06 April 2010

The Global Financial Crisis

A good article has appeared in the New York Review on this topic and its implications for regulation of the finance sector. It covers some of the points I was trying to make in 144-721 contact course, linking the global east-west savings imbalance, the 'lax' or 'moderate' (depending on your point of view) policies of the Federal Reserve, and a light-handed regulatory regime as contributors to the reckless investment behaviour that led to the GFC of 2008. Alcaly is a good authority and he uses plain English, so I am happy for students to cite this one in essays. He stresses the importance of public policy reactions in pulling the economy out of free-fall, and also to mitigate future crises. He is justly cautious in admitting, at the end, that 'there can be no assurances that it won't happen again'. The piece in the same journal by Robert Solow may also be useful.


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