Global Financial Crisis

The global financial crisis, brewing for a while, really started to show its effects in the middle of 2007 and into 2008. Around the world stock markets have fallen, large financial institutions have collapsed or been bought out, and governments in even the wealthiest nations have had to come up with rescue packages to bail out their financial systems.
On the one hand many people are concerned that those responsible for the financial problems are the ones being bailed out, while on the other hand, a global financial meltdown will affect the livelihoods of almost everyone in an increasingly inter-connected world. The problem could have been avoided, if ideologues supporting the current economics models weren’t so vocal, influential and inconsiderate of others’ viewpoints and concerns.
This article provides an overview of the crisis with links for further, more detailed, coverage at the end.

This web page has the following sub-sections:

1. A crisis so severe, the world financial system is affected
   1. Securitization and the subprime crisis
   2. Creating more risk by trying to manage risk
   3. The scale of the crisis: trillions in taxpayer bailouts
2. A crisis so severe, those responsible are bailed out
3. A crisis so severe, the rest suffer too
4. The financial crisis and wealthy countries
   1. A crisis signaling the decline of US’s superpower status?
   2. Europe and the financial crisis
   3. Structural Adjustment for Industrialized Nations
5. The financial crisis and the developing world
   1. Asia and the financial crisis
   2. Africa and the financial crisis
   3. Latin America and the financial crisis
6. A crisis in context
   1. A crisis of poverty for much of humanity
   2. A global food crisis affecting the poorest the most
   3. Human rights conditions made worse by the crisis
   4. Poor nations will get less financing for development
   5. Odious third world debt has remained for decades; Banks and military get money easily
7. A crisis that need not have happened
8. Dealing with recession
9. Developing world saving the West?
10. Rethinking the international financial system?
    1. Reforming international banking and finance?
    2. Reforming International Trade and the WTO
    3. Reforming the Bretton Woods Institutions (IMF and World Bank)?
    4. Reform and Resistance
    5. Rich countries resist meaningful reform
11. Rethinking economics?
12. More information

A crisis so severe, the world financial system is affected

Following a period of economic boom, a financial bubble—global in scope—has now burst.
A collapse of the US sub-prime mortgage market and the reversal of the housing boom in other industrialized economies have had a ripple effect around the world. Furthermore, other weaknesses in the global financial system have surfaced. Some financial products and instruments have become so complex and twisted, that as things start to unravel, trust in the whole system started to fail. 
  
        

While there are many technical explanations of how the sub-prime mortgage crisis came about, the mainstream British comedians, John Bird and John Fortune, describe the mind set of the investment banking community in this satirical interview, explaining it in a way that sometimes only comedians can.
Together with impressionist Rory Bremner, derivatives (securities derived from other securities) are also explained:

Bremner, Bird, and Fortune, Silly Money: Where did all the money go?, Part 3, November 10, 2008

Bremner, Bird, and Fortune, Silly Money: Where did all the money go?, Part 4, November 10, 2008

The betting of practically anything helped create enormous sums of money out of almost nothing. However, as former US Presidential speech writer, Mark Lange, notes, “because [derivatives are] entirely unregulated and trade on no public exchanges, their originators can deliberately hide their vulnerabilities.
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by Anup Shah

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