Making Sense of the Crisis

Description

Making sense of the financial crisis may sound like a daunting task. Often the financial system comes across as an impenetrable web of obscure institutions and complicated transactions. Explanations of how these institutions work, what instruments they use and the impact that they have on us often get lost in the technical jargon used to talk about them. Libraries are full of economic theories and analyses used to explain or justify policies and opinions, yet they often assume readers are up to speed with the facts and debates. So is it possible to make sense of the crisis? We would like to think that it is and so have published the second part to the Corporate Watch Guide to Finance and Banking. A common trend in mainstream analysis of the financial crisis has been to blame individual institutions or managers for ‘bad investment decisions’ – the good old ‘bad apples’ argument. The first article in this briefing deconstructs this and other myths and shows how the credit crunch came about as an inevitable result of the recent developments in the present arrangements of the economic and financial system, i.e. capitalism. The second article, Crisis Stories, provides summaries of, and comments on, different interpretations and analyses of the financial crisis (Marxist, Keynesian and so on). Though it was originally written and published online in 2009, the author’s analysis of the credit crunch still holds up and is, in fact, supported by recent developments. Finally, to complement ‘our’ critical take on the crisis, we have included an interview with a bank trader to give readers a glimpse into how ‘they’ think.