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financial crisis

Weekly Wire: The Global Forum

Roxanne Bauer's picture
These are some of the views and reports relevant to our readers that caught our attention this week.
 

Without Stronger Transparency, More Financial Crises Loom
Committee to Protect Journalists
The social forces that can encourage euphoria among investors and then suddenly flip them into mass panic are not unlike those that generate crowd disasters such as the stampedes that have killed more than 2,500 pilgrims at Mecca since 1990. In such moments of herd-like behavior, the common element is a profound lack of information. If neither the individuals in an enthusiastic crowd nor those charged with policing it have a grasp on how it is behaving as a whole, the mob can grow too big for its surroundings. Equally, if those people are ill-informed about the extent of the risks they face when they discover something is wrong, they will assume the worst and rush for the exits, increasing the danger to all. This describes numerous crowd disasters. It also illustrates the financial crisis of 2008.

2014 Global Peace Index
Vision of Humanity
We are living in the most peaceful century in human history; however the 2014 Global Peace Index shows that the last seven years has shown a notable deterioration in levels of peace. The Global Peace Index measures peace in 162 countries according to 22 indicators that gauge the absence of violence or the fear of violence. This is the 8th year the index has been produced.

The End of Protest? Has Free-market Capitalism Learned to Control Dissent?

Sina Odugbemi's picture

The central puzzle has often been wondered about in a thousand and one fora since the global financial crisis that began in 2008 erupted, wreaking havoc with several economies and millions of lives: how is it that social convulsions have not been the resultant of the financial crisis, the deep depressions it led to in the major economies of the West, the misery inflicted on millions, and the super-elite-pampering policies introduced to deal with the crisis? Why did puny efforts at protest like Occupy Wall Street and its many imitators vanish like candlelight in a storm?

In the new e-book, The End of Protest: How Free-Market Capitalism Learned to Control Dissent,[i] Alasdair Roberts, who is the Jerome L. Rappaport Professor of Law and Public Policy at Suffolk University Law School in Boston, takes on this puzzle and offers an explanation.

Stuck in transition!

Hans Timmer's picture

A New Year traditionally comes with upbeat thoughts. New resolutions will make life better. Past mistakes will not be repeated. And calamities are seldom predicted. These positive thoughts are not always justified, but they provide necessary energy during the first cold months of the year all the same.

At the beginning of 2014 some economic optimism actually seems defensible. Five years after the start of the global financial crisis, Europe is finally exiting their recession, albeit slowly and hesitantly. The U.S. economy is accelerating and so is growth of global production and trade. True, the BRICs are no longer as vibrant as they have been for a long time, but growth in China (a key concern of markets in recent days) is still expected to be three and a half times growth in high income countries.

Given the tradition of New Year’s optimism it is salient that the EBRD starts the New Year on a rather gloomy note with their new Transition Report. The title of this year’s report is "Stuck in transition?." But in the text they change the question mark into a firm exclamation mark, even as the report contains some suggestions of ways to escape the current impasse.

Seeing the Human Face of the Global Financial Crisis

Inci Otker-Robe's picture

The collapse of a US investment bank in the fall of 2008 turned a severe credit crunch into the worst financial crisis since the great depression, providing a blunt reminder that mismanagement of risks does not go unpunished. What is more, mismanaged risks do not respect boundaries in a tightly interconnected world, damaging anything they touch on their path, hurting especially the poor and vulnerable. While financial systems can contribute to economic development by providing people with useful tools for risk management, such as credit, savings, and insurance, they can create severe crises with devastating social and economic effects when they fail to manage the risks they retain.

When Financial Crises Attacks

11am on a Tuesday


Since 2009, the World Bank has been conducting financial crisis simulation exercises and learning valuable lessons on where institutional vulnerabilities lie. These exercises are intended to test, or simply to practice, the use of existing or proposed legal instruments, interagency and/or cross-border agreements, and other crisis management arrangements. More than 20 exercises in all world regions have been executed so far, focusing either on the interaction among top national authorities (typically between the Ministry of Finance, the Central Bank, the Bank and non-bank Supervisors, and the Deposit Insurance Agency), or on the interaction among bank supervisors of different national jurisdictions dealing with cross-border issues.

To Boost Job Creation, Fix the Skewed Financial Sector

Christopher Colford's picture


Will any government be brave enough to let a big bank fail? (Credit: Ian Kennedy, Flickr Creative Commons)

Five frightening years after the meltdown of the global financial system – with the world’s advanced economies stuck in a painful slump – policymakers are still struggling to reinvigorate job growth. If the unemployed were awaiting some tangible initiative from this summer’s G8 summit, they were surely disappointed: Last week’s G8 summit communiqué offered only boilerplate assertions that “decisive action is needed to nurture a sustainable recovery and restore the resilience of the global economy.”

The financial fiasco of 2008 left human wreckage in its wake. An additional 120 million people worldwide were plunged into poverty at the nadir of the crisis, wiping out years of development progress. According to the World Bank's most recent World Development Report, there are now about 200 million unemployed worldwide; 1.5 billion only marginally employed in tenuous jobs; and 2 billion dropouts from the workforce.  

Why are we trapped in financial crises?

Claire McGuire's picture


The financial crises has entered a new, difficult phase (Credit:©iStockphoto.com/Photomorphic)

The Thirteenth Annual Financial Sector World Bank/Federal Reserve/International Monetary Fund Seminar on Policy Challenges for the Financial Sector was held on June 5 to 7th, attracting more than 90 participants from over 60 countries. There were many distinguished speakers, including World Bank President Jim Yong Kim, IMF Managing Director Christine Lagarde and Federal Reserve Chairman Ben Bernanke.  One of the highlights was a provocative lunchtime address on The Contradictions of System Stability: One Asian View by Andrew Sheng, the President of the Fung Global Institute.

Marrying Monetary Policy and Financial Regulation

Otaviano Canuto's picture


If the global financial crisis -- and the events that led up to it -- have taught us anything, it is,“No complacency with asset price booms”. We know first hand the dire consequences of bubbles, so it is clear monetary policy makers can no longer passively observe the evolution of asset prices. If an economy is to pursue macroeconomic and financial stability, they should coordinate with financial supervisors – in an economic marriage of convenience – to ensure financial regulation and monetary policies are complementary, and implemented in an articulated way.

What does firm creation tell us about Europe's recovery from crisis?

Leora Klapper's picture

A financial crisis is a difficult time to start a business. Credit is tight, demand is low, and the future is uncertain. Even in recovery periods, entrepreneurs may be skittish about making the enormous sacrifices necessary to launch a new enterprise and lenders may be unwilling to lend to new borrowers. New data from the Entrepreneurship Database – a collaborative effort between the Bank's Development Economics Group (DEC) and Doing Business - provide an interesting look at the relationship between new firm creation and the recent financial crisis and ongoing recovery. The main indicator is new firm entry density, defined as the ratio of new registrations of limited liability companies to the working age population. The data show that new firm entry density (“entry density”, for short) dropped sharply in response to the 2008-09 financial crisis but by 2011 had recovered to pre-crisis levels in many economies.

New firm entry density over time: Percent change in entry density as compared to 2004 levels (Source: Entrepreneurship Database, 2012)


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