Financial Times Columnist Martin Wolf speaks at the Levin Institute

On Thursday February 26th, 2009, Levin hosted a lecture by Martin Wolf, Associate Editor and Chief Financial Commentator of the Financial Times. Wolf discussed his latest book “Fixing Global Finance (Forum on Constructive Capitalism)” and expanded on its themes by discussing the current financial crisis and his predictions on the global economic conditions we face in the future. The lecture was co-sponsored by Bard’s Globalization and International Affairs Program and Foreign Affairs Magazine, and was moderated by Levin President, Garrick Utley.

The ideas for Wolf’s book were based on a series of lectures he had given at The Johns Hopkins University School of Advanced International Studies. In those lectures he had discussed the weaknesses of the global financial system and how they created severe imbalances that were unsustainable and dangerous. At the Levin lecture, Wolf said the current financial crisis has proven to vastly exceed his most pessimistic predictions.

Throughout his presentation, Wolf provided an in-depth analysis of how the crisis came not only into being, but how it was destined to be global in nature. He cited excess demand, imbalances in the global balance of payments, poor countries exporting their savings to rich countries, and over-borrowing of foreign currencies in the 1990’s by developing countries, particularly in Asia. He touched upon how governments, including the U.S., have responded to the current crisis and he provided a range of scenarios that might lead to ending the downturn and provide a road to reform.

Wolf commented that within the global economic system we have come to the end of the period where the US and the UK are big borrowers and spenders. He predicted that those countries will see an increase in savings, and that we will see more balanced growth in China.
He said it took the world a lot of time and effort to get into the current crisis and he predicts it will take a lot of effort and time to get out of it. He reiterated that the crisis is the product of a global system and it will not be resolved without global reform.

During the session Wolf was asked if he sees signs that the Obama Administration is addressing the right issues in dealing with the crisis. He said they are, but he feels that their actions have been too modest in scale and ambition given the scale of the crisis. Wolf continually stressed that the crisis must be resolved on a global scale, but felt little has been done so far to begin to address the global issues.

In conclusion Wolf stated that the resolution of the global will be the resolution of the domestic, and not the other way around.

Transcript