Masters of Illusion: Bank and Regulatory Accounting for Losses in Distressed Banks

Kane, Edward J.

doi:10.36687/inetwp136

Cited by 3 publications

(3 citation statements)

References 10 publications

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“…Central bankers, given the task to safeguard the stability of the financial system, are in the stranglehold of financial speculators, who, using the ultra-low interest rates, continue to speculate, taking excessive risks, while knowingly betting on a persistent and unconditional policy backstop. Hence, central bank Quantitative Easing (QE) policies designed to help reduce systemic risks in financial systems, are, paradoxically, enlarging these risks -driven by low interest rates and the growing mismatch between abundant liquidity and a relative shortage of safe financial assets (Palma 2020;Kane 2020).…”

Section: The Oppressive Power Of Functionless Financial Investorsmentioning

confidence: 99%

Lessons for the Age of Consequences: COVID-19 and the Macroeconomy

Storm

2021

INET Working Paper Series

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Based on comparative empirical evidence for 22 major OECD countries, I argue that country differences in cumulative mortality impacts of SARS-CoV-2 are largely caused by: (1) weaknesses in public health competence by country; (2) pre-existing country-wise variations in structural socio-economic and public health vulnerabilities; and (3) the presence of fiscal constraints. The paper argues that these pre-existing conditions, all favorable to the coronavirus, have been created, and amplified, by four decades of neoliberal macroeconomic policies – in particular by (a) the deadly emphasis on fiscal austerity (which diminished public health capacities, damaged public health and deepened inequalities and vulnerabilities); (b) the obsessive belief of macroeconomists in a trade-off between ‘efficiency’ and ‘equity’, which is mostly used to erroneously justify rampant inequality; (c) the complicit endorsement by mainstream macro of the unchecked power over monetary and fiscal policy-making of global finance and the rentier class; and (d) the unhealthy aversion of mainstream macro (and MMT) to raising taxes, which deceives the public about the necessity to raise taxes to counter the excessive liquidity preference of the rentiers and to realign the interests of finance and of the real economy. The paper concludes by outlining a few lessons for a saner macroeconomics.

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Section: The Oppressive Power Of Functionless Financial Investorsmentioning

confidence: 99%

Lessons for the Age of Consequences: COVID-19 and the Macroeconomy

Storm

2021

INET Working Paper Series

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“…But parental resources may also be mobilized at the higher education level, especially in the case of academic difficulty. The literature on higher education has long highlighted financial barriers (for example, Goldrick-Rab, 2016; Kane, 1995) and more recently information biases (Abbiati and Barone, 2017;Usher, 2005) as drivers of social inequalities in higher education and it is possible that such barriers faced by disadvantaged students become even more salient in the case academic failure. In the case academic failure, it may become necessary to activate, for example, additional information to re-orientate, find additional funds to pay for an extra year of education or to invest in private tutoring.…”

Section: The Compensatory Advantage Mechanismmentioning

confidence: 99%

Overcoming failure in higher education: Social inequalities and compensatory advantage in dropout patterns

Herbaut¹

2020

Acta Sociologica

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The large proportion of dropout students from higher education has become a major concern in many industrialized countries. Despite consistent evidence of the association between social origin and dropout behaviour, it is unclear through which mechanisms social origin influences trajectories and educational outcomes in higher education, especially in countries with low financial costs for higher education studies. This study builds on the compensatory advantage mechanism to investigate the relationship between social origin, academic failure in higher education and dropout behaviour. Using a French longitudinal survey and event history analysis, results confirm that academic failure in the first year of higher education is a strong predictor of dropout, even after controlling for academic readiness for higher education. Supporting the compensatory advantage hypothesis, students from advantaged backgrounds are much less likely to drop out after academic failure than disadvantaged students and this result also holds for high-performing high-school graduates. These results stress the importance of taking into account the interplay between social origin and academic performance during higher education to reduce dropout behaviour.

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“…On the role of valuation in resolution see (SRB 2019) (EBA 2017) (de Groen, 2018)(Hellwig 2018). On the difficulty of implementing a valuation and supervisory regime that precludes forbearance see(Kane, 2020).…”

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confidence: 99%

Reset Required: The Euro Area Crisis Management and Deposit Insurance Framework

Huertas

2021

SSRN Journal

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The crisis management and deposit insurance (CMDI) framework in the euro area requires a reset.Currently the framework is far more likely to manufacture a crisis rather than enable the authorities to manage one. Specifically, the current framework is far more likely to trigger the doom loop between weak banks and weak governments than to terminate or untie it. Nor will the current framework necessarily protect deposits. There is no guarantee that a euro in covered deposits will remain a euro, if the bank in which the deposit is held fails, and/or the Member State in which the failing bank is headquartered defaults.The CMDI framework aims to enhance financial stability, limit recourse to taxpayer money, promote competition and protect depositors. These policy objectives remain valid. What needs to change is the method that authorities use to achieve those objectives. First, the approach needs to integrate microand macro-aspects of crisis management. In particular, the approach needs to take account of the prospective roles of the European Stability Mechanism, both as a provider of credit to Member States as well as a guarantor of the Single Resolution Fund. Second, the approach needs encompass the central bank as a provider of liquidity to banks individually and to the market as a whole. Finally, the approach needs to recognize that by the time any reform proposed as a result of this review would become effective, the SRB and the significant institutions in the euro area will have completed the transition and become fully resolvable via bail-in. This affords the euro area the opportunity to reset expectations about resolution.The euro area should take this opportunity to make the crisis management and deposit insurance framework more European and more uniform. Specifically, there should be a single presumptive path for dealing with failed banks: the use of bail-in to facilitate the orderly liquidation under a solvent-wind down strategy. This will protect deposits and set the stage for the transformation of the Single

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Masters of Illusion: Bank and Regulatory Accounting for Losses in Distressed Banks

Cited by 3 publications

References 10 publications

Lessons for the Age of Consequences: COVID-19 and the Macroeconomy

Lessons for the Age of Consequences: COVID-19 and the Macroeconomy

Overcoming failure in higher education: Social inequalities and compensatory advantage in dropout patterns

Reset Required: The Euro Area Crisis Management and Deposit Insurance Framework

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