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The next financial crisis

Ten years ago I took an entry-level economics class at school. It was September 2008. Lehman Brothers had just filed for bankruptcy. ‘It’s certainly an interesting time to be studying economics!’ the teacher said. It was – but you wouldn’t have known from the syllabus. There was nothing about the financial system. There were, however, plenty of elegant abstractions, showing the intersection of supply and demand in a timeless, spaceless universe.

This blind spot for finance, I discovered researching this issue, extends to the economics profession generally. More worryingly, the complexity of the financial system eclipses even its practitioners. Fabrice Tourre, the only Wall Street trader convicted of anything in relation to the global financial crisis, sent off an email to his girlfriend in 2007 when he knew something was wrong: ‘[I’m] standing in the middle of all these complex, highly levered, exotic trades [I’ve] created without necessarily understanding all of the implications of those monstruosities [sic]!!!’

Fortunately, there is a growing constituency of progressive, unorthodox economists who do understand these exotic monstrosities. And when I reached out to them to speculate about possible candidates for the next financial crisis, they were all too ready to contribute: the Eurozone, trade wars, shadow banking, central banks… At least next time we won’t be surprised when it happens.

A positive prospect on the horizon is the redesigned and relaunched New Internationalist. From September 2018 we will become a bimonthly publication, giving us more space to go in-depth, with long-form features, more visual treatments and, as always, a rigorous sense of inquiry into the political, economic and social issues of our day and our world. 

- Yohann Koshy

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Included in this issue

Botswana

Botswana: losing its sparkle?

Wame Molefhe profiles Botswana, where prosperity has morphed into corruption and inequality.

Bisbee 17 at Hot Docs, Toronto

Mixed Media: Hot Docs

Highlights from the major documentary film festival held annually in Toronto, Canada.

The Carbon Bubble

The carbon bubble

Yohann Koshy looks at the impending catastrophe linking the stock market to climate change.

How to make housing a human right

In major US cities, working people have been all but priced out, pushed into ever more distant fringes and suburbs. Mark Engler...

Against their will

Lea Surugue and Gisella Ligios report on the Roma women fighting to make the Czech authorities face up to the scandal of forced...

The interveners

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Isaias Afwerki

Worldbeater: Isaias Afwerki

We put the President of Eritrea’s track record – liberation fighter turned ruthless dictator – under the spotlight.

Is the ‘Data Mafia’ here to stay?

From the moment you were born, The Man With The Data knew you better than you knew yourself. Omar Hamdi explains.

Inside Hungary’s post-truth laboratory

Viktor Orbán, the country's autocratic hard man, is riding high, with the help of young propaganda-mongers. Lorraine Mallinder...

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Home sweet home

The foreclosure crisis in the US is still a reality for many. Jack Crosbie reports on the human cost of finance.

The next financial crisis

Clueless central banks? A trade war? Southern debt overload? Leading economists including Jayati Ghosh, Cédric Durand and...

China: a post-neoliberal order?

For Martin Jacques, 2008 represented the end of the Western-dominated financial system and the beginning of a Chinese century.

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