Canada's Housing Bubble Story: Mortgage Securitization,the State,and the Global Financial Crisis

Canada's experience during and after the financial crisis appears to distinguish it from its international peers. Canadian real estate sales and values experienced record increases since the global financial crisis emerged in 2008, rather than declines, and Canada did not witness any bank failures. The dominant trope concerning Canada's financial and housing markets is that they are sound, prudent, appropriately regulated and ‘boring but effective’. It is widely assumed that Canadian banks did not need, nor receive, a ‘bailout’, that mortgage lending standards remained high, and that the securitization of mortgages was not widespread. The truth, however, does not accord with this mainstream view. In fact, the Canadian financial and housing markets reveal marked similarities with their international peers. Canada's banks needed, and received, a substantial ‘bailout’, while federal policies before and after the financial crisis resulted in the massive growth of mortgage securitization and record household indebtedness. This article documents the growth of Canada's housing bubble, the history of mortgage securitization, and of government policies implemented before and after the crisis. Instead of making the Canadian financial and housing sectors more resilient and sustainable, the outcomes of state responses are best understood as regressively redistributive.     

On Life as a Fictitious Commodity: Cities and the Biopolitics of Late Neoliberalism

Building on a biopolitical understanding of the economic crisis, this essay contends that the occurrence of the crisis warns that life is not a real commodity but — to put it in Karl Polanyi's terms — a ‘fictitious commodity’. This means that life cannot be integrally subsumed within the economy, and therefore the crisis is to be seen as a pathological way in which societies react to the pervasiveness of capitalist relations, showing the illusory character of self‐regulating markets and ownership ideologies. Two mutually contradictory biopolitical responses to the neoliberal crisis, led by the state and grassroots movements respectively, are discussed in the concluding section of the essay.     

A NOTE ON THE ‘GREAT CONTRACTION’

The modern literature on the US banking crisis in 1931 overlooks the key role played by ‘liquidity black holes’ and under‐pricing in the corporate and government bond markets resulting from the banking system's fire sale of assets. This process weakened the bank lending channel in a continuous feedback loop which was eventually checked by ‘money creation’ by the Federal Reserve. This note investigates the work of Evans Clark (1933 ) who highlighted the process of fire sales and mispricing of assets due to non‐fundamental causes.     

Achieving supply chain ‘Leagility’ through a project management orientation

Many forces have combined to make today's supply chains more complex than ever before. These forces include the significant trend to out-sourcing; the growth of offshore manufacturing and procurement; the rising demand for customer-specific solutions and the globalisation of markets. The paper highlights the challenges that organisations must address in order to gain and retain competitiveness in today's markets – in particular, the need to achieve ever lower costs while simultaneously enhancing responsiveness. In other words, the need is to develop hybrid supply chains that are both ‘lean’ and ‘agile’. Using a single case study of a global telecommunications company as an example, the authors demonstrate how supply chain complexity can effectively be mastered by adopting a project management orientation and in the process enabling outcomes that are ‘leagile’, that is, both lean and agile.     

Trump versus Reagan – the global dimension

• ? Could the Trump era resemble the 1980s? ‘Reaganomics’ boosted world growth – but not necessarily in the ways people think – and not for emerging markets (EMs), a larger part of today's world economy. Growth then was also aided by factors such as declining interest rates, which are missing today, and we doubt that deregulation will lead to a productivity surge. US asset prices, meanwhile, were depressed in 1981, unlike now, so the big gains of the 1980s are unlikely to be repeated. EM assets should do better than back then, though.
• ? Optimistic observers – and to some extent, markets – have been drawing parallels between the policy mixes of the Trump and Reagan administrations, and talking up the prospects of stronger global growth. But while the US did support world growth in the 1980s, this was arguably more due to Keynesian' demand‐side policies than supply‐side ones: Reagan's record on supply‐side policies was mixed.
• ? The US is still an important driver of global activity, but markets may be too optimistic about the effect of Trump's policies on world growth. Any Trump fiscal stimulus will occur against a much less favourable background than that of the 1980s, when US growth also benefitted from a variety of factors missing now.
• ? It is also unclear whether Trump's administration will tolerate large expansions of the current account and fiscal deficits as the ‘price’ for more growth. And we are sceptical about the prospects of big gains from deregulation: US economic dynamism has waned, but the policies so far proposed in this area look potentially misdirected.
• ? Over the coming years asset market performance is unlikely to mirror that of the 1980s: valuations suggest less room for dollar appreciation and stock market gains this time around. But emerging market (EM) assets may do better – the soaring dollar and high US rates that hit EMs in the 1980s are unlikely to be repeated. And our analysis suggests even modestly better US growth will support commodity prices and EM growth.

     

Contingent Chicago: Restructuring the Spaces of Temporary Labor

Hiring‐halls, specializing in the placement of day‐laborers in temporary jobs, have in recent years been proliferating along major transport arteries in Chicago's low‐income neighborhoods. This article examines the phenomenon of low‐wage temporary work in Chicago from the perspective of the principal institutional actors in these highly ‘flexibilized’ or ‘contingent’ labor markets – the ‘temp’ agencies. Particular emphasis is placed on the labor‐market effects of temp‐agency strategies, both in respect to patterns of labor segmentation and in terms of the spatial (re)constitution of urban job markets. It is suggested that temp agencies are actively engaged in both the exploitation and facilitation of contingent labor‐market conditions. In this sense, they are assuming important new roles as privatized ‘labor‐market intermediaries’, with apparently deleterious effects for job security and social segregation in the lower reaches of urban labor markets. Their strategies can also be related to the social and geographic restructuring of these job markets, because the growth and polarization of temp employment has been associated with a ‘hardening’– and indeed ‘stretching’– of extant ethnic, gender and spatial inequalities. Des bureaux d'embauche, spécialisés dans le placement de journaliers sur des postes temporaires, ont récemment proliféré le long des grands axes de transport dans les quartiers défavorisés de Chicago. Cet article étudie le phénomène du travail temporaire à faible revenu dans cette ville, et ce, du point de vue des principaux acteurs institutionnels sur ces marchés du travail hautement ‘flexibilisés’ ou ‘aléatoires’: les agences de travail temporaire. Il insiste sur les conséquences des stratégies de ces agences pour le marché de l'emploi, à la fois au niveau des schémas de segmentation du travail et en termes de (re)constitution spatiale des marchés du travail urbains. Aussi peut‐on suggérer que ces agences sont activement impliquées dans l'exploitation et la facilitation des conditions aléatoires du marché du travail. En ce sens, elles jouent un rôle important et nouveau comme ‘intermédiaires du marché du travail’ privatisés, avec des effets apparemment néfastes pour la sécurité de l'emploi et la ségrégation sociale dans les circuits inférieurs des marchés urbains. Leurs stratégies peuvent aussi être liées à la restructuration sociale et géographique de ces marchés, la croissance et la polarisation de l'emploi temporaire ayant ètè associées à un ‘durcissement’, et assurément à une ‘extension’, des inégalités existantes au plan ethnique, spatial et des sexes.     

ADAM SMITH AND THE ROLE OF THE METAPHOR OF AN INVISIBLE HAND

Daniel Klein and Brandon Lucas's ‘In a Word or Two, Placed in the Middle: The Invisible Hand in Smith's Tomes’, following a vague hint by Peter Minowitz (2004) , offers original physical evidence that Smith ‘deliberately placed the phrase “led by an invisible hand”– at the physical centre of both his masterworks’. Further, it suggests that the invisible‐hand paragraphs are a response to Rousseau (1755 ); and that in ‘numerous and rich ways’, centrality holds ‘special and positive significance in Smith's thought’. This paper acknowledges the physical centrality of the invisible‐hand metaphor, but questions whether centrality alone gives weight to wider claims that the ‘invisible hand’ was Smith's ‘central idea’. It draws upon Smith's Rhetoric Lectures (1763), and argues that the invisible‐hand paragraphs in The Theory of Moral Sentiments and Wealth of Nations identify the actual objects of the invisible‐hand metaphor. This paper insists that Adam Smith is the most reliable source for revealing what he meant. In contrast, most modern attributions of special meaning to Adam Smith's use of the metaphor ignore Smith's teaching on the use of metaphors and, instead, make numerous, and often mutually exclusive, claims that Smith had a ‘doctrine’ of ‘an invisible‐hand’.     

A STRATEGIC PERSPECTIVE OF BANK FINANCIAL CONGLOMERATES IN LONDON AFTER THE CRASH

The deregulation of financial markets has led to severe challenges for bank management and banking strategy. Investment banking is a sector that has experienced important and well-publicized changes. London's celebrated ‘Big Bang’ helped to stimulate new banking strategies that were characterized by the formation of so-called ‘bank financial conglomerates’. The October 1987 stock market crash, however, has precipitated strategic and organizational crises for many of these banks active in securities business and capital market products. This article re-examines investment banking strategies in London and some of the lessons associated with the crash experiences.     

The fiscal and monetary response to COVID‐19: What the Great Depression has – and hasn't – taught us

Although some regard the New Deal of the 1930s as exemplifying an aggressive fiscal and monetary response to a severe economic crisis, the US fiscal and monetary policy responses to the COVID‐19 crisis have actually been far more substantial – and, so far, much more effective in reviving aggregate spending. Although many fear that these responses, and the large‐scale increase in bank reserves especially, must eventually cause unwanted inflation, the concurrent sharp decline in money's velocity has thus far more than offset any inflationary effects of money growth, while forward bond prices reflect a general belief that inflation will remain below 2 per cent for at least another decade. Notwithstanding the growth of the Fed's balance sheet, Fed authorities can always check inflation by sufficiently raising the interest return on bank reserves. Nonetheless, recent developments have heightened the risk of ‘fiscal dominance’ of monetary policy at some point in the future.     

Mutating Neoliberalism: The Promotion of Italian Investors in Slovakia before and after the Global Financial Crisis

In the context of the literature on ‘actually existing neoliberalisms’, this article analyzes the policies and services supporting Italian foreign direct investment (FDI) in Slovakia. It identifies a group of organizations, both Slovak and Italian, which shape and deliver neoliberal pro‐FDI policies. By studying such an ‘investment promotion community’ (IPC) before and after the global financial crisis of 2009, and during Italy's prolonged crisis, this article shows both the persistence and adaptability of neoliberal policies and institutions. In so doing, it highlights some of the transnational flows underpinning the ‘domestication’ of neoliberalism in Slovakia. These findings support recent literature arguing that post‐crisis neoliberalism can be interpreted as a stunted Polanyian double movement, in which the state has improved some of its regulatory functions but without questioning the overarching neoliberal principles. Specifically, it shows that FDI policies and the support of Italian investors rest upon a professional community that has not changed much since the 2009 crisis. This community played a crucial role in embedding neoliberal rationalities in Slovakia and supports the persistence of this ideology in the post‐crisis environment.     

THE CHINA MODEL: IS IT A GOLDEN FORMULA?

The economic crisis is an opportunity for governments to face the fact that Keynesian interventionist policies are not the path to success. However, support for such policies is being sustained by misperceptions of China's remarkable economic progress in recent years. Its success is commonly attributed to government‐led initiatives, labelled as ‘The China Model’, which divert credit away from the true source of growth: its experience of the free market. This article examines the development of the free market in China and explains why the government's recent behaviour threatens to undermine the gains of recent decades.     

Plural Cities and Ethnic Enclaves: Introducing a Measurement Procedure for Comparative Study

World cities attract two major streams of migrants – those who occupy the upper levels of their occupational hierarchies (the ‘globalized professionals’) on the one hand and marginalized, low–skill workers on the other. These two groups are often of different ethnic status, and it is argued that multicultural world cities are thus fractured in both their labour and housing markets along ethnic as well as economic lines. There has been little formal testing of these ideas, however. In this introductory article we introduce a method that can be used for comparative studies of residential fragmentation – an index of residential concentration – and apply it to three cities which have experienced rapid, multiethnic immigration in recent decades (New York, Sydney and Auckland). The patterns displayed indicate much greater fragmentation in New York than in the other two cities, suggesting that the ‘conventional wisdom’ regarding ethnic residential patterns may over–emphasize ‘American exceptionalism’. Les villes mondiales attirent deux grands flux de migrants: ceux qui occupent les niveaux supérieurs de leurs hiérarchies professionnelles (les ‘experts mondialisés’) d’une part, et les travailleurs peu qualifiés et marginalisés, de l’autre; ces deux groupes sont souvent de statut ethnique différent. De ce fait, ces grandes villes multiculturelles subissent, dit–on, une fracture de leurs marchés du travail et du logement selon des critères à la fois ethniques et économiques – affirmations qui ont rarement été mises à l’épreuve. Cet article introductif présente une méthode utilisable dans des études comparatives de fragmentation résidentielle – indice de concentration résidentielle – en l’appliquant à trois villes ayant connu une rapide immigration multiethnique au cours des dernières décennies (New York, Sydney et Auckland). Les modèles obtenus indiquent une fragmentation bien plus importante à New York que dans les deux autres villes, suggérant que la ‘croyance populaire’à l’égard des schémas résidentiels ethniques surestime peut–être ‘l’exception américaine’.     

FLEXIBLE RETIREMENT

Flexible retirement – that is, the opportunity to choose one's own personal retirement age – is a hedge against pension risk and provides insurance to workers facing health or productivity shocks. Flexible retirement and flexible pension schemes are in practice closely linked because of imperfect capital markets and institutional restrictions. I discuss three necessary conditions to provide insurance through flexible retirement. First, it should be possible to adjust the pension starting date at limited cost. This condition is gradually being fulfilled, as many countries are moving toward more actuarially neutral pension schemes. Second, individuals should be willing to adjust their labor supply in case of a wealth shock. This condition seems largely fulfilled, although the available empirical evidence suggests that the ‘standard retirement age’ is at least as important as the income effect. Third, the labor market should be able to deal with flexible individual retirement decisions. This condition is gaining importance, but has not yet received much attention in the literature. Institutions often hamper employment past the ‘standard retirement age’. Moreover, the hiring rates of older workers are low and their unemployment duration is high. Institutional reforms facilitating flexible retirement opportunities are desirable from an insurance perspective.     

Technology in the time of corona: A critical institutional reading

Drawing on institutional theory and using examples from Israel, we offer a critique of technology's deployment in responses to the coronavirus disease (COVID-19). We distinguish between technologies-in-use (“small ‘t' technologies”), the bundle of artifacts and practices that bring them into being, and “Big ‘T' Technology,” the latter being technology as an institution – shared meanings, structures, and practices that govern thought and action. Using the conceptual tool kit of institutional theory, we make three interrelated arguments. First, the deployment of technologies-in-use in response to the pandemic is embedded in diverse and contradictory institutions, the institution of technology among them. These technologies participate in the very construction of crisis, which fosters the revert to known and established ways of being and doing. Thus, technologies-in-use are not necessarily the most efficient and rational but rather the most legitimate and readily available. Second, putting certain technologies into action has not been happening by itself. Instead, we have witnessed contestations among relevant agents – like politicians and experts – who engage in institutional work to serve their interests. Third, despite its global reach, technology is locally adapted and implemented in specific contexts. All in all, institutional theory helps us to explore further and critique the naïve belief, common in public discourse, in technology as a remedy of all things. Instead, it offers a more critical understanding of the cultural dynamics involved in putting technology to work in the coronavirus crisis. This critical lens carries implications for policymaking and implementation in times of crisis.     

Entrepreneurship and Firm Boundaries: The Theory of A Firm

abstract In this paper, we consider how a better understanding of entrepreneurial activities can help explain how firm and industry boundaries change over time and how a more comprehensive understanding of boundary setting can explain where entrepreneurial activities are directed. We start from the premise that while entrepreneurs believe themselves to have superior ideas in one or multiple parts of the value chain, they are characteristically short of cash, and of the ability to convince others to provide it. This premise motivates a simple model in which the entrepreneur has a value‐adding set of ideas for ‘upstream’ and ‘downstream’ parts of a value chain, as well as for the ways to make these two parts of the value chain work better when joined under unitary control. Assuming that the entrepreneur's objective is to maximize her wealth, we observe that even in the presence of transactional risks or other factors that might make integration preferable to specialization, initial scope depends also on relatively unexplored factors such as (a) how severe the entrepreneur's cash constraint is, and (b) how much value the entrepreneur's ideas add at each part of the value chain. Entrepreneurs will focus on the areas that provide the maximum profit yield per available cash – a criterion which implies that scope choices depend on cash availability and the depth of the demand for the new idea along the value chain. We also note that entrepreneurs make money not only from the operating profits of their firms, but also from the appreciation of the assets the firm has accumulated. This consideration can change the optimal choice of the firms’ boundaries, as entrepreneurs must be sensitive to choosing the segment that will enable them to benefit not only in terms of profit, but also in terms of asset appreciation. We propose that, in the entrepreneurial context especially, it is helpful to focus on the multiple considerations affecting the choice of boundaries for ‘a’ firm – the context faced by an individual entrepreneur – rather than on generic considerations affecting ‘the’ (representative) firm. Scope choices reflect the entrepreneur's own theory of ‘how to make money’.     

Indirect Convertibility,Equity‐Based Banking and Financial Stability

Banking reform proposals put forward in the wake of the recent financial crisis maintain that equity‐based banking would be stable and would prevent bank runs. This article argues that complementing this form of banking with an indirect convertibility monetary standard and thereby dispensing with base money would enhance financial stability further. Banks would not hold a distinctive asset (base money) that would be called upon by customers at short notice, thereby removing the possibility of bank runs. No discrepancy in value between the two sides of a bank's balance sheet would arise as its assets (securitised loans) would be marked to market. Unlike other recent contributions, the intermediation model outlined here is not ‘limited purpose’ in nature as banks would not be restricted in the form of lending activity they can pursue. Common sources of banking and financial instability – liquidity risk, solvency risk, moral hazard – would be absent.     

Struggling with Meaningfulness when Context Shifts: Volunteer Work in a German Refugee Shelter

This article draws on an ethnographic study of volunteer work in a German refugee shelter to explore how individual experiences of meaningfulness are intertwined with shifting discursive and organisational contexts. At the beginning of the so‐called refugee crisis, societal discourses portrayed this volunteer work as extraordinarily meaningful – a state we capture through the metaphor of ‘overflow’. This ‘overflow’ mobilised volunteers and was an important point of reference for framing their work experiences as meaningful. Later, shifting discursive and organisational contexts challenged their framings. Instead of letting go, however, the ‘overflow’ triggered volunteers to reframe their experience in dysfunctional ways in order to sustain their sense of meaningfulness. This paper reveals how shifting societal discourses feed into individual experiences of meaningfulness, shows how individuals may respond to such shifts in problematic ways and theorises the nature of such shifts in drawing on Swidler’s notion of settling contexts.     

Dubai in the ‘Middle’

In the early 2000s, Dubai seemed the apotheosis of the global city model. Lauded as an embodiment of globalist ideals, or harshly criticized as a representation of the dangers of contemporary urbanism, it was clearly under the spotlight. Then, like the concept of the ‘global city’ itself, it disappeared from the headlines, to be subject only to sporadic and cynical attention. Today some are heralding a ‘return’ of Dubai from the anonymity of the middle ground of global city hierarchies and rankings. What is often forgotten, however, is that urbanism in Dubai did not stop. On the contrary, Dubai's continuous ‘worlding’ offers a productive opportunity for the encounter of ‘global’ and ‘ordinary’ modes of urban analysis. By unpacking the construction of a global Dubai, this article advocates greater sensitivity to the multiscalar politics that shape its continuity. Stepping beyond rumours of crisis and decline, it aims to connect the global fortunes and everyday processes that jointly characterize the development of global cities. ‘Global’ and ‘ordinary’ urbanism, it argues, are but two registers of how we could, in Warren Magnusson's words, ‘see like a city’.     

The True Meaning of ‘Social Justice’: A Catholic View of Hayek

Hayek's well‐known dismissal of the concept of ‘social justice’ is examined and questioned. While basically agreeing with Hayek's critique, the author argues that we should not entirely reject this concept, although it is often used in a vague and emotional way – ‘social justice talk’. Drawing on the tradition of classical liberalism and Catholic social teaching, he makes the case for the true meaning of social justice, which applies to the basic legal and institutional framework of a society rather than the distributional outcomes of market processes.