Debt and Distortion

2016-08-12 Business & Economics

Author : Paul Armstrong-Taylor
Release : 2016-08-12
Genre : Business & Economics
Kind : eBook
Book Rating : 01X/5 ( reviews)

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Book Synopsis Debt and Distortion by : Paul Armstrong-Taylor

Download or read book Debt and Distortion written by Paul Armstrong-Taylor. This book was released on 2016-08-12. Available in PDF, EPUB and Kindle. Book excerpt: China’s unprecedented growth has transformed the lives of its people and impacted economies across the globe. The financial system supported this growth by providing cheap loans to boost investment and, in a virtuous cycle, rapid growth insured that these loans could be repaid. However, in recent years, this virtuous cycle has turned vicious. The financial system has continued to lend freely and cheaply as the economy has slowed, and the risk of crisis has mounted. In response, the government has initiated the most ambitious financial reforms in twenty years. Financial markets, businesses and governments are concerned about these risks and are struggling to understand what the reforms will mean for China and the rest of the world. Debt and Distortion: Risks and Reforms in the Chinese Financial System addresses the need for an up-to-date and accessible, yet comprehensive analysis of China’s financial system and related reforms. It will take a systematic look at China’s financial system: how it worked in the past and how it will work in the future; why reforms are needed; what risks they bring; and their impact on China and the rest of the world. By analyzing the topic in terms of a few fundamental distortions, this book makes an otherwise complex topic accessible while simultaneously providing new insights. These distortions provide a simple framework for understanding the nature of the Chinese financial system and its future prospects. Reform in China will transform the world’s second largest economy and impact everything from Peruvian copper mines to the London housing market. Business people, government officials, financiers and informed citizens would all benefit from understanding how changes in China’s financial system will shape the global economy in the coming decades.

The Economics of Sovereign Debt and Default

2021-12-21 Business & Economics

Author : Mark Aguiar
Release : 2021-12-21
Genre : Business & Economics
Kind : eBook
Book Rating : 242/5 ( reviews)

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Book Synopsis The Economics of Sovereign Debt and Default by : Mark Aguiar

Download or read book The Economics of Sovereign Debt and Default written by Mark Aguiar. This book was released on 2021-12-21. Available in PDF, EPUB and Kindle. Book excerpt: An integrated approach to the economics of sovereign default Fiscal crises and sovereign default repeatedly threaten the stability and growth of economies around the world. Mark Aguiar and Manuel Amador provide a unified and tractable theoretical framework that elucidates the key economics behind sovereign debt markets, shedding light on the frictions and inefficiencies that prevent the smooth functioning of these markets, and proposing sensible approaches to sovereign debt management. The Economics of Sovereign Debt and Default looks at the core friction unique to sovereign debt—the lack of strong legal enforcement—and goes on to examine additional frictions such as deadweight costs of default, vulnerability to runs, the incentive to “dilute” existing creditors, and sovereign debt’s distortion of investment and growth. The book uses the tractable framework to isolate how each additional friction affects the equilibrium outcome, and illustrates its counterpart using state-of-the-art computational modeling. The novel approach presented here contrasts the outcome of a constrained efficient allocation—one chosen to maximize the joint surplus of creditors and government—with the competitive equilibrium outcome. This allows for a clear analysis of the extent to which equilibrium prices efficiently guide the government’s debt and default decisions, and of what drives divergences with the efficient outcome. Providing an integrated approach to sovereign debt and default, this incisive and authoritative book is an ideal resource for researchers and graduate students interested in this important topic.

Financial Distortion Dynamics

2017-12-17

Author : Raoul Kennedy
Release : 2017-12-17
Genre :
Kind : eBook
Book Rating : 610/5 ( reviews)

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Book Synopsis Financial Distortion Dynamics by : Raoul Kennedy

Download or read book Financial Distortion Dynamics written by Raoul Kennedy. This book was released on 2017-12-17. Available in PDF, EPUB and Kindle. Book excerpt: The world is awash in debt, of which nearly U.S. $10 trillion is negative-yielding. Financial instability and systemic risk loom over the economic landscape on a global scale. How did this happen and is there a path to a more sustainable future? A central thesis of this work is that sustainable credit and economic growth rely upon undistorted interest rates. Traditional approaches to stimulate growth through policy-directed low-cost borrowing have led to debt-fueled, inflationary dynamics that pose risks of asset bubbles, financial and banking crises, unjust wealth transfer, impoverishment through declining real purchasing power and financial repression on savers. Ultimately, the debt burden coupled with income disruption could threaten millions who depend on an unsustainable system. A microeconomic approach to interest rate determination is examined here: Credit-based natural rates of interest (CNRI). These rates are established in loanable funds markets and reflect adequate debt service capacity based on the underlying natural rates of return (NRR) of individual firms. These firm-specific natural rates of interest reflect natural returns, are countless in number and are viewed as key drivers of self-regulating, sustainable debt and economic growth rather than policy interest rates. Other topics featured are a historical overview of interest rate theory; an analysis of financial distortions in debt and equity mispricing; a novel accounting method to address artificially low financing costs for firms that benefit from taxpayer funds due to non-recognition of ownership; a distribution fitting exercise; fundamentals and pricing (with notes on dynamics in the crypto-asset space); and a review of policy interventions in the monetary realm. The analyses employ some three decades of financial data of a global firm in the consumer goods sector with a market capitalization of U.S. $200 billion as of 2017.

Permanent Distortion

2022-10-11 Business & Economics

Author : Nomi Prins
Release : 2022-10-11
Genre : Business & Economics
Kind : eBook
Book Rating : 075/5 ( reviews)

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Book Synopsis Permanent Distortion by : Nomi Prins

Download or read book Permanent Distortion written by Nomi Prins. This book was released on 2022-10-11. Available in PDF, EPUB and Kindle. Book excerpt: A riveting exposé of a permanent financial dystopia, its causes, and real-world consequences It is abundantly clear that our world is divided into two very different economies. The real one, for the average worker, is based on productivity and results. It behaves according to traditional rules of money and economics. The other doesn’t. It is the product of years of loose money, poured by central banks into a system dominated by financial titans. It is powerful enough to send stock markets higher even in the face of a global pandemic and threats of nuclear war. This parting from reality has its roots in an emergency response to the financial crisis of 2008. “Quantitative Easing” injected a vast amount of cash into the economy—especially if you were a major Wall Street bank. What began as a short-term dependency became a habit, then a compulsion, and finally an addiction. Nomi Prins relentlessly exposes a world fractured by policies crafted by the largest financial institutions, led by the Federal Reserve, that have supercharged the financial system while selling out regular citizens and leading to social and political reckonings. She uncovers a newly polarized world of the mega rich versus the never rich, the winners and losers of an unprecedented distortion that can never return to “normal.”

Hidden in Plain Sight

2016-03-29 Business & Economics

Author : Peter J. Wallison
Release : 2016-03-29
Genre : Business & Economics
Kind : eBook
Book Rating : 66X/5 ( reviews)

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Book Synopsis Hidden in Plain Sight by : Peter J. Wallison

Download or read book Hidden in Plain Sight written by Peter J. Wallison. This book was released on 2016-03-29. Available in PDF, EPUB and Kindle. Book excerpt: The 2008 financial crisis—like the Great Depression—was a world-historical event. What caused it will be debated for years, if not generations. The conventional narrative is that the financial crisis was caused by Wall Street greed and insufficient regulation of the financial system. That narrative produced the Dodd-Frank Act, the most comprehensive financial-system regulation since the New Deal. There is evidence, however, that the Dodd-Frank Act has slowed the recovery from the recession. If insufficient regulation caused the financial crisis, then the Dodd-Frank Act will never be modified or repealed; proponents will argue that doing so will cause another crisis. A competing narrative about what caused the financial crisis has received little attention. This view, which is accepted by almost all Republicans in Congress and most conservatives, contends that the crisis was caused by government housing policies. This book extensively documents this view. For example, it shows that in June 2008, before the crisis, 58 percent of all US mortgages were subprime or other low-quality mortgages. Of these, 76 percent were on the books of government agencies such as Fannie Mae and Freddie Mac. When these mortgages defaulted in 2007 and 2008, they drove down housing prices and weakened banks and other mortgage holders, causing the crisis. After this book is published, no one will be able to claim that the financial crisis was caused by insufficient regulation, or defend Dodd-Frank, without coming to terms with the data this book contains.

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Debt and Distortion

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