Origins and Resolution of Financial Crises; Lessons from the Current and Northern European Crises

Since July 2007 the world economy has experienced a severe financial crisis originating in the U.S. housing market. The crisis has subsequently spread to the financial sectors in European and Asian economies and led to a severe worldwide recession. The existing literature on financial crises rarely distinguish between factors that create the original strain on the financial sector and factors that explain why these strains lead to system-wide contagion and a possible credit crunch. Most of the literature on financial crises refers to factors that cause an original disruption in the financial system. We argue that a financial crisis with its contagion within the system is caused by failures of legal, regulatory and political institutions. One policy implication of our view is that the need for various forms of rescues of financial firms in times of crises would be reduced if appropriate institutions could be put in place Lacking appropriate institutions to avoid contagion within the financial system and a potential credit crunch, ad hoc financial crisis management is required. We draw on experiences from the financial crises in the Nordic countries at the end of the 1980s and the beginning of the 1990s. In particular, the Swedish model for crisis resolution, which has received attention during the current crisis, is discussed in order to illustrate the problems policy makers face in a financial crisis without appropriate institutions. Current European Union approaches to the crisis are discussed before turning to policy implications from an emerging market perspective in the current crisis.Financial Crisis; Institutional Failure; Insolvency Procedures; Contagion; Systemic Effects; Macroeconomic Shock; Financial Crisis Management; Swedish Model

Origins and Resolution Of Financial Crises: Lessons From the Current and Northern European Crises

Since July 2007, the world economy has experienced a severe financial crisis that originated in the U.S. housing market. Subsequently, the crisis has spread to financial sectors in European and Asian economies and led to a severe worldwide recession. The existing literature on financial crises rarely distinguishes between factors that create the original strain on the financial sector and factors that explain why these strains lead to system-wide contagion and a possible credit crunch. Most of the literature on financial crises refers to factors that cause an original disruption in the financial system. We argue that a financial crisis with its contagion within the system is caused by failures of legal, regulatory, and political institutions. One policy implication of our view is that various forms of financial rescue would be reduced in times of crisis if appropriate controls and safeguards were already in place. We draw on experiences from the financial crises in the Nordic countries at the end of the 1980s and the beginning of the 1990s. In particular, the Swedish model for crisis resolution, which has received attention during the current crisis, is discussed to illustrate the problems policymakers face in a financial crisis without appropriate institutions. We discuss European Union approaches to the current crisis before turning to policy implications from an emerging market perspective in the current crisis

Origins and Resolution Of Financial Crises: Lessons From the Current and Northern European Crises

Since July 2007, the world economy has experienced a severe financial crisis that originated in the U.S. housing market. Subsequently, the crisis has spread to financial sectors in European and Asian economies and led to a severe worldwide recession. The existing literature on financial crises rarely distinguishes between factors that create the original strain on the financial sector and factors that explain why these strains lead to system-wide contagion and a possible credit crunch. Most of the literature on financial crises refers to factors that cause an original disruption in the financial system. We argue that a financial crisis with its contagion within the system is caused by failures of legal, regulatory, and political institutions. One policy implication of our view is that various forms of financial rescue would be reduced in times of crisis if appropriate controls and safeguards were already in place. We draw on experiences from the financial crises in the Nordic countries at the end of the 1980s and the beginning of the 1990s. In particular, the Swedish model for crisis resolution, which has received attention during the current crisis, is discussed to illustrate the problems policymakers face in a financial crisis without appropriate institutions. We discuss European Union approaches to the current crisis before turning to policy implications from an emerging market perspective in the current crisis

Paracrine effects of embryo-derived FGF4 and BMP4 during pig trophoblast elongation

The crosstalk between the epiblast and the trophoblast is critical in supporting the early stages of conceptus development. FGF4 and BMP4 are inductive signals that participate in the communication between the epiblast and the extraembryonic ectoderm (ExE) of the developing mouse embryo. Importantly, however, it is unknown whether a similar crosstalk operates in species that lack a discernible ExE and develop a mammotypical embryonic disc (ED). Here we investigated the crosstalk between the epiblast and the trophectoderm (TE) during pig embryo elongation. FGF4 ligand and FGFR2 were detected primarily on the plasma membrane of TE cells of peri-elongation embryos. The binding of this growth factor to its receptor triggered a signal transduction response evidenced by an increase in phosphorylated MAPK/ERK. Particular enrichment was detected in the periphery of the ED in early ovoid embryos, indicating that active FGF signalling was operating during this stage. Gene expression analysis shows that CDX2 and ELF5, two genes expressed in the mouse ExE, are only co-expressed in the Rauber's layer, but not in the pig mural TE. Interestingly, these genes were detected in the nascent mesoderm of early gastrulating embryos. Analysis of BMP4 expression by in situ hybridisation shows that this growth factor is produced by nascent mesoderm cells. A functional test in differentiating epiblast shows that CDX2 and ELF5 are activated in response to BMP4. Furthermore, the effects of BMP4 were also demonstrated in the neighbouring TE cells, as demonstrated by an increase in phosphorylated SMAD1/5/8. These results show that BMP4 produced in the extraembryonic mesoderm is directly influencing the SMAD response in the TE of elongating embryos. These results demonstrate that paracrine signals from the embryo, represented by FGF4 and BMP4, induce a response in the TE prior to the extensive elongation. The study also confirms that expression of CDX2 and ELF5 is not conserved in the mural TE, indicating that although the signals that coordinate conceptus growth are similar between rodents and pigs, the gene regulatory network of the trophoblast lineage is not conserved in these species

Early Developing Pig Embryos Mediate Their Own Environment in the Maternal Tract

The maternal tract plays a critical role in the success of early embryonic development providing an optimal environment for establishment and maintenance of pregnancy. Preparation of this environment requires an intimate dialogue between the embryo and her mother. However, many intriguing aspects remain unknown in this unique communication system. To advance our understanding of the process by which a blastocyst is accepted by the endometrium and better address the clinical challenges of infertility and pregnancy failure, it is imperative to decipher this complex molecular dialogue. The objective of the present work is to define the local response of the maternal tract towards the embryo during the earliest stages of pregnancy. We used a novel in vivo experimental model that eliminated genetic variability and individual differences, followed by Affymetrix microarray to identify the signals involved in this embryo-maternal dialogue. Using laparoscopic insemination one oviduct of a sow was inseminated with spermatozoa and the contralateral oviduct was injected with diluent. This model allowed us to obtain samples from the oviduct and the tip of the uterine horn containing either embryos or oocytes from the same sow. Microarray analysis showed that most of the transcripts differentially expressed were down-regulated in the uterine horn in response to blastocysts when compared to oocytes. Many of the transcripts altered in response to the embryo in the uterine horn were related to the immune system. We used an in silico mathematical model to demonstrate the role of the embryo as a modulator of the immune system. This model revealed that relatively modest changes induced by the presence of the embryo could modulate the maternal immune response. These findings suggested that the presence of the embryo might regulate the immune system in the maternal tract to allow the refractory uterus to tolerate the embryo and support its development