One of the puzzles of the 2007/8 credit crunch is how a relatively small loss of capital in a tiny market segment was transformed into a global financial crisis costing close to $1 trillion and sending the world economy into slowdown.
Key players in this tragedy are a set of legal and accounting principles that are well-meaning, but turn financial hiccups into liquidity black holes.
Avinash Persaud, founder and Chairman of Intelligence Capital, discusses regulatory solutions that would avoid this happening next time- Gresham College
Avinash Persaud is the founder and Chairman of Intelligence Capital. Prior to founding Intelligence Capital and the GAM Persaud Investment Funds, he was Head of Global Research at State Street Corporation.
Previously, he was Global Head of Currency and Commodity Research at JP Morgan. He holds the Mercer Memorial Chair in Commerce at Gresham College, is a Governor of the London School of Economics and a Trustee, a member of the Board of the Global Association of Risk Professionals and the Chair of the CBC Working Group on investment flows.
He is the winner of the Institute of International Finance's Jacques de Larosiere Award in Global Finance and an Amex Bank Award as well as a prolific author.
Measures employed by governments to influence economic activity, specifically by manipulating the money supply and interest rates. Monetary and fiscal policy are two ways in which governments attempt to achieve or maintain high levels of employment, price stability, and economic growth. Monetary policy is directed by a nation's central bank. In the U.S., monetary policy is the responsibility of the Federal Reserve System, which uses three main instruments: open-market operations, the discount rate, and reserve requirements. In the post-World War II era, economists reached a consensus that, in the long run, inflation results when the money supply grows at too rapid a rate. See alsomonetarism.