Volume 43, Number 168,
January-March 2012
The new financial power
Kostas Vergopoulos*

Currently the global economic system is veering away from unity and convergence and towards a catastrophe of break-up, fragmentation, divergence, discord, and deflation. The new financial power plays the leading role in this development of global paralysis and destruction.

As indicated by the economist Wilhem Buiter, from the London School of Economics, the greatest danger within the setting of the current crisis comes from the financial logic of the surplus countries, not the deficit countries (Buiter, 2010). The countries with a financial surplus impose rigor and austerity on their deficit partners, which makes the global economic stability tremble precariously (Wolf, 2010b). Wolf goes on to state that harsh and austere policies in the European Union are tantamount to an "act of mercantilist war against the United States" (Wolf, 2010b). At the height of financial capitalism's omnipotence, the capitalist system is on the road to destabilization; the world economy quickly advances towards deflation due to the influence of this financial power. The financial mutation which saved capitalism from a dead-end in the 1970s has now led it to a deeper and darker dead-end. Historically, the same causes do not always create the same effects. The financial sphere could have been of help thirty years ago but now, with the rise of financial power, things have come full circle and the outlook is grim.

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PROBLEMAS DEL DESARROLLO. REVISTA LATINOAMERICANA DE ECONOMÍA, Volume 49, Number 194 July-September 2018 is a quarterly publication by the Universidad Nacional Autónoma de México, Ciudad Universitaria, Coyoacán, CP 04510, México, D.F. by Instituto de Investigaciones Económicas, Circuito Mario de la Cueva, Ciudad Universitaria, Coyoacán,
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