Cses Working Paper Series
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چکیده
On September 15, 2008 Lehman Brothers filed for bankruptcy, something that nearly caused a meltdown of the world’s financial system. A few days later Bernanke made his famous statement that “we may not have an economy on Monday.” In this paper, I study the situation before Lehman went bankrupt and also how this event came to operate as a trigger for the financial panic that occurred in the fall of 2008. Two key ideas inform the analysis. The first comes from Walter Bagehot in Lombard Street (1873) and states that what triggers financial panics are typically hidden losses. The second idea is that confidence plays a key role in finance; and that confidence can be conceptualized as a belief that action can be based on proxy signs, rather than on direct information about the economic situation itself. What characterized the situation before Lehman went down was a general worry that the existing proxy signs (ratings, reported earnings and so on) did not adequately represent the economic situation of various financial institutions. Once Lehman went bankrupt, this worry was transformed into a total disbelief in existing proxy signs a loss of confidence as well as a withdrawal of confidence.
منابع مشابه
CSES Working Paper Series Paper # 30 Richard Swedberg The Centrality of Materiality : Economics and Technology from Xenophon and Onwards September 2005
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تاریخ انتشار 2006