Monday, January 18, 2016

The Impact Of China’s Slower Growth On Global Financial Assets

The Impact Of China’s Slower Growth On Global Financial Assets
Connecting The Dots

Many current market pundits claim that the present reaction to slower Chinese Growth is overblown because there are minimal direct connections between the Chinese Financial System and the Triad [North America, Europe, and Japan] since Chinese banks lend almost exclusively to Chinese firms. Further there is minimal exposure by US firms or banks with the at-risk State-owned Chinese enterprises. Therefore as long as US growth remains steady US markets will be OK.

From their perspective the dramatic recent drops in the US, Japanese and European stock markets in concert with the sharp drop in Chinese markets as well as in oil prices is empathetic and not substantive except in the rare situation such as Yahoo due to their large ownership in Alibaba, the Chinese Amazon. If one accepts this viewpoint US, European and Japanese investors should look at the recent drops as only market corrections and not as something systemic that could impact the global financial system and portfolio values longer-term. 

However, accepting this facile explanation at face value would be a mistake similar to accepting Wall Street’s view that the sub-prime market crisis was manageable because over the long-term US housing prices tended to rise.

Saturday, January 2, 2016

The Enduring Relevance of “Manias, Panics, and Crashes”


Dear Bubblers, 

The following Preview of The New Edition of the KAM Paradigm should be illuminating for all of us. 

Best, Bill Rapp

The Enduring Relevance of Manias, Panics, and Crashes

The seventh edition of Manias, Panics, and Crashes has recently been published by Palgrave Macmillan. Charles Kindleberger of MIT wrote the first edition, which appeared in 1978, and followed it with three more editions. Robert Aliber of the Booth School of Business at the University of Chicago took over the editing and rewriting of the fifth edition, which came out in 2005. (Aliber is also the author of another well-known book on international finance, The New International Money Game.) The continuing popularity of Manias, Panics and Crashes shows that financial crises continue to be a matter of widespread concern.

Friday, December 11, 2015

Highlights of the Chicago Federal Reserve 2015 Forecasting Conference

Highlights 
Chicago Federal Reserve 2015 Forecasting Conference

December 4, 2015

The Conference Participants met at the Chicago Federal Reserve to present, hear and discuss the US and Global Economic outlook for 2016.

The Conference Participants met at the Chicago Federal Reserve to present, hear and discuss the US and Global Economic outlook for 2016.

Forecast – The economic forecast presented by the Leir Bubble Center Director at the Conference sponsored by the Chicago Federal Reserve reflected the views developed during the Leir Bubble Conference in September plus subsequent economic and political events. He has thus projected relatively slow growth in 2016 similar to 2015 including very low growth in the first quarter with a pick-up in the second quarter and a dip in the 3d quarter before ending the year with relatively moderate growth. Overall he has projected 2015-2016 US real GDP growth at 2.5% with the unemployment rate falling to 4.6%. A detailed Excel spreadsheet has been posted along with this summary.


Sunday, September 20, 2015

Highlights of the Leir Bubble Center 2015 Bubble Conference

Highlights Leir Bubble Center 2015 Bubble Conference

Bubbles & Politics: China, 1857, 1929

September 18 -19, 2015


The Conference Participants met at the Leir Retreat in Ridgefield, CT that was formerly the estate of Henry J. Leir to discuss over two days various research presentations related to some issues and concerns that have arisen from an apparent increase since the 1970s of financial bubbles and their impact not only on the global financial system but also politics. The topics covered ranged from the consequences of a dramatically slowing Chinese economy to the historical political and social consequences of major financial crises.

Sunday, September 28, 2014

Highlights of the Leir Bubble Center 2014 Bubble Conference

Highlights Leir Bubble Center 2014 Bubble Conference

Globalization, Bubbles and Too Big To Fail

September 19 -20, 2014

The Conference Participants met at the Leir Retreat in Ridgefield, CT that was formerly the estate of Henry J. Leir to discuss over two days various research presentations related to issues and concerns arising from an apparent increase since the 1970s in the frequency of financial bubbles and their impact on the global financial system. The topics covered ranged from the role of globalization or the reduction since the early 1970s in the barriers to international trade, investment and financial flows in creating bubbles to the creation of mega-banks that are deemed too big to fail when a bubble bursts.


Sponsorships & memberships for 2015 Leir Bubble Conference now available

New Jersey Institute of Technology's (NJIT) School of Management (SOM) 
Leir Center for Financial Bubble Research:

4th Annual Two-day Bubble Conference, September 19-20, 2014: 
"Bubbles and Globalization and the Emergence of Too-Big-to-Fail Financial Organizations"

Held at: The Leir Retreat Center, 220 Branchville Road, Ridgefield, CT 06877

Funded and Supported by: The Leir and Ridgefield Foundations; 
The Leir Retreat Center; and NJIT SOM

2015 Co-Sponsorships / Memberships NOW Available: $5,000, which includes: invitation to the conference, opportunity to present, sponsor research, access to NJIT Academic team, access to research in progress, co-op student programs, and recruiting and speaking opportunities throughout the year.


Tuesday, September 16, 2014

Agenda for 2014 Leir Bubble Conference

Agenda September 2014

Conference on Globalization, Bubbles, Too-Big-to-Fail-or-Prosecute

Friday September 19, 2014

Morning - Arrival

Noon – Lunch at the Leir Center Retreat – Welcome By Arthur Hoffman – President Leir and Ridgefield Foundations

Introduction Bill Rapp (NJIT) – Primary Purpose Of The Conference Is To Improve Our Understanding Of Global Systemic Risk And How It Has Evolved

12:45 – 1:30pm Overview and Introduction Relationship Globalization, Increased Frequency Of Bubbles and Emergence Financial Firms Too Big to Fail or Prosecute – Bill Rapp

Defining “Globalization” as trend since mid-1970s for increasing connectedness global economy and financial system due to declining national barriers to trade and FDI combined with historic advances in communications and transport.

Increase in frequency and international character of Financial Bubbles during this period and identification of apparent link between decrease in regulatory barriers and technological change and “shocks” leading to specific bubbles. Role FDI and shifts in comparative and competitive advantage [International Product Cycle] in contributing to Emerging Market Bubbles.

Emergence 1990s of highly interconnected mega-financial institutions as part of the globalization process that became SIFIs and too big to fail or prosecute.

1:30-2:15pm: Data and Regulations related to Too Big to Fail or Prosecute  – Discussion led by Ben Chou

2:15-3:00 SIFIs and Concept Of Too Big To Fail as Failure Federal Reserve Bank Regulation – Discussion from Notes led by Bob Aliber

3:00-3:15 – Break

3:15-4:15 Identifying The Potential Bad Actors Through Facial Recognition And Content Technology– Discussion led by James Cicon and Ali Akansu (NJIT)

4:15-4:45 – Globalization and the Growth in Derivatives Markets and Global Financial Interconnectedness – Ron Sverdlove [NJIT]

4:45-5:00 – Break

5:00-5:45 – Globalization and Development of the Unloved Dollar Standard Discussion led by Ron McKinnon

5:45-6:15 – Bubbles as Function of Reaching For Yield, Foreign Investor Optimism and Undervalued Risk - Discussion led by Marty Lowy

6:15-6:30 - Break

6:30-7:00 – Cocktails

7:00 -8:45 Dinner and Open Discussion on “The Everything Boom And Bubble” led by Mike Ehrlich (NJIT), and Michael Stockman – based distribution of article from the NY Times.

Saturday September 20, 2014

8-8:30am – Breakfast at the Leir Center or if you are an early riser at the hotel.

8:30-10:30am – Further Presentations Of Some Research Results

8:30-9:15 – Using an Agent based Model to Assess Systemic Risk – Richard Bookstaber (Office Treasury).

9:15 -10:00 – Media and the Market Timing of Financial Asset Price Increases - Discussion led by Mike Ehrlich and Songhua Xu [NJIT]

10:00-10:15 – Break

10:15 – 11:00 – Too Big To Fail from a Legal Perspective – Randy Guynn

11:00 – 11:45 - More on Too Big To Fail  - Discussion led by Tom Synott

11:45-12:00 - Break

12:00 – Lunch – Legal Aspects Of Too Big To Prosecute or Jail – Randy Guynn

1:15 – 2:00 – Open Discussion with focus on question whether China is a possible source of Systemic Risk

Download a copy of the agenda here.