>What were the initial causes of the crisis? (ECONOMIC RESEARCH)

The crisis is often blamed on the "excesses" in finance and banks. However it is important to understand that the crisis has far deeper causes. If we go from the most recent events to the earliest events, we can identify:

- the excesses of finance and banks;
- the rise in debt ratios and the excess liquidity;
- income inequalities and the need to boost demand via credit;
- deindustrialisation and the dichotomy of labour markets;
- globalisation and the gaps between real exchange rates.

It is sad that governments and the G20 only look at the most recent causes of the crisis (finance and banks); "intellectuals" go as far as income inequalities, but rarely link them to deindustrialisation and globalisation. This hierarchy of causes of the crisis must be identified (from the most recent to the earliest) to conduct efficient policies: in the near term, redistributive policies, in the long term, policies of reindustrialisation and maybe coordinated management of exchange rates.

To respond to the crisis, the chronicle of causes behind the crisis must therefore be clearly identified, from the most upstream causes to the most downstream causes.

We believe that the hierarchy of the causes of the crisis, from the earliest to the most recent, is as follows:

1. globalisation, and reinforcement of the competition from emerging countries by distortions in real exchange rates;
2. deindustrialisation, deskilling and dichotomy of labour markets;
3. income inequalities, low level of wages, and need to boost demand via credit;
4. rise in debt ratios and excess liquidity;
5. financial engineering, and excesses in finance and banks.

To read the full report: CAUSES OF CRISIS