Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Real bills doctrine wikipedia , lookup
Business cycle wikipedia , lookup
Virtual economy wikipedia , lookup
Steady-state economy wikipedia , lookup
Chinese economic reform wikipedia , lookup
Ragnar Nurkse's balanced growth theory wikipedia , lookup
Pensions crisis wikipedia , lookup
Nouriel Roubini wikipedia , lookup
Financial crisis wikipedia , lookup
Neoliberal Globalisation and Financial Crisis David Woodward, PHA3, Cape Town, 6 July 2012 Expansion of the Financial Sector • Reduced social provision – public private pensions – social private health insurance – public private education, care for elderly => reliance on private savings • Inequality (later) • Deregulation: – shift of finance from banking to speculation Expansion of Finance • US: 4% of GDP in 1981 8% in 2007 • UK: 5.3% in 2001 8.3% in 2007 – Grew more than 3x faster than GDP – More than health and social work (7.1%) or education (5.9%) • Role is only to get money from those who have it to those who need it • In the UK, more than health or education • Not a good buy even if it worked • In fact, it is profoundly dysfunctional, and serves little real purpose Global Finance Reduced social provision Increasing inequality Rich get richer Poor get poorer Increasing savings Speculative investment Limited increase in demand Limited productive investment opportunities Financialisation – divorce of finance from real (productive) economy Speculation Promotes Speculation Demand for speculative assets High rate of return Price increases Bubbles, Booms and Busts • This circularity creates speculative bubbles • The integration of global finance means much more money following the same trends/incentives much bigger bubbles • As bubbles inflate, they draw resources from the real economy • When they burst, more resources are taken from the real economy to bail out the financial system • ratchet effect: finance expands in the boom; the real economy contracts in the bust • Even if we can find our way out of this crisis, it will only lay the ground for the next