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Table of Contents
Intro; Foreword; Contents; List of Figures; List of Tables; Glossary of Acronyms and Concepts; Introduction; 1 Globalisation Sets the Background to the Crisis; Introduction to Globalisation; The OECD Countries Open Up; The Case of Japan; Mexico Crises; Washington Consensus; Emerging Asia; The China Growth Phase; In Summary; The China Path to Prosperity and the US Financial Crisis of 2007-2008; Export Success and Import Penetration Strategies; Exchange Rate Management and Pricing for Market Share; The Saving Glut and Real Interest Rates
Capital Inflows, Foreign Exchange Intervention and Bond BuyingThe Impact of the Rise of Asia on the West; The Competitive Response of Western Companies to Competition from Asia; The Impact of Import Penetration and Firm Innovation on Western Labour Markets; Deflation Pressures in Firms Most Affected by Globalisation; Summing up the Globalisation Background to the Crisis in the USA; The Great Bond Rally; The Great House Price Rally; Appendix to Chapter 1: Modelling the Effect of Foreign Buying on US Bond Yields; References; 2 Financial Innovation and Basel II
Introduction to Financial Deregulation and InnovationThe Basel Accords I and II; Financial Innovations: Securitisation and Derivatives; Support for Housing in the USA; Packaging Mortgages; Trading Mortgages Take off; Securitisation Follows; The 'Waterfall'; The Mortgage Conduit (REMIC) and Structured Investment Vehicles (SIVs); Teaser Rates and On-Selling; Derivatives; Derivatives Have a Long History; But the Huge Expansion of Derivative Activity Is Recent; Regulating OTC Derivatives in the Run-up to the Crisis; The Demand for Securitisation and Derivatives
Basic Bank Balance Sheet ArithmeticThe Boom in Derivatives; Regulatory and Tax Arbitrage with Complete Markets in Credit; A Basic Regulatory Principle; Banks, Implicit Government Guarantees and Shadow Banks; Tax Arbitrage; Targeting the Ratio of Risk Weighted to Total Assets to Maximise the Return on Equity; Summary; Appendix to Chapter 2: Problems with Pillar 1; References; 3 The Watershed Year of 2004: Origins and Causes of the Crisis; Introduction; Global Competition and the Equity Culture for Banking; Remuneration; Causality; Institutional and Regulatory Issues
Why Subprime Securitisation Was Concentrated in the USAWhy US Subprime Securitisation Accelerated from 2004; The American Dream Act; The Fannie and Freddie Caps; The Announcement of Basel II; The SEC Rule Changes in 2004; Corporate Governance; The Crisis Hits, the Lehman Moment; Appendix to Chapter 3: Modelling the Acceleration of US RMBS from 2004; References; 4 Business Models of Banks and Global Contagion; Introduction; Contrasting Banking Conglomerate Asset and Liability Composition; Synthetic CDO Issuance by Banks; Issuance of Credit Derivative Structured Products
Capital Inflows, Foreign Exchange Intervention and Bond BuyingThe Impact of the Rise of Asia on the West; The Competitive Response of Western Companies to Competition from Asia; The Impact of Import Penetration and Firm Innovation on Western Labour Markets; Deflation Pressures in Firms Most Affected by Globalisation; Summing up the Globalisation Background to the Crisis in the USA; The Great Bond Rally; The Great House Price Rally; Appendix to Chapter 1: Modelling the Effect of Foreign Buying on US Bond Yields; References; 2 Financial Innovation and Basel II
Introduction to Financial Deregulation and InnovationThe Basel Accords I and II; Financial Innovations: Securitisation and Derivatives; Support for Housing in the USA; Packaging Mortgages; Trading Mortgages Take off; Securitisation Follows; The 'Waterfall'; The Mortgage Conduit (REMIC) and Structured Investment Vehicles (SIVs); Teaser Rates and On-Selling; Derivatives; Derivatives Have a Long History; But the Huge Expansion of Derivative Activity Is Recent; Regulating OTC Derivatives in the Run-up to the Crisis; The Demand for Securitisation and Derivatives
Basic Bank Balance Sheet ArithmeticThe Boom in Derivatives; Regulatory and Tax Arbitrage with Complete Markets in Credit; A Basic Regulatory Principle; Banks, Implicit Government Guarantees and Shadow Banks; Tax Arbitrage; Targeting the Ratio of Risk Weighted to Total Assets to Maximise the Return on Equity; Summary; Appendix to Chapter 2: Problems with Pillar 1; References; 3 The Watershed Year of 2004: Origins and Causes of the Crisis; Introduction; Global Competition and the Equity Culture for Banking; Remuneration; Causality; Institutional and Regulatory Issues
Why Subprime Securitisation Was Concentrated in the USAWhy US Subprime Securitisation Accelerated from 2004; The American Dream Act; The Fannie and Freddie Caps; The Announcement of Basel II; The SEC Rule Changes in 2004; Corporate Governance; The Crisis Hits, the Lehman Moment; Appendix to Chapter 3: Modelling the Acceleration of US RMBS from 2004; References; 4 Business Models of Banks and Global Contagion; Introduction; Contrasting Banking Conglomerate Asset and Liability Composition; Synthetic CDO Issuance by Banks; Issuance of Credit Derivative Structured Products