Post pandemic financial system

There’s no question that this pandemic has shaken out some structural weaknesses in the current complex, interwoven financial system. I’ve created this topic as a place to catalogue good articles, information and discussion about the implications, particularly as the structure of markets and the implications for human wellbeing is extremely important to me personally, and at the heart of our mission at Vega.

2 Likes

I really enjoyed this article written for the Guardian by Adam Tooze, British historian and Professor of History at Columbia University.

He explains how the economic responses, governments, central banks and markets played out over the past few months. Towards the end he becomes reflective and I appreciated both these comments.

What we have seen in the financial system, over the past few weeks, is a victory of sorts – but it is a defensive one. Once again, we are propping up a fragile, profit-driven system to avoid something even worse. It is also a victory limited in scope.

But those inequalities pale next to the problems facing much of the rest of the world. There the crucial supply of credit is being cut off even before coronavirus cases begin to mount, meaning, once again we have confirmed that the global financial system is hierarchical. At the apex stands the US Federal Reserve. The ECB, the Bank of Japan, the Bank of England and their advanced-economy counterparts all enjoy the Fed’s direct support.

1 Like

Thanks for sharing that article @tamlyn, there’s a lot to think about with this topic.

What has really struck me is how disproportionately the pandemic has affected different groups of people, making the inequality gap even greater. As the article you linked said, there is a hierarchy, and it goes much further than the central banks.

This newsletter from Planet Money looks at it from a US perspective, but I think it’s worth considering, as this isn’t just an American problem. It really highlights how the fragility of the system more directly affects those who already have the deck stacked against them.

2 Likes

Interesting article. With regards to the Payroll Protection Program, this just highlights the problem with the access to financial institutions that hold privileged positions…

The loans are also distributed through private banks, which may lack preexisting relationships with minority business owners and may discriminate when giving out loans. Surveys show that about 38% of all small business applicants report getting the loans they requested — but just 12% of minority applicants report getting them.

2 Likes

The more I find out about these privileged positions, the more faith I have that Vega will be an equalizer and force for good.