FINANCIAL GLOBALISATION FINANCIAL GLOBALISATION AND THE STRENGH OF AND THE STRENGH OF

SELF CENTERED, “SELF SELF CENTERED, “SELF REGULATED” (c.f. K.Polanyi) REGULATED” (c.f. K.Polanyi) FINANCIAL ACCUMULATION FINANCIAL ACCUMULATION

François ChesnaisFrançois Chesnais

1. “SELF CENTERED” FINANCIAL 1. “SELF CENTERED” FINANCIAL ACCUMULATIONACCUMULATION

2. FINANCIAL GLOBALISATION 2. FINANCIAL GLOBALISATION 3. “DISTANCE FROM PRODUCTION”3. “DISTANCE FROM PRODUCTION” 4. FINANCIAL ACCUMULATION NOT 4. FINANCIAL ACCUMULATION NOT

LIMITED TO “CORE COUNTRIES”, LIMITED TO “CORE COUNTRIES”, ALSO IN BRICSALSO IN BRICS

5. WHAT TYPE OF INDICATORS5. WHAT TYPE OF INDICATORS 6. SOME ASPECTS OF THE CURRENT 6. SOME ASPECTS OF THE CURRENT

GEO-POLITICS OF FINANCEGEO-POLITICS OF FINANCE

BRIC: AN ACRONYM COINED BY BRIC: AN ACRONYM COINED BY GOLDMAN SACHS = ECONOMIES GOLDMAN SACHS = ECONOMIES « TARGETTED » AS COUNTRIES« TARGETTED » AS COUNTRIES

WHERE CORE ECONOMY FINANCIAL WHERE CORE ECONOMY FINANCIAL FUNDS & BANKS COULD EXPAND FUNDS & BANKS COULD EXPAND THEIR OPERATIONS VERY PROFITABLYTHEIR OPERATIONS VERY PROFITABLY

WHERE SELF CENTERED, “SELF WHERE SELF CENTERED, “SELF REGULATED” FINANCIAL REGULATED” FINANCIAL ACCUMULATION COULD BE ACCUMULATION COULD BE ENCOURAGED & STRENGHENEDENCOURAGED & STRENGHENED

“ “SELF-CENTERED” FINANCIAL SELF-CENTERED” FINANCIAL ACCUMULATION DEFINED AS:ACCUMULATION DEFINED AS:* AS MONEY BENT ON BEGETTING * AS MONEY BENT ON BEGETTING MONEY IN FINANCIAL MARKETS MONEY IN FINANCIAL MARKETS WITHOUT LEAVING THEIR SPHEREWITHOUT LEAVING THEIR SPHERE* AS ACCUMULATED ASSETS WHICH * AS ACCUMULATED ASSETS WHICH REPRESENT CLAIMS ON CURRENT REPRESENT CLAIMS ON CURRENT AND FUTURE OUTPUT, AS LONG AS AND FUTURE OUTPUT, AS LONG AS FINANCIAL CRASHES DO NOT WIPE FINANCIAL CRASHES DO NOT WIPE THEM OUTTHEM OUT* « SELF-CENTERED » BUT NOT * « SELF-CENTERED » BUT NOT «AUTONOMOUS », PREDATORY & «AUTONOMOUS », PREDATORY & HENCE DANGEROUSLY DEPENDENTHENCE DANGEROUSLY DEPENDENT

* SUCH FINANCIAL ACCULUMATION IS MAINLY * SUCH FINANCIAL ACCULUMATION IS MAINLY THE OUTCOME OF OPERATIONS MADE BY A THE OUTCOME OF OPERATIONS MADE BY A SPECIFIC TYPE OF CAPITALIST INSTITUTIONSPECIFIC TYPE OF CAPITALIST INSTITUTION, , WITH VERY DIFFERENT AIMS & TIME-WITH VERY DIFFERENT AIMS & TIME-HORIZONS FROM MANUFACTURING FIRMSHORIZONS FROM MANUFACTURING FIRMS

* SUCH INSTITUTION INCLUDE BANKS, * SUCH INSTITUTION INCLUDE BANKS, INSURANCE COMPANIES AND FUNDS INSURANCE COMPANIES AND FUNDS (PENSION FUNDS, MUTUAL FUNDS, HEDGE (PENSION FUNDS, MUTUAL FUNDS, HEDGE FUNDS) FUNDS)

* BUT LARGE CORPORATIONS ALSO INVOLVED * BUT LARGE CORPORATIONS ALSO INVOLVED IN FINANCIAL ACCUMULATION AS ACTIVE IN FINANCIAL ACCUMULATION AS ACTIVE AGENTS & AS MAJOR “VEHICLES” = AGENTS & AS MAJOR “VEHICLES” = PREDATORY TRAITS INCREASE CONTINUALLYPREDATORY TRAITS INCREASE CONTINUALLY

FINANCIAL INSTITUTIONS FINANCIAL INSTITUTIONS CENTRALIZE INCOME THAT IS CENTRALIZE INCOME THAT IS “SAVED”, e.g. “SAVED”, e.g.

NOT REINVESTED BY FIRMS IN NEW NOT REINVESTED BY FIRMS IN NEW PLANT (AT LEAST IMMEDIATELY)PLANT (AT LEAST IMMEDIATELY)

NOT SPENT ON GOODS AND NOT SPENT ON GOODS AND SERVICES (BE IT BY PEOPLE SERVICES (BE IT BY PEOPLE EARNING SALARIES OR BY THOSE EARNING SALARIES OR BY THOSE RECEIVING INCOME ACCRUING RECEIVING INCOME ACCRUING FROM PROFITS OR RENT)FROM PROFITS OR RENT)

THE STRONG AMBIGUITY OF SAVINGSTHE STRONG AMBIGUITY OF SAVINGS FOR LOWER INCOME LEVELS THEY FOR LOWER INCOME LEVELS THEY

REALLY REPRESENT A SACRIFICEREALLY REPRESENT A SACRIFICE AT HIGHER LEVELS THEY ARE SIMPLY AT HIGHER LEVELS THEY ARE SIMPLY

A RESULT OF INCOME IN EXCESS OF A RESULT OF INCOME IN EXCESS OF NEEDSNEEDS

IN ECONOMIES WHERE EDUCATION, IN ECONOMIES WHERE EDUCATION, HEALTH & RETIREMENT ARE LEFT TO HEALTH & RETIREMENT ARE LEFT TO INDIVIDUALS, THE SUMS PUT ASIDE INDIVIDUALS, THE SUMS PUT ASIDE ARE FODER FOR AND STRENGTHEN ARE FODER FOR AND STRENGTHEN FINANCIAL ACCUMULATIONFINANCIAL ACCUMULATION

UNSPENT INCOME IS USED BY BANKS & UNSPENT INCOME IS USED BY BANKS & FUNDS TO MANAGE “PORTFOLIOS” OF FUNDS TO MANAGE “PORTFOLIOS” OF FINANCIAL ASSETS (e.g. BONDS ,SHARES)FINANCIAL ASSETS (e.g. BONDS ,SHARES)

BANK ACTIVITIES, NOTABLY CREDIT BANK ACTIVITIES, NOTABLY CREDIT STRONGLY AFFECTEDSTRONGLY AFFECTED

SPECULATIVE OPERATIONS = “WINDFALL SPECULATIVE OPERATIONS = “WINDFALL GAINS ” (KEYNES). THIS ALSO DONE BY GAINS ” (KEYNES). THIS ALSO DONE BY CORPORATIONSCORPORATIONS

FUNDS MODIFY THEIR PORTFOLIOS ALL FUNDS MODIFY THEIR PORTFOLIOS ALL THE TIME = “ARBITRAGE” = ENDEMIC THE TIME = “ARBITRAGE” = ENDEMIC FINANCIAL INSTABILITY FINANCIAL INSTABILITY

THE TRADING OF ASSETS TAKES THE TRADING OF ASSETS TAKES PLACE IN “SECONDARY” FINANCIAL PLACE IN “SECONDARY” FINANCIAL MARKETS WHERE ASSETS CAN BE MARKETS WHERE ASSETS CAN BE TRADED AT VERY SHORT NOTICE TRADED AT VERY SHORT NOTICE (KEYNES’S “LIQUIDITY”) (KEYNES’S “LIQUIDITY”)

FOR BANKS DIFFERENT FORMS OF FOR BANKS DIFFERENT FORMS OF CREDIT = MAIN SOURCE OF PROFITCREDIT = MAIN SOURCE OF PROFIT

FINANCIAL MARKETS ALLOW THEM FINANCIAL MARKETS ALLOW THEM TO “SECURITIZE” e.g. TRADE MANY TO “SECURITIZE” e.g. TRADE MANY FORMS, NOTABLY MORTGAGEFORMS, NOTABLY MORTGAGE

INTEREST, DIVIDENDS, etc. INTEREST, DIVIDENDS, etc. PROCURE INCOME PERTAINING TO PROCURE INCOME PERTAINING TO RENT, e.g. FORMS OF LEVY ON GDP RENT, e.g. FORMS OF LEVY ON GDP

LEVY ON TAXES RAISED OR LEVY ON TAXES RAISED OR EXPORTSEARNEDEXPORTSEARNED

LEVY ON GROSS RESULTS OF FIRMSLEVY ON GROSS RESULTS OF FIRMS EFFECT ON INVESTMENTEFFECT ON INVESTMENT EFFECT ON INCOME DITRIBUTION = EFFECT ON INCOME DITRIBUTION =

JUMP IN GROWTH OF INEQUALITY JUMP IN GROWTH OF INEQUALITY IN INCOME & IN WEALTH IN INCOME & IN WEALTH POSSESSIONPOSSESSION

““GLOBALISATION”: THE WORKING GLOBALISATION”: THE WORKING OF THE WORLD ECONOMY BASED OF THE WORLD ECONOMY BASED ON LIBERALISATION AND ON LIBERALISATION AND DEREGULATION OF DEREGULATION OF

FINANCIAL FLOWS, FOREIGN FINANCIAL FLOWS, FOREIGN DIRECT INVESTMENT AND TRADEDIRECT INVESTMENT AND TRADE

MARKED BY PRIVATIZATION & MARKED BY PRIVATIZATION & ENHANCEMENT OF PROPERTY ENHANCEMENT OF PROPERTY (IPR)(IPR)

PROCESS LED BY FINANCIAL PROCESS LED BY FINANCIAL INSTITUTIONSINSTITUTIONS

FINANCIAL GLOBALISATION BENT FINANCIAL GLOBALISATION BENT ON:ON:

THE INTERNAL DEREGULATION & THE INTERNAL DEREGULATION & OPENING UP OF NATIONAL OPENING UP OF NATIONAL FINANCIAL SYSTEMS TO PORTFOLIO FINANCIAL SYSTEMS TO PORTFOLIO INVESTMENTS IN A FIRST PERIOD INVESTMENTS IN A FIRST PERIOD

LATER INCREASINGLY ON LATER INCREASINGLY ON *LIBERALISATION OF FDI & THE *LIBERALISATION OF FDI & THE FREE REPATRIATION OF FREE REPATRIATION OF CORPORATE PROFITSCORPORATE PROFITS

* FREE ACCESS OF FOREIGN BANKS * FREE ACCESS OF FOREIGN BANKS TO DOMESTIC BANKING SYSTEMSTO DOMESTIC BANKING SYSTEMS

PHASES IN THE ONSET OF FINANCIAL PHASES IN THE ONSET OF FINANCIAL ACCUMULATION :ACCUMULATION :* 2° HALF 1960s: EURO-DOLLAR * 2° HALF 1960s: EURO-DOLLAR MARKET IN LONDON MARKET IN LONDON * AFTER 1975: SYNDICATED LOANS TO * AFTER 1975: SYNDICATED LOANS TO DEVELOPPING COUNTRIES AT DEVELOPPING COUNTRIES AT VARIABLE INTEREST RATE VARIABLE INTEREST RATE DETERMINED BY U.S. DETERMINED BY U.S.

* * 1982: MEXICAN & « THIRD WORLD » 1982: MEXICAN & « THIRD WORLD » DEBT CRISIS = SERVICING OF INTERST DEBT CRISIS = SERVICING OF INTERST ON DEBT AT USURIOUS RATESON DEBT AT USURIOUS RATES* U.S. & OTHER G7 GOVERNMENT DEBT * U.S. & OTHER G7 GOVERNMENT DEBT = MASSIVE TRANSFER OF MONEY TO = MASSIVE TRANSFER OF MONEY TO FUNDSFUNDS

IN 1980s: FUNDS BECOME STRONGER IN 1980s: FUNDS BECOME STRONGER THAN BANKS MAIN VEHICLE OF THAN BANKS MAIN VEHICLE OF FINANCIAL ACCUMULATION = FINANCIAL ACCUMULATION = INTEREST ON GOVERNMENT DEBTINTEREST ON GOVERNMENT DEBT

CORPORATIONS « FINANCIARIZE »: CORPORATIONS « FINANCIARIZE »: CURRENCY SPECULATION, BUT ALSO CURRENCY SPECULATION, BUT ALSO CHANGES IN MANAGEMENT CHANGES IN MANAGEMENT STRATEGIES (USE OF MONOPSONY, STRATEGIES (USE OF MONOPSONY, « HOLLOW CORPORATION », « HOLLOW CORPORATION », PREDATORY  SOURCING OF PREDATORY  SOURCING OF TECHNOLOGY, EXTERNALIZATION TO TECHNOLOGY, EXTERNALIZATION TO LOW COST VULNERABLE FIRMS, LOW COST VULNERABLE FIRMS, AGGRESSIVE LABOR POLICIES, ETC.) AGGRESSIVE LABOR POLICIES, ETC.)

IN 1990s: MAJOR CHANGE IN THE IN 1990s: MAJOR CHANGE IN THE IDENTITY OF OWNERS OF IDENTITY OF OWNERS OF CORPORATIONS WITH SHIFT OF CORPORATIONS WITH SHIFT OF FUNDS PORTFOLIOS TO SHARES FUNDS PORTFOLIOS TO SHARES

ONSET OF CORPORATE GOVERNANCEONSET OF CORPORATE GOVERNANCE MID 1990s: NEW WAVE OF M&AsMID 1990s: NEW WAVE OF M&As NEW PUSH OF FDI, NOTABLY IN ASIA NEW PUSH OF FDI, NOTABLY IN ASIA

TAKE OFF OF STRONG FDI IN CHINATAKE OFF OF STRONG FDI IN CHINA IN MANY COUNTRIES MOUNTING IN MANY COUNTRIES MOUNTING

PRESSURE ON GOVERNMENTS TO PRESSURE ON GOVERNMENTS TO PRIVATIZE AND TO SET UP MARKET-PRIVATIZE AND TO SET UP MARKET-BASED PENSION SCHEMESBASED PENSION SCHEMES

« DISTANCE FROM PRODUCTION » = « DISTANCE FROM PRODUCTION » = KEY DIFFENCES BETWEEN KEY DIFFENCES BETWEEN AUTONOMOUS FIRMS & THOSE AUTONOMOUS FIRMS & THOSE GOVERNED BY FUNDSGOVERNED BY FUNDS

IN FIRMS CONSIDERATIONS OF LONG IN FIRMS CONSIDERATIONS OF LONG TERM EXPANSION & GROWTH CAN TERM EXPANSION & GROWTH CAN PREVAIL, LONG HORIZONSPREVAIL, LONG HORIZONS

IN FUNDS THE RULE IS « VALUE FOR IN FUNDS THE RULE IS « VALUE FOR INVESTORS EACH QUARTER » INVESTORS EACH QUARTER »

LOYALTY OF MANAGERS THROUHGH LOYALTY OF MANAGERS THROUHGH STOCK OPTIONS STOCK OPTIONS

BUT VERY GREAT PRESSURE ON LABORBUT VERY GREAT PRESSURE ON LABOR

BEGINNING IN THE LATE 1990s BEGINNING IN THE LATE 1990s VALUE FOR SHAREHOLDERS VALUE FOR SHAREHOLDERS BASED MORE ON MORE ON PRICE BASED MORE ON MORE ON PRICE OF SHARESOF SHARES

SINCE circa 2000, NET OUTFLOW SINCE circa 2000, NET OUTFLOW OF CASH FROM BOURSES FIRMS OF CASH FROM BOURSES FIRMS BUY BACK SHARES. NO NEW CASH BUY BACK SHARES. NO NEW CASH ONCE IPO FINISHEDONCE IPO FINISHED

INVESTMENT IS FINANCED INVESTMENT IS FINANCED THROUGH ISSUING CORPORATE THROUGH ISSUING CORPORATE BONDS e.g. DEBTBONDS e.g. DEBT

TODAY WHAT TODAY WHAT THE ECONOMISTTHE ECONOMIST (31.03.07) CALLS « VULTURE (31.03.07) CALLS « VULTURE FINANCE » NURTURED BY « EXCESS FINANCE » NURTURED BY « EXCESS LIQUDITY » IS OMNIPRESENTLIQUDITY » IS OMNIPRESENT

* PRIVATE EQUITY OPERATING FOR * PRIVATE EQUITY OPERATING FOR MUTUAL & HEDGE FUNDS & BANKSMUTUAL & HEDGE FUNDS & BANKS

* LBOs LEVERAGED BY THE HUGE * LBOs LEVERAGED BY THE HUGE MASS OF MONEY LOOKING FOR MASS OF MONEY LOOKING FOR JUICY FINANCIAL INVESTMENTJUICY FINANCIAL INVESTMENT

FINANCIAL INVESTORS KEENLY FINANCIAL INVESTORS KEENLY INTERESTED IN « EMERGING INTERESTED IN « EMERGING MARKETS »MARKETS »

FOLLOWING THE MEXICAN & ASIAN FOLLOWING THE MEXICAN & ASIAN CRISES & THE SHIFT TO SHARES, CRISES & THE SHIFT TO SHARES, THE INTEREST OF INVESTORS HAS THE INTEREST OF INVESTORS HAS ALSO SHIFTED = EMERGING ALSO SHIFTED = EMERGING ECONOMIES ASECONOMIES AS

LOCUS FOR PROFIT & ROYALTY LOCUS FOR PROFIT & ROYALTY REMITTANCES BY TNCs = BETTER REMITTANCES BY TNCs = BETTER VALUE FOR SHAREHOLDERSVALUE FOR SHAREHOLDERS

AS AREAS OF EXPANSION OF MAJOR AS AREAS OF EXPANSION OF MAJOR INTERNATIONAL BANKS THROUGH INTERNATIONAL BANKS THROUGH RIGHT OF ENSTABLISHMENT AND RIGHT OF ENSTABLISHMENT AND M&AsM&As

SHIFT FROM FOREIGN TO SHIFT FROM FOREIGN TO DOMESTIC PUBLIC DEBT MUCH OF DOMESTIC PUBLIC DEBT MUCH OF WHICH HELD BY DOMESTIC BANKS WHICH HELD BY DOMESTIC BANKS = INTERNATIONAL BANKS ENT ON = INTERNATIONAL BANKS ENT ON CASHING IN ON THISCASHING IN ON THIS

EMERGING ECONOMIESEMERGING ECONOMIES NOT ONLY NOT ONLY « TARGETS » ALSO LOCUS OF « TARGETS » ALSO LOCUS OF ENDOGENOUS PROCESSES ENDOGENOUS PROCESSES

FOR FINANCIAL ACCULATION BY FOR FINANCIAL ACCULATION BY LOCAL OLIGARCHICAL GROUPSLOCAL OLIGARCHICAL GROUPS

FOR THE BUILDING OF LARGE FOR THE BUILDING OF LARGE DOMESIC CORPORATIONSDOMESIC CORPORATIONS

FOR ENDOGENOUS « PURE » FOR ENDOGENOUS « PURE » FINANCIAL ACCUMULATION BY FINANCIAL ACCUMULATION BY BANKS & LATTER FUNDSBANKS & LATTER FUNDS

ENDOGENOUS FINANCIAL ENDOGENOUS FINANCIAL ACCUMULATION ACCUMULATION

IN BANKS & INSURANCE COMPANIES IN BANKS & INSURANCE COMPANIES CENTRALIZING SMALL SAVINGSCENTRALIZING SMALL SAVINGS

IN PENSION FUNDS WHEN PENSIONS IN PENSION FUNDS WHEN PENSIONS ARE PRIVATIZED ARE PRIVATIZED

CHANNELS OF ACCUMULATION = CHANNELS OF ACCUMULATION = HOLDING OF DOMESTIC PUBLIC DEBTHOLDING OF DOMESTIC PUBLIC DEBT

CREDIT AT HIGH INTEREST RATES CREDIT AT HIGH INTEREST RATES

DOMESTIC FINANCIAL DOMESTIC FINANCIAL INSTITUTIONS ARE EARLY & INSTITUTIONS ARE EARLY & STRONG ADVOCATES OF STRONG ADVOCATES OF LIBERALISATION IN FINANCE & FDILIBERALISATION IN FINANCE & FDI

DEFENSORS AND INITIATORS OF DEFENSORS AND INITIATORS OF

PRIVATE PENSION SCHEMESPRIVATE PENSION SCHEMES

PARTNERS AND EVEN INITIATORS PARTNERS AND EVEN INITIATORS OF TAKEOVERS OF NATIONAL FIRMS OF TAKEOVERS OF NATIONAL FIRMS BY FOREIGN ONES AND OF M&As BY BY FOREIGN ONES AND OF M&As BY « MIXED CONSORTIUM »« MIXED CONSORTIUM »

« DELIGHTS OF LIBERALISATION » « DELIGHTS OF LIBERALISATION » FDI LIBERALIZATION FDI LIBERALIZATION

AGREEMENTS SPELL THE END OF AGREEMENTS SPELL THE END OF LISTIAN POLICIESLISTIAN POLICIES

FIRMS PLAY IN A « NEW LEAGUE » FIRMS PLAY IN A « NEW LEAGUE » WITH RISK OF UNDER-WITH RISK OF UNDER-ESTIMATION OF INTENSITY OF ESTIMATION OF INTENSITY OF RIVALRY & SCALE OF ENNEMY RIVALRY & SCALE OF ENNEMY FINANCIAL STRICKING POWERFINANCIAL STRICKING POWER

MEANINGFUL DATA MEANINGFUL DATA COLLECTIONCOLLECTION

DATA NEEDED ON FORMS, DATA NEEDED ON FORMS, SCALE & EFFECT OF FOREIGN SCALE & EFFECT OF FOREIGN FINANCIAL TARGETTINGFINANCIAL TARGETTING

DATA NEEDED ON FORMS & DATA NEEDED ON FORMS & SCALE OF ENDOGENEOUS SCALE OF ENDOGENEOUS FINANCIAL ACCUMULATIONFINANCIAL ACCUMULATION

DATA PROVIDED BY THE DATA PROVIDED BY THE EXTERNAL CAPITAL ACCOUNT.EXTERNAL CAPITAL ACCOUNT.

CAPITAL CAPITAL INFLOWSINFLOWS: TOTAL AND : TOTAL AND COMPOSITIONCOMPOSITION::

FDI, INTERNATIONAL BANK LOANS FDI, INTERNATIONAL BANK LOANS AND SHORT-TERM CAPITAL AND SHORT-TERM CAPITAL

IDEALLY TYPE OF INVESTMENT IDEALLY TYPE OF INVESTMENT (GOVERNMENT BONDS, (GOVERNMENT BONDS, OPERATIONS IN THE HOST STOCK OPERATIONS IN THE HOST STOCK MARKET, ETC.)MARKET, ETC.)

CAPITAL CAPITAL OUTFLOWSOUTFLOWS: IDEM: IDEM

DATA ON DATA ON GOVERNMENT DEBT GOVERNMENT DEBT ((CENTRAL GOVERNMENT & CENTRAL GOVERNMENT & STATE & MUNICIPAL STATE & MUNICIPAL AUTHORITIESAUTHORITIES

SIZE OF DEBT (IN DOLLARS, % SIZE OF DEBT (IN DOLLARS, % OF GDP, % of EXPORTS, etc.)OF GDP, % of EXPORTS, etc.)

IDENTITY OF CREDITORSIDENTITY OF CREDITORS (FOREIGN OR NATIONAL) (FOREIGN OR NATIONAL)

IN THE LATTER CASE IN THE LATTER CASE BREAKDOWN (DOMESTIC BREAKDOWN (DOMESTIC BANKS, PENSION FUNDS, etc.).BANKS, PENSION FUNDS, etc.).

DATA ON DATA ON INWARD AND OUTWARD INWARD AND OUTWARD FDIFDI, WITH BREAKDOWN BETWEEN , WITH BREAKDOWN BETWEEN GREEN-FIELD AND M&AsGREEN-FIELD AND M&As

FOR INWARD FDI OF INVESTORS FOR INWARD FDI OF INVESTORS (FIRMS OR FUNDS) & (FIRMS OR FUNDS) & NATIONALITYNATIONALITY

FOR OUTWARD FDI COUNTRIES OF FOR OUTWARD FDI COUNTRIES OF DESTINATION AND NATURE OF DESTINATION AND NATURE OF INVESTMENT (M&A or INVESTMENT (M&A or GREENFIELD)GREENFIELD)

DATA ON M&As & POST-1990s DATA ON M&As & POST-1990s CHANGES IN OWNERSHIPCHANGES IN OWNERSHIP OF: OF:

NATIONAL PRIVATELY OWNED NATIONAL PRIVATELY OWNED FIRMS: OWNERSHIP BY FIRMS: OWNERSHIP BY FAMILIES, BANKS, DOMESTIC FAMILIES, BANKS, DOMESTIC PENSION FUNDS, etc.PENSION FUNDS, etc.

OF STATE OWNED ENTERPRISES OF STATE OWNED ENTERPRISES (PRIVATIZATION)(PRIVATIZATION)

ACQUISITIONS BY ACQUISITIONS BY FOREIGN CAPITAL: INDUSTRIAL FOREIGN CAPITAL: INDUSTRIAL

CORPORATIONS CORPORATIONS (MANUFACTURING, MINING OR (MANUFACTURING, MINING OR SERVICES), FINANCIAL SERVICES), FINANCIAL INVESTORSINVESTORS

DOMESTIC CAPITAL (idem) DOMESTIC CAPITAL (idem) CHANGES IN THE DEGREE OF CHANGES IN THE DEGREE OF

CONCENTRATION CONCENTRATION ACCOMPANYING CHANGES IN ACCOMPANYING CHANGES IN OWNERSHIPOWNERSHIP

DATA ON THE DATA ON THE FINANCIAL SYSTEMFINANCIAL SYSTEM FINANCIAL FINANCIAL DEPTHDEPTH (FINANCIAL (FINANCIAL

ASSETS AS % OF GDP) ASSETS AS % OF GDP) MAIN MAIN BREAKDOWNBREAKDOWN OF ASSETS OF ASSETS

(BANK DEPOSITS, GOVERNMENT (BANK DEPOSITS, GOVERNMENT DEBT, CORPORATE DEBT, EQUITY)DEBT, CORPORATE DEBT, EQUITY)

SIZE AND GROWTH OF THE SIZE AND GROWTH OF THE NATIONAL NATIONAL CORPORATE BOND CORPORATE BOND MARKETMARKET

DATA ON THE DOMESTIC DATA ON THE DOMESTIC STOCK EXCHANGESTOCK EXCHANGE

CAPITALIZATION AND CAPITALIZATION AND PERFORMANCE (BACK TO 1995) PERFORMANCE (BACK TO 1995)

LISTED COMPANIES (SECTOR LISTED COMPANIES (SECTOR OF ORIGIN, VALUE OF OF ORIGIN, VALUE OF CAPITALIZATION) CAPITALIZATION)

REGULATORY REGIME FOR REGULATORY REGIME FOR FOREIGN INVESTORS.FOREIGN INVESTORS.

DATA ON THE NATURE OF DATA ON THE NATURE OF SAVINGS & THEIR SAVINGS & THEIR CENTRALIZATION BY BANKS AND CENTRALIZATION BY BANKS AND OTHER INSTITUTIONSOTHER INSTITUTIONS

SIZE SIZE OF OF HOUSEHOLD SAVINGSHOUSEHOLD SAVINGS AND THEIR COMPOSITION (BANK AND THEIR COMPOSITION (BANK DEPOSITS, FINANCIAL ASSETS, DEPOSITS, FINANCIAL ASSETS, GOLD, PHYSICAL ASSETS)GOLD, PHYSICAL ASSETS)

SIZE & GROWTH OF SIZE & GROWTH OF PENSION PENSION FUNDSFUNDS

DATA ON DATA ON BANK CREDITBANK CREDIT DISTRIBUTION BY TYPE OF DISTRIBUTION BY TYPE OF

CREDIT (FIRMS, LARGE, SMALL, CREDIT (FIRMS, LARGE, SMALL, MORTGAGE, CONSUMER MORTGAGE, CONSUMER CREDIT, etc.)CREDIT, etc.)

COST (INTEREST RATES FOR COST (INTEREST RATES FOR TYPES OF CREDIT)TYPES OF CREDIT)

THE GEO-POLITICS OF FINANCE: THE GEO-POLITICS OF FINANCE: A FEW FEATURESA FEW FEATURES

CHANGE IN « THIRD WORLD CHANGE IN « THIRD WORLD DEBT » = LARGE TRADE DEBT » = LARGE TRADE SURPLUSESSURPLUSES & DOLLAR RESERVES & DOLLAR RESERVES BY SEVERAL MAJOR COUNTRIES, BY SEVERAL MAJOR COUNTRIES, NOTABLY BRICSNOTABLY BRICS

U.S. AS MAJOR DEBTOR COUNTRYU.S. AS MAJOR DEBTOR COUNTRY U.S.-ASIA AXIS AS MAIN GLOBAL U.S.-ASIA AXIS AS MAIN GLOBAL

RELATIONSHIP STRUCTURING RELATIONSHIP STRUCTURING WORLD MACRO-ECONOMICSWORLD MACRO-ECONOMICS

The backbone of the current systemic The backbone of the current systemic configuration of the global economy is the configuration of the global economy is the US-Asia axis : China & Japan in different as US-Asia axis : China & Japan in different as well as in similar capacities ; less crucially well as in similar capacities ; less crucially Korea &Taiwan ; India in a particular positionKorea &Taiwan ; India in a particular position

All other regions, including the EU, All other regions, including the EU, subordinate to this power axis & dependent subordinate to this power axis & dependent on the demand pull created by both poleson the demand pull created by both poles

United States needs the :United States needs the : ““China effect” on wages & the price of China effect” on wages & the price of

manufacturesmanufactures profits and so the capacity to pay profits and so the capacity to pay

dividends made by US TNC exploiting dividends made by US TNC exploiting in situin situ China’s cheap, disciplined labor China’s cheap, disciplined labor forceforce

purchase of T-Bonds made by the purchase of T-Bonds made by the Central Bank of ChinaCentral Bank of China

Other indirect positive effects for U.S.Other indirect positive effects for U.S.* Support provided by China to Japan, * Support provided by China to Japan, Taiwan & KoreaTaiwan & Korea it was unwilling/incapable to help Japan it was unwilling/incapable to help Japan

out of the post 1990 recessionout of the post 1990 recession it needs the purchase of T-Bonds also it needs the purchase of T-Bonds also

made by Japan, Taiwan & Koreamade by Japan, Taiwan & Korea

* Indirect benefits from China’s demand for * Indirect benefits from China’s demand for raw materials to Latin Americaraw materials to Latin America

China needs the United States:China needs the United States: as its principal export market = “U.S. as its principal export market = “U.S.

consumer of last resort”consumer of last resort”

as a source of productive capital but also of as a source of productive capital but also of managerial know-how and technology to be managerial know-how and technology to be assimilated and improvedassimilated and improved

currently China pays the price in the form of currently China pays the price in the form of outward flows of profits, but already outward flows of profits, but already candidate for the M&A of Western firms candidate for the M&A of Western firms

High vulnerability of these High vulnerability of these relationshipsrelationships

Risk in a quite near future of transition Risk in a quite near future of transition from “healthy” deflationary conditions from “healthy” deflationary conditions to outright deflationto outright deflation

Asia again the seat of strong latent Asia again the seat of strong latent over-accumulation & excess capacityover-accumulation & excess capacity

In other parts of the world system play In other parts of the world system play of capital’s “classical” contradictionof capital’s “classical” contradiction

Goods must be bought by economic Goods must be bought by economic agents with monetary income agents with monetary income

Wages provide “demand”, but are Wages provide “demand”, but are viewed by capitalists as “costs” and as viewed by capitalists as “costs” and as “levies” on their profits = inherent “levies” on their profits = inherent pressure to reduce real wagespressure to reduce real wages

Large scale resorting to the “China Large scale resorting to the “China effect” = little leeway to offset a U.S. effect” = little leeway to offset a U.S. recessionrecession

U.S. mortgage & consumer credit U.S. mortgage & consumer credit expansion has reached its limitsexpansion has reached its limits

U.S. external deficits put a ever greater U.S. external deficits put a ever greater strain on the dollar: what the limit level strain on the dollar: what the limit level that holders of dollar reserves accept?that holders of dollar reserves accept?

A major global financial crisis with New A major global financial crisis with New York as its heartYork as its heart

Did not materialize in 1998 or in 2001, Did not materialize in 1998 or in 2001, but it cannot be ruled out because of but it cannot be ruled out because of the huge accumulation of assets (e.g. the huge accumulation of assets (e.g. fictitious capital) and the U.S. deficitsfictitious capital) and the U.S. deficits

Much harder, possibly impossible for Much harder, possibly impossible for the Fed to resort to new massive “anti-the Fed to resort to new massive “anti-cyclical” credit creation as in the pastcyclical” credit creation as in the past

Any financial incident can trigger off the Any financial incident can trigger off the latent situation created by overcapacity & latent situation created by overcapacity & endemic overproduction endemic overproduction

Trade wars which WTO would not be able to Trade wars which WTO would not be able to controlcontrol

Monetary blocks, but great tension between Monetary blocks, but great tension between rivals for their leadershiprivals for their leadership

Reminder that the global economy created Reminder that the global economy created by liberalization is an unregulated oneby liberalization is an unregulated one