Transnational Financial Crisis

In the past thirty or so years, the world has repeatedly found itself in the situation of dealing with multiple transnational financial crises. The contributing factors for each of course vary, however there are certain patterns and likenesses that can be picked out and analyzed in hopes of better understanding how these events came to take place. This all assists in the realization that each of these issues were not in fact single, isolated problems but rather repercussions to globalization of capital. Due to the long-lasting nature of these events and the complexity and interconnectedness of global economic systems, the solutions that might have been successful historically are not necessarily applicable anymore. It is only in examining

Starting in 1982 when Mexico announced that it would default on its bank debt, and moving through to the Asian Financial Crisis in 1997 and finally to the Global Financial Crisis in 2007, the biggest common issue appeared to be, at its simplest form, was too much money being loaned to too many. In Mexico, the International Monetary Fund, or IMF, offered new loans in exchange for cutbacks in state spending, however debtor states used this to refinance their old loans and extend repayment time. Another issue in this crises was somewhat of a “Catch 22” where all the banks knew they would be better off by clearing their books to reduce risk of debtors defaulting but no bank was willing to do so

Though stronger banking regulations would be more beneficial for overall economic security, they are not put in to place simply because politicians can and are financially funded and influenced, giving them incentive to perpetrate political and economic inequality. Frustration with this system has always been present, however a good example of its modern day events were the Occupy Wall Street movements in 2011, which demanded the disbanding of “too-big-too-fail” banks. If the financial system is to be restored, this wage gap between the “haves” and the “have-nots” needs to be addressed. This could be done through taxation in hopes of redistributing wealth. Ironically, these policies that maintain the gap are exactly the ones that policy makers are attempting to preserve in recovery programs, however, as mentioned before, these are the exact kinds of things that are weakening our democracy, causing issues in our economy and slowing our economic growth. The inequality and lack of fairness in our political-economic systems is coming to light and must be addressed before any improvements can be