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

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  • Shahrokhi, Manuchehr

Abstract

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.

Suggested Citation

  • Shahrokhi, Manuchehr, 2011. "The Global Financial Crises of 2007–2010 and the future of capitalism," Global Finance Journal, Elsevier, vol. 22(3), pages 193-210.
  • Handle: RePEc:eee:glofin:v:22:y:2011:i:3:p:193-210
    DOI: 10.1016/j.gfj.2011.10.010
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    References listed on IDEAS

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    Cited by:

    1. He, Xiaoli & Jacobs, Jan P.A.M. & Kuper, Gerard H. & Ligthart, Jenny E., 2013. "On the Impact of the Global Financial Crisis on the Euro Area," Working Papers 17209, University of Tasmania, Tasmanian School of Business and Economics, revised 16 Oct 2013.
    2. Wicker, Pamela & Becken, Susanne, 2013. "Conscientious vs. ambivalent consumers: Do concerns about energy availability and climate change influence consumer behaviour?," Ecological Economics, Elsevier, vol. 88(C), pages 41-48.
    3. Herbst, Anthony F. & Wu, Joseph S.K. & Ho, Chi Pui, 2012. "Relationship between risk attitude and economic recovery in optimal growth theory," Global Finance Journal, Elsevier, vol. 23(3), pages 141-150.
    4. Kowalski, Tadeusz & Shachmurove, Yochanan, 2014. "The reaction of the U.S. and the European Monetary Union to recent global financial crises," Global Finance Journal, Elsevier, vol. 25(1), pages 27-47.
    5. Camelia I. Lungu & Cornelia Dascalu & Chirata Caraini & Erica C. Balea, 2014. "Econometric Approach of the Scenarios regarding the Impact of the Consumer’s Empowerment and Companies’ Responsibility for Environment Sustainability on the Electricity Market Performance," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 16(35), pages 187-187, February.

    More about this item

    Keywords

    Global Financial Crisis; Global recession; Capitalism; Global economy;

    JEL classification:

    • E - Macroeconomics and Monetary Economics
    • F3 - International Economics - - International Finance
    • G - Financial Economics
    • H6 - Public Economics - - National Budget, Deficit, and Debt
    • N2 - Economic History - - Financial Markets and Institutions
    • P1 - Economic Systems - - Capitalist Systems

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