Will We never Learn? UNCTAD Policy Briefs

As financial crisis becomes increasingly global, world economy seems headed for a deep and synchronised downturn. Latest UNCTAD policy brief argues that in such circumstances, traditional adjustment packages are counterproductive and countercyclical policies are needed to stimulate domestic demand in all countries. UNCTAD_PB (Download the full text in PDF format)

Redistribution and Stability: Beyond the Keynesian / neo-liberal impasse Harry Shutt

As the financial crisis that erupted in 2007 unfolds in an economic cataclysm which, it is now clear, is unprecedented in the history of capitalism, world leaders without exception reveal themselves as politically and ideologically bankrupt in their efforts to bring it under control. This is most obviously demonstrated by their insistence on the need for individuals and enterprises to boost their levels of consumption and fixed investment - with the aid of new loans from the financial sector - even though it is obvious that the immediate cause of the crisis has been the creation of excessive credit leading…

Will the Paulson Bailout Produce the Basis for Another Minsky Moment? Jan Kregel

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. Minsky_Moment (Download…

The Time has come: Let’s shut down the financial casino ATTAC's Statement on the Financial Crisis and Democratic Alternatives

ATTAC was launched in 1998 as an organization to counter the onslaught of the profit driven financial markets that was taking over the society at large. The following is the official statement issued by the organization on the current financial crisis. The statement criticizes the regime of finance capital for its own downfall and the subsequent hardships it has brought upon the poorer section of the society. The piece also suggests certain global level policy prescriptions to correct the same. attac (Download the full text in PDF format)

We Need a Paradigm Shift Jayati Ghosh

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. Most importantly, 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…

Structural Causes of the Global Financial Crisis: A critical assessment of the ‘new financial architecture’ James Crotty

The author argues that the ultimate cause of the current global financial crisis is to be found in the deeply flawed institutions and practices of what is often referred to as the New Financial Architecture (NFA) – a globally integrated system of giant bank conglomerates and the so-called ‘shadow banking system’ of investment banks, hedge funds and bank-created Special Investment Vehicles. The NFA has generated a series of ever-bigger financial crises that have been met by larger and larger government bailouts. The issues discussed in this paper are: 1) the theoretical foundation of the NFA – the theory of efficient…

Policy and Security Implications of the Financial Crisis: A Plan for America James K. Galbraith

In mid-June 2008, an international group of economists met in Paris to discuss the gravity of the current economic crisis and what the United States should do about it. The meeting was convened by Economists for Peace and Security and the Initiative for Rethinking the Economy. The author presided over the off-the-record discussions, summarized here on his own responsibility. In the process, he provides one of the most comprehensive and compelling assessments of where the United States and the world now stand, and what can be done to ameliorate the situation. financial_crisis (Download the full text in PDF format) (This…

Proposals for Effectively Regulating the U.S. Financial System to Avoid Yet Another Meltdown James Crotty and Gerald Epstein

The authors argue that the current financial crisis is a result of the radical financial deregulation process that began in the late 1970s. This evolution has taken the form of cycles in which deregulation accompanied by rapid financial innovation stimulates powerful financial booms that end in crises. Governments respond to crises with bailouts that allow new expansions to begin. As a result, financial markets have become ever large and financial crises have become more threatening to society, which forces governments to enact ever larger bailouts. In this paper the authors have analyzed a series of structural flaws in the current…