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The Legacy of the Crash

Page 39

by Terrence Casey


  13. The US has become the ‘consumer of last resort’ while China became the new ‘workshop of the world’. Chinese surpluses were plowed back into American investments, both Treasury bonds (many purchased by the central bank) and asset backed securities. For China this kept its currency artificially low, enhancing exports, and ‘self-insured’ against future financial crises, such as that which swept East Asia in 1997.

  14. Merkel is hamstrung by domestic politics; German taxpayers do not want to bail out their spendthrift Greek cousins.

  15. One should temper the predictions of China’s rise with the recollection of all of those who confidently predicted that Japan would rule the twenty-first century just a few decades ago.

  References

  Autor, David (2010) ‘The Polarization of Job Opportunities in the US Labor Market: Implications for Employment and Earnings’, 30 April, Center for American Progress.

  Blanchard, Olivier, and Gian Maria Milesi-Ferretti (2009) ‘Global Imbalances: In Midstream?’ IMF Staff Position Note, SPN/09/29, 22 December.

  Bradbury, Katherine, and Jane Katz (2009) ‘Trends in US Family Income Mobility, 1967–2004’, Federal Reserve Bank of Boston Working Paper No. 90-7.

  Bricker, Jesse, Brian Bucks, Arthur Kennickell, Traci Mach and Kevin Moore (2011) ‘Surveying the Aftermath of the Storm: Changes in Family Finances from 2007 to 2009’, Federal Reserve Board, Divisions of Research & Statistics and Monetary Affairs, 2011-17 (Washington, DC: Federal Reserve Board).

  Caballero, Ricardo, and Arvind Krishnamurthy (2009) ‘Global Imbalances and Financial Fragility,’ American Economic Review, 99(2), 584–8.

  Campos, Celia, Alistair Dent, Robert Fry and Alice Reid (2011) ‘Impact of the Recession’, Regional Trends, 43, 2010-11 (London: ONS).

  Crouch, Colin (2009) ‘Privatized Keynesianism: An Unacknowledged Policy Regime’, British Journal of Politics and International Relations, 11(3), 382–99.

  Fine, Ben (2009) ‘Neo-Liberalism in Retrospect? – It’s Financialisation, Stupid’. Paper presented at Developmental Politics in the Neo-Liberal Era and Beyond, 22–24 October, Center for Social Sciences, Seoul National University.

  Fround, Julie, Sukhdev Johal, John Law, Adam Leaver and Karel Williams (2011) ‘Rebalancing the Economy (or Buyer’s Remorse)’, Centre for Research on Socio-Cultural Change (CRESC) Working Paper No. 87, Manchester University, January.

  Gamble, Andrew (2009a) The Spectre at the Feast: Capitalist Crisis and the Politics of Recession (Basingstoke: Palgrave Macmillan).

  Gamble, Andrew (2009b) ‘British Politics and the Financial Crisis’, British Politics, 4(4), 450–62.

  Gamble, Andrew (2010) ‘The Political Consequences of the Crash’, Political Studies Review, 8(1), 3–14.

  Hacker, Jacob (2006) The Great Risk Shift: The Assault on American Jobs, Families, Health Care, and Retirement and How You Can Fight Back (New York: Oxford University Press).

  Hacker, Jacob, and Paul Pierson (2010) Winner-Take-All Politics: How Washington Made the Rich Richer and Turned its Back on the Middle Class (New York: Simon and Schuster).

  Hay, Colin (2009) ‘Good Inflation, Bad Inflation: The Housing Boom, Economic Growth and the Disaggregation of Inflationary Preferences in the UK and Ireland’, British Journal of Politics and International Relations, 11(3), 461–78.

  Hay, Colin (2010) ‘“Things can only get worse …”: The Political and Economic Significance of 2010’, British Politics, 5(4), 391–401.

  Hay, Colin (2011) ‘Pathology Without Crisis? The Strange Demise of the Neoliberal Growth Model’, Government and Opposition, 46(1), 1–31.

  Mykhnenko, Vlad, and Kean Birch (2010) ‘Conclusion: The End of an Economic Order?’, in Kean Birch and Vlad Mykhnenko (eds), The Rise and Fall of Neoliberalism: The Collapse of an Economic Order? (London: Zed Books).

  Obstfeld, Maurice, and Kenneth Rogoff (2009), ‘Global Imbalances and the Financial Crisis: Products of Common Causes’, Federal Reserve Bank of San Francisco Asia Economic Policy Conference, 18–20 October.

  Office of National Statistics (2010) ‘Press Release: Income Inequality Remains Stable’, 10 June.

  Rajan, Raghuram (2005) ‘Has Financial Development Made the World Riskier?’ Paper presented at ‘The Greenspan Era: Lessons for the Future’, Symposium sponsored by the Federal Reserve Bank of Kansas City, Jackson Hole, Wyoming, 25–27 April.

  Reich, Robert (2010) Aftershock: The Next Economy and America’s Future (New York: Alfred A. Knopf).

  Reinhart, Carmen M., and Kenneth S. Rogoff (2009) This Time is Different: Eight Centuries of Financial Folly (Princeton: Princeton University Press).

  Zakaria, Fareed (2009) The Post-American World (New York: W.W. Norton).

  Index

  9/11 terrorist attacks, see September 11 terrorist attacks

  7 July 2007 London Underground bombings see war on terror

  Affordable Care Act (ACA) 12, 112, 202–3, 207–11, 215–16, 219

  Afghanistan 13, 110, 117, 228–9, 233–6, 238

  additional US troops 228–9

  Cameron government’s policy 233–4

  congressional funding 229, 236

  public opinion 232, 234

  see also war on terror

  ‘aggrieved acquiescence’ 10, 181, 189–90

  al Qaeda 228–9, 237, 250

  Alexander, Danny 149

  al-Haramain Islamic Foundation Inc. v. Bush (May 2009) 226

  alt-A loans 42, 58

  alternative vote (AV) 11, 153–4, 173

  explained 16, 153

  referendum 11, 115, 153–5, 173, 179, 189

  American Civil Liberties Union (ACLU) 258, 260

  ‘American Dream’ 14, 267

  American International Group (AIG) 4, 15, 46–7, 61–3, 69, 122

  American National Election Study (ANES) 192

  American Political Science Association 13, 159, 176

  American Recovery and Reinvestment Act (ARRA) 16, 47, 63, 81–3, 86–8, 90–1, 93

  Angle, Sharron 149

  Anglo-Saxon capitalism 53

  anti-terrorism policy 117, 223, 230, 245, 247, 249, 252

  Appellate Committee of the House of Lords (see Supreme Court, UK) 247

  Ashdown, Paddy 142

  Asset Protection Scheme (APS) 65

  Attlee, Clement 54, 160

  austerity budget, UK 67, 71

  Authorization for the Use of Military Force (AUMF) 246–8

  auto industry bailout (US) 28, 32, 46–7, 55, 122, 171

  see also Chrysler; General Motors;

  GMAC automatic stabilizers 85

  bank bailouts 7, 9, 63

  see also American International Group (AIG); Bank of America; Bear Stearns; Bradford and Bingley; Lehman Brothers; Northern Rock; Troubled Asset Relief Program (TARP)

  Bank of America 3–4, 46–7, 61, 79, 134

  Bank of England 3, 15, 20, 24, 41, 47–8, 52, 64–6, 74, 77, 80, 83, 95, 123, 134, 264

  monetary policy 20, 66, 89

  quantitative easing 20, 48, 66, 70, 80, 123, 279

  macro-prudential oversight 7, 40–1, 52–3, 63, 273

  banker bonuses 66, 69, 76, 124, 129–30, 134

  Banking Act of 2009 52

  Barclay’s 3, 123

  Basel Accords 43

  Basel II 43

  Basel III 53

  Bear Stearns 3, 43, 45, 60–2, 79

  Beck, Glenn 144

  Beer, Samuel H. 155

  Bernanke, Ben 15, 40, 48

  ‘Big Society’ 56, 112, 119

  Bill of Rights, UK 233, 245, 257

  bin Laden, Osama 13, 223, 228–9

  Bingham, Thomas (Lord Justice) 249–51, 255, 258–9

  ‘black sites’ 223

  Blair, Tony, 1997–2007 13, 31, 38, 104–5, 122, 142, 148, 153, 172, 205, 221, 275–6

  ‘sofa government’ style 234

  Blair Government 45, 123, 221–2, 235, 245, 252

  Boehner, John 51, 116, 150, 156, 208

  Bogdanor, V
ernon 151

  Boozman, John 149

  Boumediene vs. Bush (2008) 224, 243, 246–7, 251–2, 254

  Bradford and Bingley 47, 65

  Brighton Revolution 27

  British Medical Association 211

  British National Party (BNP) 276, 281

  Brown, Gordon 32, 41, 56, 107, 125–6, 142, 148, 180, 275, 277

  New Labour 9, 30, 45, 122–3, 132, 172

  see also Brown Government

  Brown Government 3, 47, 65–6, 81–2, 179, 190

  financial crisis 3, 8–9, 45–7, 65–7, 80, 111, 130

  Brown, Scott 146, 171

  Buchanan, Patrick 156

  budget deficits, see fiscal crisis 19, 79, 84, 119

  building societies 16, 67–8

  Burnham, Walter Dean 140, 167

  Bush, George Herbert Walker 46, 104

  Bush, George W., President, 2001–2009 61, 104, 106, 221

  Bush administration 42, 109–10, 127, 144, 156, 224, 235, 252

  expansion of executive power 13, 221–2, 236, 245–6

  financial crisis 4, 9, 46, 61–3, 122, 128, 130

  lawsuits against 243, 248

  war on terror 169, 222–3, 226, 228–9, 235, 245–6

  Cable, Vince 33, 74, 149

  Cameron, David 36, 101, 104, 233

  Afghanistan 232–5

  ‘Big Society’ 56, 112, 119

  Budget cuts 34, 55, 111, 115, 275

  control orders 232–3, 246–7, 251, 255, 258, 260

  leadership 10, 104, 107, 112, 114, 118–19, 126, 172

  war on terror 13, 222, 229, 231–6

  Cameron government 6, 19–20, 229, 235, 275

  coalition with Liberal Democrats 114–15, 147–9, 154, 173

  economic policy 19, 34, 53–5, 193

  government finances 34, 55, 111, 115, 275, 268

  policies 36, 233

  National Health Service 201, 211–16

  popularity

  see also David Cameron; Liberal Democrats; Nick Clegg; George Osborne

  Cameron, Prime Minister David 10, 54, 80, 101, 104, 107, 114, 126, 147–9, 172, 281

  Campbell, Menzies (‘Ming’) 142–3

  Caplan, Bryan 140

  Carender, Keli 143–4

  Carlile, Lord 233

  Carter, Jimmy 103, 108, 169

  Castle, Mike 149, 195

  Central Intelligence Agency 223, 227–8

  chemical industry 24

  Cheney, Dick 223

  China 2, 19, 73, 271–9

  international surpluses 278–9

  rising power 277–9

  US Treasury bond purchases 279

  Christian Democracy 160

  Chrysler 28, 32, 46–7, 55, 122, 171

  Churchill, Winston 101

  Citigroup 46–7, 63

  City of London 7, 9, 39–41, 45, 69, 75, 132, 136, 273

  role in British economy 39, 41, 45, 74–5, 273

  civil liberties 221, 225, 230–3, 236–7, 247, 257–8, 260

  civil rights revolution, UK 168–70

  Clarke, Kenneth 212

  Clegg, Nick 11, 143, 146–9, 151, 173, 281

  as coalition partner 10–11, 147–9, 173, 231, 281

  as Liberal Democrat leader 143, 146–8, 151

  Clinton, Bill 12, 38, 40, 104, 109–10, 169, 276

  Clinton administration 42, 70, 93, 228

  CNBC 143

  Coakley, Martha 146

  Coalition government 8, 11, 22, 33–4, 52, 55, 66–7, 71, 79, 115, 125, 140, 142, 143, 148, 151, 153–4, 173–4, 180, 202, 216, 222, 230, 233–7, 263, 268, 276

  Cold War 2, 102, 109

  combatant status review tribunals, see military commissions

  communist parties 160, 162, 278

  Community Reinvestment Act 42, 47, 63

  Congress, US 4, 8, 15, 25, 42, 56, 70, 92, 109, 116–17, 127, 152, 163, 168–9, 191, 206, 210, 228, 237

  2010 congressional elections 125, 180, 187–9

  acquiescence in war on terror 13, 221–2, 225

  budget 50–1, 55–6, 86–7, 89–90, 92, 107, 116–17, 210, 228, 268

  financial crisis 46, 52, 67

  ineffectiveness 13, 92, 225

  oversight role 58, 128, 221–9, 248–9

  relations with courts 204, 227, 236, 246, 248–9, 251–2

  relations with presidency 108, 110, 144, 171–2, 222, 229, 236, 254

  TARP 46, 52, 67, see also Troubled Asset Relief Program

  use of force resolution, 2001 222, 246

  Congressional Budget Office 15, 48, 55, 207, 209–10

  Confederation of British Industry 19, 88

  Conservative Party 1, 10, 88

  AV campaign 154

  leadership 104–6

  ideology 1, 8, 11, 104–6, 117–18, 166, 172

  electoral record 8, 54, 105, 111–12, 114, 126, 141, 191, 184–7, 275

  relations with Republicans 102–7

  see also Cameron government; David Cameron; elections, UK general election 2010

  conservatorship 3, 62

  Constitution, UK 245, 249, 251

  Constitution, US 224–5, 254

  executive power 13, 221–3, 235–7, 248, 260

  separation of powers 50, 171, 175, 254

  Consumer Financial Protection Bureau 52, 58

  Consumer Protections and Markets Authority 53

  control orders 230, 232, 236–7, 246–7, 251–3, 255, 260

  Cook, Robin 211

  counter-terrorism, see war on terror

  Countrywide Financial 61

  courts, UK see Supreme Court, UK

  courts, US see Supreme Court, US

  credit crunch 4, 6, 64, 70, 80

  Credit-default swaps 41, 43, 51

  Crimint 232

  Crouch, Colin 271

  ‘privatized Keynesianism’ 271–2

  Darling, Alistair 66, 81–2

  debates, prime ministers 11, 146, 150–1

  Democratic Party 11, 103, 107, 141, 144–5, 148, 150–2, 163, 169, 187–9, 192, 195

  deregulation 5, 38, 40–2, 68–9, 131

  derivative trading 4, 51, 63, 271, 273

  detainees see war on terror

  devolution 166, 212–13

  dirigisme 6, 22–3, 28, 30, 35

  Disraeli, Benjamin 161

  Dixiecrats 141, 150

  doctors 202, 204, 206, 210, 211–12, 216

  Dodd, Christopher 134

  Dodd-Frank Act see Dodd-Frank Wall Street Reform and Consumer Protection Act

  Dodd-Frank Wall Street Reform and Consumer Protection Act 51, 134

  Duverger, Maurice 160, 163

  economic conditioning 181, 184

  economic voting 179–86, 188–9, 191–3

  economic-minded partisan 181, 183–5, 191, 193–4

  Edwards, Nigel 216

  Elections

  UK general election, 2010 8, 11, 56, 105, 113–15, 125–6, 141, 147, 172–3, 184–7, 202, 213, 230, 232, 281

  UK local and regional, 2011 115, 173

  US Presidential, 2008 8, 56, 73, 83, 222, 275

  US Congressional, 2010 55, 110, 113, 120, 125, 147, 149, 187–9, 191

  Electoral reform 11, 148, 151, 154 alternative vote (AV) system see alternative vote (AV)

  Emergency Economic Stabilization Act see Troubled Asset Relief Program

  Enthoven, Alain 212

  Epstein, Leon 139, 159, 163

  Euro zone 75–6, 89, 267

  sovereign debt crisis 267

  European Convention on Human Rights (ECHR) 245, 249, 251–2, 255, 257

  European Court of Human Rights (ECtHR) 231, 233, 249, 251, 257–8, 260

  European Union 6, 22, 29–30, 34, 36, 67, 73, 75, 154–6, 166–7, 205, 232, 281

  extraordinary rendition, see war on terror

  Fannie Mae (Federal National

  Mortgage Association) 3, 42–3, 45, 52, 62–3, 68, 80, 267

  Federal Deposit Insurance Corporation (FDIC) 41, 51

  F
ederal Home Loan Mortgage Corporation see Freddie Mac

  Federal Housing Authority 41, 52

  Federal National Mortgage

  Association, see Fannie Mae

  Federal Reserve 2–3, 15, 40, 48, 51–2, 61–2, 65, 272, 279

  quantitative easing 20, 48, 63, 80, 123, 279

  systemic monitoring 51, 134

  Feingold, Russ 149

  Fiat 32, 47, 122

  Financial Crisis Inquiry Commission (FCIC) 5, 40, 43, 77, 122, 128, 134

  Financial Services Authority (FSA) 41, 52–3, 66, 70, 74, 77

  Financial Stability Committee 52

  Financial Stability Oversight Council (US) 51, 63

  financialization 266

  public debt 14, 20, 45, 49–50, 84, 88–9, 268–9

  private debt 6, 14, 45, 64, 67, 72, 76–7, 86, 267, 269, 271–2, 281

  fiscal crisis

  budget plans 50–1, 58, 84–114, 117, 150, 268–9

  stimulus packages 6–8, 15, 46–8, 54, 56–7, 63, 66–7, 79–83, 86, 88, 91, 93, 171, 271, 275

  structural budget deficits 19, 33, 49, 55, 84, 95

  Fitch’s, see ratings agencies

  Fixed-term Parliaments Bill 235

  Ford Motor Company 33, 207

  Foreclosure crisis 46, 60–2, 76, 265

  Foreign Intelligence Surveillance Act (FISA) 226–7

  FOX News Network 128, 144–5

  France 22, 27, 30, 32, 89, 205, 270, 281

  Frank, Barney 42, 134

  Dodd-Frank Act, see Dodd-Frank

  Wall Street Reform and Consumer Protection Act 51

  Freddie Mac (Federal Home Loan Mortgage Corporation) 3, 42–3, 45, 52, 62–3, 80, 267

  full employment policy 1, 25, 29

  Gallup Poll 12, 113

  Gamble, Andrew 20, 279

  General election, 2010 see elections General Motors 32, 122, 133, 171

  see also auto bailouts; GMAC

  General Practitioners (GPs) 203–5, 211, 214–16

  Glass-Steagall Act 52 40, 72

  Globalization 1, 21, 135–7, 270, 279

  GMAC 46, 63

  Goldfarb, Michael 117

  Goldwater, Barry 169

  Gore, Al 104

  Government Sponsored Enterprises (GSEs) 42, 62

  see also Fannie Mae, Freddie Mac

  Graham, Lindsey 225

  Great Depression 6, 14, 40, 42, 54, 95, 107, 122, 124, 274, 280

  ‘Great Moderation’ 1, 3, 5

 

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