商业伦理学课件第10章Business, Government, and Ethics.ppt

Business Ethics Lecture 10: Business, Government, and Ethics Should the government have bailed out the financial institutions that caused the crisis of 2008? Overview From Great Moderation to Great Recession The housing bubble and the subsequent subprime mortgage Bailout of big banks: a necessary evil? Fight of the century: Keynes vs. Hayek The Great Moderation (大缓和) Duration: mid-1980s to 2007 Characteristics: economic stability (real GDP growth, unemployment, etc.) Historical background: victory against stag-flation in the 1970s Causes: central bank independence, credible monetary policies, improved economic structure, good luck, etc. Political implications: Neoliberalism, deregulation, laissez-faire The Great Recession Beginning of recession: two consecutive quarters of declining real GDP (definition given by the National Bureau of Economic Research) Great Recession (Dec. 2007 - mid. 2009): The longest and deepest recession after WWII. What assumptions are wrong: interest rates are too low Why: to avoid a recession after the bubble Cheap loans led to fast rise of asset price and massive over-building “I was wrong in my assumptions” Causes of the Great Recession The housing bubble and the underlying subprime crisis Misjudging interest rates Government overspending The Housing Bubble The originate-to-distribute model of subprime mortage “This crisis is neither the result of a normal turn of the business cycle nor an accident of history. We arrived at this point as a result of an era of profound irresponsibility . . .” The burst of the bubble Sept. 2008: bankruptcy of Lehman Brothers Nov. 2008: Citigroups stock price fell by 60% after it writing off $49 billion out of $200 billion in troubled assets. The CEO, Robert Rubin, called for government help. Financial melt-down: BoA and Merill Lynch (Nov. 2008), AIG (Mar. 2009), etc. Crisis spreading to the rest of the economy Detroit: Government rescue for General Motors and Chrysler, subsidy to both trade un