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The new international financial crisis: causes, consequences and perspectives

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  • Flavio Vilela Vieira

Abstract

The paper investigates the recent financial crisis within a historical and comparative perspective having in mind that it is ultimately a confidence crisis, initially associated to a chain of high risk loans and financial innovations that spread thorough the international system culminating with impressive wealth losses. The financial market will eventually recover from the crisis but the outcome should be followed by a different and more disciplined set of international institutions. There will be a change on how we perceive the widespread liberal argument that the market is always efficient, or at least, more efficient than any State intervention, overcoming the false perception that the State is in opposition to the market. A deep financial crisis brings out a period of wealth losses and an adjustment process characterized by price corrections (commodities and equity price deflation) and real effects (recession and lower employment), and a period of turbulences and end of illusions is in place. JEL Classification: G15; F33; N20.

Suggested Citation

  • Flavio Vilela Vieira, 2011. "The new international financial crisis: causes, consequences and perspectives," Brazilian Journal of Political Economy, Center of Political Economy, vol. 31(2), pages 217-237.
    • Handle: RePEc:ekm:repojs:v:31:y:2011:i:2:p:217-237:id:400
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    More about this item

    Keywords

    financial crisis; globalization; advanced and emerging economies;
    All these keywords.

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • N20 - Economic History - - Financial Markets and Institutions - - - General, International, or Comparative

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