Analysis of the Article Written by Deepak Lal for the Business Research Paper

Analysis of the Article Written by Deepak Lal for the Business Standard Regarding Global Financial Crisis - Research Paper Example The savings are recycled through the international banking system on a regular basis to fuel demand. Second, cheap credit given by banks without checking the creditworthiness of the borrowers. Thirdly, the rise in the commodity prices also contributed a lot to the financial crisis and Lastly, according to him is the bailout sought by some irresponsible banks from the taxpayers telling them otherwise it will lead to the complete wiping of the financial institution. He says that the 1980 crisis was resolved when the banks hugely wrote off their Third World debt, sacked their reckless managers and shareholders also suffered large losses. But, eventually, it all came under control without threatening the world economy on a large scale. Whereas, in the current times the global financial system is sinking and bailouts are no longer an exception but have become a routine affair. The difference in outcome is because that even in the 1970s surplus money was recycled but it was done by the off -shore branches of the Parent Bank, bringing no risk to the Western Banking system, even if there was a default. Whereas, the current crisis stems from UK's financial liberalisation in the 1980s, and the Clinton era abolition of the Glass-Steagall Act, which had kept a firewall between the commercial and investment banking parts of the financial system since the 1930s. In these times no difference was kept between the Payments/deposit system of the banks and the investment banking.