The financial market turmoil in 2007 and 2008 has led to the most severe financial crisis since the Great Depression and threatens to have large repercussions on the real economy The bursting of the housing bubble forced banks to write down several hundred billion dollars in bad loans caused by mortgage delinquencies At the same time, the stock market capitalization of the major banks declined by more than twice as much While the overall mortgage losses are large on an absolute scale, they are still relatively modest compared to the $8 trillion of US stock market wealth lost between October 2007, when the stock market reached an all-time high, and October 2008 This paper attempts to explain the economic mechanisms that caused losses in the mortgage market to amplify into such large dislocations and turmoil in the financial markets, and describes common economic threads that explain the plethora of market declines, liquidity dry-ups, defaults, and bailouts that occurred after the crisis broke in summer 2007 To understand these threads, it is useful to recall some key factors leading up to the housing bubble The US economy was experiencing a low interest rate environment, both because of large capital inflows from abroad, especially from Asian countries, and because the Federal Reserve had adopted a lax interest rate policy Asian countries bought US securities both to peg the exchange rates at an export-friendly level and to hedge against a depreciation of their own currencies against the dollar, a lesson learned from the Southeast Asian crisis of the late 1990s The Federal Reserve Bank feared a deflationary period after the bursting of the Internet bubble and thus did not counteract the buildup of the housing bubble At the same time, the banking system underwent an important transformation The

/pdf/deciphering-the-liquidity-and-credit-crunch-2007-2008-3612pahtil.pdf

Deciphering the Liquidity and Credit Crunch 2007-2008

The newest “new institutionalism,” discursive institutionalism, lends insight into the role of ideas and discourse in politics while providing a more dynamic approach to institutional change than the older three new institutionalisms. Ideas are the substantive content of discourse. They exist at three levels—policies, programs, and philosophies—and can be categorized into two types, cognitive and normative. Discourse is the interactive process of conveying ideas. It comes in two forms: the coordinative discourse among policy actors and the communicative discourse between political actors and the public. These forms differ in two formal institutional contexts; simple polities have a stronger communicative discourse and compound polities a stronger coordinative discourse. The institutions of discursive institutionalism, moreover, are not external-rule-following structures but rather are simultaneously structures and constructs internal to agents whose “background ideational abilities” within a given “meanin...

/pdf/discursive-institutionalism-the-explanatory-power-of-ideas-2x76ola04b.pdf

Discursive Institutionalism: The Explanatory Power of Ideas and Discourse

The third way: the renewal of social democracy

Across the broad field of heterodox political economy, ‘neoliberalism’ appears to have become a rascal concept – promiscuously pervasive, yet inconsistently defined, empirically imprecise and frequently contested. Controversies regarding its precise meaning are more than merely semantic. They generally flow from underlying disagreements regarding the sources, expressions and implications of contemporary regulatory transformations. In this article, we consider the handling of ‘neoliberalism’ within three influential strands of heterodox political economy – the varieties of capitalism approach; historical materialist international political economy; and governmentality approaches. While each of these research traditions sheds light on contemporary processes of market-oriented regulatory restructuring, we argue that each also underplays and/or misreads the systemically uneven, or ‘variegated’, character of these processes. Enabled by a critical interrogation of how each approach interprets the geographies, modalities and pathways of neoliberalization processes, we argue that the problematic of variegation must be central to any adequate account of marketized forms of regulatory restructuring and their alternatives under post-1970s capitalism. Our approach emphasizes the cumulative impacts of successive ‘waves’ of neoliberalization upon uneven institutional landscapes, in particular: (a) their establishment of interconnected, mutually recursive policy relays within an increasingly transnational field of market-oriented regulatory transfer; and (b) their infiltration and reworking of the geoinstitutional frameworks, or ‘rule regimes’, within which regulatory experimentation unfolds. This mode of analysis has significant implications for interpreting the current global economic crisis.

Variegated neoliberalization: geographies, modalities, pathways

The concept of power is central to international relations. Yet disciplin- ary discussions tend to privilege only one, albeit important, form: an actor control- ling another to do what that other would not otherwise do. By showing conceptual favoritism, the discipline not only overlooks the different forms of power in inter- national politics, but also fails to develop sophisticated understandings of how global outcomes are produced and how actors are differentially enabled and constrained to determine their fates. We argue that scholars of international relations should employ multiple conceptions of power and develop a conceptual framework that encourages rigorous attention to power in its different forms. We first begin by producing a tax- onomy of power. Power is the production, in and through social relations, of effects that shape the capacities of actors to determine their circumstances and fate. This general concept entails two crucial, analytical dimensions: the kinds of social rela- tions through which power works (in relations of interaction or in social relations of constitution); and the specificity of social relations through which effects are pro- duced (specific/direct or diffuse/indirect). These distinctions generate our taxonomy and four concepts of power: compulsory, institutional, structural, and productive. We then illustrate how attention to the multiple forms of power matters for the analysis of global governance and American empire. We conclude by urging scholars to beware of the idea that the multiple concepts are competing, and instead to see connections between them in order to generate more robust understandings of how power works in international politics.

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Power in international politics

That political analysts have increasingly turned to the question of structure and agency derives in no small part from concerns about the capacity of existing approaches to deal with complex issues of social and political change. To posit a world in which structuralist analysis will suffice is to assume that political change is effectively confined to relatively marginal modifications of behaviour set within the context of a definitive set of structuring rules or laws which remain essentially static over time. Though such an assumption renders more plausible a conception of political analysis as a social science couched in the image of the natural sciences (as argued in Chapter 2), it is increasingly difficult to reconcile with a world in which the ‘rules of the game’ seem to be in a state of near-constant flux. Though itself hotly disputed, the globalisation thesis would, for instance, suggest that many of the most cherished of political analytical assumptions (of tightly delimited political territories governed by sovereign states, of nation states and national economies as the natural units of political and political economic analysis respectively) are in a process of being transcended (for a flavour of the debate compare Held et al. 1999 with Hirst and Thompson 1999). However sceptical one might (and perhaps should) be about the new globalisation orthodoxy, the point is that were it ever plausible to posit a world in which the rules of the game remained constant over time and were immune from human intervention, it is no longer.

Continuity and Discontinuity in the Analysis of Political Change

This paper presents a comparative analysis of the determinants, sustenance and broader macroeconomic consequences of the ultimately unsustainable housing boom in Ireland and the UK in recent years It examines, in particular, the role played by ostensibly depoliticised monetary policy in both contexts in the development of a house price bubble which served to fuel consumer-led growth It assesses the viability, sustainability and reproducibility of the private debt-financed consumer boom that house price inflation has generated In the process it draws attention to the increasingly differentiated character of both government inflationary preferences and counter-inflationary performance with the shift to official measures of inflation that exclude mortgage interest repayments and, in the UK at least, to the covert repoliticisation of monetary policy It concludes by suggesting that governments may well not have time-inconsistent inflationary preferences, so much as sectorally specific inflationary preferences This might be summarised in terms of the aphorism - ‘retail price inflation poor, house price inflation good’

Good Inflation, Bad Inflation: The Housing Boom, Economic Crisis and the Rise of Public-Private Keynesianism

Relevant to whom? Relevant for what? The role and public responsibility of the political analyst

Le vote est une pratique symbolique. Pourtant, les politistes tendent a se focaliser sur les resultats des elections ou sur les motivations du vote, en oubliant la signification symbolique de la pratique elle-meme et celle qu’elle a pour les participants. Dans cet article, nous attirons l’attention sur cette dimension a travers une analyse des rituels de vote et France et au Royaume-Uni. Nous considerons ce que les electeurs font lorsqu’ils votent. En particulier, nous nous interrogeons sur la maniere dont le choix de l’electeur est concu comme une performance publique ou comme un acte accompli en prive et en secret. Nous considerons comment des pratiques, typiquement tenues pour evidentes et pourtant distinctes, nous aident a mieux comprendre dans quelle mesure ces actes refletent des frontieres differentes du public et du prive dans les deux pays, et contribuent a construire des conceptions singulieres nationales du systeme politique et du citoyen dans le processus democratique.

Voting rituals in France and Britain

In the wake of the deepest and longest recession the UK has experienced since the 1930s, this paper examines the origins, sustenance and puncturing of the growth dynamic the UK economy enjoyed between 1992 and 2007. In so doing it seeks to gauge the character, paradigmatic significance and effectiveness of the interventions made in the attempt to shore up the growth model and the prospects for the resumption of growth in the years ahead. It argues that the Anglo-liberal growth model is, indeed, fatally flawed and that, in the absence of a new growth model, it is difficult to see how sustained economic growth can be achieved. Yet it also argues that, at present, no alternative growth model is on offer and that it is wrong to infer the likelihood of a paradigm shift in economic thinking from the ‘inter-paradigm’ borrowing used to shore up the old growth model in the midst of the recession. If crises are judged as much by the transformations to which they give rise as by the accumulation of pathologies out of which they crystallize, then what we have experienced to date is not so much a crisis as a catastrophic equilibrium. Though the symptoms to which it has given rise are pregnant with the possibility of crisis, the crisis itself is yet to come.

https://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID1655726_code933752.pdf?abstractid=1643872&mirid=1

Colin Hay

Papers

Continuity and Discontinuity in the Analysis of Political Change

Good Inflation, Bad Inflation: The Housing Boom, Economic Crisis and the Rise of Public-Private Keynesianism

Relevant to whom? Relevant for what? The role and public responsibility of the political analyst

Voting rituals in France and Britain

The Story of a North Sea Bubble: The Strange Demise of the Anglo-Liberal Growth Model