62d Session of Philosophical Foundations of Law and Finance

Dear all,

For the 62nd session of Philosophical Foundations of Law and Finance (Friday 12 Nov, 6-8pm, Room 5.16, 309 Regent Street, University of Westminster), we will hold our own "G-20 Conference" and ask:

What does the current currency (?) crisis mean to mere mortals? 

If we read the business and finance press, we see Ben S. Bernarke, the chairman of the US Fed very unusually arguing publicly for quantitative easing (QE2) [http://www.washingtonpost.com/wp-dyn/content/article/2010/11/03/AR2010110307372.html] while China, Brazil, Germany [http://www.ft.com/cms/s/0/981ca8f4-e83e-11df-8995-00144feab49a.html#axzz14zm57rHG] and South Korea [http://www.globalpost.com/dispatch/commerce/101110/qe2-global-economy] vehemently against QE2.

So far as of Nov 11th, 2010, a dozen countries have responded to Ben's QE2 with quantitative tightening [see, the Asian biz-chicks on Bloomberg television accessed at 12 midnight London time.]

All of this talk leads to a symmetric race to the bottom, evidenced in the 1930's as "trade wars" [http://www.dailymail.co.uk/money/article-1322002/Mervyn-King-A-1930s-style-trade-war-ruinous.html] and in the current G-20 as a "currency war" [http://english.aljazeera.net/focus/2010/11/20101111135923477349.html].

This current period is trader's paradise because there is risk symmetry between Quantitative Easing (QE) and Quantitative Tightening (QT). QE is what the US does, and QT is what the rest of the world does to protect itself from QE.

This is a period characteristic of DICTATORIAL FINANCE where sovereign states are trying to preserve their status by pledging to protect their currencies (read here economies and way of life) but are being beaten continuously by the disciplining force of the financial markets.

To understand how far and how deep the nature of dictatorial finance has reached into the regulatory realm, we will begin reading the Dodd-Frank Act, Title II, entitled the "Orderly Liquidation Authority" [sections 201 to 217] which empowers the Authority basically to segregate and strip out the good assets of a financially active company in the US and place them in a Corporation controlled by an agency of the US government. This will be done without any constitutional right to bankruptcy and only with the minimal right to judicial review based on an "arbitrary and capricious" standard.

The entirety of the Dodd-Frank Act can be found at http://www.sec.gov/about/laws/wallstreetreform-cpa.pdf.

For the afterwards dinner, we are currently indecisive about the restaurant choice but it will most likely be Korean in honour of the G-20.

Regards,
Rezi & Joe

62d Session of Philosophical Foundations of Law and Finance

Bankruptcy Pays!

(Thanks to Business Insider)

The American Lawyer reported today that billings for professional services in the Lehman Brothers bankruptcy broke the $1 billion mark. You can see the filings here. And to think that bankruptcy practice was once considered a legal backwater by most mainstream law firms.


I've been following this because some years ago I interviewed Harvey Miller (the lead lawyer on Lehman) for a research project and he always impressed me. Rather like some other lawyers of his generation I know, his career shows no sign of stopping. And he is ready to take on new challenges at any stage. I also secretly enjoy the war stories told about Harvey and I know I wouldn't like to be on his wrong side.

I am currently reading Andrew Ross Sorkin's Too Big to Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System---and Themselves. He cleverly details how the interlocking systems of banking and regulation could not but intensify the problems inherent in the financial world. In many ways Lehman was a symptom not a cause but the ramifications are still being felt.


We know this  in the UK as we've just had our government's Comprehensive Spending Review that will cut government spending by anywhere between 25% to 40%. Mind you the banking sector seems to be doing well now.

Bankruptcy Pays!