Publikace detail

The Pending Global Crisis: A Dark Future ahead of Us?

Autoři: Teplý Petr | Černohorská Liběna

Rok: 2011

Druh publikace: ostatní - článek ve sborníku

Název zdroje: Changing Perspectives of Management

Název nakladatele: Nepalese Academy of Management

Místo vydání: Kathmandu

Strana od-do: 221-233

Tituly:

Jazyk	Název	Abstrakt	Klíčová slova
eng	The Pending Global Crisis: A Dark Future ahead of Us?	While the details of financial crises may change over time, their essence remains the same; these crises are recognized by a cycle of abundant liquidity, rapid credit growth, and a lowinflation environment followed by an asset-price bubble implosion. Understanding the underlying weaknesses inherent in these bubbles has been a hard lesson for market participants to learn, but the most important lesson is how to prevent crises from repeating. The current market turbulence began in the mid-2000s when the US economy shifted to an unbalanced macroeconomic position. By 2007, mounting defaults in the US sub-prime mortgage market led to US market instability, unleashing a global fiscal contagion that spread around the world, roiling markets and causing world economic upheaval. This contagion led to, for example, the nationalization of big financial institutions, bank failures, the end of an era in investment banking, increased federal insurance on banking deposits, government bailouts and opportunistic investments by sovereign wealth funds. In this paper, we discuss the history, macroeconomic conditions, and milestones of the US mortgage crisis. Specifically, we describe key investment banking and risk management practices that exacerbated the impact of the crisis, such as relying on an originate-to-distribute model, risk-shifting, securitization techniques, ratings processes and the use of off-balance sheet vehicles. Consequently, we address key lessons for risk management derived from the current crises and recommend policies that should help diminish the negative impact of future potential crises. In addition, we present an ethics-based platform for students, academics and professionals to progress into the necessary ethical and judgment-oriented didactic models that will ultimately serve to impede many of these crises from arising in the future.	financial crisis; mortage market; securitization

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