The new international financial crisis: causes, consequences and perspectives

Vol. 31 No. 2 (2011)

Apr-Jun / 2011
Published April 1, 2011

How to Cite

Vieira, Flavio Vilela. 2011. “The New International Financial Crisis: Causes, Consequences and Perspectives”. Brazilian Journal of Political Economy 31 (2):217-37.

The new international financial crisis: causes, consequences and perspectives

Flavio Vilela Vieira
Professor of Economics, Universidade Federal de Uberlândia.
Brazilian Journal of Political Economy, Vol. 31 No. 2 (2011), Apr-Jun / 2011, Pages 217-237


The paper investigates the recent financial crisis within a historical and comparative perspective having in mind that it is ultimately a confidence crisis, initially associated to a chain of high risk loans and financial innovations that spread thorough the international system culminating with impressive wealth losses. The financial market will eventually recover from the crisis but the outcome should be followed by a different and more disciplined set of international institutions. There will be a change on how we perceive the widespread liberal argument that the market is always efficient, or at least, more efficient than any State intervention, overcoming the false perception that the State is in opposition to the market. A deep financial crisis brings out a period of wealth losses and an adjustment process characterized by price corrections (commodities and equity price deflation) and real effects (recession and lower employment), and a period of turbulences and end of illusions is in place.

JEL Classification: G15; F33; N20.

Keywords: financial crisis globalization advanced and emerging economies