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Keynesian Return

Keynesian Return. A Fauzan Azhima, 0706291142, International Relations Department. The current financial crisis. The current financial crisis raise from three level of process: the over expansion credit in the US, UK, Spain and Ireland, that started from liquidity crisis;

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Keynesian Return

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  1. Keynesian Return A Fauzan Azhima, 0706291142, International Relations Department

  2. The current financial crisis • The current financial crisis raise from three level of process: • the over expansion credit in the US, UK, Spain and Ireland, that started from liquidity crisis; • those over credit has increased inequality of wage distribution; • led to economic stagnation English for International Relations

  3. Asia, United States, and Europe • Asia emerging economies merchantilist • United States’s unsustainable credit base economic • Europe’s divergence economic structure English for International Relations

  4. Features which made the current crisis going global • the international finance has no regulation system • the wage led deflation • the structural divergence economic in Europe English for International Relations

  5. Solution • New trends in international financial market towards re-regulating the financial markets: • strengthening the prudential regulations for banks and financial institutions • returning the capital flow limitations which include some kinds of capital controls English for International Relations

  6. Solution • Wage-led deflation being healed by returning the profit-friendly income redistribution. • Hard to be implemented in the free trade environment • Tariffs and protectionist policies are the most appropriate way out •  - Keynes international monetary system like have evolved in 1942-1945 • - combine with restraints on mercantilist policies • - symmetric and balanced international liquidity • - more full employment of national economic policies English for International Relations

  7. Solution • The euro could survive by evolving from the single currency into a common currency on the pattern of Keynes BANCOR: • Common currency which all European currencies would be convertible • Combining euro as common and national currency provide stabilized growth and trade in region • Lead to greater flexibility in dealing with great macroeconomic shocks English for International Relations

  8. Thank you English for International Relations

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