• Governance, in its simplest sense refers to the art of governing, to ensuring that it is morally defensible and efficient. (Halliday, p488, in Held & McGrew, 2003)

• Europe and North America are like colonial powers in the early 20th century ... clinging to an order they no longer have the power or the will to sustain (Woods, 2006) [See plan/links]

Responses; backlash and (re-?)Regulation

• Blame bankers; cap bonuses etc• (incentives, short-term?)

• Transaction taxes (Tobin, curb volatility)• BIS – Basel Rules; bank capitalisation and

reserve assets ratios• Banking regulation; Investment vs Retail, off-

balance sheet funds; Volcker (US), Vickers (UK)• Bolder? Co-ordination and “new Bretton Woods”• “Global Governance”

IIPE 19 & 20: Financial liberalisation, crises, Global Governance

Back to basics: international monetary system(s): Recap from weeks13 & 19 Policy implications and responses?

Normative, what is desirable?

Finance, exemplar of need for …‘Global Governance’ … ?

• Speculators may do no harm as bubbles on a steady stream of enterprise. But the position is serious when enterprise becomes the bubble on a whirlpool of speculation. When the capital development of a country becomes the by-product of the activities of a casino, the job is likely to be ill-done, (Keynes, General Theory, 1936/1973, p.159)

Contagion and crises:

• UK/Exchange Rate Mechanism 1992, Sept. 93

• Mexico 1994-95; E.Asia 1997 – Thailand, Malaysia, Indonesia;

• Russia 1998

• 2007-08 and …

Re-writing rules: capitalism’s crises

• the liquid lexicon 2007-10: US sub-prime housing, global contagion, price risk, “moral hazard”

• Credit Crunch – US finance – investment banks collapse; Northern Rock;

• Institutional responses: G7/8, Financial Stability Forum (99). OECD,

• Bank for International Settlements, G20, IMF

• Washington and London “summits”

Responses; backlash and (re-?)Regulation

• Blame bankers; cap bonuses etc• (incentives, short-term?)

• Transaction taxes (Tobin, curb volatility)

– Alternatives: Attac… World Social forum… (Occupy?)

• BIS – Basel Rules; bank capitalisation and reserve assets ratios

Responses; backlash and (re-?)Regulation

II

– Cont…

• Banking regulation; Investment vs Retail, off-balance sheet funds; Volcker (US), Vickers (UK)

• Bolder? Co-ordination and “new Bretton Woods” (London summit)

• “Global Governance”

• Governance, in its simplest sense refers to the art of governing, to ensuring that it is morally defensible and efficient.

(Halliday, p488, in Held & McGrew, 2003)

Normative, Governance: what is necessary? what is desirable?

• Reform

• Regulate

• Reversibility?

• Week 20, plus revision

Liberal debate on governance:

• reform IMF-World Bank, G20, WTO (N.Woods)• “new” patterns of global actors and governance

(Held, Archibugi et al) • issues: climate change: poverty &

inequality; security (nuclear)… and finance ? • new actors and global patterns, trans-

national networks• corporate, ‘global civil society’,

‘cosmopolitan democracy’

• Basic principles: promote the rule of law, increase transparency and democracy in global governance, increase commitment to social justice, the protection (and reinvention) of community and the regulation of the global economy

• In practice… finance ….