Banks often oppose higher equity asset ratios, because equity capital is more expensive than debt capital.

But the Fed cannot endow the banks with new equity capital and prevent a credit crunch.

Under Chapter 11, companies with a solid underlying business generally swap debt for equity. Old equity holders are wiped out and old debt claims are transformed into equity claims in the new entity which continues operating with a new capital structure.

He also has invested in non traditional asset classes, including real estate, oil, timber, private equity, and venture capital and buyout firms.

This is why equity capital held by financial institutions typically is more than twice as expensive as debt capital and why these institutions try to minimize its use.

Rather, the banking system is at the brink of insolvency, with a permanent loss in equity capital.

Investment banks like Bear Stearns and Lehman Brothers got into trouble because they had too little equity capital far less than 10 .

The typical bank is capitalized with equity, long term debt, short term debt, and deposits. Investment banks like Bear Stearns and Lehman Brothers got into trouble because they had too little equity capital far less than 10 .

These risks are already exacerbating the economic slowdown equity markets are falling everywhere, leading to negative wealth effects on consumption and capital spending.

Lack of equity capital, in turn, made risk averse shareholders hire gamblers to manage their limited liability investment companies.

Another hoped for benefit was that capital gains could be converted into home equity loans, boosting homeowners living standards.

According to the European Commission, creating a single European capital market would reduce the cost of equity capital for EU businesses by 0.5 and lower the cost of corporate debt financing by 0.4 .

Rather, bonds should be at least partly converted into equity capital, and any infusion of new capital by the government should be in exchange for securities that are senior to those of existing bondholders.

The mutual interaction between the incentive to minimize equity capital and the incentive to gamble in order to exploit the upside risks caused America s crisis.

Instead, they should become partners of private shareholders, endowing the banks temporarily with new equity capital until the crisis is over.

Equity markets were subjected to disclosure and transparency requirements.

It is a matter of both equity and efficiency.

(c) Good governance and equity at the international level

Open technology and gender equity activist Willow Brugh tweeted

The key is to reflect on six kinds of capital goods business capital, infrastructure, human capital, intellectual capital, natural capital, and social capital.

To do so, they develop complicated legal claim structures that hardly anyone can fully understand and operate with too little equity capital to cover the risks.

Given that the combined equity capital stock of all US financial institutions is roughly 1.2 trillion dollars, this is a breathtaking sum.

Taming the Private Equity Locusts

Vast amounts of short term capital, speculating on interest rate convergence or equity market gains, are flowing into the most advanced candidate countries, driving up their currencies and increasing their vulnerability to a sudden capital flow reversal.

This may be good on efficiency and even equity grounds.

What matters is a sense of equity and fair play.

What matters is a sense of equity and fair play.

Equity for prosperity, sovereignty, and dignity. For our definite independence.

Governments and central banks should use their powers to steer the import of foreign capital into direct fixed investment, equity, and to a limited extent long term hard currency debt.

They will continue to deprive the banking system of its equity capital, with little chance of it being recouped in the near future.

Banks serve a special function in the economy that does warrant a special role for the government not in setting pay, but in imposing effective capital requirements. Higher and pro cyclical equity capital requirements on banks, combined with a requirement to raise contingent long term debt debt that converts into equity in a crisis is a better way forward.

Likewise, economists have long noted that for countries gorging on capital inflows, there is a big difference between debt instruments and equity like investments, including both stocks and foreign direct investment.

) and in the capital.

Moreover, you should care about equity.

But in bad times, when it is important to keep banks lending, bank capital would automatically be increased by the debt to equity conversion.

In particular, if the firm s equity capital erodes, the government should not provide funds (directly or indirectly) to increase the cushion available to bondholders.

Housing prices peaked in 2006, and equity prices peaked in 2007.

The potential vulnerability of Western exports and equity prices is massive.

Promotion of inclusion, equity, equality, justice and tolerance in human interactions

Equity based awards, coupled with the highly leveraged capital structure of banks, tie executives compensation to a leveraged bet on the value of banks assets.

Executives collected generous bonuses, and equity holders were protected by limited liability.

This has led to heightened volatility in equity, money, and debt markets.

Economists have struggled with the tradeoff between growth and equity for centuries.

Pay equity? Yes. Absolutely a feminist issue.

There was also a commodity bubble and a private equity and hedge funds bubble.