Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Economic Globalisation > Lecture 4 - Disorganised Capital > Flashcards

Lecture 4 - Disorganised Capital Flashcards

1
Q

When was the breakdown of Keynesianism

A

1960-1970s

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Following the breakdown of Keynesianism what rose

A

Enabled the rise of new political-economic ‘ideologies’

Heralded in the most recent phases of the world economy

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

3 triggers that led to the collapse of organised capitalism

A
  • Eurocurrency market
  • Collapse of BWS
  • Oil price shock
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Who talked about the 3 triggers that led to the collapse of organised capitalism

A

Held et al 1999

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What is the eurocurrency market

A

USSR depositing money in Europe

EU banks realised they could lend this money

This boomed

US companies invested all their earnings in these banks

Strain on exchange market systems

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What is the collapse of the BWS

A
  • Strained by emergence of EC markets
  • $ speculation grew due to declining confidence
  • Domestic inflation fuelled this
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What was the oil price shock

A
  • OPEC increased the price of oil by 400%
  • Huge international transfers of funds followed
  • Increased liquidity of banks
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What did the boom lead to

A

Increased speculative trading of US dollar in money market – declining confidence in dollar (inflation and growing trade deficit).
^ This is problematic if every currency is attached to it
Pressures on global financial system and institutions following 2nd world war

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What were the 5 pressures on BWS

A

Pressure 1 – Eurodollar boom

Pressure 2 – Increasing speculative trading of the dollar due to…

Pressure 3 – Declining confidence in the value of the dollar because of…

Pressure 4 – High rates of inflation in the USA and…

Pressure 5 – Growing trade deficit

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What happened following the collapse of BWS

A
  • Nixon removed the USA from Bretton-Woods
  • New floating exchange rates globally
  • Increased competition
  • Value of currencies shaped by the invisible hand of ‘the market’
  • All major currencies devalued
  • Ushered in a new era of deregulation…
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What happened in the oil crisis

A

Main problem = oil at the time priced in dollars (following the devaluation of other currencies = big problem = weakening in confidence = uncertainty in oil market)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Who set the price of oil

A

OPEC

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Impacts of the recession on the USA

A
  • Crisis in production (overseas [NIC] competition)
  • Stock market crash
  • High inflation
  • Rising unemployment
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Impacts of the recession on the UK

A
  • The ‘3-Day Week’ – oil rationing (1973)
  • Inflation reached 20%
  • Widespread strikes by miners
  • Culminated in the Winter of Discontent in 1978
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What happened in the 1970s across the country

A

Riots

People wanted to liberalised and change things

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What had happened by the mid 1970s

A

Global financial system had collapsed
A lot of economic problems / issues

Mass production couldn’t work efficiently

Becoming more and more about the consumer and their needs

Markets saturated with low quality, poor choice products. – but consumers wanted more

Not enough money to run the country

Global competition

BWS collapsed

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

When was unemployment high in the UK

A

80s - still felling the ripples of crisis from 1973 (similar patterns to the USA)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What % of employment was manufacturing in the UK in 2011

A

5%

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

What did Nation States still try and act like

A

Their economies were organised and managed

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Who emerged to erode the organisation autonomy of the nation state

A

Thatcher and Reagan (both in 1970-1990s)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

When did Thatcher come into place

A

After peak crisis period happened and had to sort things out
(same with Reagan)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Why did it seem like there was no alternative

A

Leading industrial nations were in a situation of CRISIS

Change was therefore seen not as merely DESIRABLE but NECESSARY

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

What approach did Thatcher and Reagan promote

A

Neo-liberalism

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

The state and disorganised capitalism

A

The state has less power as production, consumption, employment and welfare are reliant on the markets to (re) distribute wealth and stimulate development

25
Q

Where did neoliberalism emerge

A

Emerged in South America in the 1980s to describe Augusto Pinochet’s economic reforms.

26
Q

What is neoliberalism described as

A

‘Market fundamentalism’ – no state control in anything, just the market

27
Q

What are the three legs to neoliberalism

A
  • Liberalise
  • Deregulate
  • Privatise
28
Q

What is privatisation

A

Selling off (or giving away) of state owned assets to private companies

29
Q

Example of privatisation

A

E.g. post office, British steel and coal. They were inefficient in market terms so had to be gone from the state - market meant to make them more efficient.

30
Q

List of key theorists

A
  • Adam Smith
  • David Ricardo
  • Hayek and Friedman
31
Q

Who as Adam Smith as a theorist

A

Social prosperity as a result of the market being self-regulating

32
Q

Who was Ricardo as a theorist

A

Encouraged free movement and trade (increase volume of trade and spatial extent of it)

33
Q

Who was Hayek and Friedman

A

Translated old 18th century ideas into a modern context; used by policy makers and government to bring down Keynesian system of managed capitalism

34
Q

Link between neoliberalism and globalisation

A

Often seen as one and the same thing
Liberalism and global markets self perpetuate and reinforce each other
(but they aren’t the same thing)

35
Q

What kind of strategy is neoliberalism seen as

A

A hegemonic strategy

36
Q

Define hegemonic

A

The one thing every national government will engage in as it places responsibility away from the state and onto the market (it is now everywhere globally – one of the most important global economic policies)

37
Q

10 characteristics of neoliberalism

A
  • Free trade
  • Privatisation
  • Deregulate businesses + finance
  • Decrease corporation tax
  • Encourage FDI
  • Trade unions
  • Decrease inflation
  • Property rights
  • Expand exports
38
Q

What did Thatcher think the main barrier was

A

Organised capitalism

39
Q

Situation in 2007

A

-Leading industrial nations (e.g. the USA and UK) were increasingly becoming reliant on credit (e.g. mortgages)
-The USA was flooded with money following Russian and East Asian crises of the late 1990s
-Housing construction boomed, as did prices, as did the amount of money being lent as mortgages
-Thus, a bubble formed in the USA…
…as is usual, bubbles cannot keep growing

40
Q

How is debt secured

A
  • Individual mortgage debts are bundled together
  • They are then assigned a ‘riskiness’
  • Sold to institutional investors
  • Often banks, investment funds or other institutions
  • Interest on debt is paid to investors
41
Q

Problems of securing debt

A
  • Overextension can happen
  • System not resilient to shocks
  • System is not transparent
  • Leveraging of debt is not transparent
42
Q

Least risky debt

A

AAA debt

43
Q

Most risky debt

A

BB

44
Q

When does the debt system fail

A

When people stop paying money back there are problems – system fails

45
Q

What was underpinning the extension of debt

A
  • House prices rise
  • Lenders don’t do as many checks
  • Then people started defaulting on mortgages, house prices dropped as well meaning investors in MBSs lost vast amounts of money
46
Q

What does it mean when lenders cant do as many checks

A

Many people with mortgages could never realistically repay them

47
Q

Who were people who cant repay debt popular to

A

Investors because of their high risk

48
Q

What happened before housing prices rose

A

House price boom forced people to take out bigger mortgages.
Therefore a lot of banks got rid of credit scores – meant people who took out mortgages could never realistically repay them. Investors liked the high risk of these.
House price slump as a result, people who invested lost a lot of money. Banks ran out of money reserves – couldn’t lend out any more money. Credit dried up.

49
Q

Consequences of the recession

A

Specialised mortgage lenders and banks were left holding loans they could not sell.

This inhibited their ability to lend (so they didn’t)

Hence the term ‘credit crunch’ and ‘liquidity freeze’

The capillaric structure of the global financial system spread the crisis globally

50
Q

Global impacts of the recession

A

-Lack of confidence in banks and FIs by investors
-Lack of credit availability
-Lack of capital holdings/asset to back the loans that had been taken out
-

51
Q

How did national banks become involved in the recession

A

National banks as lenders of last resort bailed out failing private banks

52
Q

Bailout fund for recession

A

ECB and the Fed (an other CBs) announced a bailout fund of $2.5trillion

53
Q

How did they survive the recession

A

Printing of new money – into privately owned and run banks

Only survived by the bailout of money from the state – which is what they were trying to avoid in the first place

54
Q

What happened after the recession - did neoliberalism come back?

A

The long-termism of the ‘organised economy’ had disintegrated entirely

55
Q

What did they have to do to banks following the recession

A

Had to separate banks - between investment banking and consumer banking – to make sure this doesn’t all happen again.

56
Q

Currently in the UK - debt

A

Still a high level of consumer debt in the UK – could happen again possibly

57
Q

Currently in the UK - what is the next possible crisis

A

Economic uncertainty, big organizations and investors can panic – move staff into offices into mainland Europe away from London (London may not have access to European market) e.g. Frankfurt and Paris – so they continue to have a sort of access to these markets.

58
Q

Currently in the UK - Brexit and manufacturing

A

Uncertainty in manufacturing – need to get parts from all over (inefficiency there is now large tariffs – people may remove their investments from manufacturing)

59
Q

Currently in the UK - pound

A

The Pound is trading at it’s lowest level for years

  • Great for export
  • Not so great for consumers

Economic Globalisation (10 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions