Luncheon address by Leo Melamed

Melamed, Leo

doi:10.1017/s0272503700074929

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“…This could especially be seen when, immediately after the collapse of the Bretton Woods system of fixed exchange rates, the Chicago Mercantile Exchange (the world’s central futures market in livestock long after the slaughterhouses were gone from Chicago) gave birth to the financial derivatives revolution by inventing a futures market in currencies. According to the head of the Chicago Mercantile Exchange, Leo Melamed, who initiated the process in 1971 with the help of Milton Friedman, this could not have been done without ‘the cadre of traders who left the known risks of the cattle, hog and pork belly pits for the unknown dangers of foreign exchange’ – although it also took plenty of ‘planning, calculation, tenacity and arm-twisting’ on his part (Melamed 1992: 43). The Chicago Board of Trade, which was also still the world’s centre of futures trading in wheat, corn and soya even though grain was no longer stored in Chicago, soon followed by launching a futures market in US Treasury securities.…”

Section: The Regulatory Roots Of Neoliberal Financementioning

confidence: 99%

“…Melamed recognized that the Commodity Futures Trading Commission would be ‘beneficial to the growth of our markets. Our plans relating to new financial instrument futures were ambitious and could be greatly assisted by a federal stamp of approval’ (Melamed 1992: 108).…”

Section: The Regulatory Roots Of Neoliberal Financementioning

confidence: 99%

“…It was on this foundation that the internationalization of the derivatives markets took off in the next decade. It was institutionalized with the opening of the London International Financial Futures Exchange in 1982, on the occasion of which Melamed (1992: 70) noted: ‘It was necessary first to convince the world financial community that financial futures were a necessary adjunct to the management of risk. It took years of late nights and early mornings, an incalculable amount of traveling, unceasing gospel spreading, arm twisting and ear bending.’ It was on this, more than on risk-modelling equations provided by Nobel prize-winning economists, that the derivatives revolution was built.…”

Section: The Regulatory Roots Of Neoliberal Financementioning

confidence: 99%

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Political Economy and Political Power: The American State and Finance in the Neoliberal Era

Gindin¹

2014

Gov. & oppos.

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Understanding the role of the American state in the era of neoliberal finance requires a scale of analysis that can identify not only the domestic but also the international role of the informal empire the US established in the middle of the twentieth century for superintending capitalism on a world scale. This article demonstrates that it was not so much neoliberal ideology that broke the old system of financial regulations, as it was the latter’s increasingly dysfunctional effects as finance outgrew the New Deal incubator through the post-war decades. Through the Bretton Woods crisis and the stagflation of the 1970s, institutional reform in the financial sector became a key dimension of broader competitive capitalist strategies for innovation and expansion. While this certainly involved extensive leveraging and speculation, it met the hedging needs not only of financial institutions but also of the many corporations seeking protection from the rapidly evolving vulnerabilities associated with global trade and investment. Yet the financial volatility that inevitably resulted from those very transformations meant that the Federal Reserve’s function as lender of last resort was increasingly called upon, just as the Treasury came to define its role as that of ‘failure containment’ on a global scale. On the basis of this theoretical and historical perspective, the article analyses the causes and consequences of the 2007–8 financial crisis and the ‘old/new practice of failure containment’ that has characterized the American state’s response to it.

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Section: The Regulatory Roots Of Neoliberal Financementioning

confidence: 99%

Section: The Regulatory Roots Of Neoliberal Financementioning

confidence: 99%

Section: The Regulatory Roots Of Neoliberal Financementioning

confidence: 99%

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