18march2016BEATRICEIRULLO

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B a n k i n g & F i n a n c e Tutorialpresenta?on

Ex#lain hedge,

speculative and Ponzi finance

Discuss Minsky’s

“Financial InstabilitA Hy#othesis” 2

PartI

FinancialInstabilityHypothesis

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4

Specula?vefinance

Growth

Op?mism

Minskymoment

Crisis

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hNp://www.bbc.co.uk/news/magazine-266809936

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Profit

Rules

Ins?tu?ons

hNps://commons.wikimedia.org/wiki/File:Washer.600pix.jpg#file 8

hNp://www.advisorperspec?ves.com/dshort/updates/NFIB-Small-Business-Op?mism-Index

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hNp://www.voxeu.org/ar?cle/inves?ng-europe-s-future

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hNp://www.whocrashedtheeconomy.com.au/blog/2015/05/treasurer-joe-hockey-delusional-as-rba-cuts-to-record-emergency-lows/

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hNp://www.mymoneyblog.com/charts-credit-card-debt-and-household-debt-trends.html

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hNp://www.mymoneyblog.com/charts-credit-card-debt-and-household-debt-trends.html

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hNp://www.federalreserve.gov/pubs/ifdp/2012/1064/revision/ifdp1064r.htm

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hNp://moneymovesmarkets.com/journal/2009/4/30/eurozone-money-lending-trends-s?ll-weakening.html

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PartII

Hedge,specula?veandPonzifinance

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Hedge

Specula?ve

Ponzi

hNps://en.wikipedia.org/wiki/Minsky_moment#/media/File:Stylized_Minsky_Cycle.PNG18

S?lizedMinskycicle

HedgeFinance

Specula?veFinance

PonziFinance

MinskyMoment

CREDIT

GDP

?me

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Hedge

Capitalassets

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Specula?ve

Capitalassets

Financingcosts>incomeHigheroutstandingdebt

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Ponzi

IncomeCapitalassets

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Product/factor market changes

Financial market changes

Interest rates or dividends on debt changes

Hedge

Speculative

Ponzi 23

Product/factor market changes

Financial market changes

Interest rates or dividends on debt changes

Hedge ✔ ✖ ✖

Speculative ✔

✔ ✖

Ponzi ✔ ✔ ✔24

Hedge

Profit

Ponzi

HighinterestsLowerincome

Refinancing

LowercostsHigherincome

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Specula?ve

Profit

HighinterestsLowerincome

Bankruptcy

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Hedge

Specula?ve

Ponzi

27Photobysamuiblue.Publishedon23February2013Stockphoto-ImageID:100141740

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iii)L.RandallWray(2015).WhyMinskyMaNers:AnIntroduc?onto

theWorkofaMaverickEconomist.

PrincetonUniversityPress.ISBN978-0691159126

ii)(2008)[1st.Pub.1986].StabilizinganUnstableEconomy.

McGraw-HillProfessional,NewYork.ISBN978-0-07-159299-4

i)DidHymanMinskyfindthesecretbehindfinancialcrashes?

BBCNews,24March2014.

hNp://www.bbc.com/news/magazine-26680993

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