Lehman Brothers, to collapse in 2008 ushered in a new era. Unlike previous occasions since the Second World War, when financial crises were more or less contained, the international to the Lehman collapse spilled over into the markets’ reaction Brothers’ real economy. This resulted in an unprecedented package of internationally emergency monetary and fiscal stimuli, followed by a series of massive government bailouts of banks and other financial institutions. As Mervyn King, Governor of the Bank of England, observed: banks are in life but national in “global The money gratitude to their rescuers was, death …” (FSA 2009: 36). markets’ however, brief. Regardless of the fact that the high level of sovereign debt was, to a large extent, attributable to bank bailouts and their economic consequences; the financial markets soon resumed speculation against nation states, creating a growing debt “sovereign crisis”. The neo-liberal response to high levels of public debt was to revive the economists’ that public sector deficits are economically damaging (Barro 2009; “Treasury View” Cochrane 2009; Fama 2009); and within 20 months of the emergency stimulus measures, this view came to dominate the public debate. But as Carrick-Hagenbarth & Epstein (2012, this issue) show, in the run-up to the crisis, many prominent financial economists that had actively lent their academic prestige in support of deregulation and financialisation and that now support austerity had substantial undeclared conflicts – – of interest with the financial establishment. These conflicts of interest were so extensive, yet so rarely disclosed by the leading financial economists, that it would seem the norm is for financial economists to acquire financial affiliations. Parallel to its capturing of the academy, the financial money has co-opted much of the US industry’s political elite in both parties. As pointed out by Callinicos (2012, this issue), between
Lehman Brothers, to collapse in 2008 ushered in a new era. Unlike previous occasions since the Second World War, when financial crises were more or less contained, the international markets’ reaction to the Lehman Brothers’ collapse spilled over into the real economy. This resulted in an unprecedented package of internationally emergency monetary and fiscal stimuli, followed by a series of massive government bailouts of banks and other financial institutions. As Mervyn King, Governor of the Bank of England, observed: banks are “global in life but national in death …” (FSA 2009: 36). The money markets’ gratitude to their rescuers was, however, brief. Regardless of the fact that the high level of sovereign debt was, to a large extent, attributable to bank bailouts and their economic consequences; the financial markets soon resumed speculation against nation states, creating a growing “sovereign debt crisis”. The neo-liberal economists’ response to high levels of public debt was to revive the “Treasury View” that public sector deficits are economically damaging (Barro 2009; Cochrane 2009; Fama 2009); and within 20 months of the emergency stimulus measures, this view came to dominate the public debate. But as Carrick-Hagenbarth & Epstein (2012, this issue) show, in the run-up to the crisis, many prominent financial economists that had actively lent their academic prestige in support of deregulation and financialisation – and that now support austerity – had substantial undeclared conflicts of interest with the financial establishment. These conflicts of interest were so extensive, yet so rarely disclosed by the leading financial economists, that it would seem the norm is for financial economists to acquire financial affiliations. Parallel to its capturing of the academy, the financial industry’s money has co-opted much of the US political elite in both parties. As pointed out by Callinicos (2012, this issue), between