GPF Perspectives
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
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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
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)
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)
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)