It’s the End of the World as We Know It… Again
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Widmaier, Wesley
Griffith University Author(s)
Year published
2015
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On 'Black Monday' October 19, 1987, the US stock market crashed, losing over 500 points and 22 % of its value in that single day. At around the same time, R.E.M. had just broken through as a major act, and their song 'It's the End of the World as We Know It (And I Feel Fine)' was playing everywhere, getting an extra boost from the events of the day.
In the United States, it seemed the ostensible 'Reagan era' was coming to an end. The still-evolving neoliberal economic order-based on valuing financial returns over wage increases as a source of demand-had been shown up. Asset bubbles were not to be trusted as a stable basis ...
View more >On 'Black Monday' October 19, 1987, the US stock market crashed, losing over 500 points and 22 % of its value in that single day. At around the same time, R.E.M. had just broken through as a major act, and their song 'It's the End of the World as We Know It (And I Feel Fine)' was playing everywhere, getting an extra boost from the events of the day. In the United States, it seemed the ostensible 'Reagan era' was coming to an end. The still-evolving neoliberal economic order-based on valuing financial returns over wage increases as a source of demand-had been shown up. Asset bubbles were not to be trusted as a stable basis for an economic policy order. However, a short-run solution would soon be found. Almost immediately, an untested, newly installed Federal Reserve chairman, Alan Greenspan, would flood the streets with money. The stock market would recover its lost ground over the next year and resume its ascent (it stands at 15,871 at the time of writing). Since then, over the past 28 years, the global economy has run on bubbles. Since 1987, these have spanned the Mexican peso crisis, the Asian financial crisis, the 'tech wreck' or dot-com bust, and the global financial crisis. Most recently, just this past Monday, August 24, we have seen history repeat. On 'Black Monday 2015', China's stock market lost 8.5% of its value. In turn, the People's Bank of China has taken a page from the Greenspan playbook and flooded markets with money. One can expect the Federal Reserve and US government to approve-as they should. Now is not the time to follow the Euro playbook or worry about export competitiveness. As followed on each of the above crises, lending freely is the route to recovery. However, one could be excused for wondering how we got here-addicted to bubbles and bailouts. In this light, one can view the current market situation through three lenses, to get a successively broader take on where we stand today.
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View more >On 'Black Monday' October 19, 1987, the US stock market crashed, losing over 500 points and 22 % of its value in that single day. At around the same time, R.E.M. had just broken through as a major act, and their song 'It's the End of the World as We Know It (And I Feel Fine)' was playing everywhere, getting an extra boost from the events of the day. In the United States, it seemed the ostensible 'Reagan era' was coming to an end. The still-evolving neoliberal economic order-based on valuing financial returns over wage increases as a source of demand-had been shown up. Asset bubbles were not to be trusted as a stable basis for an economic policy order. However, a short-run solution would soon be found. Almost immediately, an untested, newly installed Federal Reserve chairman, Alan Greenspan, would flood the streets with money. The stock market would recover its lost ground over the next year and resume its ascent (it stands at 15,871 at the time of writing). Since then, over the past 28 years, the global economy has run on bubbles. Since 1987, these have spanned the Mexican peso crisis, the Asian financial crisis, the 'tech wreck' or dot-com bust, and the global financial crisis. Most recently, just this past Monday, August 24, we have seen history repeat. On 'Black Monday 2015', China's stock market lost 8.5% of its value. In turn, the People's Bank of China has taken a page from the Greenspan playbook and flooded markets with money. One can expect the Federal Reserve and US government to approve-as they should. Now is not the time to follow the Euro playbook or worry about export competitiveness. As followed on each of the above crises, lending freely is the route to recovery. However, one could be excused for wondering how we got here-addicted to bubbles and bailouts. In this light, one can view the current market situation through three lenses, to get a successively broader take on where we stand today.
View less >
Book Title
Politics, policy & the chance of change: The Conversation Yearbook 2015
Copyright Statement
© 2015 Melbourne University Press. The attached file is reproduced here in accordance with the copyright policy of the publisher. Please refer to the publisher’s website for further information.
Subject
Policy and Administration not elsewhere classified