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Date Submitted: 05/05/2011 11:43 AM
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 ...