Three Grand State Projects Meet the Financial System

  • Peter GarberEmail author


Peter Garber traces the crisis to three failed public sector projects launched in the late 1990s. These were a scheme to redistribute wealth by lending to uncreditworthy borrowers for real estate purchases in the US; China’s export-driven growth strategy; and the launch of the euro in 1999. The rapid increase in China’s exports to the US created a capital flow into the US and within the Eurozone, Germany exported goods to the southern periphery and German banks lent money to banks, businesses, and governments in the south. The effect of these flows was to drive global real interest rates to very low levels and this led to the expansion of the SPVs and SIVs, effectively ways of raising short rates for those who demanded it.

Copyright information

© The Author(s) 2019

Authors and Affiliations

  1. 1.Deutsche BankNew YorkUSA

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