countries where they are cheap, lend where they are dear. Done right, this is both lucrative for bankers and good for the world, by channelling savings to their most productive use. Those economics have begun to come apart over the past five years.
More than half the world’s population lives in cities. There is clearly a significant benefit to living in a large permanent settlement with many other humans. But is living in a large city greener than living in a small one? Today we get an answer thanks to the work of Erneson Oliveira and pals at the Federal University of Ceará in Brazil.
The next year will be a year of living tactically. However, there are developments on the horizon of potential strategic consequence that will call out for larger, more coordinated, designs. In their absence, the sense that we live in a state of sublimated strategic anarchy will persist.
Irrational exuberance is back on Wall Street, encouraged by cheap credit lavished on heavily leveraged speculators, lax accounting rules and the unfortunate tendency to confuse the true value of stocks. Sky-high valuations get little skeptical coverage in the financial press, which has acted more as lapdog than watchdog in the past decade.
The greatest danger is one that will not be faced for decades but that is lurking out there. If we move to a system where half of the country is either stagnant or losing ground while the other half is surging, the social fabric of the United States is at risk, and with it the massive global power the United States has accumulated.
BlackRock’s Aladdin keeps its eyes on almost 7% of the world’s $225 trillion of financial assets. This is unprecedented—and it means flaws in the system could matter to more than just BlackRock, its investors and its customers. If that much money is being managed by people who all think with the same tools, it may be managed by people all predisposed to the same mistakes. If models are always wrong, as BlackRock posits, it should perhaps be a little worried that so many people are using the ones it offers.
Central banks around the world are pumping trillions into the economy. The goal is to stimulate growth, but their actions are also driving up prices in the real estate and equities markets. The question is no longer whether there will be a crash, but when. Some economists seek to allay fears, by noting that the real estate market still has a long way to go, but who says that you have to reach the most inflated point in the last crisis before a dramatic downturn sets in?
U.S. commercial banks and their affiliates have always faced limitations on the business they are allowed to undertake, in order to reduce the risk of business disasters that would endanger their ability to fulfill their critical role at the heart of the economic system, but we do not favor any of the major proposals for further structural divisions between commercial banking and securities and derivatives activities.
Easter Island has been thought of as a clear example of a society that destroyed itself by overexploiting its own resources. Two anthropologists now think that may not be what happened, but their alternative view is hardly consoling. On Easter Island, people learned to live with less and forgot what it was like to have more. Maybe that will happen to us. A future in which we continuously degrade our planet, losing plant after plant, animal after animal, forgetting what we once enjoyed, adjusting to lesser circumstances, cannot be called “success.” To prevent an ecological crisis, we must become alarmed – that’s when we’ll act – but the new Easter Island story suggests that humans may never hit the alarm. There’s a lesson here and it’s not a happy one.
The same kinds of politics that influence other aspects of society also help explain why some countries, such as the United States, suffer repeated banking crises, while others, such as Canada, avoid them altogether. A country does not choose its banking system; it gets the banking system it deserves, one consistent with the institutions that govern its distribution of political power.
It’s hard to analyze whether the $13 billion is a good deal for the government or for JPMorgan. There’s nothing wrong, of course, with the government recycling well-known facts to drag a bank that behaved badly to the negotiating table. Had the Justice Department aggressively investigated the banks’ practices using its full array of powers, who knows how much more it could have generated?
The Global Risks Report 2013 analyses 50 global risks in terms of impact, likelihood and interconnections, based on a survey of over 1000 experts from industry, government and academia. This year’s findings show that the world is more at risk as persistent economic weakness saps our ability to tackle environmental challenges.
The collapse of Lehman Brothers, a sprawling global bank, in September 2008 almost brought down the world’s financial system. It took huge taxpayer-financed bail-outs to shore up the industry. Even so, the ensuing credit crunch turned what was already a nasty downturn into the worst recession in 80 years. Massive monetary and fiscal stimulus prevented a buddy-can-you-spare-a-dime depression, but the recovery remains feeble compared with previous post-war upturns.
While some are congratulating themselves on avoiding another depression, no one in Europe or the United States can claim that prosperity has returned. We have done some things to improve financial markets, but other problems have gone unaddressed and some have worsened. The financial system may be more stable than it was five years ago, but that is a low bar – back then, it was teetering on the edge of a precipice.
Novelist John Lancaster, given access to the Snowden Files, discusses his impressions. At a moment of austerity and with a general sense that our state’s ability to guarantee prosperity for its citizens is in retreat, that same state is about to make the biggest advance ever in its security powers. Our spies and security services can, for the first time, monitor everything about us, and they can do so with a few clicks of a mouse and – to placate the lawyers – a drop-down menu of justifications. Looking at the GCHQ papers, it is clear that there is an ambition to get access to everything digital. And yet nobody, at least in Britain, seems to care. Snowden’s revelations are not just interesting or important but vital, because the state is about to get powers that no state has ever had, and we need to have a public debate about those powers and what their limits are to be.
Since it was created by the UN in 1988, the IPCC has synthesized scientific thinking around climate change and delivered a series of consensus assessments to policymakers. But the question is now being asked: Is the IPCC still fit for its purpose? It may do good science, but does it deliver what policymakers need?
Increased regulation and low interest rates are driving lending from the regulated commercial banking system into the unregulated shadow banking system. The shadow banks, although free of government regulation, are propped up by a hidden government guarantee in the form of safe harbor status under the 2005 Bankruptcy Reform Act pushed through by Wall Street. The result is to create perverse incentives for the financial system to self-destruct.
The volume of sea ice in the Arctic hit a new low this past winter, according to observations from the European Space Agency’s (Esa) Cryosat mission. In its three years of full operations, Cryosat has witnessed a continuing shrinkage of winter ice volume. It underlines, say scientists, the long-term decline of the floes.
Just when you thought genetically modified mosquitoes and mutated dinner entrees were the extent of biotech’s hunger to manipulate the genetic coding of the planet, scientists have now unleashed a plan to launch thousands of ‘frankenfly’ style insects into the wild in order to combat pests.
Insurers have long claimed to be the financial world’s shock absorbers, there to contain the carnage periodically unleashed by their banking brethren. Regulators have left them on the fringes of sweeping post-crisis reforms that have reshaped much of the financial sector. Until now.
A federal judge sharply rebuked the National Security Agency in 2011 for repeatedly misleading the court that oversees its surveillance on domestic soil, including a program that is collecting tens of thousands of domestic e-mails and other Internet communications of Americans each year.
It is estimated over 10 million beehives been wiped out since 2007, as part of a phenomenon known as Colony Collapse Disorder. Two Congressional Democrats have co-sponsored new legislation called the Save America’s Pollinators Act of 2013 to take emergency action to save the remaining bees in the U.S., and in turn, the U.S. food supply.
Lorenzo Fioramonti is a political scientist and specialist on governance issues who teaches at the University of Pretoria, where he directs the Centre for the Study of Governance Innovation. GDP was developed in the late 1930s in the US to help governments tackle the Great Depression, and afterwards it was used to plan America’s involvement in the Second World War. GDP is a measure of economic output. It is a market measure. What does not have a price tag is not included in GDP. This leads to the exclusion of important elements of economic performance. It neglects, for instance, the depletion of natural resources used for economic growth, as these are provided free of charge by nature. Nor does it consider the costs associated with economic growth, which include social risks, environmental degradation and the like. What matters is not statistical efficiency but social relevance. We should measure what we want rather than wanting what we measure.
After service as a Royal Marine and as an intelligence officer for the UK security services, Paddy Ashdown was a Member of Parliament (MP) from 1983 to 2001, and leader of the Liberal Democrats from 1988 until 1999; later he was the international High Representative for Bosnia and Herzegovina from 2002 to 2006.
The court may be primed for a reinterpretation of its own rulings on metadata, which can be even more revealing than content. Congress has shown little appetite for clarifying these issues, and has reliably voted to expand, not limit, the surveillance powers of the executive branch. President Barack Obama’s position on the issues is not only a continuation of his predecessor’s, but a change from the views he held as a candidate.
Scientists say that the release of large amounts of methane from thawing permafrost in the Arctic could have huge economic impacts for the world. The researchers estimate that the climate effects of the release of this gas could cost $60 trillion (£39 trillion), roughly the size of the global economy in 2012.
A new study finds that if temperatures go up by just one degree Celcius, sea levels will eventually—as ice sheet melt over the next 2,000 years—rise 2.3 meters. If temperature goes up 2 °C, oceans will rise 4.8 meters. If the planet warms by 4 °C, which is within the IPCC range of estimates, they will eventually rise by 9 meters, on average, and up to 12 meters in some parts of the world.
How do aggregate wealth-to-income ratios evolve in the long run and why? We address this question using 1970-2010 national balance sheets recently compiled in the top eight developed economies. For the U.S., U.K., Germany, and France, we are able to extend our analysis as far back as 1700. We find in every country a gradual rise of wealth-income ratios in recent decades, from about 200-300% in 1970 to 400-600% in 2010. In effect, today’s ratios appear to be returning to the high values observed in Europe in the eighteenth and
nineteenth centuries (600-700%). This can be explained by a long run asset price recovery (itself driven by changes in capital policies since the world wars) and by the slowdown of productivity and population growth. Our results have important implications for capital taxation and regulation and shed new light on the changing nature of wealth, the shape of the production function, and the rise of capital shares.
Obama has promised to deploy almost every green weapon at his disposal, from better insulation in public buildings to loan guarantees for clean energy. To engage the enemy as quickly as possible, he is relying solely on authority already granted to him by Congress, but even if the rules survive in court, a future administration could reverse them.
The potential risks of genetically modified fish escaping into the wild have been highlighted in a new study. The hybrid fish that resulted from the study out-compete both GM salmon and wild salmon. The study highlights the potential ecological consequences of genetically modified fish getting into the wild.
Food waste in America is a problem that has grown by 50 percent since the 1970s. Today, as much as 40 percent of food produced in America is thrown away. Decomposing food releases methane, a greenhouse gas that is more than 20 times as effective at trapping atmospheric heat than carbon.
The combination of a strong, rising China and economic stagnation in Europe and America is making the West increasingly uncomfortable. By buying companies, exploiting natural resources, building infrastructure and giving loans all over the world, China is pursuing a soft but unstoppable form of economic domination.
Once a non-bank financial institution has been designated as a SIFI, very real questions arise as to how best to regulate these institutions. The Fed has promised to pay careful attention to the differences between banks and other financial institutions that are designated as SIFIs. Elliott emphasizes it is crucial that they be rigorous in doing so.
Dr. Richard Haass is president of the Council on Foreign Relations. Previously, he was director of policy planning for the Department of State, U.S. coordinator for policy toward the future of Afghanistan, and U.S. envoy to the Northern Ireland peace process.
There are serious proposals to force banks to fund themselves with considerably less debt and far more money from their shareholders. This would protect the rest of us, by leaving more of the risk with shareholders and reducing the potential need for taxpayer bailouts. However, there is a trade-off for the greater safety; loans would become more expensive and the economy would slow.
Nearly 365 years ago, more than 100 warring diplomats and princes got together and created the basic framework for territorial sovereignty: nation-states, demarcated by borders. But 30 years ago, humanity gave birth to the internet. With the flip of a switch, three engineers had undone the work of more than 100 princes and diplomats.
Emmanuel Saez is the Director of the Center for Equitable Growth at the University of California at Berkeley. His main areas of research are centered around taxation, redistribution, and inequality, both from a theoretical and empirical perspective. He recommends much higher taxes on the rich.
To break the grip Wall Street has over political power would take a broad citizens’ movement, a groundswell of educated opinion focused on breaking that power, but the biggest Wall Street firms are larger and probably now more powerful than they were in the run-up to 2008.
The UN-backed PRI Initiative is a network of international investors working together to incorporate environmental, social and corporate governance (ESG) issues into decision-making and ownership practices to better align their objectives with those of society at large.
The Economics of Ecosystems and Biodiversity is an international initiative to draw attention to the economic benefits of biodiversity, the costs of biodiversity loss and ecosystem degradation, and to draw together expertise from science, economics and policy to enable practical actions moving forward.
The global financial system still teeters on the brink of collapse, and virtually nothing has been done to avert another disaster. With the spectacle of “extend and pretend” unfolding, what needs explaining is why even the well-informed and high-minded remain committed to so unpromising a status quo.
On April 21, 2012, Leonard Mlodinow published an Op-Ed in the New York Times Sunday Review titled, A Facial Theory of Politics. The article describes studies made into the effect of visual cues on electoral results. “How important is a political candidate’s appearance? We’re all worldly enough to understand that looks matter. You probably know about the famous 1960 presidential debate between an unshaven and tired Richard Nixon and a tanned and rested John F. Kennedy: those who watched on television generally thought Kennedy won the debate, while those who listened over the radio overwhelmingly favored Nixon. Still, even the most jaded politico assumes that appearance is a relatively small factor — and one that we are basically aware of. Everyone knew that part of Kennedy’s appeal was how he looked…”
Professor Ed Kane argues that the common definition of systemic risk leaves out a crucial element – the endogenous role that safety net subsidies to serious risk taking play in incentivizing firms to take action politically and economically to attain and strengthen their status as systemically important firms.
Banks take on excessive risk since they know, in case of failure, the taxpayer will step in to rescue them. That is a form of free insurance, and Ed Kane wants to end it. To do so, he says, we need to put a number on systemic risk, the amount for which the taxpayer is on the hook.
Biologist Edward O. Wilson is University Research Professor Emeritus at Harvard University, and author of the books: The Creation: An Appeal to Save Life on Earth; The Future of Life; and The Diversity of Life, which describes how man is in the process of causing the “sixth extinction”.