The Crisis and Beyond: Thinking Outside the Box

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The Crisis and Beyond:

Thinking Outside the Box

Claude Hillinger

University of Munich

Abstract

In this paper the author attempts an analysis of the current financial/economic crisis that is wider ranging and more fundamental than he has been able to find. He discusses alternatives to the financial bailouts and shows how the crisis could have been dealt with more efficiently and at little cost to taxpayers. Finally, the author discusses fundamental reforms that would reduce the volatility of financial markets and increase their efficiency. He reviews some social science literature that views the current crisis as an episode in the secular decline of the United States and more generally of the Western Democracies. The timidity of current reforms, which is striking when compared to those that followed the excesses of the Gilded Age and the Great Depression, can be understood in this framework. The author concludes that the industrialized world is now dominated by a ‘financial-political complex’ that maximizes speculative profits in good times and socializes losses in times of crisis.

Keywords

Deficit financing; financial crisis; financial instability; full

Claude Hillinger is a professor at the University of Munich.

to read the 63 page paper "The Crisis and Beyond: Thinking Outside the Box," click on

Vol. 4, 2010-23 | August 5, 2010 | http://dx.doi.org/10.5018/economics-ejournal.ja.2010-23

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When Eric Holder eventually steps down as Attorney General, he will leave behind a complicated legacy, some of it tragic, like his decision not to prosecute Wall Street after the financial crisis, and his all-out war on whistleblowers like Edward Snowden.

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