Global Policy Forum

General Analysis on the World Economic Crisis


GPF Perspectives

Perpetual Crisis: A Timeline of 40 Years of Economic Instability (January 2012)

Today’s global economic crisis has been preceded by a history of constant, systemic instability. This timeline, created by Global Policy Forum’s Anahi Wiedenbrüg and Alexander Post, shows a forty year record of disequilibria, meltdowns, panics and other forms of crises, beginning in 1970. The picture it provides is of crises as a norm – far from the “equilibrium model” ordinarily taught in economics classes. There appear here, in this on-line presentation, the collapse of major firms, extreme currency speculation, real estate and financial bubbles, Ponzi schemes, and stock market meltdowns, sometimes harming hundreds of millions of people. The reader can see that as markets have become more global and as regulations have been abolished, the system has become more prone to devastating crisis on a worldwide scale. (Global Policy Forum)

Articles and Documents

2014 | 20132012 | 2011 | 2010 | 2009 | 2008 | Archived Articles

2014

How corporations and lawyers are scavenging profits (20 March, 2014)

Since the economic crisis hit Europe, international investors have begun suing EU countries struggling under austerity and recession for a loss of expected profits, using international trade and investment agreements. This is revealed by a new report released today by the Transnational Institute and Corporate Europe Observatory. The investors – and the lawyers involved – are scavenging for profits amidst crisis-hit nations, providing a salutary warning of the potential high costsof the proposed trade deal between the US and the EU, which start its fourth round of negotiations today in Brussels. (TNI, CEO)

Alternatives to the debt crisis (19 March, 2014)

As the lion’s share of the world’s nations suffer from austerity policies, politicians, financial experts and civil society activists came together this month for a three-day international conference to discuss alternative ways of tackling the debt crisis. Themes included debt restructuring options for countries suffering from high debt burdens, the value of carrying out debt audits to help identify and repudiate illegitimate debt, the problems caused by the tight mandates of central banks, and options how to bring interest rates and eventually the costs of debt service down. (Eurodad)


2013

Oxfam has recently published a report alarming the public of the consequences of the austerity measures used to equalize the EU economies after the debt crises. The mechanisms used, have increased the risk of poverty in Europe as people are increasingly burdened by the taxes being enforced on them. Oxfam has released four recommendations that governments must implement to create a fairer society.


The Age of Austerity (March 24,2013)

There has been extensive international media coverage of Europe’s contentious austerity measures implemented in the wake of the global financial crisis and subsequent sovereign debt crises. However, austerity has not been confined to Europe in recent years, as countries of the global south have also implemented restrictive fiscal adjustments. This report examines austerity beyond Europe and argues that fiscal contraction in the global south may undermine efforts to improve economic development in the global south. 

2012

                                                                                                    

US Sues Bank of America for $1 Billion in Bad Mortgages (October 29, 2012)

A major financial corporation is being held liable for its responsibility in the financial collapse of 2008. Federal prosecutors are now suing one of the biggest US financial institutions, the Bank of America, for selling risky loans to government-sponsored mortgage finance corporations. The outcome of the lawsuit might restrain banks who may be tempted to profit in future from reckless lending, which is a major cause of the current crisis. The suit also sends an important message to regulators that they should make vital changes in their oversight of the financial sector. (CorpWatch)

Cutbacks and the Fate of the Young (October 9, 2012)

This article investigates the repercussions on the next generations of present cut backs on welfare spending such as healthcare and education- a policy adopted in the US and many other countries as part of austerity measures. Medical care costs for the elderly are increasing faster than the rate of economic growth, which means an even worse deficit for the future generation. The mountain of debt left behind coupled with cuts on welfare spending will undermine their ability to shoulder it when their time comes. The approach taken by the US presidential candidates to tackle the budget deficit issue is expected to have a huge influence on voters. (New York Times)

I.M.F. Lowers Its Forecast for Global Growth (October 8, 2012)

The IMF predicts that global economic growth will be low, given the atmosphere of uncertainty in the US and Europe. The spread of politico-economic troubles of these high-income countries is affecting the world. As these states turn to austerity measures rather than pro-growth policies, emerging markets will only be able to keep the growth-dependent global economic system afloat for a short time until it collapses altogether. (New York Times)

Money, Power and the Rule of Law (October 4, 2012)

Economic policymaking always involves a confrontation between the broader social interest and the particular interests of a selected few. In this article, economist Simon Johnson explores the applicability of the rule of law in the operation of financial institutions. Insufficient regulation in the financial sector allowed unnecessary risk-taking by banks that orchestrated the financial collapse in 2008. The effects of the crisis are felt to this day, globally. The outcome of the new case brought by the New York Attorney General against the multinational banking giant JPMorgan Chase, will shed light on how the Obama administration respects the rule of law in the financial sector. (New York Times

Growth is the Problem (September 10, 2012)

Richard Heinberg, the author of “The End of Growth: Adapting to Our New Economic Reality”, has an interesting view on the current world economic crisis. While most mainstream economists are advocating for growth to recover from the crisis, Heinberg is of the opinion that this “solution” is our problem. This “uneconomic growth” is the increase of debt, pollution and the sustained destabilization of the climate. More realistic events such as climate change are exerting huge economic tolls on states through natural disasters, as seen around the world. Taking Greece as an example he shows that unless serious steps are taken to reconfigure the economy to cope with a post-growth regime, current structures will implode and chaos will be the order of the day when society collapses. In an era where social collapse takes on a domino effect and results are felt on a global scale, having a strong core structure in place will be crucial when the battles are fought in the future for diminishing natural resources. (Truthdig)

The G192 Report: The UN and the Financial Crisis (August 9, 2012)

Despite the mainstream press coverage that the UN had “missed the boat” to lead the response to the global financial crisis, it was the UK and the US that actively blocked the UN from becoming a forum for discussion on the crisis. Soon after the crash in 2008, the President of the General Assembly initiated an UN-sponsored study on crisis mitigation led by the Nobel Prize-winning economist Joseph Stiglitz. However, opposition from the UK and the US restricted the commission’s funding and work, and severely downgraded the follow-up debate three years later. Leading Western states are responsible for marginalizing the UN and reducing its influence over economic and financial issues by creating gridlock in multilateral discussions and relying on other venues such as the G7 or the IMF where they have clearer dominance and can pursue their short-term interest. (Le Monde Diplomatique)

African Economies Face Down European Storms (August 6, 2012)

The eurozone crisis has reduced foreign aid, remittances, tourists and the demand for African exports. But the overall economic growth and investment trends are positive—some countries will benefit from the exchange rate changes and the rise in commodity prices such as gold. The eurozone crisis has blurred the distinction between “high risk” emerging economies and the “safety” zones of Europe and the US; “today, the rich world offers low growth and high risk.” As South-South foreign direct investment proved to be more resilient to global shocks, African economies can take this crisis as an opportunity to diversify their trade and create a new economic order. (This Is Africa)

Lax Controls at Banks, or Systemic Rot? (July 17, 2012)

A report from the Senate subcommittee revealed that the global bank HSBC, as well as the government regulators, failed to report money laundering. HSBC has facilitated illegal transfer of billions of dollars from Mexican drug dealers, Saudis with terrorist connections, and Iranians bypassing sanctions. But the regulators ignored warnings for more than a decade. Are regulators -and therefore governments themselves- complicit in the corruption of the global financial system? (International Herald Tribune)

The LIBOR Scandal: The Rotten Heart of Finance (July 7, 2012)

Bank traders have regularly manipulated the London inter-bank offered rate (LIBOR), the most important benchmark in determining the prices of financial instruments. The system is rotten: the figure is based on banks’ estimates rather than actual prices, and the traders setting the rates have every incentive to lie, as their banks’ profit depends on LIBOR. However, the regulators face the challenge of balancing transparency and maintaining financial stability, and they must press the banks to pay compensation but offer enough protection so that they will not require another bail-out. Although some reform ideas are being coined, “the real obstacle to change is not a lack of good ideas, but a lack of will by the banks involved to overturn a system that has served most of them rather well.” (Economist)

As China's Economy Slows, Its Leaders Face an Impasse on Which Levers to Pull (July 5, 2012)

As China’s economic growth falls sharply, the Communist Party is desperate to maintain stability ahead of this year’s leadership transition. The Chinese growth in gross-domestic product has been dependent on massive investment by the government, but China is reaching its saturation point in investment spending. Unless the government implements fundamental reforms to boost its domestic consumption, the troubles in the world’s second-largest economy may deepen the global economic crisis. (Washington Post)

How Austerity is Eroding Human Rights (June 27, 2012)

The human rights of those living in Spain have been subordinated to the demands of the financial markets as the government has been forced to take austerity measures. Poverty levels have drastically increased in the past two years. The most recent austerity budget will severely affect women with low incomes, youth and immigrants. Despite its obligation to the European Union, the Spanish government should not forget that it is also legally bound by its own constitution and international human rights treaties. Spain should use the principles of international human rights law to shape an effective and just economic recovery. (Al Jazeera)

Banks Fight Fed's Push to Make Them Less Entwined (June 25, 2012)

Wall Street firms are fighting against the “counterparty exposure” rules proposed by the Federal Reserve. The rules are designed to limit financial institutions from being too interconnected, so that a domino effect can be prevented should any one of them fail. The rules would have the biggest impact on the lucrative and monopolized derivatives business. Wall Street firms argue that the rules overstate the risk and jeopardize joint ventures. (Reuters)

The Wrong Austerity Cure (June 17, 2012)

Fiscal profligacy did not cause the debt crisis in Europe, and fiscal austerity has aggravated the crisis. Europe needs coordinated policies to promote growth, supported by the issuance of Eurobonds and the easing of deficit targets until output and employment recover.  Europe cannot succeed in restoring growth unless Germany abandons its false dream in the austerity cure. (Al Jazeera)

Greek Left Leader Renounces Bailout Deal (May 8, 2012)

After conservative party New Democracy failed to form of a new government in Greece, the initiative fell to the runner-up of the elections: Syriza, a left-wing “anti-austerity coalition.” Syriza’s electoral success instilled fear in EU-politicians, because the coalition had declared Athens’ deal with the troika “null and void.” Rather than do away with the Euro and expound mere rhetoric, however, Syriza’s main objective is to broker a better and fairer deal for the Greek people. (Guardian)

Social Model is Europe’s Solution, Not Its Problem (April 22, 2012)

In this op-ed, Paul Fourier of the Confederation Generale du Travail, one of France’s largest labor-union groups, argues that the EU’s member states should stop trying to solve the current crisis by “imposing the heaviest burden of reform on those who are least protected.” In recent years the EU has focused too much on deregulation and forging a common market without also sharing generated prosperity and tackling inequality. In fact, national social systems themselves have become sources of competitiveness. Rather than further eroding education and social mobility, leaders should support them and stop trying to cater to the opaque moods of “the markets.” (Bloomberg)        

Increasingly in Europe, Suicides ‘By Economic Crisis’ (April 14, 2012)

Europe is experiencing an increasing suicide rate - a phenomenon that researchers say corresponds with severe economic stress. The effects of the financial and economic crisis have been harsh in Europe, more so since region-wide austerity measures have been implemented. According to University of Cambridge sociologist David Strickler, “austerity can turn a crisis into an epidemic,” especially when it targets social protection provisions. Despite popular protests, repeated warnings by world-renowned economists such a Paul Krugman and Joseph Stiglitz, many UN reports, and the omen of declining employment and growth rates, the European political elite is steadfast in its commitment to austerity, with obvious and tragic results. (New York Times)

Fix Income Inequality with $10 Million Loans for Everyone! (April 13, 2012)

In this sharp and sarcastic op-ed in the Washington Post, former Federal Deposit Insurance Corporation (FDIC) director Sheila Bair proposes that the FED extends the privileges it gives to the finance sector to every American household. The former top regulatory official envisions zero-interest loans that can be used to invest in high-yield risky Greek government bonds or something a little less uncertain - either way, the point is to pocket the gains. Bair’s article makes the reader re-think the current state of affairs by shifting perspectives from the big banks to regular households, uncovering the fact that it is nothing short of tragic. (Washington Post)

Real-Estate Redux (April 10, 2012)

Originally slated for sale after the federal bailout sum was repaid, American International Group (AIG) has begun to expand its real estate business unit. The major insurance firm, which received the largest bailout of a private company in US history ($182,3 billion), is focusing on the US apartment market. AIG and others are exploiting the vacuum caused by the departure of many competitors who couldn’t find sufficient funds - an ironic side-effect of AIG’s breakdown in 2008. (Wall Street Journal)

Lenders Again Dealing Credit to Risky Clients (April 10, 2012)

A few years after the American housing bubble sparked the financial crisis, several big banks such as Capital One and GM Financial have resurfaced in the business of providing credit to subprime borrowers. According to a former FED analyst, the sector is “returning to business as usual,” denying that an increase in lending signals an improving economy. Rather than having the “confidence” to expand lending again, the banks seem to want to offset losses incurred by new regulations by once again taking advantage of the “most vulnerable.” (New York Times)

Why Are the FED and SEC Keeping Wall Street’s Secrets? (April 1, 2012)

In this column, Bloomberg’s William Cohan recounts his experiences of trying to obtain what should be public information on relations between the US Government and Wall Street firms prior to and during the financial crisis. Despite using the Freedom of Information Act, Cohan says that he was deliberately side-tracked, because the information provided to him was either heavily redacted, already publicly available or a case of intentional useless data-overload. Cohan’s story shows that last year’s hard fought discovery of the FED’s $1.2 trillion secret loans to Wall Street by Bloomberg News was not an exception, and that the government is working hard to keep secrets. (Bloomberg)

Fixing Finance Is Not Enough (April 2012)

“Fixing Finance Is Not Enough” is collection of essays by former heads of state and experts at the OECD, IMF and the United Nations, that calls attention to the social consequences of monetary and financial policies. Despite their different backgrounds, the authors agree that it is the linkages between, for instance, monetary policy, inequality and development that demand more attention. A sustainable system that fosters human development cannot be narrowly growth-based and focused on balancing budgets. (Friedrich Ebert Stiftung - New York)

The Greek Debt Crisis As Harbinger of Things to Come (April 2012)

According to author Jack Rasmus, the crisis in Greece is not so much a debt crisis, rather than the site of an opaque struggle in which global investors are trying to save their investments or otherwise “offload” the costs of their bad bets onto the Greek people. Furthermore, Rasmus argues that this situation is bound to be replicated in all other “advanced” countries in which austerity policies are implemented in an attempt to invoke the mythical “confidence fairy.” (Z Magazine)

Wall Street Confidence Trick (March 22, 2012)

In this Global Research article, attorney and author Ellen Brown explains how “interest rate swaps” bankrupted local governments in the US. Banks like Goldman Sachs convinced the governments to finance public works by issuing long-term bonds with variable interest rates and then “swapping” the rates for a fixed rate provided by the bank. During the financial crisis the Federal Reserve drove down interest rates, making the local governments net-payers because their rates remained fixed and the variable rate plummeted. To boot, the governments have had to pay millions to the banks to cancel their contracts. (Global Research)

Ireland Back in Recession As Global Slowdown Hits Exports (March 22, 2012)

The financial and economic crisis brought an abrupt end to the “Irish Miracle.” In the aftermath, the country chose to nationalize its major banks and implement various austerity measures in order to service its debts. The focus on debt servicing, however, has left the country dependent on exports for economic growth in a global economy that lacks demand. Ireland is now essentially following the same prescription forced upon debt-ridden “developing countries” that are still fighting to re-focus on their domestic economies and the needs of their people instead of private investors. (Guardian)

Greece’s Austerity Doesn’t Extend to Its Arms Budget (March 21, 2012)

For EU-watchers Greece’s peculiar relations with the global arms trade is common knowledge, but in the light of the financial and economic crisis, the sustained height of its expenditures on military products is increasingly suspect. Despite having agreed to bailout deals that involve stark austerity measures affecting its population, the country remains one of the world’s biggest arms importers. According to the Guardian, Greece could have avoided its current financial situation through less military spending alone, but appears to have been pressured by Germany and France to honor its massive outstanding arms contracts. (Guardian)

Another Hidden Bailout: Helping Wall Street Collect Your Rent (March 19, 2012)

In this blogpost, Rolling Stone’s Matt Taibbi discusses a current example of “reload,” the phenomenon of a con-artist hitting a target for the second time, now offering supposed relief. The 2008 financial crisis was precipitated by the inflation and eventual burst of the American housing bubble by Wall Street firms. Now these firms and hedge funds are returning to the housing market and the government owned companies they all but ruined. By buying up pools of foreclosed properties at whole sale prices from Fannie Mae, the firms can become landlords, collecting rent yields that are expected to exceed other investment returns in today’s markets. (Rolling Stone)

New Currency Brings Hope to Debt-Stricken City (March 16, 2012)

All around Europe, governments are cutting back on spending in reaction to the Euro crisis. But in Germany’s small city Oberhausen, locals want to reverse this trend: they want to spend more money and they are making it themselves. For two weeks, locals will be able to use “coals” to pay for goods and services in over 50 businesses that have agreed to participate in the project. Residents who want to earn “coals” can do so by engaging in activities that may be considered useful to the community. The organizers were inspired by a former slum in northeastern Brazil that have been using their own local currency for the last 12 years. The “coal” is intended to complement the Euro and create a sense of community. (Spiegel Online)

A Toxic System (March 15, 2012)

Greg Smith’s open letter of resignation from Goldman Sachs described a culture of fraud and deception, and famously revealed “muppets” to be an in-office term for clientele. This strengthened public perception of the critically nefarious role played by Goldman Sachs in global finance. In this Counterpunch article, sociologist Bond-Graham argues, however, that the immoral corporate culture driving the Big Banks is merely a facet of contemporary financial fraud. The greater problem is the development of the derivatives market and the crucial role political authority has played in it. (Counterpunch)

J.P. Morgan Chase’s Ugly Family Secrets Revealed (March 13, 2012)

In this article, Rolling Stone’s Matt Taibbi discusses the trying situation of the whistleblower who is central to the uncovering of JPMorgan Chase’s credit card collection scandal. According to Taibbi, the Dodd-Frank Act’s provisions for whistleblowers are not as robust as intended. This assessment is particularly worrisome because the financial sector’s ills have recently only been “disclosed” by upstanding insiders or societally devastating institutional collapses. (Rolling Stone)

OCC Probing JPMorgan Chase Credit Card Collections (March 12, 2012)

The JPMorgan Chase credit card collection scandal is the latest episode of structurally fraudulent behavior in the financial sector. This article in American Banker describes how the processes central to the scandal developed and how it was uncovered. As with “robo-signing,” tens of thousands of clients were knowingly disadvantaged by the bank and implicated in costly and damaging legal cases that may take years to settle. (American Banker)

Germany Fails to Meet Its Own Austerity Goals (March 12, 2012)

Rather than lead by example, Germany has failed to meet its own austerity targets over 2011 and is expected to continue this practice in 2012. Spiegel Online’s coverage of this “embarrassing lapse” comes shortly after 25 EU countries agreed to a European Fiscal Compact (EFC) that embodies Germany’s main motto for Europe: austerity until budgets are balanced. In light of the current painful measures forced upon the people of Greece, the fact that planned cuts were “not implemented” in Germany adds insult to injury. (Spiegel Online)

What Greece Means (March 12, 2012)

Depressions are visible all around Europe’s periphery. Greece is the worst case, but Ireland, Portugal and Spain are in terrible shape too.  Fearing a similar fate for their own national economies, many politicians and economists started invoking Greece as a cautionary tale about the danger of deficits and the healing power of austerity. As New York Times columnist Paul Krugman maintains, however, trying to eliminate deficits once a country’s economy is already weak is a recipe for depression. Instead of a marketing campaign for austerity, the Greek experience should be seen as a cautionary tale about the dangers of trying to reduce deficits too quickly, while the economy is still deeply depressed. (New York Times)

Justice Can Yet Be Done in Bear Stearns Case (March 4, 2012)

According to presiding judge Block, the proposed $1.05 million settlement between the SEC and Bear Stearns fund managers Ralph Cioffi and Matthew Tannin is “chump change.” Besides the “pittance” they are to pay the SEC, the defendants will neither have to admit or deny guilt for their actions (which involved losing billions for investors and ultimately the general public). Columnist William D. Cohan argues that settlements like these – of which there have been a fair amount – stand in the way of justice. Not only because they miss any reasonable “deterrent value,” but also because they preclude the public’s access to facts, explanations and accountability. (Bloomberg)

Investors Take a Shine to 'Junk' Bonds (February 27, 2012)

According to The Wall Street Journal Europe, investors are "once again piling into 'junk' bonds," bonds that are rated below investment grade and thus deemed risky by credit rating agencies. The selling point of such bonds is, of course, that they have relatively high yields, especially compared to "safe" but low yielding US Treasury bonds. The article fails to mention, however, that these otherwise highly volatile bonds are now seen to be less risky by insiders because of the European Central Bank's (ECB) provision of cheap cash that allows many firms to improve their financial situations. Investors are thus taking advantage of public interventions meant to stave of another financial crisis and doing so through the types of bonds that got us there in the first place. (Wall Street Journal Europe)

What Ails Europe? (February 26, 2012)

Why has Europe become the sick man of the world economy? Mainstream media predominantly presents two competing narratives.  The first narrative maintains that Europe is in trouble because it has done too much to help the poor; that Europe’s economic crisis is the ultimate proof for the demise of the welfare state. The second narrative argues that the cause of Europe’s evils lies in fiscal irresponsibility. In this op-ed piece, acclaimed New York Times columnist Paul Krugman disputes both of these narratives, and highlights the importance of understanding the true causes behind the EU crisis.  Understanding the nature of Europe’s troubles makes a huge difference, because false stories about Europe are being used to push policies that destroy social safety nets or cut spending in the face of a deeply depressed economy.  (New York Times)

New Citigroup Looks Too Much Like the Old One (February 23, 2012)

Despite promising improvements through “transparency” and “honesty,” Citigroup Inc. does not seem to have changed much after its 2008 taxpayer bailout. The major bank, which was heavily involved in the subprime mortgage crisis that led to the global financial crisis, is still often accused of fraud with respect to loans. In this blogpost, reporter Jonathan Weil comments on a recent civil complaint against Citigroup and shows that it is not merely incidental. (Bloomberg)

Too Big To Jail (February 22, 2012)

Several major banks including Bank of America, Wells Fargo and JPMorgan Chase, have accepted a highly contentious legal settlement on “robo-signing,” the practice of rubberstamping enormous numbers of fraudulent foreclosures on mortgages. Former chief economist of the IMF, Simon Johnson, concedes that the deal is “a complete sell-out to the financial industry.” Not only does the settlement rule out prosecutions, but penalties, if any, are relatively trivial; the bankers are apparently “too big too jail.” (Project Syndicate)

Greece Is a Smokescreen to Hide the Mother of All Bailouts (February 21, 2012)

According to Nick Dearden of Jubilee Debt Campaign, the “troika’s” (EU, ECB and IMF) policies with respect to Greece echo the economic policies pushed on Latin America in the 1980s. Now, as then, Dearden argues, the purpose of these policies is “to shift the burden of financial crisis from the financial system […] onto developing nations.” Rather than supporting the people of Greece by helping to service their debt, the point of the “bailouts” is to keep money circulating into the European financial system. This point is underlined by the expected creation of an escrow account that will guarantee that money is not spent on the Greek people. (Left Foot Forward)

SEC Surrender Continues with Bear Bankers Deal (February 20, 2012)

Despite arguing that defendants Cioffi and Tannin "misled" and "deceived" their investors, the Securities and Exchange Commission (SEC) offered them a settlement that the presiding Brooklyn judge called "a mere pittance." The two hedge-fund managers lost $1.6 billion of their investors’ money through lousy mortgage-backed securities (MBSs) and collateralized debt obligations (CDOs), eventually leading to the collapse of Bear Stearns and the financial crisis in 2008. Former JP Morgan Chase managing director and current Bloomberg columnist William D. Cohan is outraged at the SEC's weak settlement offer, more so considering one of its lawyers stated that neither defendant had gotten rich from scandal. Cohan hopes judge Block will follow the now famous judge Rakoff's example to refuse perfunctory "rubber-stamping" and demand justice. (Bloomberg)

How Did We Get Here? The Economic Crisis Explained (February 20, 2012)

As Eurozone economies tremble, public debt reaches unprecedented levels in the US and Japan and uncertainty stalks China, Brazil and other rising economies, politicians across the globe call for harsh cuts in government spending. But austerity only wrecks economies further, pushing them into a vicious circle that ultimately results in recession. Spending cuts mean job losses and falling demand for goods and services. This in turn results in firms selling less, wages going down and unemployment rising even further. Then, as demand collapses and economies shrink, debts become unpayable. This short guide of the New Economic Foundation proposes some ideas on how to break this vicious circle without returning to the old model of chronic dependence on carbon and debt. (The New Economic Foundation)

Pain Without Gain (February 19, 2012)

The European Commission confirmed what everyone suspected, namely that the economies it surveys are no longer growing, but shrinking. What is worse, their leaders are still wedded to the economic doctrine of austerity responsible for this downturn. In this op-ed New York Times article, columnist Paul Krugman proposes the inverse solution, arguing for the provision of aid to lower-level governments, to enable these to rehire the hundreds of laid of public employees and restart the rebuilding of the canceled projects. It is time, so Krugman states, that the policy elite on both sides of the Atlantic “substitutes moralizing for analysis, fantasies for the lessons of history.” (New York Times)

So, How Can Bankers Live With Themselves? (February 17, 2012)

In this entry to his series on the lives of financial industry professionals, journalist Joris Luyendijk talks to a recruiter who shines some light on the lack of culpability that bankers feel with respect to the financial crisis. Rather than culprits, bankers feel they were simply over-zealous facilitators, unwittingly inflating bubbles as they went along. To think high-end bankers may feel a sense of solidarity with their compatriots who were affected by the crisis is a mistake, explains the recruiter. The global financial elite, unhindered by feelings of national belonging or solidarity, merely seek prestige and safety guaranteed by the rule of law, wherever that may be. (Guardian)

What We Owe to Each Other (February 15, 2012)

In Greece, Portugal, Italy and Spain  - to name but a few of the European countries in which harsh austerity measures are currently being implemented - public spending is being radically cut in order to repay debt. However, as public upheavals in Greece suggest, the sacrifices that need to be made to service debts are exorbitantly high. In this Boston Review interview, acclaimed author David Graeber challenges this fundamental tenant of our current socio economic system stating that the notion that debt ought to be repaid at all cost brings people to accept things they would never tolerate under other circumstances. It becomes acceptable, for instance, for thousands of babies to die of preventable diseases because their governments need to cut in their basic health services to pay back IMF loans. Graeber disputes repaying debt as a moral imperative that trumps all other concerns and asks to “put babies’ lives ahead of Citibank’s shareholders.” (Boston Review)

Occupy's Amazing Volcker Rule Letter (February 14, 2012)

Among the many letters addressed to US banking regulators about the implementation of the Volcker Rule was one by Occupy the SEC. This "group of concerned citizens, activists, and financial professionals" affiliated with the Occupy Wall Street movement offers constructive commentary on the proposed rule and asks for a strong final formulation. It also provides much needed counterweight to the attempts by big financial institutions like JPMorgan Chase to sabotage the rule's implementation. In this blogpost, Reuters' finance blogger Felix Salmon appraises the 325 page letter and shares some of its highlights. (Reuters)

Shrinking the Banks Down to Size (February 14, 2012)

Adding to the ongoing debate about the implementation of the "Volcker Rule," the part of the Dodd-Frank Act that aims to curtail banks making risky trades for their own profit (an activity known as proprietary trading or "prop trading"), columnist Kevin Drum comments on the issue of liquidity. As many commentators have pointed out, the rule will reduce liquidity in certain markets, because banks will no longer be able to provide as much of it. According to Drum, instead of the economic doom the big banks promise, this will lead to a much welcome "organic" reduction of bank size and advantage the economy as a whole. (Mother Jones)

Volcker Rule Draws a Barrage of Bank Lobbying (February 14, 2012)

The Volcker Rule, named after former Federal Reserve Chairman Paul Volcker, is part of the 2010 Dodd-Frank Act, and aims to limit risky forms of bank trading that can negatively affect their customers and the general public. On the last day the public was able to comment on the rule before it is implemented in July, some of the world’s largest financial institutions including JPMorgan Chase, Goldman Sachs and Morgan Stanley stepped up their lobbying efforts against it. The banks claim that the rule will dry up liquidity and limit hedging abilities, leading to financial instability. The finance sector is using these arguments in an attempt to stall and amend the rule, denying that risky, self-interested behavior led to the financial and economic crisis. (Bloomberg)

Volcker Says More Market Liquidity Doesn’t Bring Public Benefit (February 14, 2012)

In response to the harsh lobbying efforts by a number of the world’s largest banks against his eponymous rule, Paul Volcker has stated that less liquidity – an expected effect of the Volcker Rule – will not harm the public interest. In fact, Volcker notes, “great liquidity, or the perception of it” can lead to dangerously risky behavior, as it did overtly in the run-up to the current financial and economic crisis. (BusinessWeek)

Britain Defends Austerity Drive Despite Downgrade Threat (February 14, 2012)

Rating agency Moody’s Investor Service (Moody’s) warned the UK that it might downgrade the country’s triple-A credit rating because the “weaker macroeconomic environment” looks too challenging for the government’s deficit reducing efforts. Conservative finance minister (“chancellor of the exchequer”) Osborne is using this warning to argue that further debt reduction is of the essence and that further austerity measures are therefore critical for economic recovery. The commitment to “expansionary austerity” – the ideological belief that spending cuts and economic growth go hand-in-hand, even in a time of economic downturn – is more of a bet than a plan, as it has failed for all other European countries currently in crisis. (New York Times)

European Doubts Growing Over Greece Debt Strategy (February 13, 2012)

For months, European leader have been trying to find a way out of the Greek debt crisis. But austerity is merely driving the country deeper into economic despair. Cuts in salaries and social spending have resulted in a dramatic drop in demand, which has in turn accelerated the economy’s contraction. Tax revenues have plunged, leading to the need for even more spending cuts. If European leaders continue pushing for similar solutions, Greece will not manage to emerge from the crisis. If, on the other hand, they force Athens out of the euro zone, the entire monetary union is at risk. This article by Spiegel’s Staff calls for a radical rethink and proposes a Plan B that until now, no politician has dared to consider: Allow Greece to go bankrupt within the Eurozone. (Spiegel Online)

Global Justice and the Future of Hope (February 10, 2012)

In 2008, Iceland experienced the systemic failure of its entire banking sector. As a response, Iceland's civil society organizations hosted a government-backed National Assembly designed to agree on a set of collective values and to establish a clear vision for how to rebuild their economy. This Share the World’s Resources article uses the Iceland documentary “Future of Hope” as a starting point to learn from the way in which Iceland’s civil society reacted to the collapse of its banking sector. In the same way than Icelanders have done since 2008, concerned citizens and activists around the world need to identify the root causes of the present economic, social and environmental crises and create a public dialogue to ensure that these causative factors are recognized and understood. (Share the World’s Resources)

Europe’s Tobin Tax Distraction (February 9, 2012)

Europe’s political leaders intend to introduce a financial transaction tax (FTT) as a key part of their efforts to contain and solve the financial and economic crisis. The levy – modeled after James Tobin’s eponymous currency tax – is supposed to end financial market volatility and generate revenues to deal with government debt. Earlier versions were proposed to finance outstanding development aid commitments, commitments that are yet again shelved in the name of self-interest. Economist Barry Eichengreen argues that the proposed FTT will miss its mark and can only be understood in terms of political gain rather than economic sense. Even though an FTT will decrease the number of transactions, it will mainly incentivize investors to go elsewhere and do nothing to mitigate Europe’s critical banking problem. (Project Syndicate)

Disbelief as Greek Politicians Delay Deal on €130bn Rescue Package (February 6, 2012)

An expected agreement among members of the Greek national government on the acceptance of a deal with "the troika" (EC, ECB and IMF) to implement further austerity measures in exchange for another bailout package, has been delayed. As Chancellor Merkel reminds that "time is of the essence" and other stakeholders heighten the tension by expressing their disbelief, government sources report that "details have to be fine-tuned." This Guardian article reports that it is not the details, but the upcoming elections that have led party leaders to political brinkmanship. In efforts to stay in power, the elites are trying to make their voters believe they do not want any part of the deal, but still try to get as much out of it as possible. (Guardian)

European Governments Are Running Out of Options (February 6, 2012)

Several governments in Europe are currently struggling to survive as they are caught between the technocratic austerity demands from "the troika" (EC, ECB and IMF) and uprisings by the people who are suffering through the "savage savings programmes." The Guardian's Ian Traynor discusses the role of popular perception in European politics, showing how in troubled countries governments are seen to be "in cahoots" with the financial sector that was largely responsible for the current crisis. On the other hand, governments of "creditor nations" are under increasing pressure as electorates no longer want their tax money to go to "profligate" countries. The perceptions suggest that the crisis is getting seriously out of hand, as the technocrats make matters worse and creditor governments tend to their voters. (Guardian)

MF Global's Money Mystery is How Much it Paid Moody's (February 2, 2012)

Major credit rating agencies like Moody's and Standard & Poor's have been widely criticized of late for their blatant "mistakes" in the run up to the financial crisis and lambasted by governments after their credit ratings were downgraded despite having followed austerity advice. According to Bloomberg reporter Jonathan Weil, governments need to make the agencies more transparent, starting with the condition that they provide full disclosure of compensation. Weil argues that since rating agencies and other types of “opinion vendors" are paid for by those they rate, their incentive structures are skewed. Exemplary is the fact that Standard & Poor’s maintained an investment-grade mark on MF Global until the day it failed with $1.2 billion “lost.” (Bloomberg)

Capturing the ECB (February 6, 2012)

In this article, economist Joseph Stiglitz critically appraises the European Central Bank’s stance towards the debate over the restructuring of Greece’s sovereign debt in February 2012. According to Stiglitz it is ironic that the ECB insisted on particular conditions for debt restructuring. One possible reason is that the ECB wanted to protect certain banks that had written out insurance and would thus have to pay up if the restructuring had taken another form. Stiglitz argues that the ECB had not done enough to make the financial system more transparent, an obvious lesson it should have learned from the crisis. (Project Syndicate)

The Greek Tragedy and Great Depression Lessons Not Learned (February 2012)

In this blogpost, journalist and former managing director at Goldman Sachs Nomi Prins explains why "Greece has been the most pillaged country in Europe this Depression." During the Great Depression of the 1930s, Greece was able to float its currency (Drachma), declare a moratorium on public debt, spend to support its economy and ultimately renegotiate repayment terms with its creditors. This time around, however, the euro-bound country has become stuck in "an unstoppable downward spiral" that is intensified by credit downgrades and powerful banks that are trying to save their bets. According to Prins, a '30s-style solution is theoretically still possible, but only with the right (and currently unimaginable) political will. (Nomi Prins)      

Litigation Risks (January 30, 2012)

Deutsche Bank faces a series of damaging lawsuits resulting from dubious deals made in the US. In the run up to the 2008 financial crisis, Deutsche Bank created financial products based on US mortgages that rapidly lost value and plunged many investors into financial trouble. To name but a few, German lender IKB is demanding a $439 million compensation and the US government is pushing for a $1 billion compensation, alleging that Deutsche Bank wrongfully obtained state credit guarantees. Regulative authorities are concerned about the many lawsuits pending against Germany’s biggest bank and have asked Deutsche bank to quantify the compensation claims. (Spiegel Online)

The Austerity Debacle (January 29, 2012)

In this op-ed, economist Paul Krugman comments on recent data showing that in terms of changes in real GDP, Britain is now doing worse than at a comparable point in time during the Great Depression. Krugman identifies the main reason for this to be the policy elite’s illusive doctrine of “expansionary austerity.” The British government has chosen to stick with “ideologically convenient wishful thinking” in support of the “confidence fairy,” despite knowing that spending cuts will lead to a deeper recession, and not, as it claims, jobs for its citizens. (New York Times)

Billionaire Hedge Funds Snub 90% Returns (January 23, 2012)

Billionaire "vulture investors" Kenneth Dart and Paul Singer are seeking a US Supreme Court hearing to help their slew of lawsuits against Argentina. Dart and Singer are seeking to be paid in full for debt securities they hold but the Argentinean government says they have foregone their chance when they declined "swap" offers in 2005 and 2010. A Supreme Court hearing could technically lead to claims on Argentinean funds held at the NY Federal Reserve, but mainly appears to be part of a broader strategy. The vulture investors have used similar tactics to take advantage of distressed governments in the past, among them Brazil and Peru. (Bloomberg News)

Capital Controls Are Not Beggar Thy Neighbour (January 23, 2012)

Capital controls, limits on the level of foreign capital that can enter and leave a country, have long been anathema to the IMF and other liberalization supporters. Since the global financial crisis, however, the IMF has backed the use of controls because Fund analysts could no longer deny the importance of controls for financial stability. In this article, Kevin Gallagher of GDAE highlights new evidence that further supports the case that controls should be the norm and that unstable capital flows, not controls impose negative costs on the system. (Global Development and Environment Institute)

The Libertarian and the Lobbyists (January 23, 2012)

At a time of vast economic instability, asking what caused the global financial crisis of 2008 is of uttermost importance. In this op-ed piece of Project Syndicate, Simon Johnson - a former chief economist of the IMF - argues that the root cause of the crisis is to be found in the three decades of de-regulation that preceded it. Moreover, “the revolving door between Congress and lobbying firms” explains how the financial sector became deregulated. According to Johnson, this incentive structure in which financial firms can buy the necessary political protection became more extreme after the 2008 financial crisis. (Project Syndicate)

Hedge Funds May Sue Greece if It Tries to Force Losses (January 18, 2012)

In recent months several hedge funds have been buying up cheap Greek debt securities in order to make profits from them as the threat of default looms. Instead of bullying Greece through orthodox legal action, hedge funds are now suggesting taking the country to the European Court of Human Rights, because they may be allowed to argue that property rights are human rights. Legal experts say the "vulture funds" may technically have a case despite the fact that the Greek people will suffer even more for the profit of a few. (New York Times)

Bailouts + Downgrades = Austerity and Pain (January 17, 2012)

In this blogpost, journalist and former managing director at Goldman Sachs, Nomi Prins, explains why the enormous bailouts of private banks by US and European governments have further undermined their economies rather than "saved" them. Prins also criticizes rating agencies for threatening governments with credit downgrades if they do not implement austerity measures, only to proceed with downgrades shortly after because their economies did not "respond favorably." According to Prins, the current system will remain at grave risk for the foreseeable future, with governments taking on ever more expensive loans to keep banks afloat at the expense of their citizens. (Nomi Prins)

Vulture Funds Profit From Greek Misery (January 16, 2012)

"Vulture funds" buy up debt securities from countries in distress at prices below face value and then try to get paid in full. They buy them from holders who think they will not get a better price, particularly when default is likely. Vulture funds then pressure governments into paying as much as possible, for instance by threatening them with costly and time-consuming lawsuits. Nick Dearden of Jubilee Debt Campaign explains the funds’ current role with respect to Greece and how they should be stopped. (Jubilee Debt Campaign)

Time to Take Control of the Rating Agencies (January 16, 2012)

In this op-ed, Aditya Chakrabortty argues that rating agencies like Standard & Poor’s are correctly criticized for the opacity of their methods and the often disastrous consequences of faulty judgments. But the most worrisome thing about them is their power and lack of accountability. Chakrabortty recounts several instances in which the ratings oligopoly ignored the probable consequences of their actions and hid behind their "neutral" but key function in the world economy. According to the author, credit ratings belong in public hands, preferably in the form of a new UN agency. (Guardian)

Eurozone: Cut to the Core (January 16, 2012)

The European project was supposed to simultaneously thrive on and instill solidarity. The current crisis has, however, put this particular bond under severe strain.  This Guardian editorial argues that the recent slew of credit rating downgrades, targeting 9 countries and, by association, the temporary financial stability fund (EFSF), is "redrawing the political map" of Europe. The downgrades divide the union into financially healthy and less healthy countries, making apparent potential divergent paths for the future. As union-wide solidarity wanes, national political problems pronounce further differences. (Guardian)

Don't Solely Blame the Ratings Agencies (January 15, 2012)

In this op-ed piece, economist Ha-Joon Chang argues that it is not obvious that the ratings agencies should bear all the blame for worsening the economic turmoil in Europe. Despite many blatant mistakes and conscious acts of manipulation, the function they perform and the environment in which they operate has been sanctioned by elected officials. Politicians should share the blame and reform the "structurally flawed financial system." (Guardian)

The Perils of 2012: When Austerity Bites Back (January 13, 2012)

In this article, Joseph Stiglitz speaks of 2011 as a year that will have serious negative consequences for the world economy, and predicts that 2012 will be even worse. The United States and key governments in Europe are likely to remain politically and ideologically dedicated to eliminating deficits with spending cuts, in spite of the obviously dismal consequences. According to Stiglitz, transatlantic short termism should make way for stimulus measures that take on crucial long-term problems such as climate change and increasing inequality. (Project Syndicate)    

RBS Likely to Axe 5,000 Jobs in Investment Bank Review (January 6, 2012)

Royal Bank of Scotland’s (RBS) current “strategic review” of its poorly performing investment division is expected to result in the axing of 5,000 jobs this year. The lay-off plans coincide with public outrage in the UK over the exorbitant bonuses that RBS managers are set to receive. In response, PM David Cameron criticized the levels of executive pay, and financial authorities re-stated their recommendations on capital requirements. The government’s indignant reaction lacks credibility, however, particularly because RBS is 84% state-owned and can therefore be controlled with real actions, rather than just words. (Guardian)       

Ponzi Planet - The Danger Debt Poses to the Western World (January 5, 2012)

Carlos Ponzi is widely known for developing a deceptive yet extremely profitable scheme, in which someone pays off old debt by constantly taking on new loans. A snowball of debt refinancing is set in motion that becomes bigger as it rolls on, ultimately ending in an avalanche. Reviewing the history of debt, this piece of Spiegel Online argues that today’s world is nothing less than a Ponzi planet. The problem, the author argues, does not lie in debt itself, but in the manner in which it is used today. Rather than borrowing money to pay real assets, governments take on credits to finance their daily expenditures and live well beyond their means. As policy makers, bankers and voters we need to seize incurring new debt to finance unsustainable lifestyles. After all, history has taught us that Ponzi Schemes never turn out well. (Spiegel Online)

Democracy, Banks, and the Current Euro Crisis (January 4, 2012)

The recent “grand bargain” in the Eurozone, quickening the implementation of austere sanctions against member states should they break fiscal rules, has highlighted the political independence and power of the European Central Bank (ECB). In this article, Sheri Berman from Barnard College debunks the standard neoliberal arguments in favor of central bank independence and points to its illegitimacy. This illegitimacy – favoring technocratic “good outcomes” over inclusive democratic process – characterizes the EU more generally and is untenable, argues Berman. Putting an end to this situation  is democratically necessary and critical for the future of the European project. (Dissent)

How Austerity Measures Threaten the Global Economy (January 3, 2012)

In this article, market analyst and commentator Marshall Auerback explains why austerity measures such as those undertaken by the new Spanish government will exacerbate the global economic crisis. Government spending is particularly necessary since the current crisis – brought on by debt-financed bubbles and moral hazard – has proven that reliance on “free” markets is fantastical and generates disasters for which “ordinary people are left holding the bag.” (AlterNet)

Rethinking the Growth Imperative (January 2, 2012)

Occupy Wall Street protestors have long been criticizing the blind pursuit of economic growth. In this op-ed piece, Harvard Professor Kenneth Rogoff echoes the protestors’ voices by arguing that designing policies geared towards dampening global warming and conflict is far more important than maximizing per capita income. Although the current period of great economic uncertainty may seem the least appropriate moment to challenge the growth imperative, it might be exactly what is required for a Harvard professor to start questioning the long term goals of global socio-economic policy making. (Project Syndicate)

UN Report: World Economic Situation and Prospects 2012 (January 2012)

The United Nations’ report World Economic Situation and Prospects 2012 warns that the risk of another global downturn has heightened substantially in the last 6 months. The report highlights the failure of policymakers in Europe and the US to deal with high unemployment, the debt crisis and financial sector fragility. According to the UN, the developed economies should halt their use of “premature” austerity measures, seriously restructure financial governance in the short term and stimulate their economies instead of imposing austerity. (UN DESA)

2011

Austerity and the Modern Banker (December 20, 2011)

In this article professor and blogger Simon Johnson, a former IMF-chief economist, contends that “big banks represent the ultimate in concentrated economic power in today’s economies.” Big banks, knowingly over-leveraged with toxic assets, managed to receive government-sanctioned bail-outs and retain top-management bonuses for which “the People” now face austerity measures. According to Johnson, this scandalous situation points to a failure of the system. (Project Syndicate)

The Eurozone Crisis is Not About Market Discipline (December 19, 2011)

The Eurozone crisis is often said to be rooted in a lack of market discipline. In this article of the Centre for Economic and Policy Research, Dean Baker disputes this argument by maintaining that it was not governments excessive spending that caused the crisis, but rather grave mismanagement from the ECB. According to Baker, to claim that the Eurocrisis is just a case of bond market exerting its disciplinary power would be like saying that a sailor who died of thirst and starvation after pirates tore up his sail was just a victim of the sea. In fact, it is only because the ECB pirates have ruined the affected countries’ economies in the first place that they are now so vulnerable to the vicissitudes of the bond market. (Aljazeera)

Britain is Ruled by the Banks, for the Banks (December 12, 2011)

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)

Chronic Pain for the Euro (December 12, 2011)

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)

Eurozone Crisis: Hopes of Recovery Recede While Recession Looms (December 11, 2011)

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)

Depression and Democracy (December 11, 2011)

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)

Eurozone Crisis Enters New Phase as ECB Fights Europe for Austerity (December 7, 2011)

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)

Standard & Poor’s Threatens Europe. Will It Matter? (December 6, 2011)

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)

Transnational Institute (TNI), “a worldwide fellowship of activist scholars,” compiled the work of five critical economists who developed solutions to the crisis in Europe. Their ideas are alternatives to recently adopted measures that advance the powers of the European Commission, imperil labor rights, and further austerity measures. The critics scrutinize the supporting narrative of “a new model of economic governance for stability,” and highlight the strong influence of the financial sector and lobbying groups on the policy making process. (Transnational Institute)

Judge Blocks Citigroup Settlement with S.E.C. (November 28, 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)

Can Technocratic Government be Democratic? (November 23, 2011)

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)

Lessons in Lobbying (November 22, 2011)

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)

Occupation as Fairness – What John Rawls Would Make of the Occupy Movement (November 17, 2011)

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)

An Open Letter to Greg Mankiw (November 2, 2011)

On November 2nd, 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)

Central Bankers: Stop Dithering. Do Something. (November 20, 2011)

In this op-ed, Adam Posen, a member of the Bank of England’s Monetary Policy Committee, argues that the global economy is needlessly suffering due to the premature abandonment of stimulus policies, or, “policy defeatism.” In order to “rebalance” economies from tax breaks to public investment and “from the financial sector to everything else,” central banks should expand instead of tightening monetary policy. According to Posen, central banks fear that not appeasing markets by “fighting inflation” will threaten their reputation of stern independence. However, Posen argues, every major financial crisis in modern economic history was exacerbated by this mistake. Instead of doing what they think is expected of them by markets, central banks should do what works for the millions of people around the world who have been targeted by painful austerity measures. (The New York Times)

Boring Cruel Romantics (November 20, 2011)

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)

Downgrade Downer - France Angry at Credit Rating Gaffe (November 11, 2011)

According to an email erroneously sent out by Standard & Poor's last Thursday, France had lost its AAA rating - an eventuality which resulted in the New York Stock Exchange falling and the euro losing against the dollar. French Finance Minister François Baroin argued that this mistake could plunge France into the same kind of difficulties that Italy is currently experiencing. Similarly, European politicians have accused the three biggest rating agencies S&P, Moody's and Fitch of exacerbating Europe's debt crisis through their downgrades. Rather than fussing and screaming about Standards and Poor’s “technical glitch”, the question of reforming a system in which so much power is granted to a rating agency ought asked. (Spiegel Online)

The World is Revolting Against the US Economic and Business Model: A Call to Action (November 7, 2011)

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)

The Globalization of Protest (November 4, 2011)

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)

People First, Not Finances (November 4, 2011)

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)

Papandreou Is Right to Let the Greeks Decide (November 1, 2011)

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)

The EU Crises Pocket Guide (October, 2011)

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)

Europe May Act Alone on Financial Transaction Tax (October 31, 2011)

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)       

Agreement in Brussels: Europe Slashed Greek Debt by 50 Percent (October 27, 2011)

Euro-zone leaders agreed to halve Greece’s debt burden and boost the euro backstop fund to over a trillion Euros. This debt reduction was indispensable to get the country back on its feet and to assure that not only taxpayers, but also those profiting from policies of unfettered borrowing, carry the burden of debt. Now, banks have to assume part of the responsibility as well. At the same time, expansion of the fund aims to grant the EFSF enough power to prevent the financial collapse of other highly indebted countries.(Spiegel Online)

The Bogey of Fiscal Stimulus (October 20, 2011)

In this article, Jomo Kwama Sundaram, UN Assistant Secretary General for Economic Development, argues that public debt is falsely made out to be an acute problem in need of elaborate austerity measures. After all, Jomo argues, public debt is generally the result of post-crisis bailouts and declining tax revenues, and not the cause of the crisis. Furthermore spending cuts and tax breaks for high income citizens have historically proven to be disastrous policy options that only increase unemployment and depress consumer demand. Instead, Jomo asserts, governments should increase public spending, halt the siphoning of money to the financial sector and actively counter the inequalities that are so morally and instrumentally destructive to social life. (Project Syndicate)

Economic Fixes Should Not Worsen Environmental Crisis (October 19, 2011)

In this YaleGlobal article, economist Dodo Thampapillai of the National University of Singapore argues that the financial and environmental crises are the related results of a culture of unbridled growth. In order to counter their effects, governments should restructure their economies and change their environmental policies so as to support equitable and sustainable lifestyles. Instead, however, most “developed” and “emerging” countries have focused on using financial rescue packages that exacerbate environmental risks. In fact, Tampapillai asserts, only a “revolutionary and abrupt change” in energy utilization can now counter the damage done. (YaleGlobal Online)

Occupy Wall Street Rediscovers the Radical Imagination (September 25, 2011)  

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)

Ban Calls on G-20 Summit to Show Boldness to Solve Global Economic Crisis (October 25, 2011)

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)

Bank’s Collapse in Europe Points to Global Risks (October 22, 2011)

The recent rescue and restructuring of the Belgian-French financial institution Dexia by the French and Belgian governments has reignited several fierce debates on bailouts and moral hazard. Dexia’s collapse was not only the consequence of the euro-zone’s debt crisis but also the result of its irresponsible over-exposure to risk and trading partners’ aggressive demands. It is now likely that those partners will be fully “compensated.” Governments and market-players insist that the rescue and compensation are needed to contain systemic contagion, but the efforts are more likely to set precedents that sustain destructive behavior for which taxpayers pick up the tab. (New York Times)

Christina Kirchner and Argentina’s Good Fortune (October 22, 2011)

In 2001, Argentina’s banking system practically collapsed, giving rise to “the mother of all financial crises.” According to IMF chief economists Kebn Rogoff and Carmen Reinhart, crises of such magnitude must be followed by slow and painful recoveries. Argentina’s rapid recovery after its $95bn default on international debt, however, provides a compelling refutation of Rogoff’s and Rainhart’s theory. The Argentine economy has grown 94 percent and considerable progress on social indicators such as poverty rates, employment records and inequality levels has also been made. What can Europe and weaker Euro-zone economies learn from Argentina’s success? (Guardian)

Currency Crisis Heightens Trans-Atlantic Tensions (October 21, 2011)

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)

Bank Bashing (October 10, 2011)

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)

EU Leaders Are Staring at Markets Like Rabbits at a Snake (October 11, 2011)

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)

To Cure the Economy (3 October, 2011)

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)

Bracing for a New Global Economic Crisis (October 3, 2011)

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)

Greek Tragedy: The Autocracy of Lenders (September 29, 2011)

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)

Green Economic: Fix Our “Ends” Not Just Our “Means” (September 29, 2011)

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)

Euro Zone Death Trip (September 25, 2011)

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)

Occupy Wall Street Rediscovers The Radical Imagination (September 25, 2011)

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)

Fixing the Economy, Not Lives  (September 20, 2011)

In response to the economic crisis, the Romanian government has adopted some of the toughest austerity measures in Central and Eastern Europe. The devastating social effects of these measures have given rise to a special kind of protest: some Romanian have committed suicide, explicitly linking their gesture to the economic situation in the country and the failure of the government to protect the most vulnerable. As an act of despair and ultimate protest against austerity measures imposed by international financial institutions, these political suicides are a powerful symbol of the human cost of neoliberal policies. (Inter Press Service)

ECB Moves to Support Italy (September 20, 2011)

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 Ailing Euro is Part of a Wider Crisis (September 17, 2011)

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)

Spooked Into Austerity, We Dig Our Own Economic Grave (September 13, 2011)

In this Op-Ed, Jayati Ghosh argues that the choice by European governments to employ austerity measures rather than stimulus measures (in an effort to overcome the financial/economic crisis) is highly political. There is ample evidence that austerity measures are self-defeating, yet governments still succumb to the power of financial firms. Rather than continuing to cut back on public spending, fiscal policy should be broadened and the financial system extensively restructured. (The Guardian)

Unreal Estate (September 12, 2011)

The belief that individual moral wisdom ought to be the basis for economic principles has long been abandoned. Today, a chasm between economic and individual morals can be observed. Debts are no longer regarded as obligations to be met, but as assets to be traded. Moreover, moral principles that hold individuals accountable do not apply to states and banks. If a private person accumulates too many debts which she is unable to repay, she must be punished. In contrast, if businesses, banks and states default, they need to be rescued. There is an urgent need for a re-moralization of economic life, which re-connects individual morals with economic principles. (Open Democracy)

UNCTAD Trade and Development Report 2011 (September 2011)

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)

Behind the Banker's Mask (August, 2011)

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

Sustainable Finance is the Way Out of Crisis (August 29, 2011)

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)

The Sinister Power of the Rating Agencies (August 16, 2011)

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)

Debt Crisis: A Default in Europe Could Benefit Poor Countries (August 9, 2011)

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)

As US and European governments openly grapple with indebtedness, global markets respond in fear of yet another financial crisis and global economic downturn. According to the authors of this analytical piece, it is not a lack of funds that prompts stop-gap solutions, but rather a lack of leadership, the effects of which are global. Leadership, they argue, requires the ability to stand for “unpopular decisions” in order to secure “solid state finances”. But this entails austerity measures that hit the least well-of the hardest. What is needed instead is leadership for transitions towards ecologically sustainable and socially just societies. (Der Spiegel)

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

In this Op-Ed piece, Dean Baker, co-founder of the Center for Economic and Policy Research (CEPR), criticizes the European Central Bank’s (ECB) fixation on maintaining low levels of inflation. According to Baker, the ECB’s anti-inflationary measures exacerbate the problems that countries, such as Portugal and Greece, are currently facing, by making it harder for them to service their debt and tackle high levels of unemployment. The author argues that Southern Europe’s popular movements should use their newly gained political leverage to “teach the ECB crew some basic economics” while pushing them to adopt alternative measures that allow for fairer, less painful and yet economically sound reforms. (IPS / Al Jazeera)

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

According to economists cited in this article, Portugal’s economic rise was illusory and bound to end. Now, after the implementation of “ultra liberal” austerity measures, approximately 25% of Portuguese live below the EU poverty line, forming a new underclass. Politicians and the business community are to blame for the “excessive consumerism and the lack of vision and strategies for real development”. (IPS News)

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

In this interview, the Center for Global Development’s senior fellow Liliana Rojas-Suarez stresses that the US’ lack of economic growth will have pronounced effects on global financial markets and development. US demand for exports from countries that rely on the US economy, such as Mexico and Central America, will hinder economic improvement in these regions.  At the same time, economies like Brazil will be oversaturated with capital seeking higher returns, leading to risks of a bubble. Rojas-Suarez says regaining international credibility and leadership is important not just for US recovery, but for continued global development. (Center for Global Development)

Making Friends (June, 2011)

In the aftermath of the 2008 global financial crisis and in the current context of economic instability, regulatory failure has been the subject of intense debate. A recent IMF publication titled “Three’s Company: Wall Street, Capitol Hill and K Street” confirmed what numerous news-publications and civil society organizations have long believed, namely that lobbying expenditures by the financial industry and network connections between lobbyists and legislators is directly associated with legislators passing bills proposing financial deregulation. Therefore, to truly regulate the financial sector, financial reform proposals should not be considered in isolation from power and money in the system. (Finance & Development)

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

What Lies Ahead in 2011? (December 13, 2010)

Nobel laureate economist Joseph Stiglitz offers his economic forecast for 2011. The prognosis is that this year will be another dire one for the global economy. Governments in the US and Europe are seemingly unwilling to implement policies that would bring down unemployment. Stigilitz also raises concerns about the abilities of emerging market economies, chief among them China and India, to reorient their economies away from export-led growth and towards greater reliance on domestic consumption. One thing is certain: Economic turbulence will not disappear anytime soon. (Project Syndicate)

'Shadow' Lenders' Emergency Fed Loans Benefitted Biggest Banks (December 13, 2010)

Big banks risky bets, which used increasing amounts of leverage and off-balance sheet banking vehicles - funds that operate in debt markets often with insufficient capital - were decisive factors in the build up to the global economic crisis. In spite of this, the Federal Reserve has supported the "shadow banking" sector in the aftermath of the catastrophic meltdown by providing billions of dollars to fund these clandestine entities. This demonstrates an unwillingness to reform an esoteric sector that threatens to bring down the global financial system again. (Bloomberg Businesweek)

Prevailing Policy: Reward the Guilty, Punish the Innocent (November 3, 2010)

By the end of 2009, the UK, US and European governments had given over 14 trillion dollars to banks in different bailout packages. The economic crisis hit hard, but the financial institutions are not the ones to suffer the most. Instead, it's the ordinary people who experience cuts in public services, shrinking paychecks, reduced pensions and increasing unemployment. Governments and financial institutions should acknowledge the structural errors in the global economic system and the need for it to be regulated and restructured. Society will continue to suffer if the same mistakes are repeated and neoliberal economic policies are not changed. (The Broker)

Global Unemployment to trigger Further Social Unrest, UN Agency Forecasts (October 1, 2010)

Governments have not properly tackled the root causes of the world's economic crisis. The ILO expresses a fear that the global employment will not recover until 2015 and that "not only the global economy but also social cohesion will be at risk." 30-35 million jobs have been lost worldwide since the crisis started in 2007. Massive demonstrations and general strikes show a discontent in a world where young people are especially strongly hit by the unemployment. It is obvious that the general public's burden is significantly heavier than the one carried by the ruling elites. (The Guardian)

Racism and Recession in Europe (June 10, 2010)

Immigrant groups become the targets of a growing bitterness that Western Europe shows as an effect of the economic crises. A wave of political movements with a racist agenda (implicit or explicit) blames the immigrants for increased crime rates and exploiting the European welfare system. The populist anti-immigration parties are rapidly gaining support by turning the focus away from financial institutions and global economic patterns, and instead making the Romas, Iraqis or Somalis the scapegoats of Europe. With uprising parties like Italy's Northern League, the UKs British National Party and Denmark's Danish People's Party, the public climate in Europe is facing a crossroad. (Foreign Policy In Focus)

Our Post-Modern Crisis (May 31, 2010)

In this Op-ed piece written over a year and a half ago, Joschka Fischer, Germany’s Foreign Minister and Vice Chancellor from 1998 to 2005, depicts a reality as accurate and timely today as it was when this article was firstly published. Fischer writes that “On the weekend of May 7-9 2010 the European Union gazed into the abyss of historical failure. […] On the surface, the matter at hand was the financial stabilization of Greece and of Europe’s common currency, but the real title of the play was “saving the banks, Part II.” With more force than any article written today, this article suggests that the current crisis is here to stay, and that no bailout in the world will solve the systemic causes underlying the ever new manifestations of old problems. (Project Syndicate)

The Truth About the Big Banks’ Unprecedented Lobbying Avalanche (May 13, 2010)

The six biggest banks in the United States continue to spend hundreds of millions of dollars to lobby Washington policymakers. The lobbyists have connections with federal agencies through both previous and current employment, creating a conflict of interest and hampering checks-and-balances. This shadow bank lobby is playing a big role in shaping the current financial reforms so as to weaken consumer protection and bank regulation. Without transparency, the "Big Six" army will be difficult to stop and the pattern of fiscal irresponsibility that led to the financial crisis will continue. (AlterNet)

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

As public funds from around the Eurozone finance Greek debt, European banks will not lose a dollar for their profiteering and over-lending - while Greek citizens face crippling austerity measures. Banks are the real winners in Europe's bailout as they regain 100 percent of their toxic loans at the expense of taxpayers and citizens. Wealthy European countries lend money to Greece because they themselves would come under great financial pressure if these loans were not repaid. John Talbott explains this predicament of Europe often overlooked in the drama laden debt saga. (Reuters)

Portugal Looking More Like Greece (May 7, 2010)

Credit rating agencies and financial speculators wreak havoc on smaller European economies. The fact that credit rating agencies are based in the US, make many European analysts believe that the agencies' activities favor American speculators - who see the falling credit ratings of European countries as an opportunity to turn a quick profit. The impacts of these sliding credit ratings on families, however, are drastic as their interest rates on private loans rise. Countries like Spain, Portugal, and Italy, like Greece have lost the ability to respond to economic pressures. The lack of monetary tools to control currency and stimulate growth makes the deficit and debt targets that financial institutions desire nearly impossible to meet. (IPS)

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

Martin Kohr, executive director of the South Centre, provides a briefing of a recent paper that asks how a sustainable recovery to the global recession is possible. The paper throws interesting light on global economic imbalances, the situation in major economies, and what needs to be done in terms of macro-economic policies. (South Centre)

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

Experts at a South Centre workshop warned developing countries to be cautious of the talk about "global economic recovery." Rather, they advised policy makers to prepare for an economy in which low-income countries rely less on exports for future growth. The reversal of stimulus policies by high-income countries could lead to a new economic dip. Special Economic Advisor to the South Centre, Dr. Yilmaz Akyuz, predicts adverse economic conditions for developing countries in the period ahead. The UNCTAD chief, Deepak Nayyar, adds that the economic recovery is partial, showing up in some sectors but not others. (South Centre)

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

Ismael Hossein-Zadeh, Professor at Drake University, observes that the financial meltdown of 2008 and the economic contraction that continues today represents more than just the ebb and flow of the market. Rather the phenomenon, and governments' reactions to it, shows an emboldening of big business and financial interests in the realm of politics. Hossein-Zadeh explains how the Keynesian reforms of the past were a product of pressure from the people, and the restructuring and regulatory policies that many expect today will need an even mightier push from below. (The Huffington Post)

Common Currency Woes (January 25, 2010)

After the dollar's fall in 2009, analysts are now focusing on troubles of the euro as differences among euro zone countries get bigger. Greece has a 12.7 % public sector deficit - four times higher than the accepted rate in the EU. Spain, Italy, Ireland and Portugal are other countries that jeopardize confidence in the euro. Although Greek Finance Minister denies that Greece will quit the euro zone, unemployment and euro devaluation will challenge these weak economies. (Der Spiegel)

Rebooting Iceland (January 13, 2010)

Iceland has become a laboratory for Europe. Its economy has swung from significant growth to a hard fall and bankruptcies in the past eight years. Iceland's current debt level puts pressure on the government, banks and individuals. The island owes $5.51 billion to Britain and the Netherlands. Fresh minds such as Gudjon Mar Gukdjonsson ponder promising strategies to revive Iceland's economy. (Der Spiegel)

2009

 

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

Economically fragile countries of the European Union are creating stress within the Euro zone. Portugal, Italy, Ireland, Greece and Spain may face further difficulties when the European Central Bank starts raising interest rates in response to economic improvements on Germany and France. (New York Times)

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

The European Bank for Reconstruction and Development (EBRD) has regained its popularity and power as countries in Central and Eastern Europe struggle with the global financial crisis. The bank declared in May that it would give $578 million to Eastern European subsidiaries of the Italian bank UniCredit, the main lending institution in the region. The President of the EBRD, Thomas Mirow, believes that the bank has developed many skills since 1991 and "the world is in great need of those skills." (New York Times)

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

This report ranges broadly -- from system-related causes of the crisis to the lack of political accountability in the global response. The report proposes a structural change in the financial system in order to regulate the post-crisis global economy. (UN)


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

Yaga Venugopal Reddy, former governor of the Reserve Bank of India, criticizes the unequal distribution of power within the G-20. Reddy believes that national interests of the US and the UK dominate the G-20's agenda and drive solutions that are short-term and self-interested. (Livemint)

The Deficits of the EU Financial Reforms (September 2009)

The Center for Research on Multinational Corporations criticizes the EU financial reforms, arguing that they do not discuss the real causes of the crisis, but focus more on reforming institutions -- such as hedge funds -- that actually caused the crisis. According to the authors, the European Commission should restrict speculative activities that have negative effects, in order to fulfill the public interest in a sustainable way. (SOMO)

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

In April 2009, the G20 agreed to a stimulus package of US$ 750 billion to be given to the IMF to fight the economic crisis. However, donor countries have not yet met their financial commitments. The author of this article takes note of the missing funding but he doubts whether the stimulus package could have had a positive effect on developing countries. The paper examines the Fund's lending policies, the potential of SDRs and the fiscal space for low income countries. (The Bretton Woods Project)

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

The global financial downturn has greatly affected Jamaica, forcing it to return to the IMF for a loan. But the country has not forgotten the bitter memory of past relations with the fund. The author compares past and present IMF practices of nine countries, which have entered Stand-By Arrangements since September 2008. He argues that recent IMF reforms have not been substantial and that the fund remains dominated by the neoliberal "Washington Consensus". (Jamaica Observer)

The Reform of the International Monetary System (June 2008)

Since the beginning of the economic crisis, countries worldwide have called for a reform of the financial system. They question the dollar as the international reserve currency. The author points out that reform debates have ignored some key problems of the global economic system, notably the large persistent unemployment and the enormous global trade and currency imbalances. (The Levy Economics Institute of Bard College)

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

Since the economic downturn, many countries mistrust the dollar-based global reserve system. The IMF will vote on a US$ 250 billion resource to increase its member states' financial liquidity through so-called special drawing rights (SDRs). Each member receives SDRs in proportion to its quota. The SDRs can then be exchanged immediately for hard currency. However, the long-term outcome of the program for developing countries remains uncertain. The SDRs will mostly go to rich countries and worldwide interest may rise. (Reuters)

Towards a Renewed Debt Crisis? (June 2009)

The poorest countries suffer most from the economic crisis. They face a decline in exports, commodity prices, and capital flows, as well as currency devaluations. A renewed debt crisis may result. This paper analyzes the situation of heavily indebted poor countries in the crisis, with a special focus on sovereign debt. (Friedrich Ebert Stiftung)

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

In recent decades, the United States has promoted a deregulated market economy, which finally resulted in the worldwide economic downturn. Developing countries are the biggest losers, especially those which followed IMF and World Bank policies. Economist Joseph Stiglitz sharply criticizes the post-colonial economic order and notes the bitter legacy which the crisis has left. (Truthout)

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

The United Nations Summit on the world economic crisis demonstrated the problematic distribution of power within the UN. Rich countries have blocked serious reforms, especially in the financial sector. The conference addressed key issues such as the international reserve system and policy space for developing countries. It also agreed to a follow-up process. However, the summit underachieved by failing to adopt a clear aid program and significant governance changes within the Bretton Woods Institutions. (Bretton Woods Project)

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

The high-level  United Nations meetings on the World Economic and Financial Crisis reveal the gap between the world's poor and rich countries. Developing countries are calling for a greater voice within the negotiations about the UN's final conference declaration. The General Assembly, by postponing the summit, has avoided an outright failure, but the delay showed the alarming divergence between the richest and the poorest in the world.(Inter Press Service)

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)

More than 200 organizations met for the Civil Society Forum prior to the United Nations high-level Conference on the World Economic Crisis. The document they produced summarizes the present situation and points out past failures. In addition, the document gives key recommendations on how to respond to the economic downturn. It especially calls for an international stimulus package for development and systemic reforms on the global financial and economic architecture. The recommendations argue for "non-debt funding," in order to give developing countries a chance to escape from a new debt crisis. (Civil Society Forum New York)


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

On Friday, June 26, the United Nations Conference on the Economic Crisis adopted an outcome document. All 192 member states agreed on strengthening the role of the UN within global financial and economic architecture, as well as the creation of a panel of experts and a follow-up working group. Nevertheless, the summit failed to implement an additional financial rescue package for the developing countries and did not establish the proposed Global Economic Coordination Council. (United Nations)

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

The myth that low inflation would automatically lead to financial stability encouraged risky behavior and created the illusion that it was safe to borrow and invest more and more. Excessive self-confidence in the international banking system transformed loans into "investments" and debts into the safest of "securities." "Inflation targeting" omits the aspects of inflation that caused the crisis, such as mortgages and asset prices, thereby enabling the economic crisis to strike during a low inflation period. (Times Online)

The Quiet Coup (May 2009)

According to Simon Johnson, a former chief economist at the International Monetary Fund (IMF), the main problem the US is facing when it comes to tackling the financial and economic crisis is well-known in the IMF: as in many emerging countries in the past, the financial elite have captured the government's actions. Johnson describes how decades of triumphant finance in the US managed to convince everyone, from ordinary voters to politicians, that what is good for Wall Street, is good for the US. This a cult of finance supported by the Wall Street "Washington Corridor" not only laid the foundation for the crisis, but also hinders attempts to solve it. Johnson concludes that the government must force the banks to write down the true value of their assets or nationalize them. But solving the lending crisis is not enough. In order to break the oligarchy? the government must systematically break up the banks and overhaul antitrust legislation. (Atlantic)


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

The distinction between developing countries and developed countries is essential in the analysis of the global economic crisis. Roberto Frenkel and Martin Rapetti identify differing key factors between developed and developing countries, as well as a crucial discrepancy in their policy responses. This briefing paper allows a more nuanced perspective on the economic slump with an explicit comparison between the global North and South. It also contains proposals on policy options for the developing countries to fight the crisis. (FES Briefing Paper

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

The G20's US$1.1 trillion package to save the world economy succeeded attracting the media's attention, but failed the world's poorest yet again. The summit missed the opportunity to begin deep reforms in the global economy, which could have benefited the poor. Instead, G20 commitments simply prop up the International Monetary Fund (IMF), without reforming policies. This eye-catching trillion dollar figure conceals the truth that some of the number is double-counted and is an "intention", which requires approval. Therefore, the actual amount of money to be disbursed is likely to be smaller. Furthermore, the headlines distract from the G20's failure to address and agree upon issues such as fiscal stimulus, regulation of cross-border financial flows and new approaches to developing country sovereign debt. (South Centre)

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

Walden Bello explains that the "show" of the G20 Summit on the global economic crisis conceals the world leaders' deep lack of direction and uncertainty over economic recovery. He describes the minimalist IMF reforms, praised by the G20, as a "non-starter", and outlines how the proposed changes to the voting system do little to balance the overrepresentation of wealthier countries in decision-making. Despite talks of reform and counter-cyclical spending, IMF conditionality still requires that low income countries' deficit spending must not exceed 1 percent of GDP. (Foreign Policy in Focus)

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

Just one week before world leaders meet at the G20 to discuss reform of the global financial system, the governor of the People's Bank of China announced a bold proposal for a new international monetary system. Because China possesses enormous foreign reserves, amounting to almost USD$2 trillion, the Chinese government calls for a new currency reserve system, controlled by the International Monetary Fund (IMF). The proposal suggests that expanding the role of the IMF's Special Drawing Rights (SDRs) could lead to the eventual creation of a centrally managed, autonomous international reserve currency. Such a strategy, aimed at achieving greater global economic stability, would require real commmitment and coordination. Are the G20 leaders ready for this? (New York Times)

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

The Organization for Economic Co-operation and Development's (OECD) threat to blacklist tax havens has pushed Switzerland, Austria, Luxembourg, Liechtenstein and Andorra to review their rules on identity secrecy. Although tax havens are not a direct cause of the financial crisis, they deprive countries from revenues needed of domestic investment and economic stimulus. The OECD estimates that tax havens hold assets between USD$1.7 and USD$11.5 trillion. An Oxfam study reveals that tax evasion also affects developing countries whose citizens hold more than USD$6.2 trillion abroad and whose governments are facing capital evasion amounting to USD$300 billion a year. (Reuters)

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

American International Group (AIG) listed Goldman Sachs, Merrill Lynch, Bank of America, Deutsche Bank and Barclays among the financial companies which received multibillion-dollar shares of AIG's rescue package from the Fed. AIG disclosed that rich executives were also paid huge bonuses after the insurance giant received government rescue loans. As a result taxpayer money, amounting to USD$170 billion was passed along by the firm and rewarded the executives dealing with the high risk financial products contracts, which caused AIG's near collapse. (New York Times)

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

Based on their study of International Monetary Fund (IMF) financial crisis loans, Third World Network (TWN) argue that the conditions attached to the IMF loans remain restrictive and worsen the crisis for many poor countries. Based on tight monetary and fiscal policy, the IMF loans are in stark contrast with the countercyclical spending undertaken by developed country governments to speed up economic recovery. TWN warns that the IMF should not prescribe these austerity policies, which proved counterproductive in the Asian Crisis. TWN recommends that the IMF should not be the primary vehicle to disperse financial assistance. Instead, policymakers should direct greater attention to regional and national arrangements such as the Chiang Mai Initiative, as well as sovereign debt restructuring. (Third World Network)

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

The unfolding global economic crisis reveals a deep and perverse irony. Despite being the cause of the financial crisis, the US benefits from China's purchase of US debt and the surge of dollars from American and foreign investors, who consider the US a safe haven. Meanwhile, low and middle income countries are hit the hardest as they struggle to raise money. The flow of dollars into the US, rather than, for example, countries in Eastern Europe makes it difficult for those countries to refinance their debt, which in the longer term, raises unemployment and poverty. (New York Times)

A Bank Bailout That Works (March 4, 2009)

Joseph Stiglitz argues that the shortsighted and risky incentives that drove reckless behavior on Wall Street to "pollute" America's banking system, must come to an end if the banks are to undergo successful restructure and refinance. He points to the failure of the Troubled Assets Relief Program (TARP) to restore bank lending and explains why the proposed bailout packages are unlikely to succeed. US Government proposals to take temporary control of banks, buying  "bad assets" and dispose of them in a "bad bank" appeals to bankers because it is less transparent and avoids democratic processes. Other ideas include providing insurance assets to banks or assisting private investors like hedge funds, to buy bad assets through private-public partnerships, which reinforces a nontransparent approach, with taxpayers carrying the burden. Stiglitz proposes instead, the creation of a "good bank", which takes all the assets of banks that do not have enough capital, sells off the old, bad assets and restructures the bank for eventual sale. This returns banks to their original purpose: lend money to those with the ability to repay it. (The Nation)

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

To confront the detrimental impact of the global economic crisis and stimulate the economies of poor countries, the Executive Board of the International Monetary Fund (IMF) supports a doubling of the amount that the Fund can lend. However, policy makers lack consensus on the ways in which to boost these additional funds. The allocation of Special Drawing Rights (SDRs) - the IMF's own currency, would provide cheap access to international resources and offer governments much needed capital to revitalize their economies. Rich countries consider this a less attractive option, since lending would not come with strings attached. (BBC)


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

The International Monetary Fund (IMF) analyzes the implications of the global financial crisis on Low-Income Countries (LICs) and estimates that poor nations will need at least US$25 billion of additional funding in 2009.  In order to investigate the extent to which the crisis will negatively affect macroeconomic growth, this report compares economic projections from January 2009, with those made before the crisis.  Possible spillover effects include a reduced demand for exports, a decline in remittances, and a reduction in aid and foreign direct investment.  Shrinking aid budgets exacerbate the risk of a humanitarian crisis in LICs.  Therefore, the IMF recommends that donors increase their funding to enable poor countries to expand social spending programs, which will enhance the protection of the most vulnerable.

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

The United Nations Conference on Trade and Development (UNCTAD) reports on the failures of financial globalization and points to deregulation of national and international trade and finance systems, as the root causes of the global economic crisis. UNCTAD urges regulators to close the loopholes in regulation, which led to speculative bubbles in futures trading markets and allowed financial investors to drive prices up, thereby manipulating markets. The report warns of the dangers of economic nationalism and recommends avoiding economic wars, by seeking a stronger and fairer multilateral approach, with global cooperation and regulation, under a global coordinating body, the UN.

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

The report "Sold Out" examines how over the past three decades financial regulators and the US Congress deregulated the financial system, leading to the collapse of Wall Street. This executive summary from the report lists twelve distinct deregulation moves which resulted in the financial meltdown. These include abolishing regulatory barriers between commercial and investment banks, allowing companies to hide "money-losing assets" from their accounts and the Federal Bank's refusal to stop subprime lending. The document draws attention to Wall Street's influence over Congress, revealing that previous Wall Street employees hold the top regulatory positions. To enforce meaningful regulation, Congress must establish new financial rules which regulates and controls Wall Street, rather than extending Wall Street's power. (Wall Street Watch)

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

Lax regulation in Western banking lies at the heart of the global financial crisis, yet the European Union seeks similar deregulation and liberalization for poorer countries. This World Development Movement (WDM) report examines the negative impact of foreign owned banks in Mexico and Brazil, which fail to make banking more affordable for the poor. Foreign banks prioritize richer customers and large companies; thereby excluding poor farmers and small scale businesses from access to credit - vital to stimulate local enterprise. Financial liberalization diverts credit away from "productive activities" such as investment in the local economy, and encourages medium and high income earners to consume using credit cards and mortgages - the same means which led to speculative bubbles and crisis in the rich countries.

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

The US government will announce another package to bail out American International Group (AIG), as the company faces the largest quarterly loss in history. This article explores how AIG used its "triple A credit rating" to create an illusion of safe investments, allowing cheap borrowing, which AIG exploited on risky assets. Because of AIG's vital position in the Western banking system, the US government is obliged to provide support, in order to prevent a "domino effect" collapse. American taxpayers will pay the price for AIG's corruption, which some predict amounts to at least one hundred billion US dollars. (New York Times)

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

The editor of Share the World's Resources outlines the academic debate on globalization and argues that over-simplistic framing of the theory has polarized globalization as "good" or "bad". He states that we cannot blame globalization for the economic crisis, but rather "bad economics" and a lack of understanding of international trade. The crisis presents a turning point for globalization. Re-designing institutional structures, founded upon bottom-up participation could create fairer opportunities to re-distribute the benefits of globalization more equally. Skeptics must move beyond their opposition to free-market principles, and seek a new global trading system, one which balances protectionism and liberalization.

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

Financial crisis and economic downturn in the US, combined with Asia's accumulation of dollars, challenge the credibility of the IMF, which has long been dominated by the US. While there is consensus on the necessity to reform IMF governance, debate remains over the type of reform. This creates space for emerging economies to push for initiatives such as Asian financial integration and Latin America's "Bank of the South". The author outlines concrete strategies that the US could take to reform the IMF, but is skeptical about whether these would be enough to stop Asia and Latin America from opting for regional alternatives to the Bretton Woods Institutions. (World Politics Review)

Asia: The Coming Fury (February 4, 2009)

As Asia's once booming export-led industrialization faces severe decline, Walden Bello warns of the rising protests and potential resurgence of social revolution across Asia. He examines the illusion of "decoupling" Asia's supposed immunity to economic downturn and financial crisis arising in the West. This article argues that the US credit crunch brings an end to Asia's prosperous export era since economic growth in this region is based on complex export chains: China assembles parts imported from other Asian countries, which it then exports to the West. Thus, China's consumer-goods industry depends upon demand from US and Western Europe, which in turn, relies upon the availability of credit in the West. (Foreign Policy in Focus)

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 Assembly of Social Movements at the World Social Forum makes unprecedented political statements outlining measures to overcome the economic crisis. The Assembly argues that the solution to the crisis cannot be found within a capitalist system, one based on privatization and exploitation, since this system is the source of the problems. Instead, the Assembly calls for popular mobilization around some concrete suggestions such as nationalizing the banking sector without compensations. (Transnational Institute)

The Perils of More Globalization (February 3, 2009)

We should critically examine the globalization of the world economy and its impact on prosperity over the past thirty years. A UN study shows that poverty increased almost as much in countries that remained disconnected from the world economy as in those which fully liberalized their markets. The author challenges the pro-liberalization scare tactics of Gordon Brown, which imply that a move away from a liberalized economy automatically entails a retreat to extreme protectionism and autarky. Globalization has led to increased instability, and world leaders must acknowledge its detrimental impact, which hits the poorest countries hardest. (Guardian)

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

In response to the financial crisis, this letter, formulated by a collection of NGOs and social movements presents a voice from poor Southern countries to the G20. They urge world leaders to adopt a new approach in the reform of the global financial systems, demanding a system based on human rights, working to benefit the public. In an effort to establish a fairer balance of power, a democratized UN, which reaches beyond the G20 and sits at the heart of the financial system, forms the cornerstone of their policy proposal. (Choike)

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

Ben Bernanke, chairman of the Federal Reserve and other leading voices in global finance, believe that a new system of global financial oversight is necessary - to confront the increasingly unstable global financial market. They argue that greater coordination, through a united global approach, would prevent conflicts of interest and promote financial stability. Skeptics question the reality of achieving a global front, pointing out that when faced with crises, countries actions reflect national interest, disregarding international consequences and actually represents a setback for global initiatives. (International Herald Tribune)

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

This note by the UN Commission for Social Development discusses the impact of the inter-related global crises which define the context of social development. It outlines how volatile food and oil prices, climate change and the financial crisis threaten to plunge millions more into poverty in both developed and developing countries. Key policy recommendations include measures to strengthen social welfare and social protection systems, investment in energy efficient agricultural production for food security, expanding trade and increased regional cooperation between developing countries.

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

China has bought more than one trillion US$ of debt and the demand for bonds has kept borrowers' interest rates low in the US. Since the financial crisis, confidence in the US economy has decreased, and the Chinese Central Bank has encouraged Chinese banks to lend more domestically. If China stopped purchasing US Treasures, the US government would find it even more difficult to incur deficit spending, which would lessen chances for an economic recovery. (New York Times)

Fighting Off Depression (January 5, 2009)

Nobel laureate Paul Krugman defends Obama's proposed economic rescue plan, arguing that flooding the banking system with liquidity has not helped stimulate the economy. However, Krugman is concerned that it will take the US Congress months to pass it and that the final proposal might turn out to be "too cautious". He argues that the dominant economic thinking of the past decades and its focus on monetary policies have shown their limits and that politicians now need to acknowledge the old Keynesian prescription of large government deficit-spending. (International Herald Tribune)

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)

The international economic crisis increases the inequalities between rich and poor countries. Developed countries can run a larger deficit to provide bail-outs and stimulate their economy. Developing countries, on the other hand, do not have the financial capacity to take such economic risks. In its recommendations, the Commission emphasizes the need for additional assistance to developing countries and urges rich countries to consider "the adverse consequences" that their policies might have on poor countries. (United Nations)

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

Linkages between US debt and the world's unhealthy reliance on the US dollar result in global instability and imbalances, at the roots of the world financial crisis. Arguing that the world economy has grown overly dependent on the US deficit, the author explains how the US debt has been necessary to supply reserves for the global economy, which enables economic expansion and growth. If the US reduced its overall debt, the volume of money in the global economy would contract, harming everyone. The crisis presents a turning point, showing the need to supersede the dollar as the international reserve currency and replace it with a new source of money supply - not reliant on one country's national currency. This change could lead to greater stability and equity in the global economy. (The Levy Economics Institute of Bard College)

World Economic Situation and Prospects 2009 (January 2009)

This executive summary provides an overview of global economic performance, detailing the origins of the global financial crisis and its impact on world trade and finance. The report examines the implications for developing countries, the policy challenges ahead and reform of the international financial structures and institutions. (DESA/UNCTAD)

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

The global financial crisis opens up debate about re-regulation. While regulation can help to provide market stability, it does not necessarily lead to generally positive outcomes. Patent and copyright laws skew income distribution towards a few well-placed corporations. Financial regulation can also result in monopolistic control and income advantages for insiders in the regulatory system. Re-regulation must avoid these pitfalls. (Boston Review)

Capitalist Fools (January 2009)

Professor Joseph Stiglitz identifies critical mistakes, made during the Reagan, Clinton and Bush II administrations, which led to the financial crisis. Under chair Alan Greenspan, the Federal Reserve neglected its role as a regulator and helped inflate both the high-tech and the housing bubble. The US Congress allowed commercial banks to invest in high-risk projects, the government's economic policy led to excessive borrowing and lending, and politicians failed to address the underlying weakness in the US economy, even when the crisis hit. Most of the mistakes made boil down to one fundamental flaw: the belief that "markets are self-adjusting". (Vanity Fair)

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.

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