About Ending Over-Lending

Ending Over-Lending advocates the use of cash flow analysis to assess the financial stability of nations. While extensively and successfully used in corporate financial analysis, cash flow approaches are significantly under-studied in economics. The debt to cash flow ratio, for example, can provide a direct measure of the debt-carrying capacity of nations. Ending Over-Lending proposes a macro-prudential foundation for 21st century monetary macro-economics in which nations manage their affairs within a Stable Zone of leverage.

GOALS

Help advance the financial and economic stability of nations
Help improve the world’s ability to predict financial crisis
Contribute to the theoretical understanding of monetary macro-economics

AUDIENCE

The Ending Over-Lending initiative is proposed to be of interest to the following groups:

Academic community
Central Bank research and policy departments
Financial Stability Boards
Rating Agencies
Hedge Funds
Sovereign Fixed Income Portfolio Managers
Int’l Bond & Currency traders
Bear Community
Interested Individuals

ENDING OVER-LENDING OBJECTIVES:

TEN-YEAR MONITORING PROJECT – 2010 – 2020 – Undertake to monitor the Total Country Debt and each of the four major Sectors – Household, Corporate, Financial, and Government - for as many nations as Debt/Cash Flow data is available. Provide 1 year, 3 year, 5 and 10 year Analysis & Conclusions.
MACRO-PRUDENTIAL POLICY PROPOSAL – Develop a Macro-Prudential policy tool based on key leverage and coverage cash flow metrics under the Ending Over-Lending approach, to be reviewed by various Financial Stability Boards.
DEFINE THE DEBTS OF NATIONS – Develop a catalogue of specific definitions for the various methodologies to identify the debts of nations and sectors.
STUDY THE STRUCTURE AND REPORTING OF SYSTEM OF NATIONAL ACCOUNTS – Develop recommendations to improve the reporting of debt and cash flow components in the System of National Accounts and the Integrated Macro-Economic Accounts.
HISTORICAL DEBT AND GROSS SAVING DATA COLLECTION – Collect historical data for crises events, particularly data components allowing a Debt/Cash Flow calculation.
EXTEND THE RESEARCH - Identify additional metrics towards a ‘tool box’ of high impact indicators of financial instability. Deploy Stock-Flow consistent modeling and other recent research approaches to assess or implement the indicators. Formally propose the Debt /Cash Flow approach as an implementation of H.P. Minsky’s Financial Instability Hypothesis.