Investigating the potentially contradictory microfoundations of financialization

The existing academic literature on financialization points to multiple instances in which firms attempt to demonstrate the vitality of their stock-market position in ways which ultimately prove to be self-harming. I demonstrate, in the first instance as a matt er of immanent logic, that these actions are linked to the interplay of contradictory tendencies in the microfoundations of financialization. Under conditions of financialization, firms create additional sources of credit to capitalize their productive activities by driving their stock price into greater increases than the market average, thereby generating capital gains. Yet, the more it becomes public knowledge that the financing tricks used to inflate the stock price provide no productive benefit to the firm, the more it would seem to create incentives for fund managers to hold portfolios that replicate the stock market as a whole. In this way, they will minimize their exposure to financial misrepresentation. Such a stance undermines financialized business models, but it does in any case conform to fund managers' basic theoretical training, which revolves around the logical demonstration that an individual stock cannot systematically out-perform the market average. I review the available empirical studies of fund manager decision-making to show that they find against the existence of a simple performativity loop operating between finance theory and fund manager behaviour. However, on many points the empirical evidence does confirm the theoretically derived conclusion concerning the potentially contradictory microfoundations of financialization. Fund managers often do act in a way which is consistent with finance theory's core claim that an index-tracking strategy represents the only equilibrium portfolio, even if this is only rarely as a result of the direct performativity of the theory

Discordant identification of pediatric severe sepsis by research and clinical definitions in the SPROUT international point prevalence study

Introduction: Consensus criteria for pediatric severe sepsis have standardized enrollment for research studies. However, the extent to which critically ill children identified by consensus criteria reflect physician diagnosis of severe sepsis, which underlies external validity for pediatric sepsis research, is not known. We sought to determine the agreement between physician diagnosis and consensus criteria to identify pediatric patients with severe sepsis across a network of international pediatric intensive care units (PICUs). Methods: We conducted a point prevalence study involving 128 PICUs in 26 countries across 6 continents. Over the course of 5 study days, 6925 PICU patients <18 years of age were screened, and 706 with severe sepsis defined either by physician diagnosis or on the basis of 2005 International Pediatric Sepsis Consensus Conference consensus criteria were enrolled. The primary endpoint was agreement of pediatric severe sepsis between physician diagnosis and consensus criteria as measured using Cohen's ?. Secondary endpoints included characteristics and clinical outcomes for patients identified using physician diagnosis versus consensus criteria. Results: Of the 706 patients, 301 (42.6 %) met both definitions. The inter-rater agreement (? ± SE) between physician diagnosis and consensus criteria was 0.57 ± 0.02. Of the 438 patients with a physician's diagnosis of severe sepsis, only 69 % (301 of 438) would have been eligible to participate in a clinical trial of pediatric severe sepsis that enrolled patients based on consensus criteria. Patients with physician-diagnosed severe sepsis who did not meet consensus criteria were younger and had lower severity of illness and lower PICU mortality than those meeting consensus criteria or both definitions. After controlling for age, severity of illness, number of comorbid conditions, and treatment in developed versus resource-limited regions, patients identified with severe sepsis by physician diagnosis alone or by consensus criteria alone did not have PICU mortality significantly different from that of patients identified by both physician diagnosis and consensus criteria. Conclusions: Physician diagnosis of pediatric severe sepsis achieved only moderate agreement with consensus criteria, with physicians diagnosing severe sepsis more broadly. Consequently, the results of a research study based on consensus criteria may have limited generalizability to nearly one-third of PICU patients diagnosed with severe sepsis

The US Dollar, the Euro, and the Yen: An Evaluation of Their Present and Future Status as International Currencies

The process of European integration and especially the introduction of the euro as the single currency for up to now 12 member countries of the EU in 1999 may alter the existing clear currency hierarchy. The euro area is comparable in size to the US with respect to GDP and even exceeds the US regarding the share in world trade. Thus questions arise of whether the international monetary system turns out to be bipolar in the long run or whether the yen can also play its part. It turns out that real activity, size and sophistication of financial markets, monetary and financial stability and inertia are the most prominent characteristics making a currency to be preferred on a world-wide level. We thus conclude that the integration and the development of European financial markets are of special importance for a stronger international role of the dollar, but that the historical experience of only gradually changing supremacy of international currencies still applies

Financial Crises in 1997 – 2001 Shortcomings of the International Financial Architecture

What economists and policy-makers for a long time had considered as virtually impossible has happened: except for North America and Europe, since 1997 the world financial system has moved with dazzling speed from crisis to crisis. Major countries in Asia, Europe and Latin America collapsed or fell prey to the contagiousness of the crisis. It all started in Thailand in the summer of 1997, quickly spread to other South-East Asian countries, dragged down Japan, infested Russia and spread to Latin America. The starting point in South East Asia is all the more remarkable as these economies were admired world-wide for their achievements and the World Bank – surely a very involved and knowledgeable institution – wondered in a publication of 1993 about explanations for the "Asian miracle". And, indeed, these countries had accomplished the miracle of lifting themselves out of poverty during the last 20 –30 years. Their success was sustained for several decades. And this success was achieved despite or because of, a social organisation in opposition to Western values: all these countries had limited democracy and, instead, substantial oligarchic structures with widespread corruption and extensive import protection and state involvement. But they were successful. Hence the search for "Asian values" to understand the "Asian miracle". Had the crisis –with a major financial turmoil including currency collapse, widespread bankruptcy of the banking and corporate sector, drop in GDP – been linked to Asia one could have argued that special Asian factors (excessively rapid growth, corruption, fixed exchange rates, etc…) were at work. But in the meantime the list of victims of financial turmoil lengthened: Russia, Brazil, Argentina and Turkey. And whilst Korea and Malaysia came out of the crisis relatively unscathed, Indonesia is still on the brink. Are there lessons to be drawn? The first lesson of the crisis is that there is much more systemic risk than previously admitted. In 1997 and 1998 lenders and investors had reconsidered emerging market risk as a whole and changed tack abruptly, without a clear change in fundamentals. The second is that the IMF's surveillance does not work as well as assumed and that the IMF has difficulties in effectively stemming an unfolding crisis. The world markets have become more global, but international institutions have not kept pace. The official mission of the IMF is to assist countries with a balance of payments problem. But in fact the IMF is expected to carry out surveillance to prevent financial crises and their spreading to other countries and to assist countries with international liquidity problems. It would be unreasonable to expect the IMF to deal well with all these expectations for which it was not set up. This paper argues that the IMF, more often than not, has made the severity of a crisis worse.