考克斯圆桌会议moderncapitalismandfinancialcrisi.pptVIP

Modern Capitalism as the Solution to the Financial Crisis:The Caux Round Table Approach Stephen B. Young Global Executive Director The Caux Round Table Belgrade, December 2008 Financial meltdowns are a systematic Dysfunction of capitalism Tulip mania – 1620 Mississippi company France1719/1720 South Sea Company London 1711/1720 Wall Street 1929 Junk bonds 1980s Ds/telecom 1990s Sub-prime mortgages/CDOs Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one! Charles Mackay “Irrational Exuberance” Alan Greenspan Charles MacKay, Extraordinary Popular Delusions and the Madness of Crowds, with a foreword by Andrew Tobias (1841; New York: Harmony Books, 1980). Mike Dash, Tulipomania: The Story of the Worlds Most Coveted Flower and the Extraordinary Passions It Aroused (1999) Peter M. Garber, Famous First Bubbles: The Fundamentals of Early Manias (Cambridge, MA: MIT Press, 2000). Charles Kindleberger, Manias, Panics, and Crashes: A History of Financial Crises (Wiley, 2005, 5th edition) What Causes a Financial Crisis? Mis-pricing of risk Increases in real risk are not captured in nominal market prices Asset prices become irrational Valuation becomes unrealistic Present value reflects the risk of actually receiving future income Capital value is a function of income! Misjudgments about future income distort present capital values In financial bubbles, mis-pricing is sustained by infusions of debt Higher and higher asset values are supported by borrowed funds Excess liquidity – based on future promises to pay – transforms investment into speculation; a trading mentality takes over the markets; prudence loses out to greed; illusion trumps reality – for a time Dynamics of the Current Crisis Sub-prime mortgage loans made, more and more against future resale value of the home, not against real income Mortgage loans packaged and sold to global capital markets Collateral Debt