Working Paper

Sovereignty Effects

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With my remarks today on financial markets and the financial crisis, I do not make any claims to originality. Rather, they are intended as a reminder of certain circumstances that are already familiar to us, in one form or another.

First of all, I would like us to remember that since 2007 and 2008, the crisis has undergone various phases that document an escalation of the situation as a whole. It began as a crisis of private debt, as a collapse of the American home mortgage market; then, it became a dramatic problem of global liquidity that led, by necessity, to a crisis of public budgets, to a crisis of sovereign debt. And now, in the most recent turn, we have arrived at a situation, which one could describe as a paralysis or sclerosis in political decision-making. We are faced with a “crisis of governance” with an unclear distribution of responsibilities among instances of political power, economic actors, democratic procedures and the role of civil society. The turbulence of the financial markets has become a crisis of the entire capitalist system, including its political institutions and legal foundations. This political sclerosis is even more remarkable considering that the final decision, the restoration of the system, is foreseeable: the financial markets were or are being refinanced through bailout packages, cheap money and deficit-brakes.