Minsky’s Money Manager Capitalism

MINSKY’S
MONEY
MANAGER
CAPITALISM
 AND
THE
GLOBAL
FINANCIAL
CRISIS



L.
RANDALL
WRAY
 University
of
Missouri‐Kansas
City,
UMKC
 WRAYR@UMKC.EDU
 WWW.CFEPS.ORG
 WWW.LEVY.ORG
 hJp://neweconomicperspecQves.blogspot.com/


*I
thank
Yeva
Nersisyan
for
the
research
assistance
underlying
this
analysis


Global
crisis:
Lessons
from
Keynes
and
 Minsky


•  Crisis
represents



–  an
ins9tu9onal
failure
(banks
mutated
from
 u9li9es
to
casinos);

 –  an
intellectual
failure
(dangerous
view
of
efficacy
 of
mkts);

 –  and
moral
failure
(system
built
on
money
values)


•  Ins9nc9ve
and
quick
return
to
Keynes
(the
 master—Skidelsky)
 •  With
Minsky’s
insights
on
the
transforma9on
 that
led
to
the
crisis


Is
the
Financial
Crisis
over?


•  No.
Hardly
begun:


–  Residen9al
real
estate,
commercial
real
estate,
shopping
mall
debt,
 home
equity
loans,
credit
card
debt,
student
loans,
auto
related
debt,
 business
loans,
Euro
debt,
developing
country
debt,
state
and
local
 government
debt,
pension
funds,
insurance
companies,
credit
default
 swaps,
CDOs,
CDO‐squared,
CDO‐cubed,
SPVs,
SIVs,
Life
insurance
 seVlements,
peasant
insurance,
REITs,
junk
bonds,
interest
rate
swaps,
 financialized
health
care…



•  This
is
round
3
of
a
9
round
bout:


–  Round
1
=
liquidity
crisis
of
shadow
banks
 –  Round
2
=
wave
of
insolvencies
of
home
mortgage
specialists
 –  Round
3
=
bail‐outs
and
cooking
the
books
to
pay
bonuses
 –  Round
4
=
another
round
of
defaults
forces
loss
recogni9on
 –  Round
5
=
knock‐out
punch
with
a

full
scale
Minsky‐Fisher
 debt
defla9on
dynamic


A
Minsky
Moment
or
a
Minsky 
Half‐Century? 


•  Stages
Approach


–  Commercial
capitalism
 –  Finance
capitalism
 –  Paternalis9c
(Managerial‐Welfare
State)
capitalism
 –  Money
Manager
capitalism
(financializa9on,
ownership 
society,
neoliberalism,
neoconserva9vism,
shadow 
banking)


•  •  •  •  •  Stability
bred
instability
 Accumula9on
of
financial
assets/liabili9es
 Globaliza9on
 Securi9za9on
 Self‐supervision
...