Global Financial Crisis

SouthViews No. 168, 12 June 2018

Warnings of a new global financial crisis

By Martin Khor

There are increasing warnings of an imminent new financial crisis, not only from the billionaire investor George Soros, but also from eminent economists associated with the Bank for International Settlements, the bank of central banks. The warnings come at a moment when there are signs of international capital flowing out of some emerging economies, including Turkey, Argentina and Indonesia. Some economists have been warning that the boom-bust cycle in capital flows to developing countries will cause disruption, when there is a turn from boom to bust. All it needs is a trigger, which may then snowball as investors in herd-like manner head for the exit door. Their behaviour is akin to a self-fulfilling prophecy: if enough speculative investors think this is the time to move back to the global financial capitals, then the exodus will happen, as it did in previous “bust” phases of the cycle. (more…)

SouthViews No. 152, 24 July 2017

Prepare Now for the Next Financial Crisis

By Martin Khor

The Asian financial crisis started 20 years ago and the global financial crisis and recession 9 years back. When a new global financial crisis strikes, the developing countries will be more damaged than in the last crisis as they have become less resilient and more vulnerable. They thus need to prepare from being overwhelmed. (more…)

SouthViews No. 151, 6 July 2017

The Asian financial crisis – 20 years later

By Martin Khor

It’s been 20 years since the Asian financial crisis struck in July 1997. Since then there has been an even bigger global financial crisis, centred in the United States starting in 2008. Will there be another crisis in the near future? The Asian crisis began when speculators brought down the Thai baht, making fortunes in the process. Within months, the currencies of Indonesia, South Korea and Malaysia were also affected. The crisis was to turn the East Asian Miracle into an Asian Financial Nightmare. (more…)

SouthViews No. 115a, 26 March 2015

Can the World Afford to Put All Hopes on Debt Contract Improvements for Sovereign Debt Workout?

By Yuefen Li

The lack of a formal sovereign debt restructuring mechanism has been considered by many as a serious deficit or missing link in the international financial architecture. However, even though the international debates on the topic have been going on for decades, heating up each time with the onset of a debt crisis and cooling down when the crisis was contained, up to now such debates have not yet come to fruition. With the onset of the global financial crisis and especially the legal litigation against Argentina and Greek debt crisis, the debate has become even more intensified with views more convergent than ever on the need of a mechanism. For decades, timely and orderly sovereign debt restructuring which can restore medium term debt sustainability to debtor countries as well as less costly to creditors has been the common expectation of stakeholders involved in sovereign debt restructuring, except those who want to get their windfalls in the debt crisis. (more…)

SouthViews No. 115, 23 February 2015

Developing Economies Increasingly Vulnerable in Unstable Global Financial System

By Yılmaz Akyüz

After a series of crises with severe economic and social consequences in the 1990s and early 2000s, emerging and developing economies have become even more closely integrated into what is widely recognised as an inherently unstable international financial system. Both policies in these countries and a highly accommodating global financial environment have played a role. Not only have their traditional cross-border linkages been deepened and external balance sheets expanded rapidly, but also foreign presence in their domestic credit, bond, equity and property markets has reached unprecedented levels. New channels have thus emerged for the transmission of financial shocks from global boom-bust cycles. (more…)

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