A Global History of the Financial Crash of 2007-2010

by Lybeck, Johan A.

• ISBN13: 9781107648883
• ISBN10: 1107648882
• Format: Paperback
• Copyright: 2011-12-31
• Publisher: Cambridge Univ Pr

Summary

We have just experienced the worst financial crash the world has seen since the Great Depression of the 1930s. While real economies in general did not crash as they did in the 1930s, the financial parts of the economy certainly did, or, at least, came very close to doing so. Hundreds of banks in the United States and Europe have been closed by their supervisory authorities, forcibly merged with stronger partners, nationalized or recapitalized with the tax payers' money. Banks and insurance companies had, by mid 2010, already written off some 2000 billion dollars in credit write-downs on loans and securities. In this book, Johan Lybeck draws on his experience as both an academic economist and a professional banker to present a detailed yet non-technical analysis of the crash. He describes how the crisis began in early 2007, explains why it happened and shows how it compares to earlier financial crises.

Author Biography

Johan A. Lybeck has worked as Managing Director of Finanskonsult AB (Stockholm) and Risk Analysis SA (Brussels) for the last twenty-five years. As an academic, he has been, inter alia, a chaired professor of economics, associate professor of econometrics, and adjunct professor of finance. His banking career includes jobs as Senior Vice President of Swedbank (Stockholm) in charge of financial strategy, and as Chief Economist at Matteus Bank. He holds a Ph.D. degree in Economics (University of Michigan, 1971) and a "fil. lic." in Political Science (University of Gothenburg, 1986).

Table of Contents

List of figures	p. vii
List of tables	p. ix
Preface	p. xi
Acknowledgments	p. xvii
List of abbreviations	p. xviii
Introduction	p. 1
Financial crises in the USA and Europe, but not in Asia	p. 14
Chronology of events: January 2007-June2011	p. 29
Could today's financial crisis have been foreseen?	p. 95
The US housing market and the subprime crisis	p. 112
Securitization and derivatives spread the crisis around the world	p. 141
Inherent conflicts of interest in subprime securitization	p. 163
Write-downs in banks and insurance companies, 2007-2009	p. 169
Liquidity risk aspects of the crisis and a comparison with 1907 and 1929	p. 171
The liquidity-risk framework proposed by the FSA and the BIS	p. 210
Credit risk aspects of the crisis, rating and solvency	p. 214
Government support activities for banks' capital ratios, 2007-2010	p. 257
The proposed new capital requirements under Basel III	p. 274
Financial crises in modern history: similarities and differences	p. 280
Worldwide changes in regulation and supervision as a result of the crisis	p. 312
List of regulatory authorities in the USA	p. 358
Overview of bank taxes in different countries	p. 360
Outstanding issues	p. 361
Bibliography	p. 372
Index	p. 388
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