Presentation on Minsky's Financial Instability Hypothesis and financing schemes.

1. 18 march 2016
BEATRICE IRULLO
1
B a n k i n g & F i n a n c e
Tutorial presenta?on

2. Ex#lain hedge,
speculative and Ponzi finance
Discuss Minsky’s
“Financial InstabilitA Hy#othesis”
2

3. Part I
Financial Instability Hypothesis
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4. 4

5. Specula?ve finance
Growth
Op?mism
Minsky moment
Crisis
5

6. hNp://www.bbc.co.uk/news/magazine-26680993
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7. 7
Profit
Rules
Ins?tu?ons

8. hNps://commons.wikimedia.org/wiki/File:Washer.600pix.jpg#file 8

9. hNp://www.advisorperspec?ves.com/dshort/updates/NFIB-Small-Business-Op?mism-Index
9

10. hNp://www.voxeu.org/ar?cle/inves?ng-europe-s-future
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11. hNp://www.whocrashedtheeconomy.com.au/blog/2015/05/treasurer-joe-hockey-delusional-as-rba-cuts-to-record-emergency-lows/
11

12. hNp://www.mymoneyblog.com/charts-credit-card-debt-and-household-debt-trends.html
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13. hNp://www.mymoneyblog.com/charts-credit-card-debt-and-household-debt-trends.html
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14. hNp://www.federalreserve.gov/pubs/ifdp/2012/1064/revision/ifdp1064r.htm
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15. hNp://moneymovesmarkets.com/journal/2009/4/30/eurozone-money-lending-trends-s?ll-weakening.html
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16. Part II
Hedge,
specula?ve and
Ponzi finance
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17. 17
Hedge
Specula?ve
Ponzi

18. hNps://en.wikipedia.org/wiki/Minsky_moment#/media/File:Stylized_Minsky_Cycle.PNG
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S?lized Minsky cicle
Hedge Finance
Specula?ve Finance
Ponzi Finance
Minsky Moment
CREDIT
GDP
?me

19. 19
Hedge
Capital
assets

20. 20
Specula?ve
Capital
assets

21. Financing costs > income
Higher outstanding debt
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Ponzi
Income Capital
assets

22. 22

23. Product/factor
market changes
Financial market
changes
Interest rates or
dividends on
debt changes
Hedge
Speculative
Ponzi
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24. Product/factor
market changes
Financial market
changes
Interest rates or
dividends on
debt changes
Hedge ✔ ✖ ✖
Speculative ✔
✔ ✖
Ponzi ✔ ✔ ✔ 24

25. Hedge
Profit
Ponzi
High interests
Lower income
Refinancing
Lower costs
Higher income
25
Specula?ve

26. Profit
High interests
Lower income
Bankruptcy
26
Hedge
Specula?ve
Ponzi

27. 27 Photo by samuiblue. Published on 23 February 2013
Stock photo - Image ID: 100141740

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iii) L. Randall Wray (2015). Why Minsky MaNers: An Introduc?on to
the Work of a Maverick Economist.
Princeton University Press. ISBN 978-0691159126
ii) (2008) [1st. Pub. 1986]. Stabilizing an Unstable Economy.
McGraw-Hill Professional, New York. ISBN 978-0-07-159299-4
i) Did Hyman Minsky find the secret behind financial crashes?
BBC News, 24 March 2014.
hNp://www.bbc.com/news/magazine-26680993

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