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The Global Financial Crises of 2007–2010 and the future of capitalism

  • Shahrokhi, Manuchehr
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    This paper presents an analysis of the 2007-2010 Global Financial Crisis which started with the sub-prime crisis in the U.S. and became global very fast. It argues that the financial system in the United States is a complex interlocking structure of markets, institutions and regulators. The causes and culprits of the crisis, the misaligned incentives of participants and exogenous events such as the wars in Afghanistan and Iraq, precipitated failure in key markets: commodities, sub-prime housing, equities, and credit. One of the strategic consequences of this crisis is that the US will lose its dominance in world power, the frequent crises and vulnerabilities of the Neoliberalism and examines the future of capitalism. Of the alternatives to economic system, the capitalism is the most viable economic system. However, it must adopt real and efficient allocation of resources to maximize welfare of all parties and seriously address the income inequality. It must reject crony capitalism, enact true financial regulation of institutions and markets, end corporate socialism and address the system’s structural deficiencies.

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    File URL: http://www.sciencedirect.com/science/article/pii/S1044028311000287
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    Article provided by Elsevier in its journal Global Finance Journal.

    Volume (Year): 22 (2011)
    Issue (Month): 3 ()
    Pages: 193-210

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    Handle: RePEc:eee:glofin:v:22:y:2011:i:3:p:193-210
    DOI: 10.1016/j.gfj.2011.10.010
    Contact details of provider: Web page: http://www.elsevier.com/locate/inca/620162

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    1. Richard N. Cooper, 2007. "Living with Global Imbalances," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 38(2), pages 91-110.
    2. Shachmurove, Tomer & Shachmurove, Yochanan, 2011. "String of defaults: Spanish financial crises through the years," MPRA Paper 36012, University Library of Munich, Germany.
    3. Martin Feldstein, 2008. "Resolving the Global Imbalance: The Dollar and the U.S. Saving Rate," Journal of Economic Perspectives, American Economic Association, vol. 22(3), pages 113-25, Summer.
    4. Michael P. Dooley & David Folkerts-Landau & Peter Garber, 2004. "The revived Bretton Woods system," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 9(4), pages 307-313.
    5. Catherine L. Mann, 1999. "Is the U.S. Trade Deficit Sustainable?," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 47, January.
    6. Yochanan Shachmurove, 2009. "Entrepreneurship in Qatar," PIER Working Paper Archive 09-025, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
    7. Alan Greenspan, 2004. "The Evolving U.S. Payments Imbalance and Its Impact on Europe and the Rest of the World," Cato Journal, Cato Journal, Cato Institute, vol. 24(1-2), pages 1-11, Spring/Su.
    8. Amiyatosh Purnanandam, 2011. "Originate-to-distribute Model and the Subprime Mortgage Crisis," Review of Financial Studies, Society for Financial Studies, vol. 24(6), pages 1881-1915.
    9. William R. Cline, 2007. "Why the U.S. External Imbalance Matters," Cato Journal, Cato Journal, Cato Institute, vol. 27(1), pages 53-58, Winter.
    10. Feldstein, Martin, 2008. "Resolving the Global Imbalance: The Dollar and the U.S. Saving Rate," Scholarly Articles 2792081, Harvard University Department of Economics.
    11. Meltzer, Allan H., 2012. "Why Capitalism?," OUP Catalogue, Oxford University Press, number 9780199859573, December.
    12. repec:cto:journl:v:24:y:2004:i:1-2:p:1-11 is not listed on IDEAS
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