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A Crisis of Value

This book explains the fundamental causes of the bank's failure, including the inadequacy of the regulatory and supervisory framework. For some, it was the repeal of the Glass-Steagall Act that was the overriding cause, not just of the collapse of Lehman Brothers, but of the financial crisis as a whole. The book argues that the cause is partly to be found both in weak and ineffective regulation and also in a programme of regulation and supervision that was simply not fit for the purpose. Lehman Brothers' long history began with three brothers, immigrants from Germany, who sold selling groceries and dry goods to local cotton farmers. Dick Fuld, the chairman and CEO, and his senior management, ignored the increased risks, choosing to rely on over-valuations of the firm's assets. The book examines the regulation of the Big Five investment banks in the context of the changes which took place in the structure of banking after the repeal of the Glass-Steagall Act. It describes the introduction of the European Union's Consolidated Supervision Directive in 2004. The book examines the whole issue of valuing Lehman's assets and details the regulations covering appraisals and valuations of real estate, applicable at the time and to consider Lehman's approach in the light of these regulations. It argues that that the valuation of Lehman's real estate assets was problematic to say the least, as the regulators did not require the investment banks to adopt a recognized methodology of valuation, and that Lehman's own methods were flawed.

Editors: Stan Metcalfe and Alan Warde

There has been increasing interest and debate in recent years on the instituted nature of economic processes in general and the related ideas of the market and the competitive process in particular. This debate lies at the interface between two largely independent disciplines, economics and sociology, and reflects an attempt to bring the two fields of discourse more closely together. This book explores this interface in a number of ways, looking at the competitive process and market relations from a number of different perspectives. It considers the social role of economic institutions in society and examines the various meanings embedded in the word 'markets', as well as developing arguments on the nature of competition as an instituted economic process. The close of the twentieth century saw a virtual canonisation of markets as the best, indeed the only really effective, way to govern an economic system. The market organisation being canonised was simple and pure, along the lines of the standard textbook model in economics. The book discusses the concepts of polysemy , idealism, cognition, materiality and cultural economy. Michael Best provides an account of regional economic adaptation to changed market circumstances. This is the story of the dynamics of capitalism focused on the resurgence of the Route 128 region around Boston following its decline in the mid-1980s in the face of competition from Silicon Valley. The book also addresses the question of how this resurgence was achieved.

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economic activity that lies outside the market, as in household production, and there is also serious debate about extending market principles to other spheres including trade in genetic material. The approach we take reflects our view that markets are indissolubly and simultaneously economic and social. As frameworks of norms that provide regularity to behaviour but permit changes in behaviour, they operate at multiple levels thereby constraining the conduct of individuals, groups and organisations. As frameworks, they are continually evolving. They emerge, grow

in Market relations and the competitive process

analysis of changing forms of competition in the historical development 74 Mark Harvey of UK food supermarkets. The conclusion drawn from this analysis is that competitive processes are a result of processes of transformation wider than intra-market dynamics. Empirico-normative views of competition Leaving aside neo-classical views of ‘perfect competition’, this much acclaimed market force has attracted surprisingly few empirical ‘competition studies’ to complement those in the field of innovation. There is a wide range of conceptions of what constitutes competition

in Market relations and the competitive process

football clubs have become plcs and in doing so have bypassed the key FA regulation against the commercial exploitation of clubs by gaining FA agreement that the newly created plc holding companies would be exempt from rule 34 which had, up until that time, prevented the owners of clubs from extracting profits. This change in the corporate governance of football clubs has heightened conflict between the various stakeholders – match-going supporters, TV viewers, shareholders and managers.2 The institutional arrangements around the creation and development of the market

in Market relations and the competitive process

4 Regulating the ‘Big Five’ This chapter will examine the regulation of the Big Five investment banks in the context of the changes which took place in the structure of banking after the repeal of the Glass-Steagall Act and the introduction of the European Union's Consolidated Supervision Directive in 2004. Immediately after the financial crisis, various reasons were found for the failure of so many banks, and indeed for the collapse of Lehman Brothers. This is despite the obvious fact that the major investment banks were

in Lehman Brothers
Scale of demand and the role of competences

competences developed by Evolution of the UK software market 145 outsourcing. The UK software sector is not alone in this trend – indeed the situation is far worse for the European software sector. The body of this chapter is organised in the following way: the next section describes the role of demand factors in the process of vertical disintegration and distinguishes between the product and service segments of the software market. Section three reviews the changing need for software in the growth of the global software industry. Section four highlights the role of a

in Market relations and the competitive process

land inventory which do not generate current cash flow but have substantial value and are often overlooked in evaluating its worth … in recognition of the change in real estate valuation metrics, we have taken a significant markdown on the position. Our equity exposure in Archstone is currently carried at 75 for a value of less that $1.8bn. 1 Lehman claimed that the valuations were fair, but that was on the basis of their own valuations with the assistance of their real estate adviser

in Lehman Brothers

chapter is that characterisations of ‘new economy’ that are based on the idea of dematerialisation are problematic because the distinction on which they are based misrepresents the issue of materiality. A historical account of socio-economic change which argues that ‘things’ have become ‘less material’ assumes that they were somehow more, or more transparently, material in the past, an argument that is contested by most research in areas such as sociology of consumption, material culture and science and technology studies. Indeed, as the next section argues, notions of

in Market relations and the competitive process
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economists to have shared Herbert Simon’s view (1976: xii) that the premisses should be the unit of analysis; but even though it is standard practice to explain differences in behaviour, including changes in behaviour over time, by differences in the premisses from which behaviour is deduced – usually differences in opportunity sets, and often with specific emphasis on incentive structures – these differences are not themselves investigated. The reason is that decision premisses are assumed to reflect precisely the fundamentals of economic analysis; they are therefore

in Market relations and the competitive process