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The Next Revolution in our Credit-Driven Economy

Book Description

Go inside the research to see the global consequences of unethical banking

The Next Revolution in our Credit-Driven Economy: The Advent of Financial Technology integrates market theory and practice to help investors identify growth opportunities, and to help regulators create a sustainable economic environment. Author Paul Schulte, former economic analyst with the National Security Council, draws upon his own decade-spanning research to demonstrate how unethical banking practices provide the brute force that drives political and economic crises worldwide. By unbundling how credit markets work, this authoritative guide provides deep insight into crisis avoidance and detection, successful investment climates, and the groundwork that must be in place for policy makers to build a sound basis for economic growth. Clear, succinct case studies provide examples of policy and its effects on economic stability, giving you a stronger understanding of the network of forces that determine how loan/deposit ratios behave around the world.

Countries that lend more than they save consistently get into trouble, with catastrophic consequences for the rich and middle class as well as the politicians. This book shows how credit excesses bring about price collapse in stocks, currencies, and real estate, and provides direction for change in the context of global economics.

  • Dive deep into the mechanisms underlying the credit markets
  • Learn how unregulated borrowing leads to socioeconomic crises
  • Examine real-world policy options through global case studies
  • Discover how credit rises are best detected and avoided

An economic climate in which even the smallest hiccup can have long-lasting consequences should be the ideal impetus for a close scrutiny of global banking practices and economic policy. The Next Revolution in our Credit-Driven Economy takes you behind the scenes for a new perspective, and a more informed look at where the world needs to begin changing.

The second half of the book will take a look at the revolution driving financial technology. Companies in Silicon Valley and giants like Alibaba are challenging the landscape for banking. This has profound implications for policy makers, banks and for a new class of entrepreneurs who are developing software which is taking away market share from bank and challenging decades-old financial empires. The book will explore the reasons why many global banks remain flat-footed. It will go into detail about the new companies and software that are moving in the Far East and with innovations in securities, bonds, foreign exchange, retail lending and SME lending. Lastly the book will look at the strategy behind Alibaba and how it will challenge many companies from a powerful base inside China.

Table of Contents

  1. Title Page
  2. Copyright
  3. Dedication
  4. Acknowledgments
  5. About the Author
  6. About the Website
  7. Introduction: A Few Numbers Can Crack the Code
  8. Part One: How Bank Credit Drives Economics (Not the Other Way Around) and Why
    1. Chapter 1: A Few Simple Concepts That Anyone Can Understand
      1. The Error of Our Ways
      2. The Mechanics of Economics
      3. Economic Blinders
      4. The Corporate Example
      5. Painful Reality
      6. How Political Chaos Is Created from Runaway Greed
      7. Tangible Leverage Is the Other Vitally Important Factor
      8. When <i xmlns="http://www.w3.org/1999/xhtml" xmlns:epub="http://www.idpf.org/2007/ops" xmlns:m="http://www.w3.org/1998/Math/MathML" xmlns:svg="http://www.w3.org/2000/svg" xmlns:ibooks="http://vocabulary.itunes.apple.com/rdf/ibooks/vocabulary-extensions-1.0">Debt</i> Becomes a Dirty and Dangerous Word Becomes a Dirty and Dangerous Word
      9. European Bank Woes
      10. Following the Numbers
    2. Chapter 2: Differences between Liquidity and Solvency Are Thin
      1. Current Account versus LDR
      2. Bad Credit Karma
      3. The “Good” Banks
      4. A Wellspring of Debt
      5. Lessons in Asia
    3. Chapter 3: Anatomy of a Credit Crisis and Examples in the Real World
      1. Capital Cycles
      2. The Winners after a Crisis
      3. The Absurdity of Wholesale Lending: This Is a B-A-D Business
  9. Part Two: I Am From the Government, and I Am Here to Help Your Broken Banking System
    1. Chapter 4: Socialization of Debt after Mismanagement by Bankers (or, Why Keynesian Economics Doesn't Work)
      1. Thailand
      2. The United States: In Many Ways, a Carbon Copy of Thailand
      3. Spain and Ireland: The Most Extreme Examples of Irresponsible Lending in Modern History
      4. The United Kingdom
      5. Indonesia
      6. Conclusion
    2. Chapter 5: Why Capitalist Bankers Create Soviet Banking Models When the Going Gets Rough
      1. Basel I: The Japanese Financial M&A Boom and Bust
      2. Basel II: The Rise of the AAA-Rated CDO Boom and Bust
      3. Basel III: The Rise of the Government Debt Boom and Bust?
    3. Chapter 6: Central Banks Are Carrying the Greatest Load and Will Dominate Outcomes
      1. Why Have Central Banks Become So Involved in the Solution of the Global Financial Crisis?
    4. Chapter 7: How Bankers and Policy Rescuers Affect Stocks, Foreign Exchange, and Property
      1. LDRs and Determining Currency Values
      2. The Best Indicator for Value for Financials
      3. What about ROE as a Measure in Itself?
      4. As with All Living Corporations, Return on Capital Is Everything
  10. Part Three: Interlude
    1. Chapter 8: Why Government and Institutions Get Suckered into Debt Binges
      1. Why Are We Comfortable Crawling into Bubbles and Staying There Despite Dangers?
      2. Human Folly: Believing in Something Is Better than Believing in Nothing, and Injustice Is Better than Disorder
      3. 11 Rules To Avoid Getting Pulled into a Bubble
      4. Conclusion: Cassandras must replace delusions with a new vision
  11. Part Four: The Revolution in Financial Architecture
    1. Chapter 9: Why Is This Revolution Happening Now and Why So Fast?
      1. Do Banks Have the DNA To Change?
      2. Technology Is Advancing while Banks Deal with the DA
      3. Emergence of New and Big Players like BlackRock, Alibaba, and Blackstone
      4. Telecom Companies Now See Revenue in Banking
      5. Legal Issues: The Sheriff and the DA Are After Banks for at least 20 Economic Crimes
      6. Have Banks Lost the Goodwill of the Regulator?
      7. The Tax Man
      8. Rules on Subsidiaries around the Globe
      9. Leftover Derivatives from the Global Financial Crisis
    2. Chapter 10: The Revolution in Alternative Investments
      1. Private Equity: Much Dynamic Activity To Replace Businesses That Banks Exited
      2. Hedge Funds Are Backing Technology and Have Abandoned Banks
      3. Sovereign Wealth Funds
    3. Chapter 11: The Revolution in Big Data and SME Lending in the Emerging World
      1. What Happens When Sales and Research Can't Be Paid for Access or IPO Research?
      2. After the Regulators, New Technology Is Leading to End Times for High-Touch Banking
      3. Crowdfunding Is Threatening Traditional Lending
      4. The Jewel in the Crown for Financial Technology: SME Lending
      5. Big Data, Crowdfunding, and the SME: The Magic Formula
      6. Examples: Bringing Together the Data To Create New Opportunities and Reliable Credit Ratings
      7. Payment Systems
    4. Chapter 12: Banking and Analytics—The PayPal Gang, Palantir versus Alibaba, and Hundsun
      1. The PayPal Gang Summit: Big Data, Research, Credit Ratings, and Cybersecurity
      2. Alibaba's Cloud Business: The Future of Banking
      3. AliCloud and Hundsun: The Mother Lode of All Financial Data
      4. Hundsun: A Vast Array of Information on Financial Services
      5. Final Analysis: There is No Such Thing as Private Information for Anyone
    5. Appendix
    6. Bibliography
    7. Index
  12. End User License Agreement