Citigroup Case Analysis of the 2008 Financial Crisis
Low interest rates resulting in excessive liquidity
Saving imbalances between the West and Asia due to currency manipulation and corporate
theft of data, as well patent/IP fraud.
Risky borrowing/Sub-prime loans/De-regulatory philosophy
Gatekeeper (credit agency) conflicts of interest
U.S. policymakers, businesses, and labor groups argue that Chinese currency is
undervalued by as much as 40 percent against the dollar, making Chinese exports
cheaper, putting massive dollar flows in the hands of the Chinese.
Undervaluation is also because of the yuan has expanding the U.S. trade deficit with
China, hurting U.S. manufacturers and depressing U.S. employment, which continues to
hover above 9 percent. As evidence that the yuan is "significantly undervalued" (PDF),
the U.S.-funded nonpartisan Congressional Research Service cited the sharp increase in
China's foreign exchange reserves from $403 billion to $1.5 trillion between 2003 and 2007
(lol), and China's large trade surplus totaling $268 billion in 2007.
In 2010, the country's foreign exchange reserves had climbed to around $3.2 trillion, and
its trade surplus had narrowed to $183.1 billion.
U.S. financial regulatory failures ultimately forced trade surpluses on China. --Albert
Keidel
The main indicator that the yuan is undervalued is that China continues to accumulate
large foreign exchange reserves. That, Dadush says, is "indicative of China's intervention
in the market to keep the yuan from rising."
The lax U.S. financial regulations that fueled highly leveraged over-borrowing and
overconsumption of Chinese exports. "U.S. financial regulatory failures ultimately forced
trade surpluses on China," says Keidel. Governments build foreign exchange reserves to
fend off speculation against their currencies as they liberalize their financial markets, he
says.
The CDO issue / sCam Debt Obligations (2) suCk Dick for repaymentO
Particular specific interests involved in this case (166-167)
Clinton Admin Robert Rubin, Charles Prince, whatever other similarly minded individuals, their
consciousness types
The article goes over basic solutions. Adjustments to regulating business processes (4-5), capital
requirements (5), Compensation regulation (6), More risk liability (7), and who gets to decide
selection of management (7). Interesting solutions presented, but think of alternatives as well.
--> The question is how should the west adjust these factors of the economy while retaining
competitive western economic qualities and increasing profitability and economic wealth/gains
It's argued that "fear of firing can discourage excessive risk taking if its perceived losses will be
held against executives" as well "fear of firing can encourage excessive risk taking is executives
perceive appointment controllers are more concerned about earnings than risk"
Low interest rates resulting in excessive liquidity
Saving imbalances between the West and Asia due to currency manipulation and corporate
theft of data, as well patent/IP fraud.
Risky borrowing/Sub-prime loans/De-regulatory philosophy
Gatekeeper (credit agency) conflicts of interest
U.S. policymakers, businesses, and labor groups argue that Chinese currency is
undervalued by as much as 40 percent against the dollar, making Chinese exports
cheaper, putting massive dollar flows in the hands of the Chinese.
Undervaluation is also because of the yuan has expanding the U.S. trade deficit with
China, hurting U.S. manufacturers and depressing U.S. employment, which continues to
hover above 9 percent. As evidence that the yuan is "significantly undervalued" (PDF),
the U.S.-funded nonpartisan Congressional Research Service cited the sharp increase in
China's foreign exchange reserves from $403 billion to $1.5 trillion between 2003 and 2007
(lol), and China's large trade surplus totaling $268 billion in 2007.
In 2010, the country's foreign exchange reserves had climbed to around $3.2 trillion, and
its trade surplus had narrowed to $183.1 billion.
U.S. financial regulatory failures ultimately forced trade surpluses on China. --Albert
Keidel
The main indicator that the yuan is undervalued is that China continues to accumulate
large foreign exchange reserves. That, Dadush says, is "indicative of China's intervention
in the market to keep the yuan from rising."
The lax U.S. financial regulations that fueled highly leveraged over-borrowing and
overconsumption of Chinese exports. "U.S. financial regulatory failures ultimately forced
trade surpluses on China," says Keidel. Governments build foreign exchange reserves to
fend off speculation against their currencies as they liberalize their financial markets, he
says.
The CDO issue / sCam Debt Obligations (2) suCk Dick for repaymentO
Particular specific interests involved in this case (166-167)
Clinton Admin Robert Rubin, Charles Prince, whatever other similarly minded individuals, their
consciousness types
The article goes over basic solutions. Adjustments to regulating business processes (4-5), capital
requirements (5), Compensation regulation (6), More risk liability (7), and who gets to decide
selection of management (7). Interesting solutions presented, but think of alternatives as well.
--> The question is how should the west adjust these factors of the economy while retaining
competitive western economic qualities and increasing profitability and economic wealth/gains
It's argued that "fear of firing can discourage excessive risk taking if its perceived losses will be
held against executives" as well "fear of firing can encourage excessive risk taking is executives
perceive appointment controllers are more concerned about earnings than risk"
