The global financial crisis : triggers, responses and aftermath

266 Pages·2012·3.22 MB·English

by  Tony Ciro

The Global Financial Crisis
Triggers, Responses and Aftermath
Tony Ciro
The Global Financial crisis
This page has been left blank intentionally
The Global Financial crisis
Triggers, responses and aftermath
Tony ciro
Australian Catholic University, Australia
© Tony ciro 2012
all rights reserved. no part of this publication may be reproduced, stored in a retrieval system
or transmitted in any form or by any means, electronic, mechanical, photocopying, recording
or otherwise without the prior permission of the publisher.
Tony ciro has asserted his right under the copyright, Designs and Patents act, 1988, to be
identified as the author of this work.
Published by
ashgate Publishing limited ashgate Publishing company
Wey court east suite 420
Union road 101 cherry street
Farnham burlington
surrey, GU9 7PT VT 05401-4405
england Usa
www.ashgate.com
British Library Cataloguing in Publication Data
ciro, Tony.
The global financial crisis : triggers, responses and aftermath.
1. Global Financial crisis, 2008-2009. 2. Financial
crises--case studies. 3. bank failures. 4. international
finance. 5. Economic stabilization. 6. United States--
economic policy--2001-2009. 7. United states--economic
policy--2009- 8. structural adjustment (economic policy)--
european Union countries. 9. Financial institutions--law
and legislation. 10. international economic relations.
i. Title
330.9'0511-dc22

Library of Congress Cataloging-in-Publication Data
ciro, Tony.
The global financial crisis : triggers, responses and aftermath / by Tony Ciro.
p. cm.
includes bibliographical references and index.
ISBN 978-1-4094-1139-0 (hbk) -- ISBN 978-1-4094-1140-6 (ebk)
1. Global Financial crisis, 2008-2009. 2. capital market--law and
legislation. 3. Financial services industry--law and legislation.
i. Title.
K1114.c57 2012
330.9'0511--dc23
2011045192
isbn 9781409411390 (hbk)
ISBN 9781409411406 (ebk) II
Printed and bound in Great britain by the
MPG books Group, UK.
Contents
Preface vii
List of Acts and Cases ix
List of Abbreviations xi
About the Author xiii
Introduction: Timeline of the Crisis 1
1 Previous Crises 13
2 Triggers of the Crisis 33
3 The Crisis Goes Global 55
4 Financial Markets and the GFC 75
5 Rescue Packages and Policy Responses 93
6 Inquiries and Proposals for Reform 141
7 New Financial Markets Regulation 169
8 The Way Forward 207
Bibliography 219
Index 239
This page has been left blank intentionally
Preface
Writing a book is always challenging, especially when the topic is a constantly
moving target such as the global financial crisis. The inspiration for writing the
book involved the idea of providing commentary on and analysis of one of the
most catastrophic global economic events to confront the international economy
in the modern era. Not since the 1930s Great Depression has the world witnessed
so much panic, volatility and uncertainty in international financial and currency
markets.
In what is now described as the “Great Recession,” the millions of workers
who lost their jobs as a result of the financial crisis demonstrate the human face of
the modern-day tragedy. The demise of Lehman Brothers was the single greatest
catalyst for the global crisis that would eventually undermine confidence and trust,
even with seasoned and sophisticated investors.
Despite staging a recovery following unprecedented government and central
bank intervention, the international economy remains fragile and hostage to a
“wall of worry.” Headwinds in the form of the European sovereign debt crisis,
burgeoning US government debt and global imbalances remain and continue to
pose substantial challenges to the international recovery effort.
The Chinese proverb, “may you live in interesting times” is often described as a
curse. Whilst intended as a curse, it may well be symptomatic of the current turmoil
confronting the world’s financial markets. Indeed, global events in the last decade
have demonstrated great upheaval, economically, socially and environmentally.
The current financial crisis has been no different. Financial markets had become
dislocated, dysfunctional and disruptive. The global economy now needs a period
of relative calm to prevail and a return to stable economic conditions. Indeed,
financial markets all over the world need to experience less interesting times.
Publishing with Ashgate requires the manuscript to be peer-reviewed by
experts in the field. I am grateful for the anonymous comments made by the
reviewers that have been incorporated in the manuscript. I also want to thank
Alison Kirk from Ashgate who was thoroughly professional and provided helpful
comments and assistance along the way. I also want to thank my assistant De-anne
English-McAdams who provided valuable assistance with the preparation of the
Bibliography and Table of Contents. Last but not least, I want to thank my family,
who have always provided me with encouragement and support.
Tony Ciro
Melbourne
Australia
This page has been left blank intentionally
List of Acts and Cases
Bank Holding Company Act 1956 (US)
Banking Act 1933 (US)
Banking Act 1935 (US)
Bank Products Legal Certainty Act 2000 (US)
China Currency Manipulation Act 2008 (US)
Commodity and Futures Trading Act 1974 (US)
Commodity Exchange Act 1936 (US)
Commodity Futures Modernization Act 2000 (US)
Corporations Act 2001 (Cth)
Cuomo v Clearing House Association Case No 08-453, 129 S.Ct. 2710 (2009)
Dodd–Frank Wall Street Reform and Consumer Protection Act 2010 (Pub.L.
111–203, H.R. 4173) (US)
Economy Protection Bill 2008
Emergency Economic Stabilization Act 2008 (P.L. 110-343; H.R.1424).
Federal Deposit Insurance Reform Act 2005 (US)
Federal Reserve Act 1913 (12 U.S.C. ch. 3)
Financial Services Act 1986 (UK)
Financial Services Act 2010 (UK)
Financial Services and Markets Act 2000 (UK)
Fraud Enforcement and Recovery Act 2009 (P.L. 111-21) (US)
Futures Trading Act 1921 (US)
Gambling Act 2005 (UK)
Gaming Act 1710 (UK)
Gaming Act 1835 (UK)
Gaming Act 1845 (UK)
Gaming Act 1845 (UK)
Gaming Act 1892 (UK)
Gaming and Betting Act 1912 (NSW)
Grain Futures Act 1922 (US)
Grizewood v Blane 138 ER 578, (UK)
Hill v Wallace 259 US 44 (1922), US Supreme Court, Washington, DC