| 2008: financial or breakdown crisis? New world geopolitics under way | | Print | |
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The 2008 crisis hits two targets: The monetary system, particularly the floating exchange rate mechanism; The financial market, particularly the creative valuation methods. On the side of the international monetary system, the 2008 financial crisis hides intense geopolitics manoeuvres that are intended to create the conditions for a new world order to emerge. Hence, a new international monetary system should be established creating some regulations for the floating of major world currencies. Most probably, it will not see any more the predominance of one currency on all the others. On the side of the financial market, the 2008 crisis is virulently correcting the asymmetry of the market. It is deleveraging the stock values back to the early 1980s. In other terms, the market is purging the system and clearing out the creative valuation of stocks. However painful the financial and economic consequences may be, the geopolitical implications hurt the most all Western governments. This paper analyzes the correlation of economic and financial data with the geopolitics endeavours. It accounts for the key policy decisions that have influenced the events until the unfolding of the current crisis. The focus is put on the geopolitics reasons underlying economic and financial options and choices. The challenge posed at the forthcoming G20 summit requires addressing basic issues in order to prevent further market slides and potentially serious geopolitics crisis. Albeit the horrific financial data pounded daily by the media, economics fundamentals appear to be at odds with such data. The analysis hints on the responsibility of politics and media in leveraging on the current crisis. While governments are struggling to re-assert some sort of "imperial" sovereignty in the market, the globalized system has largely bypassed them. The nomadic attribute of capital does not change the requirements for market efficiency and return on investments. The current violent deleveraging and disinvestment in the financial markets confirms this attitude. The analysis argues that governments squabbling with markets over regulations risk making more damages than profits. Instead, global regulatory systems should be set to prevent and repress financial piracy as well as unworthy management conducts of financial actors. The benevolent treatment to commercial and central bankers so far is sending the wrong signal to both shareholders and stakeholders. Contents
2008_financial_crisis_a_system_breakdown by Dr. Paolo Raffone , The CIPI Foundation Published on November 14, 2008
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