Fragile Finance: Debt, Speculation and Crisis in the Age of Global Credit (Palgrave Macmillan Studies in Banking and Financial Instiutuions)

203 Pages·2016·1.55 MB·English

by  Anastasia Nesvetailova

Fragile Finance
Debt, Speculation and Crisis in the
Age of GlobalCredit
Anastasia Nesvetailova
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Palgrave Macmillan Studies in Banking and Financial Institutions
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Yener Altunbas, Blaise Gadanecz and Alper Kara
SYNDICATED LOANS
A Hybrid of Relationship Lending and Publicly Traded Debt
Elena Beccalli
IT AND EUROPEAN BANK PERFORMANCE
Santiago Carbó, Edward P.M. Gardener and Philip Molyneux
FINANCIAL EXCLUSION
Violaine Cousin
BANKING IN CHINA
Franco Fiordelisi and Philip Molyneux
SHAREHOLDER VALUE IN BANKING
Munawar Iqbal and Philip Molyneux
THIRTY YEARS OF ISLAMIC BANKING
History, Performance and Prospects
Mario La Torre and Gianfranco A. Vento
MICROFINANCE
Philip Molyneux and Munawar Iqbal
BANKING AND FINANCIAL SYSTEMS IN THE ARAB WORLD
Anastasia Nesvetailova
FRAGILE FINANCE
Debt, Speculation and Crisis in the Age of Global Credit
Andrea Schertler
THE VENTURE CAPITAL INDUSTRY IN EUROPE
Alfred Slager
THE INTERNATIONALIZATION OF BANKS
Patterns, Strategies and Performance
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Fragile Finance
Debt, Speculation and Crisis in the Age of
Global Credit
Anastasia Nesvetailova
City University, London, UK
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Anastasia Nesvetailova 2007
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For Gennady (1939–1999) and Eleonora Nesvetailov
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Contents
Acknowledgments ix
List of Abbreviations x
Introduction 1
1 The Rise of Fragile Finance 9
The post-World War II international financial regime 10
Deregulation and privatisation 11
Financial innovation 16
Finance as a global system 20
2 A Theory of Fragile Finance 25
Efficient market theory of finance: Crisis? What crisis? 26
Why EMT is not a theory of crisis 29
Mutation of the orthodoxy 33
3 Keynesian and Heterodox Theories of Financial Crises 42
Money, finance and speculation 43
International political economy and the ‘disjuncture
paradigm’ 45
The errors of the disjuncture thesis 51
4 Hyman Minsky and Fragile Finance 56
The financial instability hypothesis 57
Minskyan financial fragility in the international context 64
5 Dilemmas and Paradoxes of Fragile Finance 72
Destabilising stability 72
The illusions of liquidity 74
A new type of crisis 82
6 The East Asian Crisis: A Minskyan View 85
The rise of financial fragility in East Asia 87
The Thai crisis 91
The South Korean crisis 96
Crisis contagion 99
Illiquidity and Minskyan debt deflation in East Asia 101
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viii Contents
7 Ponzi Capitalism Russian-style 105
Russian laissez-faire 106
Speculation, Ponzi finance and debt 112
The crisis 116
A Minskyan crisis? 126
8 Ponzi Finance Goes Global 128
Brazil, 1999 130
Turkey, 2000–2001 132
Argentina, 2001 133
Financial fragility in the emerging markets: some lessons 134
Minskyan crises in the U.S. economy 136
After the crises 142
Conclusion 147
Central banks and illiquidity 147
Towards a new post-Keynesian financial architecture? 151
Bibliography 156
Name Index 179
Subject Index 184
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Acknowledgments
Writing can be a very rewarding, but also a frustrating process.
Without the help of family and friends, it would have been impossi-
ble to balance the highs and lows of research. My deepest gratitude
for his extraordinarily generous help, guidance and support for this
book (and many, many, many previous drafts) goes to Randall
Germain.
My students at the University of Sussex were a wonderful audience
and their questions and comments provided many useful insights
into the direction of this book. I am most grateful to my fellow
colleagues, for stimulating intellectual exchange and constructive
criticisms: Duncan Wigan, Sam Knafo, Johnna Montgomerie, Kees
van der Pijl, Or Raviv, Phil Cerny, Dick Bryan, Avinash Persaud
Susanne Soederberg, Peter North and many others. Many special
thanks to Hazel Woodbridge, Shirley Tan and the rest of the produc-
tion team at Palgrave Macmillan for their hard work and efficiency.
I am indebted to Virot Ali, for his excellent research support and
expertise on East Asia. And to Ronen Palan, for patient help with
editing and much more.
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