The Global Financial Crisis

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Below are the top discussions from Reddit that mention this online Coursera course from Yale University.

Offered by Yale University. Former U.S. Secretary of the Treasury Timothy F. Geithner and Professor Andrew Metrick survey the causes, ... Enroll for free.

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Taught by
Andrew Metrick
Michael H. Jordan Professor of Finance and Management
and 1 more instructor

Offered by
Yale University

Reddit Posts and Comments

0 posts • 4 mentions • top 1 shown below

r/worldnews • comment
1 points • kl88o

LOL so here is the transcript of one part of the yale course that summarize the issue with euro zone crisis

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>So why have the after-effects of
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>the global financial crisis been so much worse in the Eurozone
>
>than in the United States? In the United States while
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>the recovery was somewhat slow, there was no double dip recession and
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>within several years, unemployment had gone back down
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>very close to pre-crisis levels. In the Eurozone,
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>we're nowhere near achieving that, why? There's one mean central reason, and
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>that reason is that the Eurozone is not what economists call
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>an optimal currency area.
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>...
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>there are automatic stabilizers in the federal system in the United States
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>that enable us to recover from that shock. The citizens of other states all pay
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>taxes to the federal government and the federal government makes transfers
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>to unemployed people in Connecticut. If Connecticut all of a sudden had
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>the most unemployed people in the country, Connecticut would automatically get
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>the most assistance from Washington. There's no vote and there's no way for citizens of other states to pull
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>back on that in the short term. Similarly, while there are cultural
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>differences in the United States, there are many people in Connecticut
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>with roots and friends and family in other states
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>of the United States. And who were able to move if there were
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>a shock here from Connecticut to other parts of the United States without it
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>being an enormous problem for them. Compare that to what goes on in Europe. When there is a shock that happens
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>to Greece or to Portugal, while it is legally possible for people from
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>Greece and Portugal to move to Germany or to France and many have,
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>there are cultural differences, linguistic differences,
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>religious differences in many cases. And just the lack of having roots in those
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>countries that make that movement more difficult. So if you were unemployed in Greece or
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>in Portugal, it is not so simple for you to go and
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>to find a job in Germany. Not as simple as it would be for
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>someone from Connecticut, for example, to move to California. In addition to reduced labor mobility, there is a lack of fiscal
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>federalism in Europe that is nowhere near the level of where we
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>currently have it in the United States. So as it would be for the unemployment
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>insurance in the United States, if people all lost their
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>jobs in Connecticut, there would be automatically money flowing
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>from the citizens of other states. That doesn't happen in Greece. Rather, when Greece has enormous problems,
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>there's no direct transfer that will happen from countries like Germany and
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>France that are doing better. Instead, there's a need to go back to
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>the citizens of those countries and ask for what sounds like a bail out. Where in reality what we
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>often have at least in part are the after effects of a shock. The lack of this fiscal adjustment,
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>automatic fiscal transfers, or easy labor mobility means that Eurozone
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>countries faced with this shock, not having their own monetary policy, are left to rely on the last
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>two things on this list. That is, nominal wage and
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>price reductions or deflation. This type of deflation also called
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>an internal price adjustment. So rather than adjusting your
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>prices all at once by having your currency depreciate, which automatically
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>means that your prices are now going to be lower relative to everybody
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>else who doesn't have your currency. And you do it in one fell swoop. Rather than being able to do that, you have to effectively go business to
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>business and individual to individual recognize the problems in the market and
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>reduce prices and reduce wages. This creates an additional challenge for
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>any economy that is heavily indebted. If my mortgage and
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>my debts are in one currency and those are fixed and you reduce my earnings in that same currency, then my debt
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>seems even bigger than it was before. This is a debt overhang problem that is
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>exacerbated by any kind of deflation. We often worry about inflation. Inflation is normal to us, we've seen it in many different
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>economies at many different times. Deflation is a very rare thing
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>to happen under a non-metallic currency such as we have
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>had since the 1930's. But deflation is extremely painful. And when it does occur,
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>it means that people who have debts who find their wages falling,
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>see those debts as being even greater. And anybody considering an investment has
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>to understand that the dollar that they actually have today,
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>they're gonna need to earn an even higher return on it going forward
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>than they otherwise would. This problem, this challenge of
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>a deflationary environment when there's a large amount of debt, being the only way
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>that you can actually have an adjustment after a shock, in one region is the reason
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>that the European union or the Eurozone, what is now the Eurozone area, is not a
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>place that you would initially look at and think they should have only one currency. That's a structural weakness
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>that's been in place since 1992. It was effectively a bet on the part
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>of the framers of the Eurozone, that they would be able to achieve
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>a level of cultural unity and of fiscal unity that would take
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>place before they got hit by a large enough shock that could break
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>the entire union apart. That bet wasn't necessarily a terrible bet
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>if you factor in all of the political and social reasons why such
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>a union would be valuable. But the fact of the matter is
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>that that bet did not payoff and in the end the shock came
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>before the union came. And we're now facing
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>the effects of that shock.

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here is a link to where you can find the 8 min video for free

https://www.coursera.org/learn/global-financial-crisis/lecture/EYEqn/the-economics-of-the-euro

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just for fun even though it will probably be a waste of my time,

here is another source

https://www.jstor.org/stable/23287217?read-now=1&refreqid=excelsior%3Afa10e0f7d6d9c1eddd7bca7299ed9108&seq=23#page_scan_tab_contents

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if you are confident in your knowledge on economics you can just read page 175-200, it talks about the issue with weak growth, difficulty of internal devaluation, and specifically, issues caused by having the Euro.

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