By Simon Johnson
Despite its key function in developing the ruinous monetary main issue of 2008, the yankee banking has grown higher, extra ecocnomic, and extra immune to legislation than ever. Anchored through six megabanks whose resources quantity to greater than 60 percentage of the country’s gross household product, this oligarchy proved it might probably first carry the worldwide financial system hostage after which use its political muscle to struggle off significant reform. 13 Bankers brilliantly charts the increase to energy of the monetary quarter and forcefully argues that we needs to get a divorce the massive banks if we wish to steer clear of destiny monetary catastrophes.
Updated, with extra research of the government’s fresh try to reform the banking undefined, it is a well timed and professional account of our political economic system.
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Additional info for 13 Bankers: The Wall Street Takeover and the Next Financial Meltdown (Vintage)
So long as the political establishment remained captive to the idea that America needs big, sophisticated, risk-seeking, highly profitable banks, they had the upper hand in any negotiation. Politicians may come and go, but Goldman Sachs remains. The Wall Street banks are the new American oligarchy—a group that gains political power because of its economic power, and then uses that political power for its own benefit. Runaway profits and bonuses in the financial sector were transmuted into political power through campaign contributions and the attraction of the revolving door.
But despite J. P. Morgan’s financial muscle, the private sector could not come up with sufficient funds. S. 63 The Panic of 1907, which nearly brought the financial system crashing down, clearly demonstrated the risks the American economy was running with a highly concentrated industrial sector, a lightly regulated financial sector, and no central bank to backstop the financial system in a crisis. The major private banks might be able to reshape industries as they wished, but they could not be relied upon to stabilize the financial system in a crisis, especially with J.
Derivatives are essentially zero-sum transactions. The face value, or notional value, of a derivative is the basis on which the value of the transaction is calculated. For example, in an interest rate swap, the payments made by the two parties are calculated as interest rates (percentages) on the notional value; the amount of money that changes hands is much lower than the notional value. The market value of a derivative contract is calculated by the Bank for International Settlements as the current value of the contract to the party that is “in the money”—in other words, the amount of money that would change hands in order to close out the contract at this moment.
13 Bankers: The Wall Street Takeover and the Next Financial Meltdown (Vintage) by Simon Johnson