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GLOBAL FINANCIAL CRISIS OF THE XXI CENTURY AND ITS IMPACT ON THE WORLD ECONOMY: PROBLEMS, ANALYSIS, EXPERIENCE
Doctor of Economics Nino Tagoshvili Georgia, City of Telavi
ARTICLE INFO ABSTRACT_
The fragility of the global financial institutions and their functions' ineffectiveness are clearly revealed by the current world financial crisis. It is primarily manifested in the loss of public confidence towards them and their inability to respond adequately to the world's new challenges. It turned out, that the International Monetary Foundation (IMF) and the World Bank are incapable to prevent, not only global but also the financial and economic crisis developed in various countries. It is noteworthy that the current world crisis cast doubt not only the economic and financial theories developed nowadays but also revealed the weakness of the practical anti-crisis leverages during the settlement of the situation.
Based on the analysis, is concluded: After half-century since its foundation, it became evident that the International Monetary Foundation failed to fulfill its mission. It hadn't done what it would have done - Appropriation of funds for countries, which had economic difficulties. After that, the countries would be able to reinforce the economic so that the majority of the population would have been employed in the country. Nearly a hundred countries have suffered crisis. Moreover policy initiated by the International Monetary Foundation has contributed to global instability, for example: Lliberalization of the Capital Market.
When any country is in crisis, implemented programs by International Monetary Fund situation did not improved, but further fueled, especially for the poor.
Introduction. During the description of the XXI century world economic processes there are highlighted the causes of the global economic crisis and the ways of their overcoming.
Currently, the deepest global crisis in the world has been grounded in the US, which spread rapidly in developed countries, later in the large developing countries and slowly penetrated into smaller countries.
The reason for the crisis is the economically unfounded policy of credit expansion, mistakes made in fair value evaluation and management transparency. Additional hardness added to the imperfections by the inappropriate assessment of the risk, neglecting and impairment of insufficient provision of loans and other financial instruments (e.g. derivatives), which led to the refusal to perform credit obligations.
At present, the current world financial crisis has clearly revealed the weakness of global financial institutions and their functions inefficiency. This, first of all, reveals in the loss of public trust in them and their inability to adequately respond to the new challenges of the world. Became known that the International Monetary Fund (IMF) and the World Bank are not capable of avoiding, not only the global, but also the local financial and economic crises developed in different countries. It is noteworthy that today's global crisis has questioned not only the economic and financial theories developed yet, but also the weaknesses of practical anti-crisis leverages in the regulation of the situation. World financial system enter in the deep imbalance period, none of the state has failed to provide adequate resistance to the wave of world financial markets. We can say that in the world there are no international standards development institutions, which will be able to develop effective proposals in terms of overcoming the crisis and to take the appropriate collective decisions. All of them raised the necessity of radical reform of world financial architecture established today.
Research Results. Based on the analysis, it is concluded: After the half century from the established it was clear that monetary fund could not do its mission, did not do what it should have done - allocated money to the countries, which had economic difficulties, after that, these countries
Received 1 November 2017 Accepted 8 November 2017 Published 7 December 2017
KEYWORDS
Globalization of the Economic,
International Financial Institutes,
Financial and Economic Crisis of the World, Overcome of the Poverty, Anti-Crisis measures
© 2017 The Author.
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were able to strengthen the economy, so that the majority would have been employed in the country. Despite of this fact that we know much more about the ongoing economic processes today, than we knew fifty years ago and despite the International Monetary Fund's attempts, over the past twenty-five years, the crisis has become increasingly common in different countries of the world and as a rule (except for the Great Depression), it is more difficult than it was before. Almost 100 countries have suffered a crisis. Moreover, the policy initiated by the International Monetary Fund, ex: The liberalization of the capital market has contributed to global instability. When the country was in crisis, the programs implemented by the International Monetary Fund (IMF), Instead of having an improved situation, became more tense, especially for the poor.
The inadequate regulatory policy of governments contributed to the current crisis. The crisis is a failure of governments and they must answer the question before the society, although the cause of the financial institutions is a criminal act. These crimes are the result of the government's decline. Governments are facing a need for regular reforms. The vulnerability of the vicious processes on the financial market has become a society, reputation and competence of governments, financial institutions have lost confidence.
The reason for the current financial crisis is the United States real estate market deflot.
The crisis is perceived by its anatomy, on the one hand, the danger of living, and on the other hand, we find a favorable opportunity to find the optimal paths. In particular, new fields and market segments will be created, new technologies are created, innovations are utilized to maximize the tendencies of oriented profit maximization, and the method of effective investing in the foreground, using scientific technical progress and the financial sector will move to new methods of management.
At the beginning of the XXI century, the main economic trends in the world industrialized countries forced to change the force and compulsory policy in the relations of dialogue and cooperation with each other. There are two radically different view of the globalization process: first, the progressive globalization process, which will contribute to the development of the world economy and the global threat of certain countries (especially in developing countries and economies in transition) and at the same time, the whole world role of a dangerous trend. Due to the comprehensive and contradictory nature of globalization, the unmistakable attitude towards globalization is quite logical. The first step towards globalization is to understand her as an objective process. Globalization has supporters and adversaries. Supporters focus on positive aspects, and adversaries are negative aspects.
Thus, globalization can be assessed as positively and negatively. In the process of globalization, the country must be able to maximize the negative impacts of economic globalization and risk insurance. Naturally, the country should be able to avoid the negative trends of global economy. It should also be taken into consideration that all the positive side of globalization will not always fit nationally national interests. It is therefore more logical that all sovereign states endeavor to develop an adaptive strategy for individually globalization.
In the economic science, the nature of economic cycles is quite well and deeply researched, and therefore anatomy of the crisis, however, it is not yet known that the crisis of time has not been determined, as there is no clear legality in their interval interval. One fact is that global economic development is accompanied by global crises and the system of effective preventive measures to prevent it is not yet worked out.
Therefore, in order to overcome the economic crisis, we believe that the European and Asian interconnection agreement is an expansionary budgetary policy. After that, each state must set the way for the crisis to come out of the crisis.
The current global financial crisis has dramatically demonstrated the weakness of global financial institutions and their inefficiency. This, first of all, reveals the loss of public trust in them and adequately respond to the new challenges of the world. It turned out that the International Monetary Fund (IMF) and the World Bank are not capable of avoiding the global financial and economic crises developed in different countries. It is noteworthy that today's global crisis has questioned not only the economic and financial theories developed yet, but also the weaknesses of practical anti-crisis leverages in the regulation of the situation. The world financial system entered a deep imbalance, with no government able to provide adequate resistance to the wave of world financial markets. It can be said that there are no institution of international norms that can effectively develop effective proposals and tackle collective decisions in the world.
All of this necessitated radical reform of the world financial architecture established today.
That is why today it is becoming increasingly ripe about the radical transformation of today's world financial architecture, since it is no controversy that the regulation mechanisms of financial problems are
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not as effective as the international and national financial institutions. Financial-economic problems have long gone beyond the boundaries of a separate country and received a global look.
The International Monetary Fund failed to fulfill its primary mission - promoting global stability. It was also unsuccessful to try to fulfill the new obligations taken on itself, such as the management of transition from commerce to market economy.
Economic policy is unreasonable if it does not contain basic concepts of funding and the main concepts of development of finances and the use of the application is not supported by the practical work of the state, with the financial support of the process of reproduction.
No ready-to-model of transition to market economy will not be used for Georgia unless specifically specified in the economic characteristics of the country.
Fig. 1.
It becomes even clearer that the financial stabilization and inflation suspension measures can not be achieved without the revitalization and production of the economy. This should be considered by an anti-crisis commission, whose main goal is to achieve financial stabilization.
■Exp«nse
Fig. 2.
Financial stability is an attempt to represent the will of the nation without the enactment of the production, in terms of national-state interests.
Of course, it is possible to overcome the crisis, the main thing is to do it with minimal social-economic losses and within the shortest possible period of time.
Recommendations and general conclusions. In the context of market relations, the global analysis of the global economic crisis is based on relevant findings and recommendations. The new financial architecture of the world in our view can be based on the following:
- Integration of poor countries into the world economy system, which will give them the necessary impulse. Otherwise, these countries will remain in permanent poverty;
- The reasonable and regulated movement of international capital must be accompanied by measures aimed at strengthening macroeconomic equilibrium and banking structures;
- Protection of the Golden Rule of transparency, which is the fundamental basis of effective management, successful economic development and rational behavior of markets;
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- Effective state management and regulation, which includes: stimulating of private sector activities, breaking up of monopolies, introduction of a more simpler and transparent regime of management, etc.
- Develop and adopt the norms and rules of conduct, which implies more objective supervision and regulation of the world as well as national markets;
- Multilateral, multiprofile approach to the solution of world financial and economic problems and refusal of hegemony in one of the countries.
- In the anti-crisis program, for the purpose of preventing or mitigating the impact of global crisis, priority should be given to increase the quality of economic independence of the country.
- One of the main cornerstones of the anti-crisis program should be the state budget and the country's budget system. The crisis and the budget are in good relations with each other.
- One of the strategic mechanisms of anti-crisis regulation is the monetary credit policy.
- The anti-crisis program should pay particular attention to the optimal balance between fiscal and monetary policies.
- The program needs to work out mechanisms that will regulate the system of remuneration in the country.
- One of the key factors in the anti-crisis program is to strengthen the fight against corruption.
REFERENCES
1. Joseph E. Stiglitz: Globalization and its discontents, 2012.
2. ,,The US Financial and Economic Crisis: Where Does it Stand and Where Do we go from here?,, by Martin Baily and Douglas J. Elliot, Institute on Business and Public Policy at Brookings. June, 2009, USA.
3. „Recession in America ,, - The Economist, November 15,2007
4. Райх Марио и Долан Саймон: Глобальный Кризис, M.: 2009 г.
5. Колодко Гж. Неолиберализм и мировой экономический кризис. Вопросы экономики, 2010, №3, с. 61.
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