The global financial emergency: how to overcome it

The current financial crisis has lasted longer and been more damaging than expected, revealing the extent of market failure. The rule-free market era is over. No longer does anyone believe the “solid” economy – especially real estate – will turn into a “liquid” economy, thanks to deregulation. Widespread digital technology – a fundamental resource in globalization – does not help sell “toxic” shares: uncertainty about their worth only worsens the crisis.
With the stock market crashing around our ears, communications take on a key role, in an effort to guarantee transparency and to reduce the domino effect. People wonder, for example, whether reassurances from the government and institutions will end up having the opposite effect on how individuals and enterprises manage their savings.
People are also worried about the consequences for the real economy, though Italians can be somewhat comforted by the limited indebtedness of families and the strength of their manufacturing sector. The Italian banking system, too, remains relatively sound, with a solid territoriality. Still, Italians suffer from a high public debt, which suggests they might review the Stability Pact.
Governments around the world have enacted various plans to counter the crisis, reaching record-breaking levels of intervention, but the results have not been immediately evident. As Italy has already suggested, these governments should all cooperate: unified action is sure to have a far greater effect. Also, the international institutions established after the second world war need to be reviewed and possibly revamped. They do not appear up to today’s challenges.
How are relations between politics and economics changing? The rule-free market’s failure has led to a significant commitment on the part of governments to save private businesses. But what effects will this have on the capitalist framework in general? Participants suggested that we may be entering a phase of reduced economic freedom; relations between the economy and institutions are changing. But hopefully the new system that emerges will ensure better guarantees for all.