Topic 1: Global Impact of the 2008 Financial

Transcript:Topic 1: Global Impact of the 2008 Financial:
Topic 1: Global Impact of the 2008 Financial Crisis (FC): Comparing Canada and the Third World Countries (One county or the Developing World in general, with examples on countries) Framework: Formulate a framework using the arguments and concepts from one or more Kit Articles 1-5 and from Term 1 lecture 5 on Financial Crisis. Thesis: The endless accumulation of capital is the cause for financial crises in the global economy. Economic development through globalization is guided by the Washington Consensus: “privatization of state productive enterprises, reduction of state expenditures, opening of the frontiers to uncontrolled entry of commodities and capital, and the orientation to production for export (Wallerstein, 2011: 4)”. However, since 1970s, the capitalists’ shifted from production to financial speculation for their continued accumulation of capital As a result, the world-system went through a series of speculative bubbles of which the FC of 2008 is one, that has lead to serious global rise in indebtednesses. Thesis: While the 2008 financial crisis that originated in the US, had severe economic and financial repercussions on the core countries (the US and the European), the regulatory regimes of the Canadian financial institutions limited Canada’s exposure to the crisis and minimized its adverse impact on the economy and employment. In contrast, the Third world countries where most people are already poor, faced worsening of poverty due to their declining GDP, loss of export trade and growing unemployment that led to greater poverty. Impact of the 2008 Financial Crisis (FC): Canada Economy and Finance Employment and Economic security Human Development and Poverty Canada: Financial Crisis of 2008 (FC) Economy and Finance 1. FC: less impact than in other AICs. Credit has solid growth as Canada’s financial institutions are better capitalized and less leveraged than their international counterparts. Canadian financial institutions continue to be the healthiest in the world. World Economic Forum has ranked Canada’s banking system as the soundest in the world for 3 consecutive years. 2. Strong growth in world prices of most commodities produced in Canada since mid-2010 3. Canada’s sound fundamentals have made Canadian financial assets attractive to international investors http://www.bankofcanada.ca/2011/03/speeches/great-recession-canada-perception-reality/ http://www.budget.gc.ca/2012/plan/toc-tdm-eng.html 2012: http://www.budget.gc.ca/2011/plan/chap2-eng.html The six largest domestic banks hold > 90% of banking industry assets. This adds to the banking industry’s stability In 2006, sub-prime loans accounted for less than 5% of new mortgages in Canada, compared to 22% in the United States. While >50% of all mortgage debts outstanding