The 2007– crisis: common patterns and new thinking

This chapter provides case studies of the recent US and European financial crises, and shows that China is at risk of a turning point from boom to bust. Also, some new thinking is presented, which explains the continuing occurrence of large-scale financial crises. Key financial variables are shown to be driven more by psychological and social constructs than is commonly understood. Money and wealth can be created, transferred, and destroyed across the global economy independently of the rest of the ‘real’ economy. Also, expanding our understanding of recent crises can be assisted by evolutionary and complex systems approaches, especially ones that privilege the role of interactive knowledge and belief systems. A new political economy of financial crisis is advanced to organize issues and topics related to large-scale financial crises.