the economic and policy effects of the global … vi… · • consequences economic stagnation ......
TRANSCRIPT
Outline of Presentation
• The Crisis• Economic Interdependency• Consequences
Economic Stagnation Fiscal Crisis of the StateParties and Policies
• European Union
Twelve Causal Factors• (1) Sub-prime Loans• (2) New Mortgage Products/Lower Standards • (3) Concentrated Asset Holdings • (4) Housing Price Declines
(5) Monetary Policy Tightening (6) Accounting Rules (7) Rating Agencies(8) Loan and Security Misrepresentation (9) Off- balance Sheet Activities(10) Excessive Leverage(11) Regulation(12) Home Ownership Social Policy
•
The drop in GDP during the recession from the fourth quarter of 2007 to the second quarter of 2009 was 5.1%, worse than initially projected. That marks the deepest recession since World War II.
Part Two: Understanding Economic Interdependency
• Financial Balances (a micro example)• Financial Balances and the Economic
Sectors
private balance = govt deficit + trade balance
Stagnation Causes
• Euro Zone Structure
• Globalization
• Asset Inertia
• Low Profit Expectations (consumer deleverage + housing)
Recession Employment E G /Growth Months M
1975 15 60 .25
1980 – 1982 18 84 .21
1991 16 96 .17
2002 7 60 .12
2008 – 7/2009 .3 20 .02
Source: Bureau of Labor Statistics.
Fiscal Crisis of the State
1. Public Debt Legacy2. Financial Crisis and Bailouts3. Private Debt + Recession4. Obama Stimulus5. Private Deleverage + State Budgets6. Economic Stagnation
Parties and Policies
• Party Polarization• +• Historic Deficits• +• Entitlement Funding• =• Deficit Reduction Stagnation Lock-in
Dr. William Van LearBelmont Abbey [email protected]