Credit-Default-Swaps and the 2008 Financial Crisis: An Inquiry into the Underlying Legal Origins and the European Union’s Regulatory Reforms

After the 2008 financial crisis, the financial innovation product Credit-Default-Swap (CDS) was widely blamed as the main cause of this crisis. CDS is one type of over-the-counter (OTC) traded derivatives. Before the crisis, the trading of CDS was very popular among the financial institutions. But meanwhile, excessive speculative CDSs transactions in a legal environment of scant regulation accumulated huge risks in the financial system. This dissertation is divided into three parts. In Part I, we discussed the primers of the CDSs and its market development, then we analyzed in detail the roles CDSs had played in this crisis based on economic studies. It is advanced that CDSs not just promoted the eruption of the crisis in 2007 but also exacerbated it in 2008. In part II, we asked ourselves what are the legal origins of this crisis in relation with CDSs, as we believe that financial instruments could only function, positive or negative, under certain legal institutional environment. After an in-depth inquiry, we observed that at least three traditional legal doctrines were eroded or circumvented by OTC derivatives. It is argued that the malfunction of these doctrines, on the one hand, facilitated the proliferation of speculative CDSs transactions; on the other hand, eroded the original risk-control legal mechanism. Therefore, the 2008 crisis could escalate rapidly into a global financial tsunami, which was out of control of the regulators. In Part III, we focused on the European Union’s regulatory reform towards the OTC derivatives market. In specific, EU introduced mandatory central counterparty clearing obligation for qualified OTC derivatives, and requires that all OTC derivatives shall be reported to a trade repository. It is observable that EU’s approach in re-regulating the derivatives market is different with the traditional administrative regulation, but aiming at constructing a new market infrastructure for OTC derivatives.

Present at the Creation: Montana Higher Education Reforms from 1972 Constitution -- Dr. Lawrence K. Pettit “In the Crucible of Change”

Prior to the passage of the 1972 Constitution, Montana’s higher education system was both controlled and victimized by Montana’s politics. Alternatingly, Governors or the Legislature tried to control and/or impose political ideology upon the management and teaching/content within the University System. Political favoritism and power-broking were the hallmark of the legislative appropriation process. Under the new Constitution, a newly empowered Board of Regents, and a new Commissioner of Higher Education managed the system and controlled the allocation of the legislative appropriations, but not without a major battle before the Montana Supreme Court. Dr. Lawrence K. Pettit (Larry Pettit) (b. 5/2/1937) was present at the creation of this newly structured higher education system as the first Commissioner of Higher Education in Montana after his appointment by the Board of Regents of the University System in 1973. Larry Pettit has had a dual career in politics and higher education. Pettit, of Lewistown, served as legislative assistant to U.S. Senators James E. Murray and Lee Metcalf, campaign manager, head of transition team and assistant to Montana Governor Thomas L. Judge, taught political science at The Pennsylvania State University (main campus), was chair of political science at Montana State University, Deputy Commissioner for Academic Programs at the Texas Higher Education Coordinating Board, Chancellor of the University System of South Texas (since merged with Texas A&M University), President of Southern Illinois University, and President of Indiana University of Pennsylvania from where he retired in 2003. He has served as chair of the Commission on Leadership for the American Council on Education, president of the National Association of (University) System Heads, and on many national and state boards and commissions in higher education. Pettit is author of “If You Live by the Sword: Politics in the Making and Unmaking of a University President.” More about Pettit is found at http://www.lawrencekpettit.com

Agrarian learning processes in Switzerland 1918–1939

This paper examines the social impacts of weather extremes and the processes of social and communicative learning a society undertakes to find alternative ways to deal with the consequences of a crisis. In the beginning of the 20th Century hunger seemed to be expelled from Europe. Switzerland – like many other European countries – was involved in a global interdependent trade system, which provided necessary goods. But at the end of World War I very cold and wet summers in 1916/17 (causing crop failure) and the difficulties in war-trade led to malnutrition and enormous price risings of general living-standards in Switzerland, which shocked the people and caused revolutionary uprisings in 1918. The experience of malnutrition during the last two years of war made clear that the traditional ways of food supply in Switzerland lacked crisis stability. Therefore various agents in the field of food production, distribution and consumption searched for alternative ways of food supply. In that sense politicians, industrialists, consumer-groups, left-wing communitarians and farmers developed several strategies for new ways in food production. Traditionally there were political conflicts in Switzerland between farmers and consumers regarding price policies, which led mainly to the conflict in 1918. Consumers accused famers of holding back food to control extortionate prices while the farmers pointed to the bad harvest causing the price rising. The collaboration of these groups in search for new forms of food-stability made social integration possible again. In addition to other crisis-factors, weather extremes can have disastrous impacts and destroy a society’s self-confidence to its core. But even such crisis can lead to processes of substantial learning that allows a regeneration of confidence and show positive influence on political stabilization. The paper focuses on the process of learning and the alternative methods of food production that were suggested by various agents working in the field during the Interwar period. To achieve that goal documents of the various associations are analyzed and newspapers have been taken into consideration. Through the method of discourse-analysis of food-production during the Interwar period, possible solutions that crossed the minds of the agents should be brought to light.