The 2008 financial crisis which caused the global financial and banking system to nearly collapse has left several unanswered questions about change and whether enough was done for a similar crisis to prevent. The most significant economic tragedy since the stock market collapse of 1929 was this financial crisis. It began with a sub-prime debt crisis in 2007 and in September 2008 it expanded into a global banking crisis after the collapse of Lehman Brothers. Huge rescue and other initiatives designed to reduce risk distribution have failed, and the world economy has plunged into recession. A crash of the US Subprime Mortgage industry and the reverse housing bubble has influenced the world's other developed economies. Moreover, the current financial system has also encountered other vulnerabilities. Any financial goods and instruments are now so complicated and distorted that trust in the whole system begins to collapse as things continue to collapse.
The interview was conducted with Yashika Morris, a professor of International Finance. She spoke multiple times in conferences discussing where we stand ten years after the biggest capitalist crisis since the Great Depression. She is a profound selection as an interviewee regarding the chosen topic because of her great interest, academic, and practical knowledge and practice.
“I claim that the contradictories of the 1997-8 East Asian Financial Crisis (EAFC) laid the basis for consequential changes in global finance and development finances, which were deepened during and after the global recession, into several dimensions. The EAFC reinforced neoliberalism by exploiting foreign and internal players that had recently struggled to achieve political change before the crisis. The EAFC opened up a radical, inconsistent replenishment of the liberalization of capital flows. The crisis has created a huge new user base for the IMF. However, the organization inevitably faced a crisis loss because EMDEs' crisis solution culminated in tactics (such as the depletion of reserves) fleeing its orbit. The fortuitous global economic conditions following the EAFC allowed the accumulation of reserves. Tensions between Japan and China, tensions that were recently manipulated by the IMF and the United States Government, which firmly opposed the AMF, rapidly dispersed the Asian monetary funds (AMF) initiative catalyzed by EAFC. Although the AMF initiative was not successful, the crisis gradually gave rise to outcomes in and outside the region. As far as the continuation of the crisis is concerned, IMF coffers have been restored and its central position in crisis management; assistance packages for the distressful countries followed the well-proven pro-cyclical pattern (that is that during the crisis the IMF is enforcing restrictive macroeconomic policies). As I said earlier, IMF leadership, research staff, and workers operating with crisis countries normalized the use of capital controls in the sense of discontinuities during the global crisis. The EMDEs took the extraordinary step of lending (in 2009, 2012). The institution's customer base moved to and from the European suburbs; and friction between IMF and Eurocentres, the decision to offer exemplary entry in the broader eurozone loan packages; and there was evidence that debt sustainability is being threatened in Greece. Whilst the Fund tends to support budget savings during emergencies, it also routinely argues that 'bad investment' is required to protect the most vulnerable in crises. In reality, Joseph Stiglitz, a prominent critic of the IMF (Nobel Laureate), now argues that the IMF "was an untiring crucian" toward injustice.”
Unfortunately, we have an understanding of market fundamentalism, currently the prevailing philosophy, that economies are self-adjusting; and this is incorrect because it is usually government interference that can rescue the economies in times of distress. We have had some 5 or 6 crises since 1980, including the global banking issue in 1982; the Continental Illinois bankruptcy in 1984; and the 1998 inability to name any 3 of Long-Term Capital Management. Any time, the authorities or businesses are preparing to rescue the sector. Therefore, the authorities must be made mindful of precedents. However, somehow this notion of markets tending to stabilize and random fluctuations has achieved popularity, and all these excellent investing instruments have been constructed on these. For many countries, particularly China, the crisis opened channels to strengthen informal institutional control. In connexion, the crisis appears to have led to a new IMF standard which gives key positions to EMDE's, especially China, including number two. In another way, China fulfilled a long-suffering aim to make the IMF integrate its currency into Special Drawing Privileges in 2014 in line with the concept of discontinuities at the IMF. A key issue in the future is whether US participation in and power in these institutions would be diluted by the Trump administration's trademark animosity to multilateral institutions. Other players, particularly China (as other EMDEs), will fill up the void left behind by the US withdrawal if it is disengaged from those institutions. And as this happens, it is important to pay attention to whether more players within the organizations build a room for their voice, opportunities for dialogue, and the development of heterogeneous and autonomous crisis response. The government had the rationalized, cohesive bureaucratic resources available to wreak havoc across the South and East of the country. At least, in 2018, the Trump administration could barely beat Mexico, let alone China, we should take some comfort. Emerging pluripolarity 's efficient incoherence is essential to the constrained and centralized essence of the administration's policies' spillover impacts.
The interview I conducted is a valuable experience because I observed the things and directions that I think I can't learn or found in the book study. I think such kind of experiences are necessary for allowing students to explore out of the bound ideas and concepts. Moreover, this is an interactive experience where we can ask and let the interviewee respond further depending on his response we can inquire about the things we are curious to know. The concepts and ideas discussed in the interview are directly linked to the economic concepts we have discussed in our course. This interview let me know about how we can avoid any crisis, how multiple organizations have a central role in any financial crisis or event that can drastically alter any country or various countries’ financial situation or relationships.
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