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How the rich get richer – money in the world economy | DW Documentary

Exploding real estate prices, zero interest rate and a rising stock market – the rich are getting richer. What danger lies in wait for average citizens? For years, the world’s central banks have been pursuing a policy of cheap money. The first and foremost is the ECB (European Central Bank), which buys bad stocks and bonds to save banks, tries to fuel economic growth and props up states that are in debt. But what relieves state budgets to the tune of hundreds of billions annoys savers: interest rates are close to zero. The fiscal policies of the central banks are causing an uncontrolled global deluge of money. Experts are warning of new bubbles. In real estate, for example: it’s not just in German cities that prices are shooting up. In London, a one-bed apartment can easily cost more than a million Euro. More and more money is moving away from the real economy and into the speculative field. Highly complex financial bets are taking place in the global casino - gambling without checks and balances. The winners are set from the start: in Germany and around the world, the rich just get richer. Professor Max Otte says: "This flood of money has caused a dangerous redistribution. Those who have, get more." But with low interest rates, any money in savings accounts just melts away. Those with debts can be happy. But big companies that want to swallow up others are also happy: they can borrow cheap money for their acquisitions. Coupled with the liberalization of the financial markets, money deals have become detached from the real economy. But it’s not just the banks that need a constant source of new, cheap money today. So do states. They need it to keep a grip on their mountains of debt. It’s a kind of snowball system. What happens to our money? Is a new crisis looming? The film 'The Money Deluge' casts a new and surprising light on our money in these times of zero interest rates.

Jane Kelsey: Secret talks bring threat of financial crises

"They also want to make light-handed regulation the global norm. A standstill rule aims to freeze the existing level of regulation as the new bottom line. What Wikileaks posted was the draft chapter on financial services. We can assume it will be very similar to the TPP's financial services chapter. This is especially scary, because it aims to extend the model of liberalised and deregulated financial markets that brought us the global financial crisis. The International Monetary Fund has criticised the US and EU for being in denial over the risks this model poses to themselves and the world. Yet they are pushing a more extreme version in Tisa, and, presumably, in the TPP. The Wikileaks expose caused a flurry across the Tasman. Journalists realised that Tisa could threaten the four pillars policy that prevents mergers and takeovers among the Australian banks, who own most of ours. Limiting competition means less reckless behaviour. Removing those restraints means pressure for even higher returns and temptations to play Russian roulette in the shadow banking system."

Protecting Financial Stability: Lessons from the Coronavirus Pandemic

Jackson, Howell Edmunds and Schwarcz, Steven L., Protecting Financial Stability: Lessons from the Coronavirus Pandemic (June 30, 2020). Duke Law School Public Law & Legal Theory Series No. 2020-39, Harvard Business Law Review, Available at SSRN: https://ssrn.com/abstract=3644417 or http://dx.doi.org/10.2139/ssrn.3644417 Note: Its stunning how many legal changes have been made in the financial sphere "because of the coronavirus epidemic"

review of: This Time Is Different: Eight Centuries of Financial Folly

"Building on a historical narrative that uses an extensive data set of their construction, Reinhart and Rogoff (hereafter R&R) show that periods of excessive public debt accumulation generally do not end well. Over time, many countries have defaulted on their debt (including restructuring) for a variety of reasons and by a variety of methods (inflating away the real value of the debt has been very popular). These defaults, they show, can produce detrimental spillover effects. Recent defaults by Russia (1998) and Argentina (2001) come to mind, and the possibility of a future restructuring by Greece looms large for its foreign creditors (for example, European banks)—and for European policymakers. One drawback of R&R’s analysis, which they readily admit, is that it focuses almost entirely on debt issued by governments, or sovereigns, rather than by the private sector. In the financial crisis of 2007-09, which they term the “Second Great Contraction,” the accumulation of private debt (chiefly mortgage debt of the dodgy variety) and the collapse in nominal house prices eventually helped trigger a banking and financial crisis of immense proportions and a collapse in economic activity. In response, federal government outlays in the United States and other advanced economies rose enormously, which resulted in huge budget deficits that have significantly boosted debt-to-GDP levels. Since emerging and developing countries tend to rely heavily on foreign creditors such as large multinational banks, sharply higher debt-to-GDP ratios in the context of weakening economic fundamentals can lead to “sudden stops”—that is, credit is withdrawn abruptly, leading to a cascade of defaults. In advanced economies, which have better credit and inflation histories, and thus sharply lower probabilities of default, rising debt-to-GDP ratios tend to weaken economic growth."

Private Firms Working in the Public Interest-Is the Financial Statement Audit Broken? Abigail Bugbee Brown

2007 - "The Big Four accounting firms have become the object of much scrutiny following the string of financial statement fraud scandals at the beginning of this century. The apparent involvement of the large auditing firms in the accounting misdeeds comes as a surprise, since the academic literature on auditor incentives predicts that large, reputable firms will not engage in collusion with their clients. The lace of a consensus economic framework to understand the incentives facing the audit firms that reflects the historical reality has hindered consensus building in the policy response to the scandals. This dissertation develops a principal-auditor-agent model that suggests there may well be socially sub-optimal levels of audit intensity, even among the best audit firms. It explores archival historical evidence to identify examples of how these incentives have shaped the profession and develops a more nuanced reading of the root causes of the recent scandals. This work also identifies the gaps in our understanding of the cost and occurrence of fraud that hinders a proper cost-benefit analysis of policy options designed to improve the quality of information available to the market."

Opinion: Crisis, Emergency Measures and Failure of the ISDS System: The Case of Argentina

"The first salient conclusion is that the ISDS system has a very low capacity to adapt to totally exceptional circumstances for which it does not seem to have been designed. Despite the efforts of Argentinian attorneys to show that the measures implemented in the post-crisis period were adopted in an emergency context, being so exceptional as to justify any breach of the substantial clauses of the BITs, few tribunals were prepared to sustain this defence."

The "Prudential Exception" In The GATS After The Case Argentina – Financial Services

Alexandre Marques da Silva Martins - "Experience has shown there has been a need for prudential measures to be imposed on financial services. The global financial crisis of 2007-08 is quite an emblematic example. Therefore, states and financial institutions have united to establish standards as for financial services like the Basel Committee. Only one case about prudential measures in the realm of financial services has been decided thus far at the WTO. In this case, adjudicators heavily utilized the recourse to the ordinary meaning of the main GATS expressions surrounding the prudential measures. This recourse may limit the aid that international norms other than the WTO legislation may provide when resolving issues related to the GATS prudential exception. Still according to the adjudicators, the prudential exception at issue is of evolutionary nature, evolving over time to adapt to particular situations. Besides, there has to be a rational relationship between the measures and their reasons."