The Geopolitical Consequences of the Financial Crisis

PRINCETON – Worried investors and policymakers are becoming obsessed with Great Depression analogies. But the lesson of 1931 is only in part financial or economic.  The 1931 crisis was so big and so destructive because it was a financial drama that played out on a geo-political stage.

Two surprising conclusions are emerging in today’s discussions, but only one has been fully digested. First, big public sector action is needed.  Second, such action is complicated because in a globalized world the need for assistance spans borders.

First, private sector solutions have been tried but have failed in a breathtakingly short space of time. The most frequent consolation in this failure is that a really bad crisis is purgative. Insolvent businesses close, bad loans are written off, and lenders can lend with new confidence again.

To continue reading, please log in or enter your email address.

To access our archive, please log in or register now and read two articles from our archive every month for free. For unlimited access to our archive, as well as to the unrivaled analysis of PS On Point, subscribe now.

required

By proceeding, you agree to our Terms of Service and Privacy Policy, which describes the personal data we collect and how we use it.

Log in

http://prosyn.org/gKgmNKH;

Cookies and Privacy

We use cookies to improve your experience on our website. To find out more, read our updated cookie policy and privacy policy.