Most economists would agree that due to the credit crunch, global markets are facing potential collapse (Stiglitz, 2008; Monbiot, 2007).
As we know, our current recession began in the USA where banks got into the habit of granting mortgages to lenders unable to pay them back. This created a liquidity crisis in the country which banks and government were unable to resolve, and soon these economic difficulties spread to the rest of the world (BBC News, 2008).
Why does the global finance system seem so weak? It appears that there are no global rules or "safety nets" to govern it (Rodrik,2008) .
In this essay, I will argue that we have to radically assess the 20th Century philosophy of free trade and globalisation due to the failures we've experienced recently in global markets. I will begin by looking at how this philosophy was based on an erroneous logic and then go on to describe the ways in which it has set us back with regard to financial efficiency and growth. I will then go on to discuss the ways in which I think this current crisis will affect future research in my subject area International Banking and Finance.
Reference:
BBC NEWS,2008.Timeline Global Credit Crunch.[Online]
updated 31 December 2008.
Available at:http://news.bbc.co.uk/1/hi/business/7521250.stm
Accessed:13 January 2009
Dan Rodrik,2008.No Cheers for Globalisation.[Online]
updated Thursday 31st July 2008.
Available at:http://www.guardian.co.uk/commentisfree/2008/jul/31/economy.globalisation
Accessed:13 January 2009
As we know, our current recession began in the USA where banks got into the habit of granting mortgages to lenders unable to pay them back. This created a liquidity crisis in the country which banks and government were unable to resolve, and soon these economic difficulties spread to the rest of the world (BBC News, 2008).
Why does the global finance system seem so weak? It appears that there are no global rules or "safety nets" to govern it (Rodrik,2008) .
In this essay, I will argue that we have to radically assess the 20th Century philosophy of free trade and globalisation due to the failures we've experienced recently in global markets. I will begin by looking at how this philosophy was based on an erroneous logic and then go on to describe the ways in which it has set us back with regard to financial efficiency and growth. I will then go on to discuss the ways in which I think this current crisis will affect future research in my subject area International Banking and Finance.
Reference:
BBC NEWS,2008.Timeline Global Credit Crunch.[Online]
updated 31 December 2008.
Available at:http://news.bbc.co.uk/1/hi/business/7521250.stm
Accessed:13 January 2009
Dan Rodrik,2008.No Cheers for Globalisation.[Online]
updated Thursday 31st July 2008.
Available at:http://www.guardian.co.uk/commentisfree/2008/jul/31/economy.globalisation
Accessed:13 January 2009
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