Lehman, Bears Stearn, Citibank, Merrill Lynch, Société Generale, and UBS, Wachovia
International bank lending 16x 1975-95 $265 billion in 1975 $4.2 trillion in 1995 $40 trillion in 2008 Int’l financial flows 14x 1980-2006 $12 trillion in 1980 $167 trillion in 2006 Foreign investors share of US treasuries — 60% US corporate bonds — 25% US stocks — 12% Forex China $1.8 trillion Japan $1 trillion Russia $560 billion India $290 billion
1970s First oil crisis US dollar devalued twice USA inflation + low growth stagflation Currency crises in 24 emerging market economies 1975-1997 5-8 percent reduction in GDP in 2-3year period
Indonesia’s GDP 14% in 1998. Argentina’s GDP 7% in 1989, 11% in 2002.
Global Financial Instability Symptom of a deeper malady Expression of a deeper evolutionary process Patchwork mechanism may work temporarily Will be followed by even greater crisis later
Harvard economist key White House adviser during 1970s