Global Financial Crisis
It is now
more than a year since the sub-prime lending crisis in the US
mortgage sector came to light. The unprecedented and still
unfolding financial crisis in the developed world brings with
it the end of the illusion of the market being
“efficient”. This is the time for a fundamental rethinking
on financial liberalisation in order to reduce systemic and
global instability. This section presents papers and articles
that seek to explain the causes and consequences of the U.S.
subprime mortgage crisis. Through a critique of the underlying
structure and dynamics of deregulated finance, they analyse
how this crisis has led to a generalized credit crunch in
other financial sectors, which ultimately affects the real
economy and the world economy at large.
the Paulson Bailout produce the basis for another Minsky
The reorganisation of the financial
system that appears to be taking place in the US does not seem to respect the
basic principle that any reformulation of the regulatory system should limit the
size and activities of financial institutions, and should be dictated by the
ability of supervisors, regulators etc. to understand the institutions’
operations. Instead, it seems to support larger financial institutions that are
created by merging weak institutions with stronger ones. If the present trend of
bank mergers continues, the resolution of the crisis, as Minsky always
predicted, will lay the basis for another financial crisis.
Perspective on the Crisis
Discussions of the current world economic crisis tend to focus exclusively on
the bursting of the housing bubble in the United States. This no doubt is the
immediate cause of the crisis, but underlying its operation is the fact that the
stimulus for booms in contemporary capitalism has increasingly come from such
bubbles. The U.S. whose size and strength make it, in the current regime of
trade liberalization, the main determinant of the pace of expansion of the world
economy as a whole, has increasingly come to rely on such bubbles to initiate
and sustain booms. The dot-com bubble whose bursting had caused the previous
crisis was followed by the housing bubble which started a new boom. This has now
come to an end, precipitating a major financial crisis and initiating what looks
like a major depression reminiscent of the 1930s.
for Effectively Regulating the U.S. Financial System to
Avoid Yet Another Meltdown
Time has come: Let's Shut Down the Financial Casino
need a Paradigm Shift
Everyone now recognises the need to reform the international economic regime.
But the idea should not simply be to fix a system that is obviously broken: we
need to exchange it for a better model. That is because the current financial
architecture has failed in some very important ways.
the international financial system has failed to meet two obvious requirements:
of preventing instability and crises, and of transferring resources from richer
to poorer economies. Not only have we experienced much greater volatility and
propensity to financial meltdown across emerging markets and now even industrial
countries, but even the periods of economic expansion have been based on the
global poor subsidising the rich.
The Financial Crisis and the
The past two weeks have made it clear that the developing world is far from
immune to the storms raging in financial markets in industrial countries. Stock
prices in emerging markets have gone on similar roller coaster rides to those in
New York and Europe. Indeed, they have shown such very high volatility, going
sharply up and down on a daily basis around an overall declining trend, that the
pattern is reminiscent of the behaviour of stock indices in the last major
international financial upheaval in 1929/30 – the Great Depression. And the
credit crunch and freezing of interbank lending have been only too evident even
in developing countries whose economic “fundamentals” are apparently strong and
whose policy makers believed that they could de-couple from the global trends.
This almost immediate diffusion of bad news is the result of financial
liberalisation policies across the developing world that have made capital
markets much more integrated directly through mobile capital flows, as well as
created newer and similar forms of financial fragility almost everywhere. But
the international transmission of turbulence is only one of the ways in which
the global financial crisis can and will affect developing countries.
Causes of the Global Financial Crisis: A Critical
Assessment of the 'New Financial Architecture'
Accumulation Process in the Period of
Prabhat Patnaik - 2008
paper, based on a lecture given in memory of
D. D. Kosambi, discusses the current global
crises in terms of rising inflation and food
shortages, and argues that this situation
reflects the inherent nature of capitalism
which engages in accumulation through both
expansion and encroachment. This squeezes out
peasant agriculture and all petty producers,
and ultimately leads to a supply constraint on
goods produced by these groups. Under the
current context of capitalism, these forces
are creating a crisis for mankind.
Global Food Crisis
Jayati Ghosh - 2008
The recent food
shortages and rapidly rising prices of food have adversely
affected billions of people, especially the poor in the
developing world. This is very much a man-made crisis,
resulting from the market-oriented and liberalising policies
adopted by choice or compulsion in almost all countries, which
have either neglected agriculture or allowed shifts in global
prices to determine both cropping patterns and the viability
of farming, and also generated greater possibilities of
speculative activity in food items. This article discusses the
features, causes of the current crisis and indicates an
alternative policy framework for redressal.
The Real World Economics
The international economic system creates damaging
inequalities between rich and poor, and fuels climate change and environmental
degradation. Through Real World Economic Outlook, NEF aims to expose the problems
with the international finance and economic systems and create appropriate remedies. We
are also researching and campaigning on changes to global governance to tackle
international issues like climate change, and work by jubilee research
continues nefs pioneering involvement in tackling international debt. transforming
markets goes beyond corporate responsibility to set out a new vision for harnessing and
channelling enterprise to meet social and environmental need.
International Development Economics
IDEAs or International Development Economics Associates is a
pluralist network of progressive economists across the world,
engaged in research, teaching, and dissemination of critical
analyses of economic policy and development. Its members are
motivated by the need to strengthen and develop alternatives to the
current mainstream economic paradigm as formulated by the
neo-liberal orthodoxy. The organisation is based in the South and
led by economists based in several developing countries, but
membership of the network is open to all those committed to
developing and using alternative non-orthodox tools of economic
analysis appropriate for meeting development challenges.
is post-colonial thinking?