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Reflexão num minuto (5)

@AnnPettifor, sobre a crise nos mercados bolsistas (Social Europe):

The 2007-9 global financial crises was caused by an economic model based on financial de-regulation and liberalization, privatization of taxpayer-financed assets, excessive private indebtedness and wage repression. That economic model has not undergone fundamental or even superficial change since then. The failure to reform or transform this flawed economic model is causal of today’s crisis, as it was of the 2007-9 crisis.

China is no longer able to help central bankers keep western economies alive. The model has led to a a surfeit of private debt, to a deficiency of global demand. The collapse in commodity prices signals a debt-deflationary period of stagnation (or worse) ahead. Until politicians, central bankers, economists and officials recognize this reality, and take action to reform and transform the existing economic model, there will be no cure for volatility, deflation and market failure. Stephen King of HSBC has warned: “the global economy is a ship sailing the seas of volatility with no lifeboats.”

So yes, I beg to differ with the equanimity with economists analysis this week’s stock market volatility. Because of the failure to deal with the causes of financial crises and market failure this is not just a correction. The global economy is sailing into dangerous waters.