Germany's brake on European capital-market development

In February 2015, the European Commission published a Green Paper in which it put forward the goal to ‘build a true single market for capital’ for all European Union member states by 2019. The present paper argues that there is no realistic prospect of achieving this goal given that the Green Paper omits any reference to a formidable impediment blocking a European capital-market union: the German government's stance on debt. The inescapable fact is that this government's reluctance to increase the supply of its bonds is depriving the European capital market of one of the essential ingredients necessary to its enlargement on the one hand and to the efficiency of its operation on the other: the former because capital-market enlargement crucially depends on attracting institutional investors who must hold a substantial proportion of their bond portfolios in the form of safe government bonds; the latter because the efficient functioning of the capital markets crucially depends on the efficiency of the money markets where safe government bonds are by far the most important form of collateral

The colonization of the future: An alternative view of financialization and its portents

Financialization is generally interpreted by heterodox economists to be a dysfunctional and thus historically transient outgrowth of contemporary capitalism: dysfunctional because it is seen to be driven by attempts to escape production and profit realization constraints in the real economy, transient because these attempts are seen to be ultimately futile. This article proposes the contrary argument that financialization is a functionally useful feature of contemporary capitalism that is entirely in keeping with the latter’s continuing development as a commodity system. Specifically, it will be argued that just as globalization represents the extension of the commodity principle along the axis of geographical space, financialization represents the extension of this same principle along the axis of time: the future is being colonized so as to make it take the overspill of the pressures on organizations operating in the present

The role of shadow banking entities in the financial crisis: a disaggregated view

This article examines the role of the shadow banking system in the global financial crisis of 2007–9. In order to do this, one must first explain the reasons for the explosive growth of shadow banking in the immediate pre-crisis era. Current explanations for this growth tend to hold two contrasting sector (notably regulatory arbitrage and financial innovation); the other emphasising exogenous factors (notably the ‘search for yield’). Integrating these two explanations, in this article we develop a disaggregated view of the shadow banking system. After clarifying the nature of the relation between the regulated and shadow banking systems, we inquire more closely into the different entities that inhabit the shadow banking system, the different activities that these entities performed and the different financial products that these entities supplied. The disaggregated view of shadow banking suggests that while some parts of the system played an important role in the initial subprime phase of the crisis through their involvement with the toxic securities that were at its centre, other parts of the system were key to the subsequent money and inter-bank phases of the crisis through their close ties with the regulated banks

The best of both worlds: scale economies and discriminatory policies in London’s global financial centre

From the early 1960s onwards London has managed to vie with New York for the top spot as an international financial centre. Ever since then, London has reigned as a leading global financial hub, despite not having behind it anything like the political or economic backing enjoyed by New York. This paper seeks to explain this phenomenon by building on Kindleberger’s classic analysis of financial centres as international hubs that arise due to economic, geographic and infrastructural advantages, and more recent theories of specialized financial centres which suggest that financial centres deploy discriminatory business practices in order to compete with the scale economy-based centres. Our central claim is that London’s continuing financial supremacy can be traced to the way that the opposing ‘economic’ and ‘political’ sets of criteria necessary for a financial centre are here inextricably fused together in a mutually reinforcing dynamic. Three case studies are used to support this claim: the market for international loans and deposits; the forex (FX) and over the counter (OTC) derivatives markets; and the area of asset and collateral management

Financialisation reinforced: the dual legacy of the covid pandemic

This paper examines the impact of the covid pandemic on the financialisation process, here viewed as the growing domination of the world’s bond and equity markets over the world’s product markets. Two major arguments are advanced. The first is that the pandemic has reinforced the functionality of financial market scale, which is that its continuing growth signifies nothing other than that government and corporate organisations are colonising the future to cope with the rising financial pressures of the present. The second argument is that the pandemic has also accentuated one of the more notable dysfunctional aspects of the continuing growth of financial market scale, which is its enforcement of a core-periphery divide between the advanced and emerging market economies that occupy the global financial system. The paper concludes with some policy implications of the analysis that includes the call for a global wealth tax

GEOMATICS AND CIVIL ENGINEERING INNOVATIVE RESEARCH ON HERITAGE: INTRODUCING THE “ENGINEER” PROJECT

This paper aims to introduce the concept and objectives of a recently supported European project entitled “Geomatics and Civil Engineering Innovative Research on Heritage”, in short ENGINEER. The ENGINEER project visions to enhance and extend inter-departmental multidisciplinary research activities of the Department of Civil Engineering & Geomatics of the Cyprus University of Technology through coordination and support actions as well as through targeted research activities with the support of European leading institutions. Project tasks aim to fill research multidisciplinary gaps, push, and extend knowledge into new and innovative fields dealing with the monitoring, digitization, visualization, and preservation of ancient monuments and cultural heritage sites, assisting their protection, promotion, and safeguarding

An evolutionary approach to international political economy: the case of corporate tax avoidance

Corporate tax avoidance is both widespread and diverse in its practical mechanics. The scope of the phenomenon often leads economists to conclude that in the jungle of economic competition, tax planning (or optimisation) is among the necessary tools to ensure the survival of the fittest. This theory is increasingly associated with a Darwinian theory of economic evolution. In this paper, I develop a contrasting framework of the evolutionary political economy of corporate tax avoidance. Analysing core concepts of Old Institutionalist Economics (OIE), I examine the core drivers of corporate tax avoidance in a globalised system of states. The major contrast, I find, is between that of the corporate and legal personality and the institutional environment in which it operates. Historically, each corporate entity has been considered a separate legal person, yet a series of ‘mutations’ of incorporations laws created a widening gap between theory and reality, and these, in turn, give rise to tax arbitrage. Narrowing this gap, however, impinges on another venerable historical institution, the institution of sovereignty and sovereign inequality

The European banks' role in the financial crisis of 2007-8: a critical assessment

Since the outbreak of the financial crisis in 2007, opinion has been divided over whether its root cause was weak regulation and bank funding problems or the pressure of investor demand for US safe assets. New research on the European banks’ role in the crisis may finally help to resolve the issue. Far from being peripheral players in the crisis, European banks were deeply implicated in its causal origins as evidenced by their activities in the two US debt markets that were at the heart of the crisis: those for collateralised debt obligations (CDOs) and for asset backed commercial paper (ABCP). These activities would seem to lend weight to the conclusion that regulation and bank funding issues were the key causal variables in the financial crisis. However, it is a conclusion only made possible by ignoring the pre-crisis connection between the federal funds rate and the rate of ABCP demand from the institutional money market mutual funds (MMMFs). This paper argues that when this connection is closely examined, it turns out that the evidence surrounding the European banks’ role in the financial crisis gives greater weight to the safe asset demand explanation of the crisis

The European Commission's proposal for a financial transactions tax: a critical assessment

A financial activities tax (FAT) and a financial transactions tax (FTT) are the main alternative ways of recouping some of the public money used to bail out the financial sector after the great crisis of 2007–08. In preparing a common proposal for the European Union, the European Commission initially appeared to favour the FAT, but then swung its weight behind the FTT in late 2011. Its rationale was that in addition to generating revenue, this tax could also help to stabilize the financial markets by curbing excessive speculative trading. This article takes a different position. Its central argument is that the FTT would amplify rather than dampen market instability by interfering with the functions of important financial institutions. Its chief conclusion is that the FAT is superior to the FTT