Coming up:
Crash Course on Debt crisis in the global south, and radical solutions:

Nov 05 2020 16:00 CET local time
#3 What is Subordinate Financialisation?

More info to be announced...
Current series:
About this series:
Crash Course on
Debt crisis in the global south, and radical solutions:

In this series, we discuss the field of debt crises in the ‘developing world’, and the different aspects that determine the subordinate economic and financial position of the Global South and why this matters. Has anything changed since the 1980s debt crises when a global movement called for a debt jubilee? What are the prospects for change? And how can these kinds of debt crises be prevented in future?

The indebtedness of developing countries had reached alarming levels before the Covid-19 crisis. A wall of money, managed by investment funds seeking profits across the planet, had an endless appetite for investments in debt from the Global South. Once the panic hit capital markets in March 2020, financial flows to the Global South suddenly stopped. The drop in financial flows to developing countries was faster and larger than at any crisis seen before. Since May, money has started to flow back, leaving the Global South with even less means for coping with the consequences of the Covid-19 crisis.

This disproportionate mood swing of capital markets is a perfect illustration of the difficult position developing countries find themselves in when it comes to today’s financialised global economy. In this Crash Course series, we take a look at the different aspects that determine the subordinate economic and financial position of the Global South and why this matters. We will discuss the different mechanisms that produce unequal economic relations, and also the possible solutions for tackling the root causes of these inequalities.

In the 1980s we saw debt crises in many parts of the Global South. This was followed by ‘Structural Adjustment Programmes’ set by the World Bank and the International Monetary Fund (IMF): indebted countries had to pursue austerity policies, privatise state enterprises and liberalise their economies.

In the 1990s, global financial markets were further liberalised, creating opportunities for speculative funds to take advantage. This resulted in new debt crises in regions like East Asia. More recently we have also seen the controversial handling of the Greek debt crisis and the severe adjustment package imposed upon Greece, with the consequences that followed from it.

The Quantitative Easing (QE) programmes of central banks in the Global North injected trillions of dollars into the financial system after the global financial crisis of 2007, paving the way for another round of potential debt crises today. The surplus of capital and low interest rates in developed economies led to a rise in capital flows to developing countries. Then Covid-19 came along. Again we saw an unprecedented increase in money being injected into the financial system by central banks in the Global North. This rising tide of capital flows has the potential to result in a new period of ‘lost decades’, provoked by debt crises.

In this Crash Course series, we discuss the field of debt crises in the ‘developing world’. Has anything changed since the 1980s debt crises when a global movement called for a debt jubilee? What are the prospects for change? And how can these kinds of debt crises be prevented in future?

Speakers in this course:
Andrew M. Fischer (ISS), Ingrid Harvold Kvangraven (University of York), Ewa Karwowski (University of Hertfordshire)
Previous series:
About this series:
Crash Course on
Monetary policy, central banks and ideology:

Our new Crash Course on monetary policy, central banks and ideology is a platform designed to open up debate on how we can move out of the current crisis and make the necessary steps towards achieving social, economic and ecological justice. Crash Course is inviting global experts on monetary policy to break down complex issues in lay terms and make them accessible to all so that we can understand how to shape our global monetary policy for a fairer future.

The financial crisis of 2007/2008 caused a huge shock throughout the global north. The finance-driven economic model was rescued by extreme measures taken by central banks in developed economies, which embarked on ‘unconventional monetary policy’. One of these policies was the massive purchase of assets by central banks, primarily government bonds, with instantly created money. This asset purchasing programme was branded ‘Quantitative Easing (QE)’.

QE policies were controversial right from the start. While the community of central bankers had always displayed a unified front, QE policies led to a visible split on several issues. The Bank for International Settlements, for example, refuted  the claims made by the European Central Bank (ECB) that QE money was reaching the real economy.

The Dutch and German central banks criticised the ECB’s QE policies on the grounds that they would reduce the disciplining effects of markets on corporations. In their opinion, this would result in zombie companies. Ben Bernanke, the former Chair of the US Federal Reserve, responded to the lack of monetary theory: “The problem with QE is that it works in practice, but it doesn’t work in theory.”

In the years that followed, the effects of QE became apparent. It was one of the most spectacular engines for wealth inequality. The QE money that was injected into the financial system remained circulating in the financial system instead of reaching the real economy. QE blew bubbles in real estate markets and stock markets. The asset-owning class – the rich – became even richer. Everyone else was confronted by austerity policies – after all, someone had to pay the bill.

There was also a global component. Investors searched for a return on investment as interest rates were low in the global north. One of the outlets of this massive wall of money looking for activities was a huge increase in the amount of debt in in the global south. In particular, non-financial corporations and government debt in the global south swelled through bonds issued in dollars and euros. This debt will play an important role in how the Covid-19 crash will impact on economies throughout Africa, Latin America and Asia.

The 2020 Covid-19 crash

Fast forward to the Covid-19 crash. Centrals banks intervened enormously as the global financial system appeared to go into the second meltdown in just 13 years. This time around everything is even bigger and moving even faster. But a community of engaged and critical researchers stands ready to comment on the ongoing monetary policy changes and help with formulating progressive policy proposals, drawing lessons from the previous global financial crisis.

If we are able to pump tens of trillions of dollars into the financial system to save the global economy, why not use this to finance the necessary steps to move to green societies? How can we use the Covid-19 crisis to become stronger than before? What is the role of central banks and monetary policies in this process? How can monetary policy be useful to avert a new decade of austerity and debt crisis in the global south, and to finance a global green deal instead?

These are the issues we are planning to discuss in our first Crash Course series on transformative monetary politics in a series of four webinars.

Speakers in this course:
Jens van’t Klooster (KU Leuven), Benjamin Braun (Max Planck Institute), Pablo Bortz (Universidad de San Martín), Daniela Gabor (UWE Bristol)