The Crisis behind Present Crises: Westerdaemmerung Perspective

Jan Winiecki
WSIiZ Working Papers
No 1.
The paper looks at what this author sees as real causes of the present crisis of the West. For it is not the greedy bankers but opportunistic politicians that created – through their policies – the world of mega-moral hazard for the national economies, with those operating according to the created de facto rules of the game yielding to the temptations. Financial sector firms first benefited and later suffered, when results of governmental policies began to be felt in the US and shortly thereafter elsewhere. But the great financial crisis and ensuing recession is not a “stand alone” phenomenon. In fact, governmental policies in question accelerated adverse long term trends of increasing public expenditures and declining economic growth rates. Without deep cuts in and serious efficency reforms of the Western welfare state the long term stagnation will set in in the next 5-10 years.
Keywords: monetary policy, global financial crisis, financial assets bubbles, moral hazard, law of unintended consequences, debt sustainability, state and economy, welfare state, Eurozone, Stability and Growth Pact, Euro crisis
JEL classification: E60, E62, F30, F34, F62, G01, G15
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