U.S. Economic Crisis 2008 essay
The global financial crisis, which started from the problems in the US mortgage market in 2007, consequently gradually spread throughout the world. Sale of assets and withdrawal of funds from other countries by large US corporations led first to a lack of liquidity and credit resources in the financial markets, and then to the problems in the real economy. Many of EU states that pursued an active policy of integration into the world economy have become no exception.
Thus, for the first two weeks of January 2008 the European DJ Euro Stoxx Banks stock index fell by about 10% (Agarwal & Samanta, 2014). According to Eurostat published in February 2009, industrial production in the EU in 2008 decreased by 11.5%, which is an absolute record: this was the biggest fall since 1986 (Stiglitz, 2010). Despite the fact that the official end of the global economic crisis is considered the second quarter of 2009, the average economic activity in the euro zonerecovered by about 2/3 compared with losses of 2008-2009 (Choi, 2013). Indeed, the constant growth of the fiscal deficit and public debt in the US, accompanying government measures to rescue the national economy, marked the beginning of a prolonged global debt crisis with the cumulative effects and, according to Agarwal and Samanta (2014), the second recession began in 2011 and continues to this day.
In general, most recently in the markets the concerns have increased about prospects for the world economy in the face of growing interdependence in the global market.Especially in light of the persistence of debt problems in the euro zone and the lack of specific solutions, as well as a marked slowdown of the US economy, which fuels the rumors that the Federal Reserve will have to take new measures to stimulate it (Stiglitz, 2010; Choi, 2013). However, the massive printing of money to save the demand, to support the economy and reduce unemployment postpones the problem, but no longer removes it: liquidity ceased to transform into economic growth. Moreover, today experts (Agarwal & Samanta, 2014) consider obvious that the economic measures of international monetary and financial regulation are almost completely exhausted, while the West has not developed any political agenda to prevent the global crisis. In particular, the failure of regulatory role of institutions like the International Monetary Fund (IMF) and the World Bank causes great concerns, as well as the dependence of markets on the actions of the US Federal Reserve, which back in the 1990’s, in fact, turned intothe institute of influence on the global economy having no authority from the other actors in the world politics.
In addition, the global crisis has moved from financial to social and political phase. The American version of the socio-political and economic protest had milder forms and expressed mainly in the electoral behavior, unlike the EU countries, where dissatisfaction resulted in street demonstrations. Thus, in November 2010 by-election to the US Congress brought success to Republicans striking the positions of the Democratic Party and the Obama administration. Democrats are did not lose the Senate, but kept minimal advantage over Republicans in it. The president had less room for maneuvering. In the meantime, social protest and indignation surge swept Germany, France, Italy and Greece; in the latter, for example, the main “sore spot” of Europe, the country’s GDP has not grownsince the first quarter of 2010 (Choi, 2013). Because of the crisis, in October 2009, Greece held early parliamentary elections thatbrought the Socialists to power. Political changes also occurred the Czech Republic, Latvia, Lithuania and a number of other states.
Against this background, a kind of pause occurred in international relations. Its main features were the refusal of the US, the EU and Russia from the activity in the field of international political relations. However, judging by the events in the Arab world, there are signs that the economic and socio-political manifestations of the crisis are accompanied bycertain features of the international political destruction in the form of growing threats of new interventionism. However, the changes initiated by the crisis impact on the quality and content of modern democracy, revealing its limitations and lack of flexibility of the dominant political institutions. In addition, the crisis distinctly demonstrates the gap between elite groups from the general population.
Thus, in the current phase of the cycle, on the one hand, the methods of state regulation are being modified and enhanced, on the other hand, the transformation of neo-liberalism. At the same time, processes of degradation of political institutions are now mostly noticeable, as the new model of global development and democracy has not yet emerged.
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