Global Capital Market: Risks and Rewards

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Global Capital Market: Risks and Rewards (34:00)
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What are the mechanisms that drive international finance? Does worldwide capital mobility destabilize the global economy? Do the benefits to investors outweigh the potential for monetary crises? This program illustrates the flow of international capital, analyzes the risks it presents to banking and currency systems, and studies international political structures created to address those risks. The video presents the pros and cons of financial globalization, in the process explaining the concepts of inter-temporal trade, portfolio diversification, income inequality, and capital inflow and outflow. Recounting fiscal catastrophes that provoked international alarm—including the 1995 Mexican peso crisis and the 1997 implosion of Asian economies that impacted nations across the world—the program draws parallels between our current investment climate and the so-called First Age of Globalization in the late 19th century. A Films for the Humanities & Sciences Production. (33 minutes)

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Segments in this Video - (7)

1. Financial Globalization: A Controversial Issue (03:27)
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Today's global economy is increasingly financially integrated; financial globalization removes restrictions on international trade of financial assets. Most economists accept that trade liberalization is beneficial but analysts disagree on the issue of fi

2. Benefits of Financial Globalization: Inter-Temporal Trade (04:43)

Most economists agree that the main benefits of increased international capital mobility are inter-temporal trade and risk diversification. Inter-temporal trade allows for smoothing spending over time. The First Age of Globalization exemplifies how inter-

3. The Benefits of Financial Globalization: Risk Diversification (01:31)

Most economists agree that the main benefits of increased international capital mobility are inter-temporal trade and portfolio diversification. Portfolio diversification refers to the reduced risk to lenders who place savings in various assets with diffe

4. Costs of Financial Globalization (06:19)

Opponents of financial globalization see international capital mobility as a destabilizing force. They cite excessive capital inflows and outflows, income inequality, and international tax competition as sources of problems for the global economy.

5. International Capital Mobility and the "Impossible Trinity" (06:37)

International capital mobility constrains the options facing domestic economic policy. In a global economy a country cannot simultaneously pursue exchange rate stability, independent monetary policy, and perfect capital mobility; only two of these three g

6. Evolution of the Global Capital Market (04:58)

From 1870 to 1913 the gold standard effectively kept the world under a fixed exchange rate system. World War I, the Great Depression, and World War II wreaked havoc on the world economy. In 1944 the Bretton Woods Conference shaped the world's post-war mon

7. Evolution of the Global Capital Market: Financial Crises (03:28)

In 1973 the international monetary system established at Bretton Woods in 1944 collapsed and countries allowed their exchange rates to fluctuate. The financial and currency crises of the 1980s and 1990s in South America, Europe, Asia, and Russia have led

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