3000 word economics essay

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Department of International Politics

City, University of London

IP3024 Global Money and Finance

Autumn Term 2019-2020

Dr Stefano Sgambati, Course Convenor [email protected]

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1. Course Description The main aim of this course is to introduce students to complex issues with regards to money, finance and banking in global capitalism. Aimed at students from a wide variety of backgrounds, the course will help students build an understanding of the political and social foundations of global financial markets, learn about theories of finance and speculation, and become acquainted with studies of financialisation. The course will address both theoretical and practical questions about the nature and production of money, its linkages with debt, banking and speculation in financial markets, and explore how different classes of economic agents have become entangled with the upper layers of global finance. In order to facilitate a better insight into the operations of global financial markets, the course is structured as follows: after exploring key concepts about money and finance, and reconstructing a history of their contemporary context, the course will focus on the ways in which different agencies and structures – states, corporations, households, banks and related financial agencies operating in the shadows – have become ‘financialised’ starting from the 1970s.

2. Teaching, Learning and Assessment On completion of this module, students will:

• Be familiar with major changes in global capitalism that have propelled the financial sector to its leading position today;

• Demonstrate theoretical and empirical knowledge about the operation of global financial markets and monetary systems;

• Be able to draw lessons from the recent outbreaks of financial volatility and crises.

3. Assessment The assessment for this module has two components:

1. The New Bretton Woods Conference role game (case study pitch 15% + role game 15%) = 30% of final mark

2. Essay (3,000 words) = 70% of final mark

4. About the role game The world needs a new global monetary architecture and a new type of finance to address the urgent socio-economic and environmental problems of the present – stagnation, debt, austerity, inequality, poverty, environmental destruction, authoritarianism, involution of democratic institutions. Each tutorial group will form a team of private consultants and/or civil servants with knowledge of financial matters. The teams will organise (in week 10) and run (in week 11) a 50-minute session on macro themes part of the global agenda for a New Bretton Woods. The main objective of the conference sessions is not to offer a comprehensive plan for a New Bretton Woods but rather to (a) inform the New Bretton Woods Executive Committee (chaired

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by the course convenor plus other international delegates from City) about the cogent financial problems of the day and (b) present prospective solutions, guidelines, reform proposals or at least a list of priorities for the Committee to take under consideration in view of reaching the new agreements. The role game is split into two parts – ‘case study pitch’ and ‘conference session’ – that will take place over week 10 and week 11 respectively. They are each worth 15% of the final module mark (30% altogether). In preparation for week 10, students in each tutorial group will autonomously form small teams of civil servants and/or private consultants. Each team (4 to 6 people) will be responsible for pitching a case study and present it in week 10. The two teams that will score the highest points win the Case Study Pitch. The winning pitches will be the main themes of the New Bretton Woods conference session to be held in week 11. On week 10, mini teams will receive grades on their pitch (worth 15% of final mark). On week 11, students will receive grades on their performance for the role game proper (worth another 15% of final mark). While the work on both parts of the game has to be team-led, marks will be individual. For more detail, please consult the Role Game Guide.

5. About the final essay Final Essay: 3,000-word essay on the topic of your choice but authorised by the module leader. The topic must be broadly in line with at least one of the lectures’ main themes. The essay is worth 70% of the final mark. Deadline: Please follow the information in student handbook. All essays need to be uploaded on Moodle.

6. Attendance Attendance of lectures and participation in tutorials and class assessments are compulsory. Please notify me in advance in case of legitimate reason for absence.

7. Plagiarism Please consult Student Handbook on Academic Misconduct policy. When writing your essay, DO NOT:

• Copy, cut and paste • Copy stuff from your other essays • Cut and paste references you have no idea about (page numbers are essential) • Commission others to write your work

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8. Reflective Learning Week Please note that there will be no lectures or tutorials in week 6. There will be department wide activities for students this week. It also provides you with an opportunity to catch-up on coursework and to begin thinking about your assessed essay topic.

Course Outline

Week 1 Introduction Finance, Politics and Crisis

Week 2 Understanding Money and Finance Banking, Leverage and Financial Bubbles

Week 3 The Globalisation of American Money and Finance Reorganising World Money After Bretton Woods

Week 4 The Fiscal Crisis of States Consolidating Public Debts in the Neoliberal Era

Week 5 The Rise and Fall of Central Bank Governance From Inflation Targeting to Quantitative Easing

Week 6 Reading Week

Week 7 The Financialisation of Corporate Management The Stock Market as a Predatory Arena

Week 8 The Making of the Indebted Household Portfolio Society and the Everyday Politics of Securitisation

Week 9 Global Banks, Money Managers and Financial Markets The Global Banking Industry Today

Week 10 Role Game (Part 1) The New Bretton Woods – Case Study Pitch

Week 11 Role Game (Part 2) The New Bretton Woods – The Conference Panels

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Some books on global money and finance*: - Admati, A. and Hellwig, M. (2013), The Bankers' New Clothes. What's Wrong with Banking and What to Do About It, Princeton: Princeton University Press. - Aglietta, M. (2018) Money. 5,000 Years of Debt and Power, London: Verso. - Amato, M. and Fantacci, L. (2012) End of finance, Polity Press. - Lysandrou, P. (2018) Commodity. The Global Commodity System in the 21st Century, London: Routledge (Chapter 5: Control). - Mattli, Walter (2019) Darkness by Design. The Hidden Power in Global Capital Markets, Princeton University Press. - Mellor, M. (2010) The future of money. From financial crisis to public resource, London: Pluto Press. - Rethel, L. and Sinclair, T. (2013) The Problem with Banks, London: Zed Books (Chapter 5: Problems with reform proposals). - Ricks, M. (2016) The money problem. Rethinking financial regulation, Chicago, IL: University of Chicago Press. - Weber, Beat (2018) Democratising money? Debating Legitimacy in Monetary Reform Proposals, Cambridge University Press. - Wray, R. (2012) Modern Money Theory. A primer on macroeconomics for sovereign monetary systems, Basingstoke: Palgrave Macmillan. * All books contain a chapter on reform proposals and/or guidelines for the future.

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Week 1 Introduction Finance, Politics and Crisis Introductory Reading - Van der Zwan, N. (2014) Making sense of financialisation, Socio-Economic Review, 12: 99-129. - Thompson, F. and Dutta, S. (2016) Financialisation: A Primer. Available at: https://www.tni.org/en/publication/financialisation-a-primer

Week 2 Understanding Money and Finance Banking, Leverage and Financial Bubbles Keywords Money – banking – leverage – financial bubbles – liquidity – Minsky – financial instability – Ponzi finance Questions

• Where does money come from? • Are banks mere financial intermediaries? • Why is modern finance inherently unstable and fragile?

Required Reading - Bezemer, D. and Hudson, M. (2016) Finance is not the economy: reviving the conceptual distinction, Journal of Economic Issues 50(3): 745-768. - Nesvetailova, A. (2007) Fragile Finance: Debt, Speculation and Crisis in the Age of Global Credit, Basingstoke: Palgrave Macmillan (Chapter 4). - Sgambati, S. (2016) Rethinking banking. Debt discounting and the making of modern money as liquidity, New Political Economy, 21 (3): 274-290.

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Further Reading *- Admati, A. and Hellwig, M. (2013), The Bankers' New Clothes. What's Wrong with Banking and What to Do About It, Princeton: Princeton University Press (Chapters 2, 3). - Bjerg, O. (2014), Making money. The philosophy of crisis capitalism, London: Verso. - Bryan, D. and Rafferty, M. (2006) Capitalism with Derivatives. A Political Economy of Financial Derivatives, Capital, and Class, Palgrave Macmillan. - Chick, V. (1992) The evolution of the banking system and the theory of saving, investment and interest, in Chick, V. (author), Arestis, P. and Dow, S. (eds.), On Money, Method and Keynes. Selected Essays, St. Martin’s Press. - Christophers, B. (2013) Banking across boundaries. Placing finance in capitalism, Chichester: Wiley-Blackwell. - Di Muzio, T. and Robbins, R. (2017) An Anthropology of Money. A Critical Introduction, Routledge. - Dodd, N. (2014) The social life of money, Princeton & Oxford: Princeton University Press - Hicks, J. (1989) A Market Theory of Money, Oxford University Press. - Hudson, M. (2012) The Bubble and Beyond, Dresden: Islet. - Ingham, G. (2004) The nature of money, Polity Press. - Kindleberger, C. (1978) Manias, Panics and Crashes: A History of Financial Crises, Palgrave Macmillan. - Knafo, S. (2009) Liberalisation and the Political Economy of Financial Bubbles, Competition & Change, 13 (2): 128-144. - Knafo, S. (2013) Financial crises and the political economy of speculative bubbles, Critical Sociology 39(6): 851-869. - McKenzie, R. (2011) Casino capitalism with derivatives: fragility and instability in contemporary finance, Review of Radical Political Economics, 43(2): 198-215. - Mellor, M. (2010) The future of money. From financial crisis to public resource, London: Pluto Press. - Minsky, H. (1986) Stabilising an Unstable Economy, Yale University Press. - Pettifor, A. (2017) The production of money: how to break the power of bankers, London: Verso. - Ryan-Collins, J. et al (2014) Where Does Money Come From? A Guide to the UK Monetary & Banking System, New Economics Foundation.

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- Werner, R. (2005) New Paradigm in Macroeconomics, Basingstoke: Palgrave Macmillan. - Werner, R. (2014) Can banks individually create money out of nothing? The theories and the empirical evidence, International Review of Financial Analysis, 36: 1-19. - Wray, R. (2012) Modern Money Theory. A primer on macroeconomics for sovereign monetary systems, Basingstoke: Palgrave Macmillan. - Wray, R. (2013) What do banks do? What should banks do? A Minskian perspective, Accounting, Economics and Law, 3(3): 277-311.

Week 3 The Globalisation of American Money and Finance Reorganising World Money After Bretton Woods Keywords Dollar hegemony – monetary power – international reserve currency – Eurodollar market – floating exchange rates – capital flows – currency swaps – the money market Questions

• What’s the power of the Dollar? • Has this power increased or diminished since the collapse of the Bretton Woods system? • What are Eurodollar markets and how did they emerge?

Required Reading - Burn, G. (1999) The State, the City, and the Euromarkets, Review of International Political Economy, 6(2): 225-261. - Cohen, B. (2015) Currency Power. Understanding Monetary Rivalry, Princeton University Press (Chapters 3 and 4: Monetary Power; From Currency to Power). - Schwartz, Herman M. (2019) “American Hegemony: Intellectual Property Rights, Dollar Centrality, and Infrastructural Power”, Review of International Political Economy, 26(3): 490- 519.

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Further Reading *- Aglietta, M. (2018) Money. 5,000 Years of Debt and Power, London: Verso (Chapter 7: International Currency Faced with the Test of History). - Brenner, R. (2000) The Boom and the Bubble, New Left Review 6: 5-43. - Burn, G. (2006) The re-emergence of global finance, Basingstoke: Palgrave Macmillan. - Gowan, P. (1999) The Global Gamble. Washington's Faustian Bid for World Dominance, London: Verso. - Green, J. (2016) Anglo-American Development, the Euromarkets and the Deeper Origins of Neoliberal Deregulation, Review of International Studies 42: 425-449. - Helleiner, E. (1994) From Bretton Woods to Global Finance. A world turned upside down, in Stubbs, R. and Underhill, G. (eds.), Political Economy and the Changing Global Order, Macmillan, 163-175. - Helleiner, E. (1995) Explaining the globalisation of financial markets: bringing states back in, Review of International Political Economy 2(2). - Helleiner, E. (1996) States and the Re-emergence of Global Finance, Cornell University Press (Chapter 6: Four Turning Points in the late 1970s and early 1980s). *- Konings, M. (2007) The institutional foundations of US structural power in international finance: from the re-emergence of global finance to the Monetarist turn, Review of International Political Economy, 15(1): 35-61. - Konings, M. (2011) The Development of American Finance, Cambridge University Press. *- Palan, R. (1998), Trying to have your cake and eating It: how and why the state system has created offshore, International Studies Quarterly 42: 625-644. - Panitch, L. and Gindin, S. (2008) Finance and American Empire, in Panitch, L. and Konings, M. (eds.), American Empire and the Political Economy of Global Finance, Palgrave, 17-47. - Seabrooke, L. (2001) US Power in International Finance. The Victory of Dividends, Palgrave. - Varoufakis, Yanis (2015) And the Weak Suffer What They Must, Penguin Vintage (chapters 2 and 3).

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Week 4 The Fiscal Crisis of States Consolidating Public Debts in the Neoliberal Era Keywords Taxation – public debt – government spending – sovereign debt management – bond market – state creditworthiness – fiscal consolidation – austerity Questions

• Why have states partly lost their ability to tax? • How do governments compensate for their fiscal faults?

Required Reading - Roos, Jerome (2019) Why Not Default? The Political Economy of Sovereign Debt, Princeton University Press (Chapters 2 and 3). - Streeck, W. (2015) The Rise of the European Consolidation State, Discussion Paper 15/1, Max Planck Institute for the Study of Societies. - Wray, R. and Nersisyan, Y. (2015) Understanding Money and Macro-Economic Policy, The Political Quarterly, 86(S1). Further Reading - Clarke, S. (1988) Keynesianism, Monetarism and the Crisis of the State, Edward Elgar Publishing. - Davis, A. and Walsh, C. (2016) The role of the state in the financialisation of the UK economy, Political Studies 64(3): 666-82. - Dowling, E. (2017) In the Wake of Austerity: Social Impact Bonds and the Financialisation of the Welfare State in Britain, New Political Economy 22 (3): 294-310. - Dutta, S. (2017) Sovereign debt management and the globalisation of finance: recasting the City of London’s Big Bang, Competition & Change. *- Fastenrath, F. et al (2017) Where States and Markets Meet: The Financialisation of Sovereign Debt Management, New Political Economy 22 (3): 273-293.

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- Hager, S. (2015) Corporate ownership of the public debt: mapping the new aristocracy of finance, Socio-Economic Review 13(3): 505-523. - Hager, S. (2016) Public Debt, Inequality and Power. The Making of a Modern Debt State, University of California Press. - Hardie, I (2011) How Much Can Governments Borrow? Financialisation and Emerging Markets Government Borrowing Capacity, Review of International Political Economy 18(2): 141-167. *- Konings, M. (2010) Neoliberalism and the American State, Critical Sociology, 36(5): 741-765. - Lagna, A. (2016) Derivatives and the Financialisation of the Italian State, New Political Economy 21 (2): 167-186. - Lazzarato, M. (2015) Neoliberalism, the financial crisis and the end of the liberal state, Theory, Culture and Society 32(7-8): 67-83. - Mehrling, P. (2000) The state as financial intermediary, Journal of Economic Issues 34(2): 365- 368. *- Preunkert, J. (2017) Financialisation of Government Debt? European Government Debt Management Approaches, 1980-2007, Competition & Change 21(1): 27-44. - Salsman, R. (2017) The Political Economy of Public Debt. Three Centuries of Theories and Evidence, Cheltenham UK: Edward Elgar. - Streeck, W. (2014) Buying Time. The Delayed Crisis of Democratic Capitalism, London: Verso. - Streeck, W. (2014) The Politics of Public Debt: Neoliberalism, Capitalist Development and the Restructuring of the State, German Economic Review 15: 143-165. - Wang, Y. (2015) The Rise of the ‘Shareholding State’: Financialisation of Economic Management in China', Socio-Economic Review 13(3): 603-625.

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Week 5 The Rise and Fall of Central Bank Governance From Inflation-Targeting to Quantitative Easing Keywords Central bank independence – monetarism – inflation-targeting – ZIRP (zero interest rate policy) – QE (quantitative easing) – lender of last resort – open market operations – dealer of last resort.

Questions

• What are central banks for? How are they linked to governments? • Are central banks mere financial regulators or active market players? • How has central banking changed since the 2007-08 crisis?

Required Reading - Bowman, A. et al (2013) Central bank-led capitalism?, Seattle Univ. Law Rev. 36: 455-487. - Jones, E. and Matthijs, M. (2019) Rethinking Central-Bank Independence, Journal of Democracy, 30(2): 127-141. - van’t Klooster, J. and Fontan, C. (2019) The Myth of Market Neutrality: A Comparative Study of the European Central Bank’s and the Swiss National Bank’s Corporate Security Purchases, New Political Economy, https://doi.org/10.1080/13563467.2019.1657077 Further Reading - Braun, B. (2015) Governing the future: the European Central Bank's expectation management during the Great Moderation, Economy and Society 44(3): 367-391. - Braun, B. (2016) Speaking to the people? Money, trust and central bank legitimacy in the age of Quantitative Easing, Review of International Political Economy, 23(6): 1064-1092. - Braun, B. (2018) Central banking and the infrastructural power of finance: the case of ECB support for repo and securitisation markets, Socio-Economic Review, 1-24. - Capie, F., Goodhart, C., Fischer, S. and Schnadt, N. (1995) The Future of Central Banking, Cambridge University Press.

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- Dow, S. (2014) The relationship between central banks and governments: what are central banks for?, in Goodhart, C., Gabor, D., Vestergaard, J. and Erturk, I. (2014) Central Banking at the Crossroads. Europe and Beyond, London: Anthem Press. - Dow, S. (2017) Central banking in the twentieth first century, Cambridge Journal of Economics 41: 1539-1557. - Dyson, K. and Marcussen, M., eds. (2009) Central Banks in the Age of the Euro. Europeanization, Convergence and Power, Oxford University Press. - Gabor, D. and Ban, C. (2016) Banking on bonds. The new links between states and markets, Journal of Common Market Studies 54(3): 617: 635, - Goodhart, C., Gabor, D., Vestergaard, J. and Erturk, I. (2014) Central Banking at the Crossroads. Europe and Beyond, London: Anthem Press. *- Jacobs, L. and King, D. (2016) Fed Power. How Finance Wins, Oxford University Press. *- Krippner, G. (2007) The Making of US Monetary Policy: Central Bank Transparency and the Neoliberal Dilemma, Theory and Society 36: 477-513. *- Mehrling, P. (2011) The New Lombard Street. How the Fed Became the Dealer of Last Resort, Princeton University Press. - Polillo, S. and Guillén, M. (2005) Globalisation pressures and the state: The Worldwide Spread of Central Bank Independence, American Journal of Sociology 110(6): 1764-1802. - Quaglia, L. (2008) Central Banking Governance in the European Union. A Comparative Analysis, London: Routledge. - Tymoigne, E. (2014) Modern money theory, and interrelations between Treasury and Central Bank: the case of the U.S., Journal of Economic Issues 48(3): 641-662.

Week 6 – Reading Week Please note that there will be no lectures or tutorials in week 6. There will be department wide activities for students this week. It also provides you with an opportunity to catch-up on coursework and to begin thinking about your assessed essay topic.

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Week 7 The Financialisation of Corporate Management The Stock Market as a Predatory Arena Keywords Shareholder value – financialised managerialism – mergers and acquisitions – leveraged buyouts – corporate raiders – activist shareholders – corporate buybacks – EBITDA – stock market bubbles Questions

• How do corporations generate profits? • Why do corporations engage in stock repurchases? • Is the stock market a source of financing for capital formation, ‘real’ investments and

industrial production? Required Reading - Hudson, M. (2012) The Bubble and Beyond, Dresden: Islet (Chapter 9: Junk Bonding Industry). - Knafo, S. and Dutta, S. (2019) The Myth of the Shareholder Revolution and the Financialisation of the Firm, Review of International Political Economy. https://doi.org/10.1080/09692290.2019.1649293 - Lazonick, W. (2014) Profits without Prosperity, Harvard Business Review 47-55. Further Reading - Aglietta, M. and Breton, A. (2001) Financial Systems, Corporate Control and Capital Accumulation, Economy and Society 30(4): 433-66. - Boyer, R. (2005) From Shareholder Value to CEO Power. The Paradox of the 1990s, Competition & Change 9(1): 7-48. - Cheffins, B. (2015) Corporate Governance Since the Managerial Capitalist Era, Business History Review 89(4): 717-744. - Deeg, R. and Hardie, I. (2016) What is Patient Capital and Who Supplies It? Socio-Economic Review 14(4): 627-645.

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- Dumenìl, G. and Levy, D. (2015) Neoliberal Managerial Capitalism, International Journal of Political Economy 44: 71-89. - Heilbron, J. et al (2014) The Origins and Early Diffusion of ‘Shareholder Value’ in the US, Theory and Society 43: 1-22. - Knafo, S. and Dutta S. (2016) Patient Capital in the Age of Financialised Managerialism, Socio- Economic Review 14 (4): 771-788. - Knafo, S., Dutta, S., Lane, R. and Wyn-Jones, S. (2019) The Managerial Lineages of Neoliberalism, New Political Economy, 24(2): 235-251. *- Krippner, G. (2005) The Financialisation of the American Economy, Socio-Economic Review 3: 173-208. *- Lazonick, W. (1992) Controlling the Market for Corporate Control: The Historical Significance of Managerial Capitalism, Industrial and Corporate Change 1(3): 445-488. - Lazonick, W. (2017) The New Normal Is ‘Maximising Shareholder Value’: Predatory Value Extraction, Slowing Productivity, and the Vanishing American Middle Class, International Journal of Political Economy 46: 217-226. - Lazonick, W. and O’Sullivan, M. (2000) Maximising Shareholder Value: A New Ideology for Corporate Governance, Economy and Society 29: 13-35. - Newberry, S. and Robb, A. (2008) Financialisation: Constructing Shareholder Value...For Some, Critical Perspectives on Accounting 19: 741-763. - Soederberg, S. (2010) Corporate Power and Ownership in Contemporary Capitalism. The Politics of Resistance and Domination, London: Routledge.

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Week 8 The Making of the Indebted Household Portfolio Society and the Everyday Politics of Securitisation Keywords Securitisation – household debt – mortgages – subprime borrowers – uncollateralised debt – credit cards – student loans – ABSs and CDOs – SIVs and SPEs Questions

• Why do banks lend to subprime borrowers? • What is securitisation about?

Required Reading - Appel, H. (2015) You are not a loan. Strike debts and the emerging debtors movement, Tikkun Magazine 30(1). - Cooper, Melinda (2017) Family Values. Between Neoliberalism and the New Conservatism, Zone Books (Chapter 4: ‘The return of inherited wealth: asset inflation and the economic family’). - Fligstein, Neil and Adam Goldstein (2015) “The emergence of a finance culture in American households, 1989-2007”, Socio-Economic Review 13(3): 575-601. - Soederberg, S. (2014) Student loans, debtfare and the commodification of debt: the politics of securitization and the displacement of risk, Critical Sociology 40 (5): 689-709. Further Reading - Aalbers, M. (2015) Financialisation of Housing, Routledge. - Ascher, I. (2016) Portfolio Society. On the Capitalist Mode of Prediction, Zone Books.

- Christophers, B. (2016) For real: land as capital and commodity, Transactions of the Institute of British Geographers, 41(2): 134-148. *- Davis, G. (2009) Managed by markets. How finance reshaped America, Oxford University Press (Chapter 6: from Employee and Citizen to Investor: How Talent, Friends and Home became Capital’).

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- Eaton, C. et al (2016) The financialisation of US higher education, Socio-Economic Review 13(3): 507-35. - Fernandez, R. and Aalbers, M. (2016) Financialisation and Housing: Between Globalisation and Varieties of Capitalism, Competition & Change 20(2): 71-88. - Fields, D. and Uffer, S. (2016) The Financialisation of Rental Housing: A Comparative Analysis of New York City and Berlin, Urban Studies 53(7): 1486-1502. - Hudson, M. (2012) The Bubble and Beyond, Dresden: Islet (Chapter 8: The Real Estate Bubble at the Core of Today’s Debt-Leveraged Economy). - Krippner, G. (2016) Democracy of credit: ownership and the politics of credit access in late twentieth-century America, American Journal of Sociology 123(1): 1-47. - Langley, P. (2008) Sub-prime Mortgage Lending: A Cultural Economy, Economy and Society 37 (4): 469-494. - Langley, P. (2009) The Everyday Life of Global Finance. Saving and Borrowing in Anglo-America, Oxford University Press. - Lazzarato, M. (2011) The Making of the Indebted Man, Semiotext(e). - Leyshon, A. and Thrift, N. (2007), The Capitalization of Almost Everything: The Future of Finance and Capitalism, Theory, Culture & Society 24 (7-8): 97-115. - Montgomerie, J. (2009) The pursuit of (past) happiness? Middle-class indebtedness and American financialisation, New Political Economy 14 (1): 1-24. - Montgomerie, J. and Büdenbender, M. (2015) Round the Houses: Homeownership and Failures of Asset-Based Welfare in the United Kingdom, New Political Economy 20 (3): 386-405 *- Ross, A. (2013) Creditocracy. And the case for debt refusal, London: OR Books. - Ryan-Collins, J. et al (2017) Rethinking the Economics of Land and Housing, Zed Books. - Seabrooke, L. (2010) What Do I Get? The Everyday Politics of Expectations and the Subprime Crisis, New Political Economy 15(1): 51-70. - Soederberg, S. (2013) The US Debtfare State and the Credit Card Industry: Forging Spaces of Dispossession, Antipode 45 (2): 493-512.

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Week 9 Shadow Banking, Money Managers and Financial Markets The Global Banking Industry Today Keywords Asset management – hedge funds – money market funds – institutional investors – shadow banking – cash equivalents – repos – capital market – money market. Questions

• How do global banks make money? • What role do money managers and institutional investors play in the global financial

system? • What are financial markets and how do global banks dominate them?

Required Reading - Balluck, K. (2015) Investment banking: linkages to the real economy and the financial system, Bank of England Quarterly Bulletin Q1. - Mattli, Walter (2019) Darkness by Design. The Hidden Power in Global Capital Markets, Princeton University Press (Introduction). - Ricks, M. (2016) The Money Problem. Rethinking Financial Regulation, Chicago, IL: University of Chicago Press (Chapter 1: Taking the Money Market Seriously). - Sgambati, S. (2019) The Art of Leverage. A Study of Bank Power, Money-Making and Debt Finance, Review of International Political Economy, 26(2): 287-312. Further Reading - Claessens, S., Pozsar, Z., Ratnovski, L., and Singh, M. (2012) Shadow banking: economics and policy, IMF Staff Discussion Note, International Monetary Fund. - Christophers, B. (2015) Against (the idea of) financial markets, Geoforum 66: 85-93. - Engelen, E. et al (2011) After the Great Complacence. Financial crisis and the politics of reform, Oxford: Oxford University Press (chapter 4: Banks misunderstood).

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- Erturk, I. and Solari, S. (2007) Banks as continuous reinvention, New Political Economy 12(3): 369-388. - Erturk, I., Leaver, A. and Williams, K. (2010) Hedge funds as war machine: making the position work, New Political Economy 15(1): 9-28. - Fernandez, R. and Wigger, A. (2016) Lehman Brothers in the Dutch offshore financial centre: the role of shadow banking in increasing leverage and facilitating debt, Economy and Society 45(3-4): 407-430. - Gabor, D. (2016) The (impossible) repo trinity: the political economy of repo markets, Review of International Political Economy 23(6): 967-1000. - Gabor, D. and Vestergaard, J. (2016) Towards a theory of shadow money, New York, NY: Institute for New Economic Thinking, INET working paper. - Guttman, R. (2018) The transformation of banking, in Nesvetailova, A. (ed.), Shadow Banking: Scope, Origins and Theories, Routledge. - Hardie, I., Howarth, D., Maxfield, S. and Verdun, A. (2013) Banks and the false dichotomy in the comparative political economy of finance, World Politics 65(4): 691-728. - Helgadόttir, O. (2016) Banking upside down: the implicit politics of shadow banking expertise, Review of International Political Economy, 23(6): 915-940. - Lysandrou, P. (2012) The primacy of hedge funds in the subprime crisis, Journal of Post Keynesian Economics 34(2): 225-253. - Lysandrou, P. (2018) Commodity. The Global Commodity System in the 21st Century, London: Routledge (Chapter 5: Control). - Lysandrou, P. and Nesvetailova, A. (2015) The role of shadow banking entities in the financial crisis: a disaggregated view, Review of International Political Economy 22(2): 257-279. - Michell, J. (2017) Do shadow banks create money? ‘Financialisation’ and the monetary circuit, Metroeconomica 68(2): 354-377. *- Murau, S. (2017) Shadow money and the public money supply: the impact of the 2007-2009 financial crisis on the monetary system, Review of International Political Economy, 24(5): 802- 838. - Nesvetailova, A. and Palan, R. (2013) Minsky in the shadow: securitization, Ponzi finance, and the crisis of Northern Rock, Review of Radical Political Economics, 45 (3): 349-368. - Nesvetailova, A. (2015) A crisis of the overcrowded future: shadow banking and the political economy of financial innovation, New Political Economy 20(3): 431-456. - Nesvetailova, A. (ed.), Shadow Banking: Scope, Origins and Theories, Routledge.

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- Palan, R. and Wigan, D. (2018) The economy of deferral and displacement. Finance, shadow banking and fiscal arbitrage, in Nesvetailova, A. (ed.), Shadow Banking: Scope, Origins and Theories, Routledge. - Pozsar, Z. (2014) Shadow banking: the money view, Washington, DC: Office of Financial Research, working paper. *- Rethel, L. and Sinclair, T. (2013) The Problem with Banks, London: Zed Books (Chapter 5: Problems with reform proposals). - Sweeney, R. (2017) Global banks or global investors? The case of European debt flows, Competition & Change 21(5): 364-387. - Thiemann, M. (2012) Out of the shadows? Accounting for special purpose entities in European banking systems, Competition and Change 16(1): 37-55.

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Week 10 Organising the New Bretton Woods Case Pitch In preparation for week 10 STEP1 Form a small team (4 to 6 people) with other students in your tutorial class.

• Students should autonomously form teams by the end of week 9. • Each team should work on a case study pitch to be presented on week 10.

STEP 2 The team must choose one thematic area among the ones below:

1. Governments (States) 2. Central Banks (Expertise) 3. Corporations (Business) 4. Households (Society) 5. Banks, Money Managers and Financial Markets (Finance)

STEP 3 The team must choose the focus of analysis:

• Country level (e.g. US, UK, China, Germany, etc.); • Regional level (e.g. EU, BRICS, Asia, North America, South America); • World level; • Sector/size (option only available to teams that have opted for ‘expertise’); • Class/group (option only available to teams that have opted for ‘society’).

Please note, step 1, step 2 and step 3 must be completed BEFORE week 10. On week 10 (part 1: presenting the pitch) Each team will have 12 to 15 minutes (depending on how many teams have formed) to present their pitch, inform their choices and thus provide an overview of their case study.

• Please note, the teams do no need to tell the class ALL there is to know about the case study but, instead, they should explain why it is relevant and useful to look at into in more detail in view of the New Bretton Woods conference.

The two teams that score top points win the Case Study Pitch.

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• If both winning teams have opted for the same macro theme, then the conference session will revolve around that one macro theme (though it might encompass different levels of analysis).

• If winning teams have opted for two different macro themes, then the conference session will include an overview, analysis and discussion of both macro themes.

• Please note, there will be advantages and disadvantages in both cases. Presenting on one macro theme would entail more in-depth research on the topic. Presenting on two macro themes would entail drawing connections between them.

The course convenor will evaluate the presentations, give the scores and provide each team with a feedback form. Please refer to the assessment criteria table below.

• Please note, the presentation of the case study cannot fall on the shoulders of a selected few. All team members are expected to present, everyone must actively contribute to the case study pitch prior to the presentation in class.

On week 10 (part 2: organising the session) STEP 4 After the Case Study Pitch is completed, the mini-teams are dismissed. Now all students in the tutorial class constitute one big team responsible for preparing the conference session to be held in week 11. The tutorial team must choose the format of the session:

• The team can opt for the ‘open debate’ format (level: hard) or the ‘structured presentation’ (level: easy) or a mixture of both, i.e. presentations followed by open debate (level: medium).

STEP 5 The team must create mini-groups, assign tasks and roles.

• To this purpose, the team will split into 3 to 5 mini-groups, each of which will be assigned a specific task (e.g. to produce an analysis of the problem with banks) and/or role (e.g. to act as a delegation of central bankers or Treasury officials).

• The creation of groups and the assignment of role and tasks should be done autonomously by team members. The course convenor will only intervene in case agreement will not be found.

• Finally, the team will appoint a chair for the conference session. This can be done informally or via election. It will be the chair’s responsibility to open the session with a few introductory words, moderate the debate and make sure that each presentation/intervention stays within the time limits.

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Week 11 Presenting at the New Bretton Woods Conference Sessions Each team will run a 50-min thematic panel at the New Bretton Woods conference. All team members are supposed to participate by either presenting, chairing, illustrating graphs and figures, or by intervening in the open debate (also depending on the format of the session). The chair will be responsible for moderating the session. Please note, students will have to present and discuss problems and solutions with regards to their case study based on information and analyses available in the academic literature. At the same time, they are permitted to rely on media and other sources including video resources. At any rate, the role game is based on students’ own previous research and understanding of the case, as matured through the entire module. The course convenor and the other guest delegates from the Dept. of International Relations will not intervene, or interfere, for the duration of the role game. Participation in the Conference Panel is worth half of the Role Game exercise, or 15% of the final mark for the module. All students will receive individual marks given by at least two members of staff present at the final session.