Global Policy Forum

UK PM David Cameron unexpectedly cast a veto at an EU summit meant to “save the Euro.” Risking European-alienation and political isolation, the PM defended his action in the name of “national interest,” arguing that regulatory exemptions for “the City” were critical to the UK’s economy. In this article, Aditya Chakrabortty debunks Cameron’s claim by showing that the UK’s financial sector is a public liability rather than a source of wealth. According to Chakrabortty, the City’s strong financial backing of the incumbent Conservative Party allows it to set the rules that it itself must subsequently abide by; an unsavory prerogative that clearly extends into Europe. (The Guardian)

As politicians attempt to frame the prospective European intergovernmental treaty – should it be called a “17-plus,” ‘27-minus” or “everyone but the United Kingdom” deal? – the question of whether its substance is appropriate for Europe’s problems is left unanswered. In this article, several pundits underline the fact that the “old rules” finally gaining “real teeth” under a new treaty, will not suddenly make them less arbitrary, let alone more effective. Ireland and Italy, for instance, were both hardly in breach of the rules yet are now in distress, facing stark austerity measures. Rather than more fiscal rigor to appease the “irrational markets” in the short term, governments should be able to wield more resources to do what is right for their societies in the long term. (New York Times)

Only days after a UK-veto blocked an amendment of the Lisbon Treaty in order to insulate its financial sector from any kind of prudential regulations, the Bank of England, ironically, released a paper that calls for strong “rules-based” (instead of “principles-based”) regulations and revisits the merits of the abandoned Bretton Woods system. Its findings are however not merely a lesson for defenders of “the City,” but also a warning to those EU-leaders who persist in taking pro-cyclical measures as financial stability remains fickle and unemployment soars. (The Guardian)

According to Paul Krugman, it is time to call the current global situation a “depression;” not just according to narrow economic terms (defined in terms of GDP-loss and the duration of recession) but also in broader, particularly political, terms. Not only because unemployment soared explosively around the world, but also because democratic values are under alarming strain. In Europe, where the Euro has become a divisive force and market-courting austerity measures seem to have bullied out common sense policies, a worrisome trend cannot be ignored: the rise of extreme right-wing parties that seek authoritarian rule. This trend, Krugman argues, should provoke EU leaders to do what is necessary for their societies – not only economically, but also politically. (New York Times)

European leaders discussing what fiscal discipline measures ought to be implemented to prevent the accumulation of vast amounts of sovereign debt, are akin to house owners arguing about what kind of safety regulations should be put in place once the house is already on fire. As the latest OECD report maintains, the Eurozone is already in recession – it is already on fire. Rather than wondering how to improve fire safety regulations, Europe’s leaders should be developing strategies to extinct the fire already in place. In this piece of the Centre for Economic and Policy Research, Mark Weisbrot gives his view on what Europe’s political fire marshals have to do in order to extinct the flames that are currently devouring Europe. (Centre for Economic and Policy Research)

On the eve of an expected breakthrough in the Eurozone’s negotiations concerning the debt crisis, rating agency Standard & Poor’s (S&P) “warned” the area’s AAA countries that they were on “downgrade-watch.” Hardly just a warning, the statement doubles as a threat to political leaders to make market-appeasing choices, echoing S&P's recent US credit rating downgrade. Since the beginning of the global crisis, media, politicians, civil society and business analysts have criticized the role rating agencies like S&P have assumed in pressuring governments to take austerity measures that hurt millions of ordinary citizens. A Bloomberg analyst notes, for instance, that the agency should “back off” and refrain from narrowing the policy options of the Eurozone’s leaders. (Washington Post)

Critical Perspectives and Alternative Solutions to the Eurozone Crisis (December 2011)

On Monday November 18, New York federal judge Rakoff threw out a settlement of a mortgage derivatives case between the US Securities and Exchange Commission (SEC) and banking giant Citigroup because it “did not satisfy the law.” According to Rakoff, the SEC’s longstanding practice of offering defendants a deal that allows them to settle without admitting to any wrongdoing, forces the courts to rule without the necessary facts despite an “overriding public interest in knowing the truth.” The judge also halted the SEC’s familiar claim that settlements are prudent, noting that “recidivist” Citigroup had settled five times before. Citi would now merely have to pay $285 million, despite misleading investors in the amount of $700 million and receiving two multi-billion dollar public bailouts to remain afloat. By dismissing the settlement, the judge forcefully breaks with the tradition of perfunctorily “rubber stamping” deals made between the SEC and Wall Street. (The New York Times)

In this short essay, EU Politics professor Vivien Schmidt discusses the democratically legitimate merits a temporary technocratic government can have in times of crisis. A critical condition is that the lack of democratic input - technocratic governments are usually not elected - should be made up for by implementing measures that “truly represent the people.” According to Schmidt, the incumbent Greek government has failed to fulfill this condition. (Telos)

Former Citibank trader and financial sector lobbyist Robert Jenkins is the latest addition to the Financial Policy Committee (FPC), a new UK institution charged with assessing and containing risks to financial stability. In a recent speech, he spoke out against complaints made by his former colleagues that the Basle III global capital requirements for banks – relatively basic measures developed in response to the financial crisis – were a threat to the financial system. According to Jenkins, however, soberly-run banks that cut bonuses can still easily do well under the new rules. In fact, arguing the contrary is “intellectually dishonest and potentially damaging.” (Bank of England)

In the past two months, the Occupy movement has voiced concerns that there is something extremely odd about the foundations of our contemporary economic system. The economy ought not to be a game that rewards those already privileged, whether by talent or family. The economy should be a fair system of cooperation from which all citizens, including those who cannot work, gain fairly. In this Boston Review interview, Joshua Cohen discusses John Rawls' "justice as fairness," a practical conception of justice that lays out the moral principles on which  a fair form of organizing our economic and political life could be based. (Boston Review)

On November 2^nd, Harvard-Graduate students expressed their support to the Occupy movement by walking out of an introductory economics course in form of protest. In a letter written to the class’ professor, the students expressed their discontent with the inherent bias in the selection of the material being taught. Rather than providing a broad and critical insight into economic theory, they found that the course espoused a limited view of economics that perpetuates systems of economic inequality and social injustice. Highlighting the enormous impact that our way of thinking and conceiving of economics has on social life, students demand a change in the manner in which economics is currently being taught. (Harvard Talks Politics)

In this op-ed, Paul Krugman argues that the policymakers who pushed Europe into adopting the Euro and “bullied” both Europe and the US into austerity, should be “toppled from their pedestals.” According to Krugman, such policy makers stick to fantastical ideas without regard for real human suffering and in spite of available data. In the euro-zone, for instance, the ECB has erroneously focused on “anchoring inflation expectation” despite low inflation levels. In the US, economic policy makers have shifted their focus from unemployment to budget deficits, even though the former problem far outweighs the latter. Policy making in Europe and the US, argues Krugman, can no longer be based on wishful thinking and must now focus on doing what needs to be done so that ordinary people are no longer forced to make huge, avoidable sacrifices. (The New York Times)

In this “Call to Action” statement, the authors argue that the global uprisings of today, against gross inequalities and ecological destruction, demand a new way of thinking and a set of practical steps towards new forms of social life. It is not a coincidence, they submit, that mainstream contemporary thought on economics and social life are void of social justice, the real effects of externalities and a general concern for the common good. US business schools, amongst the world’s top-ranking schools, have played an instrumental role in creating this situation, focusing exclusively on rational self-interest. It is now time, the authors insist, that this narrow and harmful way of thinking is discarded in favor of new, more inclusive and socially just ways of thinking about social life. (Share the World’s Resources)

In this short analytical essay interlaced with personal experience, professor Joseph Stiglitz argues that the protest movement that began in Tunisia has now become global. Political regimes indeed differ across the world, but, Stiglitz asserts, all social protests equally express the sense that “the system has failed.” Its main failure has been the production and sustenance of unjustifiable inequalities that separate the politically and economically powerful from everyone else. According to Stiglitz, the system should be changed to meet the protesters’ very basic and fair demands: a fairer society and economy in which people matter, not money. (Project Syndicate)

Led by the slogan "People First, not Finance", the People’s Forum, a group of anti-capitalist and anti- G20 activists based in Nice, protested at the high-level meeting in Cannes to make their voices heard. They are concerned that the G20 leaders will do little to nurse the deep social wounds in Europe and around the world. The EU leaders’ decision to boost the European financial stability facility was, for instance, interpreted as a "halfway measure" and a “cosmetic solution” which jumps at the defense of banks and does little to ease the cyclical problems of the financial system. As the protestors are well aware of, truly putting people first requires much deeper, structural changes. (Inter Press Service)

Prime Minister Papandreou’s surprising late-October plan to hold a referendum on a “rescue package” for Greece was called off only a few days later. Domestic party politics and euro-zone pressures undoubtedly influenced the rationale for both its launch and abandonment. It is, however, also important to assess the plan from a democratic point of view. Written in the intermediate period, Sven Böll’s commentary on the referendum underlines the Greek people’s long overdue right to legitimate democratic processes. It is not only owed to them by their failing government, but also by “the troika” (European Commission, ECB and IMF) that has forced devastating austerity programs and structural reforms upon them. (Spiegel Online)

How did a private debt crisis turn into a public one? Why can it be used as an excuse to introduce harsh austerity measures? What are the social consequences of these measures? This useful pocket guide published by the Transnational Institute provides straightforward answers to all of these questions by explaining how a crisis created in Wall Street was made worse by EU policies, how it has enriched the 1% to the detriment of the 99% and what alternatives exist to prioritize people and the environment above corporate profits. (Transnational Institute)

A few days before the summit in Cannes, Der Spiegel obtained a copy of the G-20 draft communiqué in which many reforms for the global financial system are announced. Among them is the idea that a financial transaction tax (FTT) should be implemented to decrease market volatility and simultaneously raise money for development aid. German Finance Minister Schaueble has already publicly announced that the EU should implement an FTT regardless of general G-20 support. Hardly a radical initiative, the EU cannot but endorse the FTT were they to be forced to go it alone. (Spiegel Online)       

Why is Wall Street being occupied? According to acclaimed author David Graber, protestors on Wall Street have learned that the 70s crisis was never resolved, but rather was contained by cheap credit at home and massive plunder abroad. For the US’ new generation of well-educated unemployed youth, these crises are the only constant in an era of socio-economic uncertainty. In this light, the protestors’ call to “Occupy Wall Street” entails more than merely taking over the financial district of lower Manhattan. It is a call to envision alternatives to the present form of capitalism. If the occupiers of Wall Street succeed in initiating a public debate which questions the nature of markets, of debt, of the purpose an "economy" serves, then – so David Graber states – they “will have done us the greatest favor anyone possibly can.” (Guardian)

In a letter sent to G-20 leaders a week before their meeting in Cannes, UN Secretary General Ban Ki-moon urges them to show “the bold leadership needed to resolve the global economic crisis and achieve sustainable development.” According to Ban, global public protests like Occupy Wall Street express a loss of faith in the ability of governments and public institutions to address economic uncertainty and the “mounting inequality” within and across nations. Most importantly, Ban calls on the leaders to do everything they can to help the world’s poorest and most vulnerable, because putting their interests on hold would not only be counter-productive but also immoral.  (UN News Service)

Chancellor Merkel is struggling to combine financial orthodoxy with more European integration in an attempt to reassure financial markets on German terms. President Obama, meanwhile, is trying to pin the blame of US economic stagnation on her inability to do so. According to Ulrike Guérot of the European Council on Foreign Relations, the US is the country with the real economic problem, whereas the EU has more of a governance problem, “a real war of orthodoxy.” Current painful austerity measures and economic restructuring are the effects of European states’ unwillingness to overcome political division, rather than of economic necessity. (Spiegel Online)

Around the world, hundreds of thousands have taken to the streets to protest against the global banking system. Engaged in their own dispute with the banks, some European politicians have welcomed the demonstrators’ message. Social Democrat leader Sigmar Gabriel from Germany, for example, expressed the need to separate investment banking from commercial banking. In the same spirit, European Commission President Jose Manuel Barroso demanded legal consequences for rogue bankers. These statements are welcomed, but must be taken with a grain of salt. The continued presence of protestors has the power to transform these statements from opportunistic rhetoric into concrete action. (Spiegel Online)

As the euro-crisis persists, the EU’s two most prominent political leaders, Merkel and Sakozy, continually feign agreement when financial markets panic and remain silent when the dust settles. The Chancellor and the President have jointly supported several robust proposals of late, such as the Financial Transaction Tax, but failed to implement them. Rather than cater to the short-term moods of the markets, the leaders should come up with some new ideas that can solve Europe’s problems without driving the people into punishing austerity. (Spiegel Online)

In this piece, Joseph Stiglitz highlights the importance of truly understanding the causes of the ongoing economic crisis. After all, the prescription for what aids the global economy is only as successful as the accuracy of the diagnosis of its ills. Before the crisis, the economy had three interrelated problems. First, demand was progressively lowered by rapid productivity increases in manufacturing sector. Second, growing inequality lowered expenditures by pushing money away from workers who would spend it to rich bankers who do not. Third, emerging economies’ build-up of foreign reserves further weakened global aggregate demand. To treat our patient’s ails, Stiglitz prescribes strong government expenditures and a radical restructuring of the financial sector. (Project Syndicate)

The world should brace itself for a new global financial and economic crisis. In anticipation, the South Centre organized a conference on how this might affect the South and how developing countries should prepare and respond. Besides trying to restrict the degree to which their economies are exposed to systemic problems originating in the North, developing countries should review their development policies and take an active role in the reformation of the international financial and monetary system. That the countries that pursued their own tailor-made development policies did the best in terms of recovery after the first crises, is but one of many arguments supporting the view that the countries of the South should choose their own development paths. (South Centre)

In 1982, the world economy stood at a financial precipice. The two long decades of IMF-imposed austerity which followed did little but worsen the debt crisis. Today, few if any believe that austerity will help countries like Greece to climb out of recession. Jeffery Sachs, a former advocate of Structural Adjustment, maintains that “further cuts will push it [Greece], over the edge […] and spill over to Italy, Spain, Portugal, Ireland, and even France.” Rather than safeguarding the interests of those institutions causing the crisis, a neutral body which adjudicates on the liability of lenders ought to be established. Such “Debt Court” would remove power from financial markets and puts it in the hands of the people. (Share the World’s Resources)

Crises will continue to persist as long as responses to current interrelated crises remain anchored in mainstream economics and ecological modernization, Growth continues to be perceived as the only measure of development; environment and ecosystems continue to be perceived as unlimited. Fashionable “green turns,” such as green economy, green growth or sustainable growth will not do the trick. Instead of focusing on means such as efficiency and technological innovation, policymakers should realize that the main driver of the crises lies in the end goal of unlimited growth. (Open Democracy)

In this op-ed piece, Paul Krugman criticizes the euro-zone’s devotion to the “hard-money-and-austerity-dogma.” With public debts on the rise after the end of the lending boom, insistence on austerity in hopes of restoring private-investor confidence is sure to hurt the countries in distress. The complementary desire to keep inflation low will only make matters worse, because even more painful measures will be necessary to stay competitive and keep exporting products. The euro-zone should stop seeing investor-confidence and low-inflation as a two-part panacea and focus instead on creating an environment in which its heavily indebted members have a chance to recuperate. (New York Times)

Standard and Poor’s recent downgrade of Italy’s “sovereign-rating” came as a surprise to both analysts and government bond-investors. In an effort to temper a sudden rise in bond-yields and to avert fears of debt-contagion, the European Central Bank (ECB) quickly moved to buy up Italian government bonds. Even though the prospects for Italy’s economic performance are not positive, the timing and the effects of the downgrade justify concerns over the power of the big rating agencies. (Wall Street Journal)

The current efforts to safeguard the Euro reflect not merely a European crisis but a crisis in capitalism. The level of global private debt is too high and financed by too many different currencies whose risk is, in turn, supposedly alleviated by even more financial bets. There is, however, a collective unwillingness “to call a spade a spade” and to recognize the Eurocrisis for what it is: the most recent sign for the undeniable reality that the way in which capitalism has been conceived and practiced has long become unsustainable. (Guardian)

UNCTAD’s Trade and Development Report 2011, focused on the “post-crisis policy challenges in the world economy”, criticizes current global financial governance arrangements and provides far-reaching proposals for a new international monetary and financial system. Many countries, most notably developed ones, have not been addressing the root causes of the crises, but have rather been fighting “symptoms” with “unambitious efforts”. The report particularly criticizes countries that choose to use austerity measures to “restore investor confidence”, rather than providing appropriate stimulus packages that would benefit the real economy and support social justice. (UNCTAD)

Europe’s most recent crisis is not merely about cutting public debts and safeguarding the euro; most importantly, it is a battle about the meaning of democracy. Democracy is traditionally linked, with political accountability, but it also means economic accountability. By opening up countries finances to public scrutiny and analysis, a debt audit would “remove the mask of financial power which pulls the strings” and empower citizen with the knowledge of how Europe’s current crisis came about. (Redpepper) 

Jeffrey Sachs recently argued that the US and the EU fail to see the underlying structural problems that inhibit their economic recovery. According to Simon Zadek of the Global Green Growth Institute, Sachs’ “liberal Keynesian” analysis and proposed solutions are too conservative. Instead of focusing on restructuring national economies in a “globalizing world”, policy debates should discuss global economic challenges in the face of global issues such as climate change, poverty and inequality. A core topic should be the thorough rethinking of what financial markets are and what their “broader public purpose” should be; if anything, self-interested “short-termism” should become a thing of the past. (openDemocracy)

This article from Spiegel Online gives a critical overview of the role that financial rating agencies play in the modern world economy. Rating agencies are companies that rate the riskiness of financial products, including government bonds. Both private and public investors are often legally obliged to follow the advice of such agencies in order to avoid taking risks that could trigger a financial crisis. However, since the beginning of the global financial crisis, agencies have been criticized by media and politicians. Agencies are not only scolded for using esoteric rating methods, but also accused of knowingly exacerbating the crisis countries like Greece are in by downgrading their rating-status; a move that they know investors are bound - often obliged - to act on. (Spiegel Online)

In this contribution the Guardian’s “Poverty Matters” blog, Jonathan Glennie of the Overseas Development Institute explores how debt default by a relatively rich country like Greece, could provide support for alternative solutions to global debt problems. Glennie points out that default is no longer a controversial option in political and academic circles because its benefits are increasingly seen to be legitimate. Still, however, many poor countries are forced to pay their debts whilst their societies suffer. According to Glennie, a Greek default might inspire burdened countries to do the same and encourage world leaders to look for a “fair and transparent mechanism to deal with debt problems”. (The Guardian)

Is The World Going Bankrupt? (August 8, 2011)

Protest Movements Teach Economics to Bankers (August 8, 2011)

Food Aid for “New Poor”, Extra Wealth for Nouveau Riche (August 2, 2011)

The Lingering Effects of the U.S. Debt Shodown: Q&A With Liliana Rojas-Suarez (August 2, 2011)

Vows of Change at Moody's, but the Flaws Remain the Same (April 13, 2011)

Ratings agencies like Moody’s and Standard & Poor’s played an integral role in the global financial meltdown. Banks pressed analysts at the rating agencies to provide high ratings to deals that were destined to fail. Banks and ratings agencies cozy relationships continue despite the risks associated with proceeding with a business as usual approach to rating debt and equity deals. (ProPublica)

Euro Economists Expect Greek Default, BBC Survey Finds (March 28, 2011)

A Greek sovereign default is likely, which will have dramatic effects on the viability of the Euro.  Economists have voiced their concern over the sustainability of European governments’ debt, even as they enact unpopular debt reduction measures.  Almost a year has passed since the first rumblings of the debt crisis and there are no signs that it will be going away anytime soon. (BBC News)

World 'Unable to Handle any Future Shocks' (January 13, 2011)

Governments' have a "critically low" capacity to respond to future financial shocks. Sovereign defaults and asset bubbles pose systemic risks that threaten to collapse the entire system. The illicit economy is growing rapidly, another alarming trend. Ultimately, the global economic order must change if future crises are to be prevented. (The Independent)

ECB Gives Portugal Temporary Lifeline, Traders Say (January 10, 2011)

Germany and France are pressing Portugal to take an EU-IMF bailout as economic contagion continues to spread throughout Europe. The potential rescue package comes on the heels of similar deals for Ireland and Greece. While Portugal and other European nations including Spain, Italy, and Belgium may not need assistance, such speculation demonstrates clear weakness in European debt financing, which strongly affects the international economy. (Reuters)

2010

Who are the Real Winners in Europe's Bailout? (May 11, 2010)

Moving From Recession to a Real Global Economy (April 23, 2010)

"Global Economic Recovery" May Also Bring More Problems to the South (March 8, 2010)

A New Phase, Not Just Another Recession (February 15, 2010)

Common Currency Woes (January 25, 2010)

Rebooting Iceland (January 13, 2010)

2009

 

The Worst May Not Be Over for Europe (December 30, 2009)

Global Economic Crisis Rescues European Bank (October 7, 2009)

Report of the Commission of Experts on Reforms of the International Financial System (September 21, 2009)

US, UK are Hijacking G-20 Agenda (September 14, 2009)

The Deficits of the EU Financial Reforms (September 2009)

The Potential Development Implications of Enhancing the IMF's Resources (August 4, 2009)

IMF Reform: Aged Wine in a New Wineskin (July 19, 2009)

The Reform of the International Monetary System (June 2008)

IMF Backs US$ 250 Billion Plan to Bolster Member's Reserves (July 20, 2009)

Wall Street's Toxic Message (July 8, 2009)

Rich Countries Block Reform at UN Summit (June 26, 2009)

Poor Countries Fight For a Say At Crisis Meet  (June 5,2009)

Civil Society Background Document and Key Recommendations on the UN Conference on the World Financial and Economic Crisis and its Impact on Development (June 2009)

Outcome Document of  United Nations Conference on the World Financial and Economic Crisis and its Impact on Development (June 2009)

Blame this Crisis on the Myth of Inflation (May 8, 2009)

The Quiet Coup (May 2009)

Some Reflections on the Current Global Crisis from a Developing Countries Perspective (May 2009)

Reality Behind the Hype of the G20 Summit (April 5, 2009)

U-20: Will the Global Economy Resurface? (March 30, 2009)

China Urges New Money Reserves to Replace Dollar (March 23, 2009)

No Safe Haven for Artful Tax Dodgers (March 18, 2009)

AIG Lists the Banks to Which it Paid Rescue Funds (March 15, 2009)

The IMF's Financial Crisis Loans: No Change in Conditionalities (March 11, 2009)

A Rising Dollar Lifts the US but Adds to the Crisis Abroad (March 9, 2009)

A Bank Bailout That Works (March 4, 2009)

Will the G20 Expand the Role of the IMF? (March 3, 2009)

The Implications of the Global Financial Crisis for Low-Income Countries (March 2009)

The Global Economic Crisis: Systemic Failures and Multilateral Remedies (March 2009)

Sold Out: How Wall Street and Washington Betrayed America (March 2009)

Taking the Credit; How Financial Services Liberalization Fails the Poor (March 2009)

Propping Up a House of Cards (February 28, 2009)

Globalization in a Turnstile: The Debate Ahead (February 25, 2009)

Towards a Post-Bretton Woods Global Financial Architecture (February 6, 2009)

Asia: The Coming Fury (February 4, 2009)

Fear and Loathing in Davos (February 4, 2009)

Policymakers at the 2009 World Economic Forum in Davos acknowledged the need to re-direct economic policy away from American-style, capitalist globalization and pointed to market failure as a major cause of this crisis. Blaming American financiers for their irresponsible behavior, which helped spread instability and risk to poorer countries, Joseph Stiglitz reflects on the role of the US in future global economic policy. As confidence in the US declines rapidly, and world economic prospects look bleak, Stiglitz asks whether the US will continue to take the lead in global economic policy, this time setting an example of heavy protectionism.(Guardian)

Declaration of the Assembly of Social Movements at the World Social Forum 2009 (February 5, 2009)

The Perils of More Globalization (February 3, 2009)

For a New Economic and Social Model, Let's put finance in its place! (February 1, 2009)

Idea of Global 'Sheriff' to Tighten Regulation is Seriously Considered (January 27, 2009)

The Current Global Crises and their Impact on Social Development (January 20, 2009)

China Losing Taste for Debt from the US (January 8, 2009)

Fighting Off Depression (January 5, 2009)

The First Meeting of the Commission of Experts of the President of the United Nations General Assembly on Reforms of the International Monetary and Financial System (January 6, 2009)

Macroeconomic Imbalances in the United States and Their Impact on the International Financial System (January 2009)

World Economic Situation and Prospects 2009 (January 2009)

Free Market Myth: Regulation Is Everywhere. Let's Choose Who Benefits (January 2009)

Capitalist Fools (January 2009)

2008

Principles for Economic Recovery and Financial Reconstruction from Progressive Economists (December 22, 2008)

This statement, issued by a group of progressive economists, calls on the Obama administration and the new Congress to go beyond a mere economic stimulus package. In addition to short-term measures that stimulate the economy, the new administration must undertake institutional changes as part of the recovery and reconstruction program. In particular, the financial sector must be reformed so that it serves the needs of people and communities. A successful economic program thus must reject the extreme free market and neoliberal policies that contributed to the current financial and economic crisis. (Political Economy Research Institute)

The Triumphant Return of John Maynard Keynes (December 5, 2008)

Nobel Laureate Joseph E. Stiglitz describes the US and other rich countries' shift towards Keynesian interventionist policy as a "triumph of reason and evidence over ideology and interests". However, the author fears that Keynesian doctrines will be used and abused to serve some of the same interests, if government intervention is limited to bailing out the financial sector. (Guatemala Times)

Citi's Taxpayer Parachute (November 25, 2008)

This editorial from the Wall Street Journal notes that while the bailout of Citibank is a good deal for equity holders, the benefits for taxpayers are uncertain. Ninety percent of the money used for the bailout of the US biggest bank comes from taxpayers' money. The author stresses that it is not the first time Citibank needs "resuscitation", which makes it questionable why Citibank director, Robert Rubin and other directors still are employed.

Statement on the G-20 Summit on the Financial Crisis (November 15, 2008)

Contrary to the Europeans, who call for more global regulation of cross-border financial flows, the US argues that the nation state should be the primary regulatory authority responding to the financial crisis. According to this article, the US defends the primacy of the nation state to avoid external financial regulation and to protect its own financial sector's "competitiveness". (Casino crash)

Financial Bailout: Government Criticized for Opting for IMF Loan (November 12, 2008)

While Western governments have played an active role in the financial crisis, paying billions in bailouts to banks and financial companies, the IMF still insists that poor countries cut back on government spending in return for loans. Civil society organizations recommend that governments in poor countries look for local alternatives to IMF loans so they can respond to the financial crisis by increasing spending on health, education and agriculture. (Dailytimes)

Ditch the Smooth Transition. The People Voted for Change (November 14, 2008)

Sixty percent of the US population strongly favors stricter regulations on financial institutions while only twelve percent support aid to financial companies. President-elect Barak Obama has appointed individuals to the government that are unlikely to start regulating the market and he did himself support the use of taxpayers' money to bail out Wall Street. Further, the Democrats are not demanding the Federal Reserve to reveal which corporations received almost US$ 2 trillion in emergency funds. Author Naomi Klein argues that if the Democrats applied new rules across the board, the market would stabilize and adjust. (Guardian)

Banking on Change: Towards an Economic System that Works for People and the Planet (November 2008)

The G20, the world's twenty leading countries, should not decide on global economic politics on behalf of the entire world population. Civil society organizations argue that all governments and civilians must collaborate to build a new set of principles that strengthen national and local economies. For instance, governments should renegotiate free trade agreements, control capital flows, call for debt cancellation and close tax havens. (Choike)

The World Turned Upside Down: The Centre Won't Hold Any More (November 6, 2008)

For two centuries, Western countries have dominated world trade and global politics. Now, the western neoliberal model is in crisis and emerging countries in East and South Asia, and Latin America challenge the world hegemony, making global governance more diversified. For example, after the collapse on Wall Street, the US asked China and Singapore for financial help. (Le Monde diplomatique)

Towards a New Global Economic Compact (October 30, 2008)

After the Asian financial crisis at the end of the 1990s, many people called for reform of the global financial architecture. But the international financial institutions resisted comprehensive reform and they continued to exclude the poorer countries from decision making. The head of the UN High Level Task Force on the global financial crisis, Joseph Stiglitz, argues that the UN is the only institution that has broad legitimacy and that it should take a lead role in reforming and monitoring the global financial system. (World Economy & Development In Brief)

UN Chief Calls for Protection of Migrants amid Financial Crisis (October 29, 2008)

Secretary General Ban Ki-moon urged countries to deal with the financial crisis by allowing foreign workers into their country. The ILO estimates that over 200 million people will lose their jobs in 2009. The crisis can deepen the inequalities between rich and poor in the world, and force millions of people to migrate in search of a better life. (Integrated Regional Information Networks)

Statement on the Proposed "Global Summit" to Reform the International Financial System (October 29, 2008)

Over 550 organizations from 88 countries call the G20 summit on the financial crisis "a New Undemocratic Washington Consensus." Although rich countries are responsible for the financial collapse, the crisis strongly affects the poorest countries. Therefore, all governments must be involved in developing global solutions for the benefit of the majority of the world's people. (Eurostep)

Return of the State (October 28, 2008)

To avoid future financial crises, national leaders should put into practice the ideas of the late economist John Maynard Keynes, regarding government intervention in the economy. Governments must regulate banks and financial speculation and pursue fiscal policies that strengthen the role of the nation-state in the global economy. (Frontline)

A Crisis-Opportunity Moment (October 23, 2008)

On November 15, 2008, leaders of the world's 20 largest industrial and emerging economies will meet to discuss responses to the financial crisis. This article urges the political elite not to focus solely on the financial markets, but also address problems of ordinary people. Governments should lessen the rising inequality of people living in cities, as the majority of the world population now live in urban areas. (openDemocracy)

Reversal of Fortune (October 13, 2008)

Nobel laureate Joseph Stiglitz describes how neoliberal "fundamentalists" with their narrow focus on free market and deregulation of the economy caused the deep financial crisis. Stiglitz urges governments to refrain from using standard monetary policy, such as lowering and raising the interest rate. Instead, governments should invest in infrastructure, education and technology to create stable international growth. (Vanity Fair)

The Crisis and the Environment (October 17, 2008)

The financial crisis affects the environment in different ways. Global Co2 emissions might decrease because falling incomes force people to use less energy. But on the other hand, due to the crisis, investors will refrain from putting their money into energy projects, thus decreasing greenhouse gas reductions. (Foreign Policy In Focus)

A World in Flux: Crisis to Agency (October 16, 2008)

The financial crisis provides a rare opportunity for world leaders to reform the structures of global governance. This article suggests that a global summit should launch a reform of the financial system. Governments should in future regulate financial companies and control currency speculation through a tax on all currency transactions across borders. A new financial system must also reduce income inequalities. Today, 20 percent of the world's population receives over 80 percent of the world's income. (OpenDemocracy)

The Question To Be Asked: "Where Will the Money Come From?" (October 13, 2008)

In India over 2,000 farmers committed suicide in the past 15 years, and more than 40 percent of Indian farmers cannot make a decent living from agriculture. The Indian government claims it cannot afford to support the farmers financially. But the government easily rolled out money to save the rich people in India from the negative effects of the global financial crisis. (Share the World's Resources)

Farmer in Chief (October 9, 2008)

This article urges the next President of the United States to reform the US food system in order to improve health care, energy independence and to alleviate climate change challenges. A new food system must improve infrastructure for a regional food economy and support diversified and ecological agriculture based on solar energy. Further, the next president should campaign to change the unhealthy and unsustainable fast food culture in the US. (New York Times)

The Financial Crisis and the Developing World (October, 2008)

This article argues that the current financial crisis presents an opportunity to replace the dominant view that markets can be self-regulating. The author reviews the different channels through which the crisis will negatively affect developing countries and emerging markets, pointing out that those who liberalized their financial sector are now the most vulnerable. In addition, he points to the double standards of the US and Europe, as they did not follow the belt-tightening economic policies they prescribed for developing countries, but instead adopt stimulus measures that widen the budget deficit. (Third World Network)

Seized: The 2008 Land Grab for Food and Financial Security (October 2008)

The global financial crisis is prompting investors to seek new sources of profit. Many are buying cheap agricultural land in developing countries to make a profit from the soaring food prices. But privatization of land threatens small-scale farming and food security in the world's poor countries, as fertile land concentrates into the hands of a few private companies. (GRAIN)

Making Financial Markets Work for Development (October 2008)

This working paper for the International Follow-Up Conference in Doha November 2008, proposes a new financial architecture including a special tax on capital assets and improved supervision of investors. The paper describes the current financial system as a "casino economy," based on competition, speculation and pursuit of profit, which contributes to increasing food prices and makes the poor pay the costs of the global financial crisis. (Evangelischer Entwicklungsdienst)

Global Financial Crisis: Does the World Need a New Banking 'Policeman'? (October 8, 2008)

This article argues that neither the World Bank, nor the International Monetary Fund nor the World Trade Organization have the power to solve the global financial crisis. In order to adapt to the economic situation of the 21st century, the Bretton Woods system, founded in 1944, needs to be reformed. A new way of economic governance must be based on regulation and restrained rules to manage the risks of banks and financial institutions. (Telegraph)

Food and Markets: A Crisis of Faith (September 30, 2008)

This article argues that the financial crisis provides an opportunity for world leaders to review their political performance. They can continue to rely on a "self-regulating" market, which caused the crisis. Or they can put forward a new agenda for food security and redistribution of the world's resources. (Share the World's Resources)

No "Bailout" for the World's Poorest (September 30, 2008)

During the High-Level Event on the Millennium Development Goals, Secretary General Ban Ki-moon urged participating countries to raise an additional US$72 billion to help reduce poverty. This article argues that governments spend "peanuts" on eradicating poverty compared to the US$700 billion proposal to bail out Wall Street. The World's impoverished people do not receive a bailout, yet they pay the tax bill for the economic crisis. (Inter Press Service)

Wall Street Meltdown Primer (September 26, 2008)

In this article,Walden Bello analyzes the history of finance-driven capitalism and argues that overproduction, greed and speculation are key factors behind financial crises. Neoliberal economic policy produces speculative bubbles with short-term profits for very few actors. The author warns that the collapse on Wall Street will spread and translate into an Asian recession. (Foreign Policy in Focus)

Charity Coffers Face Credit Crunch (September 26, 2008)

NGOs worry that the Wall Street crisis will tempt governments to reduce international aid and make investors more cautious about supporting development projects. The economic crisis also affects individual donors, who have already lowered their donations to charity organizations. (Integrated Regional Information Networks)

The Week that Changed Everything (September 22, 2008)

In this article, Ann Pettifor says that the global financial crisis has compelled even the more conservative voices in media to challenge the neoliberal economic model of deregulation and liberalization. Pettifor argues that John Maynard Keynes' writings from 1936 can serve as a guideline to alleviate the crisis. The author argues that "Money-lenders, speculators, and orthodox neoliberal economists" must give way to pioneers promoting capital control and regulation of the global economy. (openDemocracy)

The Fall of Wall Street Is to Market Fundamentalism What the Fall of the Berlin Wall Was to Communism (September 16, 2008)

The financial crisis on Wall Street - with major banks and financial institutions running to the government for help - marks an end to a market-oriented economic organization. Former World Bank Chief Economist Joseph Stiglitz proposes a new economic model with "speed bumps" to dampen expansions of assets, and a "financial product safety commission" to make credit safer. Stiglitz further urges world leaders to make the new economic model more comprehensible to the public than the collapsing system of economic liberalization.(Huffingtonpost)

USA 2008: The Great Depression (April 1, 2008)

This Independent article notes that a record high number of US citizens - 28 million - rely on food stamps to feed themselves and their families. According to the author, this constitutes a "sure sign the world's richest country faces economic crisis." Though the global hike in food prices disproportionately affects poor countries, this article shows that rich countries, such as the US, are not immune.

2008: The Demise of Neoliberal Globalization (February 4, 2008)

Immanuel Wallerstein argues that in the global economic system, two main ideologies have always been "cyclically in fashion"- neoliberalism and Keynesian thinking. He argues that neoliberalism and the unrestrained market system it advocates have led to global financial turmoil. Consequently, the public and economic policy makers are moving back towards Keynesian and more socialist thinking. Wallerstein asks whether this shift in ideology will be able to restore economic order despite the damage done by neoliberal policies. (Yale Global)

Don't Cry for Me, America (January 18, 2008)

This article compares the US economic recession with the past decade's financial crises in Latin America and Asia, arguing that they have similar causes, though the consequences in the US will be less severe. Investors, spotting an opportunity for significant returns, pumped vast amounts of money into the US financial market. These investments ended up financing a "housing-and-credit bubble." Once it became clear that this bubble would burst, investors quickly began to withdraw their invested capital, causing an economic downturn. (New York Times)

The Naked System (January 8, 2008)

This National Post article argues that several "paradoxes" in the global finance system caused the financial crises of 2008. One such paradox is the fact that there is no single, consistent policy on currency rates, and that nations vacillate between fixed and flexible currency systems. Another paradox discussed by the author is the existence of government controlled sovereign-wealth funds (SWF's) in a world where the private sector is generally considered more productive.

Back to Top

 

---