4. When?
• THE IMMEDIATE CAUSE OR TRIGGER OF THE CRISIS
WAS THE BURSTING OF THE UNITED STATES
HOUSING BUBBLE WHICH PEAKED IN 2005–2006.
• HIGH DEFAULT RATES, RELATED TO "SUBPRIME"
AND ADJUSTABLE RATE MORTGAGES, BEGAN TO
INCREASE QUICKLY THEREAFTER AND,
EVENTUALLY, THE SUBPRIME CRISIS EXPLODED IN
2007, SPREADING WORLDWIDE.
7. Consequences
• Failure of many Banks and Financial Institutes
• Bear Sterns, Lehman Brothers and AIG (and many other
Financial Institutes) saved by the Us Government
• Contagion to the rest of the world
8. Step 2:
Financial Contagion and Real Economy
1) Crisis of Banks and Financial Institutes in
America and in Europe
10. Consequences on Real Economy
Crisis of European Financial Institutes and Banks
Crisis of the Financial Markets
Increase of failure rate in business sector
Increase of unemployment and discharges
Reduction of private consumption
Reduction of private investments
Reduction of saving rate and increase of private debt
13. Step 3:
European Sovereign-Debt Crisis
FROM LATE 2009, FEARS OF AN EUROPEAN SOVEREIGN-
DEBT CRISIS DEVELOPED AMONG THE INVESTORS
WHY?
• RISE OF PRIVATE AND GOVERNMENT DEBT LEVELS
• A WAVE OF DOWNGRADING OF GOVERNMENT DEBTS IN SOME EUROPEAN
COUNTRIES
14. IRELAND
• THE IRISH SOVEREIGN DEBT CRISIS WAS BASED ON THE STATE
GUARANTEEING THE SIX MAIN IRISH-BASED BANKS WHO HAD FINANCED
A PROPERTY BUBBLE
• THE ECONOMY COLLAPSED DURING 2008 AND IRELAND WAS FORCE TO
RECEIVE A LOAN FROM INTERNATIONAL MONETARY FUND (IMF) TO SAVE ITS
BANK SYSTEM AND ITS ECONOMY.
15. PORTUGAL
IN THE FIRST HALF OF 2011, PORTUGAL REQUESTED A €78 BILLION
IMF-EU BAILOUT PACKAGE IN A BID TO STABILIZE ITS PUBLIC
FINANCES
16. GREECE
UNSUSTAINABLE PUBLIC SPENDING, PUBLIC SECTOR WAGES AND PENSION
COMMITMENTS DROVE THE DEBT INCREASE AND PUT GREECE INTO ONE OF ITS
DEEPEST CRISIS EVER
17. GREECE RECEIVED A SIGNIFICANT LOAN TO SAVE ITSELF FROM DEFAULT.
ON THE OTHER SIDE, IT WAS FORCED BY IMF, EUROPEAN COMMISSION
AND EUROPEAN CENTRAL BANK TO ADOPT A SEVERE AUSTERITY
PROGRAM THAT HAS PUT GREECE INTO A DRAMATIC ECONOMIC AND
SOCIAL SITUATION
21. CRISIS OF EURO SYSTEM
• THE STRUCTURE OF THE EUROZONE AS A MONETARY UNION WITHOUT FISCAL
UNION CONTRIBUTED TO THE CRISIS.
• THE CRISIS IS MENACING EURO SYSTEM FROM ITS FOUNDATIONS
22. EU EMERGENCY MEASURES
1) EUROPEAN FINANCIAL STABILITY FACILITY
3) EUROPEAN FINANCIAL STABILIZATION
MECHANISM
5) EUROPEAN CENTRAL BANK MEASURES
7) EUROPEAN STABILITY MECHANISM (ESM)
9) EUROPEAN FISCAL COMPACT
11) ANTI-SPREAD SCHIELD
25. Crisis
Let’s not pretend that things
will change if we keep doing
the same things. A crisis can
be a real blessing to any
person, to any nation. For all
crises bring progress.
Creativity is born from
anguish, just like the day is
born form the dark night. It’s
in crisis that inventive is born,
as well as discoveries, and big
strategies. Who overcomes
crisis, overcomes himself,
without getting overcome.
(Albert Einstein)
26. De-growth
Social movements
Decroissance (France)
Decrescita (Italy)
27. 1st Conference on Economic Degrowth
for Ecological Sustainability and Social
Equity, Paris April 2008
28. 2° Conference on Economic
Degrowth for Ecological
Sustainabiliy – Barcellona 2010
3° Conferenza Internazionale
su Decrescita e Sostenibilità
Ecologica ed Equità Sociale –
Venezia, Settembre 2012
37. Political program:
• Taxes on transport
• Taxes on global financial transaction
• support of peasant agricolture
• reduction of working time with a redefinition
of work that will make jobs available to all
• investment on the production of relational
goods
• heavy penalties on spending for advertising
41. Slow movement Downshifting Swapping
Self-production Time bank
42. The Easterlin Paradox suggests that a
society's economic development and
its average level of happiness are not
linked. It affirms the absence of a
significant relationship between the
improvement in happiness and the
long term rate of growth of GDP per
capita.
43. The Wellbeing &
The Quality of life
A Comparison between 2 economic
approaches
44. FULLFILL HUMAN NEEDS
GOODS COMMODITIES
• Material and • material means
immaterial means
45. Traditional Economic theory
• ECONOMIC SYSTEM & APPROACH TO
POVERTY
1) Production People--Commodities
2) Consumption People-Commodities
46. Traditional theory
Gross Domestic Product = Commodity or Service * its
Price
• WEALTHY = WELLBEING
(INCOME,GDP) = (STANDARD OF LIVING)
47. A question for you
• A teacher pay a housemaid for cleaning his
house
This service enter into the count of the GDP
BUT
what happens in the economy if the teacher
get marry with his housemaid and she
continues to clean the house?
48. A service made for free (offered by the wife in the
cleaning of the house ) is not taken into account in
the count of GDP.
--- GDP decreases
It is equal to say
WELLBEING decreases!!!!!
49. New Economic Theories
CRITIC
Income or wealth is an inadequate proxy of
the wellbeing
In the traditional count of the wellbeing of a
Country we leave out everything that is not
reducible to commodity
50. • How these services should be valued?
social and affective relations
Cares for children by parents
Cares for elder people by relatives
There is NO PRICE for this fundamental
services
51. Review the concept of well being
• Shift the attention on PEOPLE
• Focus the attention on the importance of the
TYPE OF LIFE that people are able to lead.
Ex. 2 people
Having Same income
One is healthy, one is ill
52. Amartya Sen - Capability Approach
• WEALTHY ------------ WELLBEING
Multidimensional nature of the quality of life
Everyone has own characteristics
53. Amartya Sen - Capability approach
• “Beings and Doings” (Stati di Essere e di
Fare)
Ex. of achievment
To be /Not to be well- fed
To be /Not to be learned
To be/ Not to be in good health
54. EXAMPLES
CNEL - ISTAT CITY OF BRISTOL
• 12 wellbeing dimensions • Annual survey
• 134 statistical indicators • “Quality of life in your
neighbourhood”
55. Faculty of Economics at Roma3
• Research Project “The wellbeing and the
quality of life in the city halls of Rome”
• Multidimensional analysis
• Bottom up method : Focus group