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Systemic Risk

The Myth of Rational Finance and the Crisis of Democracy

Five years have passed since the outbreak of one of the worst financial crises the world has ever witnessed. Yet, despite the exceedingly diverse range of publications that have sought to explain the causes and the logic of the crisis, central questions have remained unanswered. Indeed, not only has systemic risk become a buzzword, but it has also developed into an acute threat. But what exactly constitutes the very essence of this concept, and ought it to be considered an economic or a political phenomenon?

In addressing these questions, this volume draws upon political economy as an approach to analyze the concept of systemic risk as well as corresponding dilemmas of political order, legitimacy, and expertise. The resulting discussion posits major consequences for the political governance of financial systems in the increasingly interconnected world of the twenty-first century.

282 pages | 23 color plates, 2 halftones | 5 1/2 x 8 1/2 | © 2013

Political Science: Public Policy

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Table of Contents

1              Introduction: Systemic Risk Revisited – Steps to an Integrated


2              Describing Systemic Risk

                2.1          Basic Features of Systemic Risk

3              The Myth of Rational Finance: A Review of Systemic Properties of

                Global Finance

                3.1          System Governance

                3.2          Overconfidence in Governance Capabilities

                3.3          Learning Disabilities

4              Understanding Systemic Risk

                4.1          An Economic Approach to Systemic Risk

                4.2          A Political Approach to Systemic Risk

                4.3          An Integrated Approach to Systemic Risk

5              Micro-Cases of Global Financial Governance Institutions

                5.1          The FSB

                5.2          The BCBS

                5.3          A Critical Examination of the FSOC           

                5.4          An Early Assessment of the ESRB

6              What’s Democracy Got to Do with it – a Crisis of Democracy?

7              What’s Law Got to Do with it?




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