POLB81H3 Lecture Notes - Lecture 8: 1997 Asian Financial Crisis, Currency Crisis, Speculation

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POLB81 Lecture 8 March 4th 2013.
Global Governance Forum
Global forum on the on-going European crisis. Is this an instant of institutionalism? No
because it’s a company not an institution. It’s an instant of transnationalism, the power
of credit rating Agency to influence what goes on in the global economy. Britain’s
financial minister said relax, it’s not so bad. These credit Agencies matter but sometimes
they screw up but that doesn’t change the fact that they matter. Credit Agencies warns
British currency/economy. States cannot stop financial crisis by themselves.
The global financial crisis. We talk about crisis all the time. Crisis can apply certain
things. What does it mean to have a crisis? What’s a crisis, how do we know? Is
governing a crisis different from governing a crisis from something else?
o Immediacy*
o Help
o Uncertainty
o Large negative effects/fundamental problems
o Urgency*
o Scale
o It can spread
o Tipping point/Critical Juncture*
o The speed of which problems are unfolded
Crisis: You have to take action quickly. Economist is worried if the US didn’t take action,
then the global economy is going to explode. Crisis is in the eye of the beholder. A crisis
does trigger a different government response.
Financial Crisis
Financial crises are nothing new because it’s been going on at least 400 years.
Tulip mania crisis - one of the first financial crisis.
Financial crisis is not just something we deal with in the 20th and 21 century. Crisis in
many ways go hand in hand in with the global capitalist economy. If you want to do
good, you should be prepared for the bad. (Capitalism gives us the Boom and bust
cycle) They are part of the system, inherent to the system.
One of the things we see in time is the growth of the speed and scope of the financial
crisis over time. The question is, what to do with this crisis?
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