Article Analysis: On the Contradictions of the New International Financial Architecture: Another Procrustean Bed for Emerging Markets?

This essay will argue that the 2008 financial crisis has brought to the forefront of global political consideration what some economists have known for some time. This is that 1) The global financial system is inherently flawed and cyclical recessions are a product of its nature 2) The interconnectedness of the global financial system means macro-management cannot fully buffer an economy against these cyclical recessions 3) Policy has

Contradiction of Finance Capitalism, by Richard Peet, critiques global finance capitalism within this context. Peet states that “we now life in the era of global finance capitalism”, which suggests that whether we like it or not, the society we live in is capitalist so we might as well cope with it (Peet, p.1). Peet argues that it has overcome every part of the system, which has made it so hard to avoid. He said the finance capital is made up of “concentration and centralization of capital in large corporations, cartels, trusts, and banks” (Peet, p.1). Peet also refers to David Harvey who “has argued that ownership and management of capitalist enterprises have fused together, as upper management” (Peet, p.1). They argue that it is these capitalist entities control what happens with development. In other words, corporations have enough power that they now control states’ markets and what they invest in. Additionally, Peet discusses Randy Martin’s “the financialization of everything” to explain that finance has grown to be politically powerful, too (Peet, p.1). Corporations have been able to create monopolies and thus become hegemonies. They have realized that economic power creates political power. These government institutions are the “capitalist class” who claim to work on “democratization” and “equalization”

In the late 2000s, major countries all across the world experienced a rapid decline in economic activity comparable to that of the Great Depression. The United States’ real estate market collapsing and “large amounts of mortgage-backed securities and derivatives…[losing] significant value” (Investopedia, LLC.) caused this Great Recession. Three wealthy countries, Japan, Germany and the United States, each experienced a distinct reaction to the economic obstacles that arose during the 2000s and continued into the 2010s, thus the three countries responded in varying ways.

Simply throwing money at any crisis and thinking it would miraculously solve itself is erroneous. This is illustrated in the previous efforts of the World Bank and the International Monetary Fund. A major drawback of World Bank (as well as the IMF) is its role in causing high debt among developing countries. Although the World Bank’s intention is to help countries, they also cause those countries to take on debt that they must pay interest on and remain under the conditions of the institution.

Within the novel, The Confessions of an Economic Hit Man, the author provides many strengths that can be depicted very strongly throughout it. The first one to which comes to appear almost in every chapter is the exposure of financial institutions that include the World Bank, International Monetary Fund (IMF) and General Agreement of Tariffs and Trade (GATT) (Hamann, 12). These are the major financial institutions that have a great impact still to this day of how loans and currency exchanges are dealt

“What kept Japan down were repeated macroeconomic policy mistakes” (The New York times, 2008). In fact, the Japanese government’s action was not effective regarding the situation of their economy. The use of monetary policy did not only worsen the effect of the liquidity trap but also create a deflationary pressure. On the other hand, their slow cuts in Bank of Japan nominal interest rate and deflation lead to nominal and real interest rate of different levels. Even nominal interest rate at zero, real interest rate has been positive. Fiscal policy was inadequate to increase demand and output but led to deficits and accumulating government debt.

The three major international economic institutions are the International Monetary Fund (IMF), the World Bank and the World Trade Organization; this book mainly focuses on the IMF and the World Bank, due to the author’s first-hand experience with both institutions. The IMF, a public institution built as a guiding hand for economic stability around the world, has brought false

In 2008, the world experienced a tremendous financial crisis which is rooted from the U.S housing market. Moreover, it is considered by many economists as one of the worst recessions since the Great Depression in 1930s. After bringing a huge effect on the U.S economy, the financial crisis expanded to Europe and the rest of the world. It ruined economies, crumble financial corporations and impoverished individual lives. For example, the financial crisis has resulted in the collapse of massive financial institutions such as Fannie Mae, Freddie Mac, Lehman Brothers and AIG. These collapses not only influenced own countries but also international scale. Hence, the intervention of governments by changing and expanding the monetary

In the twentieth century, the world had witnessed two world wars. After the First World War, the Central Powers of Germany, Austria-Hungary, and the Ottoman Empire were defeated by the Allied Powers of Great Britain, France, and the United States. Great Britain and France forced Germany to pay for war reparations; however, Germany was also under war destruction and economic crisis. In order to keep up with the war reparation payments, Germany borrowed money from the United States. France and Great Britain received the reparation payments to pay their loans from the United States; thus, the cycle eventually led to serious global economic crisis, known as the Great Depression of the 1930s. This economic and political legacies led to dictatorship regimes in Germany and Italy and eventually retaliation against the Allied Powers, a major cause of World War II. Learning the mistakes from World War I, the Allied Powers established the International Monetary Fund or IMF; yet, the International Monetary Fund has more failures than its successes.

This essay looks at two articles which were written within the last three months about reforms that are being made to the United States financial system. The first article is a review of news from Secretary Geithner that the United States is close to making some real reforms. He talked specifically about hedge funds and risk-taking within the banking system in general (Reuters, 2012). The second article discussed the issues that are present with Fannie Mae and Freddie Mac, how both sides of the aisle want to dismantle them, and the inherent problems in doing so (Chadbourn, 2012). The comments from readers of the two articles were specific, and for the most part, showed some intelligent discussion.

In the year of 1327, Kind Edward III of England defaulted on his Italian debts. This caused the banks of Bardi and Peruzzi in Florence to collapse. Who would know that over 650 years later, the world would still have these types of problems? After World War II, the need for an organization like the IMF was finally realized. After the war, politicians and economists began to work on blue prints for a postwar world. They envisioned a liberal international economic order, based on stable world currencies and revived world trade. The International Monetary Fund (IMF) finally came into existence on December 27, 1945. On this date, twenty-nine

The American financial industry is a very active industry in the world. Although the history for American financial industry is shorter than other old capitalist counties, such as English, France , Netherland, due to the industry ‘s potentiality, creativity and successful supervision comes from government ,the American financial industry has been growing fast since it was established hundreds year ago. Overall ,at present ,from the aspects of industry scale and structure ,monetary policy and the freedom of transaction ,those are more mature and perfect than any other countries, as al result ,the US financial industry has become the world 's most advanced financial industry .

Economical term ‘recession’ means a significant decrease in activity across the economy, which last longer than few months. This phenomenon is visible in employment, wholesale-retail trade, and others. The recession is considered a normal part of the business cycle. Nevertheless, a one-time crisis can trigger the onset of a recession. The global recession through 2007 to 2009 resulted in significant breakdowns to practically all the developed and developing countries. In order to prevent a future financial crisis, numerous government policies were enforced. A recession usually last 6 to 18 months and interest rate fall to stimulate the economy. During a recession, people tend not to spend, borrow, but to save money because of a fall in confidence. The government initiates an expansionary fiscal policy which involves increasing stimulus government spending and cutting taxes. However, the question is can increased stimulus spending help end the recession.

Financial crises are fundamentally, periods of economic turmoil. This essay is an analysis of the underlying economic scenario in three specific financial crises that have occurred, since the Wall Street crash of 1929. It goes on to explain its impact on global trade and the lessons that G20 governments can learn from them.

As contemporary literature has shown, since the 1980s the world has experienced a strong wave of financial integration, which – through capital-market liberalization – seems to have played a vital role in facilitating economic growth, in opening up national capital accounts and in boosting the cross-border movements of goods, services, technology, labour and capital (Elson, 2011; Caprio et al., 2012).