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Financial Crisis: What Happened? What Next?

Dear DA,

Even without really understanding the current “financial 9/11”, one can pick up a sense of fear, panic and uncertainty.

Blame for the crisis is attributed to “greed and fear”…or insufficient regulation…or too high bonuses paid to financial whizz kids…or irresponsible lenders pushing cheap loans…or irresponsible individuals accepting them…and so on.

But the crisis also needs a deeper structural analysis of how financial markets have changed over the past 2-3 decades – because it is these changes that lie behind the current financial meltdown, particularly those changes associated with “new financial instruments” and “vehicles” such as derivatives and private equity.

And because the neoliberal edifice has been so spectacularly shaken in these past few months, the crisis also provides an opportunity for the public to redefine what constitutes “the public interest” and to reassert its claims over how finance should be managed and allocated and in whose interest.

For the past couple of years, The Corner House and its colleagues have been trying to understand the impacts of the new finance on the ground – for instance, on communities affected by mining or plantations – and to analyse what difference it might make to solidarity strategies with affected communities: Is capital just capital, whether it comes from hedge funds, private equity, banks or the state? Or does the very structure of this new finance create new challenges?

Our work on this is still unfolding, but with the financial landscape changing by the day, we thought we should share with you now our analysis to date. So we have posted on our website two papers – see www.thecornerhouse.org.uk:
A (Crumbling) Wall of Money: Financial Bricolage, Derivatives and Power
Taking it Private: Consequences of the Global Growth of Private Equity

Because events are still unfolding so rapidly, however, we are posting them as “works in progress” that we aim to update as soon as we can.

Within the next few weeks, we hope to post other papers on sovereign wealth funds, hedge funds, and the liberalisation of the banking and financial system that enabled the crisis to happen.

We hope you find the papers useful. Your comments and feedback are always welcome.

Best wishes from all at The Corner House

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