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The origins of the crisis lay in our inability to cope with the
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consequences of the entry into the world trading system of countries such as China, India,
==Index and Glossary==
and the former Soviet empire – in a word, globalisation. The benefits in terms of trade
There is an index to the topics dealt with in the economics articles [[Economics/Related Articles|here]], and a glossary of economic terms [[Economics/Glossary|here]].
were visible; the costs of the implied capital flows were not.
The new entrants adopted a strategy of expanding manufactured exports to create
employment. High rates of saving depressed domestic demand. So substantial trade
surpluses were required to keep total demand in line with supply. Equally, the countries
importing those manufactured goods ran trade deficits and required low saving rates to
maintain balance in their economies. Everyone seemed to gain. High-saving countries
created employment, and low-saving countries enjoyed faster consumption growth as
cheap imports meant that living standards rose by more than the increase in production –
worth around half a percentage point a year in the United Kingdom. These were the
benefits of greater trade.
But the pattern of poor countries saving a lot and rich countries borrowing was not
sustainable. The consequences of our inability to cope with these capital flows did not show


A key driver of those imbalances has been very high savings rates in countries like
See also the [[Politics/Index|'''index to the politics articles ''']].
China; since these high savings exceed domestic investment, China and other
countries must accumulate claims on the rest of the world. But since, in addition,
China and several other surplus countries are committed to fixed or significantly
managed exchange rates, these rising claims take the form of central bank reserves.6
The Review then noted that these were “typically invested not in a wide array of equity,
property or fixed income assets—but almost exclusively in apparently risk-free or close to
risk-free government bonds or government-guaranteed bonds”.7 This then led to “a
reduction in real risk-free rates of interest to historically low levels”.8 Professor Willem
Buiter of the London School of Economics observed that this reduction in the worldwide


[[User:Nick_Gardner#Methodology|methodology]]


http://www.fsa.gov.uk/pubs/other/turner_review.pdf The Turner Review
{|align="right" cellpadding="10" style="background-color:#FFFFCC; width:40%; border: 1px solid #aaa; margin:20px; font-size: 92%;"
A regulatory response to the
|"''The European Union is something ...
global banking crisis
very precious, not only for us in Europe, but also for the rest of the world. Because the European Union is, in fact, the result of a project for peace that brought together nations emerging from the ruins of the Second World War. It was the European Union that united them in peace around the values of respect for human dignity, freedom, democracy, justice, rule of law and respect for human rights.''"
March 2009  FSA
real interest rate allowed the “US to continue on this low-interest, high-liquidity asset
boom”.9


[http://www1.worldbank.org/finance/html/database_sfd.html ''Bank Crises Database'' World Bank 2003]</ref>
:Merci Olsson, of Nobel Med, congratulating  President Barroso on the award of The Nobel Peace Prize t the European Union, 12 October 2012.
|}

Latest revision as of 04:28, 22 November 2023


The account of this former contributor was not re-activated after the server upgrade of March 2022.


Index and Glossary

There is an index to the topics dealt with in the economics articles here, and a glossary of economic terms here.

See also the index to the politics articles .

methodology

"The European Union is something ... 
very precious, not only for us in Europe, but also for the rest of the world. Because the European Union is, in fact, the result of a project for peace that brought together nations emerging from the ruins of the Second World War. It was the European Union that united them in peace around the values of respect for human dignity, freedom, democracy, justice, rule of law and respect for human rights."
Merci Olsson, of Nobel Med, congratulating President Barroso on the award of The Nobel Peace Prize t the European Union, 12 October 2012.
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