Labour Research January 2009


The credit crunch

Housing bubbles, globalisation and the worldwide economic crisis

Graham Turner, paperback, 232 pages, £14.99

Graham Turner works as an independent consultant in the City. From this vantage point, and his first hand experience of the Japanese crisis of the 1990s, he explains the origins of the financial downturn and proposes measures “to ensure that there is no repeat of the flawed economic policies that have created the biggest credit bust since the 1930s”.

He argues that current events stem from a crisis in globalisation that challenges the free market economic model. This conclusion is based on his theory that abuse of free trade resulted in companies moving production and jobs overseas to access cheap labour.

This in turn led to huge imbalances in the US and UK economies with them importing more than they could export and governments allowing debt and house prices to spiral out of control. The inevitable bursting of the housing bubble is, according to Turner, a disaster for neoliberal globalisation.

Turner’s approach is clearly Keynesian and his analysis of the credit crunch has been adopted by many on the left. He wants to see a free trade environment that does not fuel boom and bust, although critics have argued that this could never happen.

This book is very accessible and is a great source for understanding the roots of the current financial crisis.