Oct 28th 2009
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Loading ...Capital market dysfunctionality conference: Living online library
Above is an interactive feature containing overviews of the speakers and subjects covered at the Capital Market Dysfunctionality Conference at UTS, in October 2009. Please use its inner navigation to interact with its content. The feature is also a living library containing the papers delivered at the conference, and we ask attendees and others to add reference resources – to enable it to grow during the conference and beyond, as a research and teaching aid.
The Global Financial Crisis began with a series of financial and economic imbalances which had developed at an increasingly frenetic pace over recent years. The first bubble to burst was in the US housing market and the consequences spread across asset classes and geographies like a series of tumbling dominos, each one taking down others as it fell, the momentum gathering and the impact of each collapse magnifying.
The widespread use of financial engineering to distribute risk, combined with the massive leverage that had been allowed to build in the system, fiscal policies, national economies and financial institutions were exposed as relying excessively on best case scenarios and inadequately prepared to cope with the crisis.
We had borrowed too much, against assets that were priced too high. When the good times were over, prices fell, and debts were called in. The global economy was caught short – from suburban mortgage borrowers, to international financial powerhouses, we didn’t have the cash to get out of debt and we couldn’t sell what we owned at a high enough price to cover what we owed.
How academics, policy makers and financial practitioners come to understand how a collapse on such a scale was possible, will largely determine what the response – if any – is appropriate.
The following conversation is the first of our Cafe21C interview series. B21C editor Mike Hanley talks to Dr Paul Woolley, founder of the Paul Woolley Centre for Capital Market Dysfunctionality at the London School of Economics, the University of Toulouse, and UTS; Ron Bird, Professor of Finance and Economics at UTS: Business, and Jack Gray, Adjunct Professor of Economics at UTS: Business. The topics ranged across the gamut of economics, from the inadequacy of the efficient markets hypothesis, through the impact of agents on the size of the financial markets and their efficiency, through to policy prescriptions to avoid another crisis.
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