Another Global Financial Crisis for Developing Countries? Anis Chowdhury and Jomo Kwame Sundaram

George Soros, Bill Gates and other pundits have been predicting another financial crisis. In their recent book, Revolution Required: The Ticking Bombs of the G7 Model, Peter Dittus and Herve Hamoun, former senior officials of the Bank of International Settlements, warned of ‘ticking time bombs' in the global financial system waiting to explode, mainly due to the policies of major developed countries. Recent events vindicate such fears. Many emerging market currencies have come under considerable pressure, with the Indonesian rupiah, Indian rupee and South African rand all struggling since early this year. Brazil's real fell sharply in June, and Argentina…

The State of the Indian Economy Jayati Ghosh

Only the blind or the foolhardy would claim that the Indian economy is in good shape. Despite the government’s obsession with high GDP growth – according to which the Indian economy is doing not just reasonably well but is among the best performers in the world – the fault lines are now only too evident: the external fragilities, the internal imbalances, the crisis in agriculture, the lack of employment opportunities, the rising inequality and the growing insecurity of material life for the majority of the population. Indeed, these problems are now so intense that they are clearly evident in plain…

The Real Problem with Free Trade Jayati Ghosh

Even if free trade is ultimately broadly beneficial, the fact remains that as trade has become freer, inequality has worsened. One major reason for this is that current global trade rules have enabled a few large firms to capture an ever-larger share of value-added, at a massive cost to economies, workers, and the environment. For full article click here (This article was originally published in the Project Syndicate on September 10, 2018)

Pakistan: Who needs a crisis? C.P. Chandrasekhar

With Imran Khan’s Pakistan Tehreek-e-Insaaf (PTI) or “Movement for Justice” winning 116 of the 272 seats filled through election in Pakistan’s National Assembly, the former cricketer is set to be installed as his country’s next Prime Minister. So attention has now shifted to how he would address the  ‘crisis’ the country faces. That crisis is not a crisis of growth. Pakistan has registered year-on-year growth rates exceeding 5.4 per cent in the three consecutive years ending financial year 2017-18, a record matched this century only in the globally-synchronised, high growth years 2003-2007. Nor could it be identified as a crisis…

Argentina: The risk of transforming a currency crisis into a financial crisis Alejandro Vanoli

Despite past experiences, the recent agreement between Argentina and the IMF includes unrealistic projections. On Friday, July 13th, the IMF staff report on its Argentina agreement was released. There, the staff has sought to protect itself, warning of the risks inherent in the dynamics of the Argentine situation. But the tango between the IMF and Argentina is inconsistent and unsustainable  because of the unrealistic projections incorporated in the agreement, the rigidity generated by the limitations in the use of monetary and exchange rate instruments to face the crisis, and the validation of policies that will aggravate the crisis. The agreement…

Did developing countries really recover from the Global Crisis? C. P. Chandrasekhar and Jayati Ghosh

We are nearing the tenth anniversary of the collapse of Lehman Brothers in the United States that sparked a Global Financial Crisis,affecting every economy in significant ways. That crisis generated extraordinary monetary policy responses in the advanced economies, with low interest rates and unprecedented expansion of liquidity, in an effort largely driven by central banks to keep their economies afloat. By contrast, expansionary fiscal policy was barely used after the first initial stimulus. In the event, even with these incredibly loose monetary policies, the advanced economies have generally spluttered along, with periodic hopes of recovery dashed by repeated slowdowns –…

The Indiscreet Aggression of the Bourgeoisie C. P. Chandrasekhar

Neoliberal economic policy—the framework of measures that preaches market fundamentalism but uses the state to engineer a redistribution of income and assets in favour of finance capital and big business—has lost its legitimacy. A huge financial crisis and a decade of recession or low growth, that have hurt most sections except the elite 1 per cent, have convinced the majority in many countries that neoliberalism is no alternative. That change in mood was revealed by the Brexit vote and the Trump victory among other developments. However, this has not setback but unleashed a new aggression on the part of the…

Did This Straw Break the Finance Sector’s Back? T. Sabri Oncu

I will define the straw and start with quoting from my July 2017 H T Parekh Finance Column titled “Debts That  Cannot Be Paid Will Not Be” (Öncü 2017). With my June 2015 H T Parekh Finance Column article titled “When Will the Next Financial Crisis Start?” [Öncü 2015a] I initiated an investigation of the possibility of a new phase in the ongoing global financial crisis (GFC) that started in the summer of 2007. [This article was retitled on the Policy Research in Macroeconomics website as “What Straw Will Break the Finance Sector’s Back?” when it was republished three days…

George Soros on the Current Conjuncture Prabhat Patnaik

Billionaire financier George Soros has set financial markets aflutter by suggesting that a new world financial crisis is in the offing. In a speech he gave recently to a think-tank, he underscored the outflow of finance capital from the third world which is likely to catch these economies in a cycle of exchange rate depreciations and austerity. And he talked specifically of the European Union facing an “existential crisis” on account of three factors: its territorial disintegration as exemplified by Brexit, austerity, and the refugee crisis. The solution he offered for Europe was a typically Keynesian one which included a…

Has Donald Trump Already Changed US Trade? C.P. Chandrasekhar and Jayati Ghosh

There is no doubt that President Trump is upending global trade. He has unleashed a trade war with China as well as with some of the US’ s purported allies, using grounds of “threats to national security” to impose tariffs on many US imports. The likely retaliation will obviously affect some US exports in turn. The trajectory of world trade suddenly looks quite uncertain – and this will also depress investment across the trading world. So the Trump effect on world trade is clearly just beginning. But the naked self-interest of Trump’s moves, the “America first” orientation declared by the…