Seminar: Global ulighed som en af hovedårsagerne til finanskrisen

TIME: Thursday, 4 October, 13 – 15

VENUE: Danish Institute for International Studies, Main Auditorium, Strandgade 71, ground floor, Christianshavn, 1401 Copenhagen K.

Ever since the outbreak of the current Global Financial Crisis, policy makers have been struggling to reconfigure financial regulation to avoid future repetitions of the system’s breakdown.

TIME: Thursday, 4 October, 13 – 15

VENUE: Danish Institute for International Studies, Main Auditorium, Strandgade 71, ground floor, Christianshavn, 1401 Copenhagen K.

Ever since the outbreak of the current Global Financial Crisis, policy makers have been struggling to reconfigure financial regulation to avoid future repetitions of the system’s breakdown.

In the past few days the European Commission has unveiled the first part of a plan to create a banking union, with unified supervision arrangements under the European Central Bank (ECB).

But, have the people responsible for shaping new regulation both within the EU and abroad understood the root causes of the crisis?

The dominant explanation of the crisis among both mainstream and heterodox economists is that the volume of toxic securities in the financial system grew to the point where the system could no longer cope, and that a series of supply-push factors drove the system to reach this point of critical mass.

The blame is then placed on the banks and their associates who created and distributed Collateralized Debt Obligations (CDO), while the investors who bought these products are considered passive agents.

Photis Lysandrou holds the view that demand-pull factors were also an important driving force behind the growth of the CDO market. His analysis brings global inequality to the centre of the CDO story.

Without low household incomes there would have been little demand for the sub-prime mortgage loans that formed the raw material for these structured credit products. At the same time, wealth concentration was key to elicit the observed demand for CDOs.

High net worth individuals were both a major source of the downward pressure on ordinary bond yields in the pre-2007 period and a major supplier of funds to the hedge funds who bought CDOs to satisfy the need for yield.

The policy implications of this analysis are that income distribution and wealth ownership have to be more equitably structured if global financial crises are to be avoided in the future.

Speakers:
Photis Lysandrou, Professor, London Metropolitan University, UK
Duncan Wigan, Assistant Professor, Copenhagen Business School
Jakob Vestergaard, Senior Researcher, DIIS

Programme:

13.00-13.10: Introduction; Jakob Vestergaard, Senior Researcher, DIIS

13.10-13.50: Global Inequality as One of the Root Causes of the Financial Crisis; Photis Lysandrou, Professor, London Metropolitan University, UK

13.50-14.05: Coffee Break

14.05-14.20: Discussant; Duncan Wigan, Assistant Professor, Copenhagen Business School

14.20-15.00: Comments and questions

Chair: Jakob Vestergaard, Senior Researcher, DIIS

The seminar will be held in English.

Please note that the doors will be closed at 13.00.

Participation is free of charge, but registration is required. Read more about the seminar and use the online registration form on the website no later than Wednesday, 3 October at 12 noon.

Please await confirmation by e-mail from DIIS for participation.