To isolate, observe and manipulate environmental
variables and study human interactions. No snapshot can approximate a
video sequence where humans are concerned.
Financial Crises, Global Capital Flows and
The International Financial Architecture
By: Dr. Sam Vaknin
The recent upheavals in the world financial markets were quelled by the
immediate intervention of both international financial institutions
such as the IMF and of domestic ones in the developed countries, such
as the Federal Reserve in the USA. The danger seems to have passed,
though recent tremors in South Korea, Brazil and Taiwan do not augur
well. We may face yet another crisis of the same or a larger magnitude
momentarily.
What are the lessons that we can derive from the last crisis to avoid
the next?
The first lesson, it would seem, is that short term and long term
capital flows are two disparate phenomena with very little in common.
The former is speculative and technical in nature and has very little
to do with fundamental realities. The latter is investment oriented and
committed to the increasing of the welfare and wealth of its new
domicile. It is, therefore, wrong to talk about "global capital flows".
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