This paper from University of Massachusetts focuses on the ultimate cause of the global financial crisis. It suggests that, the flawed institutions and practices of what is often referred to as the New Financial Architecture (NFA), the globally integrated system of bank conglomerates and the so-called ‘shadow banking system’ of hedge funds, investment banks, and special investment vehicles, are responsible for the global financial crisis.
It traces the evolution of NFA and discusses its structural flaws. Key issues covered are: (i) that the efficient capital markets theory accepted by regulators, even though weak, is misleading; (ii) the incentives embedded in the NFA, which lead to excessive risk taking; (iii) that mortgage-backed securities, central to the current boom, are too complex to have been priced right, and that they thus eventually collapsed when the boom-time optimism faded; and (iv) a high generation of leverage by the NFA.
Paper can be found here
Supplement to our doom and gloom diet, CBI/PwC released financial services survey. The highlight from my perspective is on page 8 about the depressing mood of securities traders in relation to their business. Particularly a negative balance statistic of -92%.
Click here to get the survey publication.
Emerging markets with their liquidity-laden coffers and a knack of investments are becoming attractive destinations for skilled financial services professionals and investors. In particular it is Middle East with Dubai, India and South Asia with Mumbai and East Asia with Shanghai.
These markets and their SWF’s are also answering prayers with their bailout packages, resulting in increased stakes in the ever-so-global financial & capital markets.
See a few links below:
On the move: Lack of deals alters poaching season
Bankers in London and New York are being told to relocate
Wall Street 2007 – Shanghai, Dubai, Mumbai or Goodbye
Interesting article by Cynthia hosted by Bankersonline, it discusses technology/IT risk in banking context to a certain extent. However, it will not be much to expect some reference to the capital requirement regulation and how it acts as a board level motivation to take technology/IT risks management more seriously. More on it here