The Future of Financial Globalisation

The BIS Annual Conference took place last week – the papers are here.

My paper “Financial Globalisation and the Crisis” has some discussion of the Irish case.

3 replies on “The Future of Financial Globalisation”

We need to define globalisation.

Globalisation is simply the cross border creation of credit by banks…… stuff like Labour and physical capital follows this mechanism.

The heart of this period of globalisation ( certainly post 1980) was the EMU and the eurosystem.
Article 123 and previously the fiscal discipline meme withen Europe prevented rational wage growth withen tradional borders so banks created more cross border bank consumer credit then previously was the case….this ate the surplus of countries without providing core domestic capital which national fiscal and money creation normally provided.
Depleting more and more resourses over time.
Think closure of European Nuclear programmes in early 80s and the export of capital to China to build coal fired power stations which was cheaper from a global banking perspective at that time.

This energy /wage / credit creation arbitrage system can only work when the price of oil is low unless there is a major change in ship technology or something.
Slow steaming just won’t cut it.

Spuds must be produced in Ireland
Cars for the British isles in Ellesmere port.

Why ?
The supply chains are now too long….driving up input prices.
Only a monetary revaluation will give the price signal for these commercial activities to begin again in domestic economies.

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