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Global Economic System, The

Global Economic System, The

How Liquidity Shocks Affect Financial Institutions and Lead to Economic Crises

George Chacko, Carolyn Evans, Hans Gunawan, Anders Sjoman

Jul 2011, Hardback, 288 pages
ISBN13: 9780137050123
ISBN10: 0137050127
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Written for financial professionals, the authors thoroughly explain the modern global credit system; the roles of banks, hedge funds, insurers, central banks, mortgage markets, and other participants; and the credit-related instruments they rely on. In particular, the authors illuminate the crucial importance of liquidity, and show why liquidity failures have been the key cause of all major market crashes for the past several decades. The Global Financial System thoroughly examines economic environments in which slow de-leveraging leads to prolonged sluggish growth, and compares today's environment to other periods of deleveraging, such as the Great Depression and the Japanese economic meltdown of the '90s and '00s. It predicts potential pathways for the current crisis, and offers essential guidance to both policymakers and investment decision-makers.

Chapter 1: Motivation for Understanding Liquidity Risk 1

Chapter 2: Liquidity Risk: Concepts 11

Chapter 3: The Great Depression 59

Chapter 4: Japan’s Lost Decade 105

Chapter 5: The Great Recession 173

Chapter 6: Conclusion 247

Index 261

A sophisticated, higher-level look at financial institutions in the new global economy, how they are interconnected, and why they fail.

  • Explains the interconnected, interdependent global financial world in the context of recent market crises and other events.
  • Includes a thorough discussion of the core cause of most major market and economic crashes: failures of liquidity.
  • Not a beginner's book: designed for readers who already understand the basics of finance, including working professionals and advanced students.
  • George Chacko is Associate Professor of Finance at Santa Clara University’s Leavey School of Business and formerly Associate Professor at Harvard Business School, Managing Director at State Street Bank, and Chief Investment Officer at Auda Alternative Investments. He holds a Ph.D. and M.A. in Business Economics from Harvard University and a B.S. from MIT.

    Carolyn L. Evans is Associate Professor of Economics at Santa Clara University. She has worked at the Federal Reserve Bank of New York, the Federal Reserve Board of Governors, and the White House Council of Economic Advisers. She holds a Ph.D. and M.A. in Economics and a B.A. in East Asian Languages and Civilizations, all from Harvard University.

    Hans Gunawan is Senior Financial Analyst at Skyline Solar and formerly a manager of financial planning and analysis at JAPFA. He holds an MBA from Santa Clara University and a B.S. from University of California, Berkeley.

    Anders Sjöman is Vice President of Communications at Voddler. He was formerly Senior Researcher for Harvard Business School’s Paris-based Europe Research Center. He holds an M.Sc. from the Stockholm School of Economics.

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