GLOBAL FINANCIAL AND ECONOMIC CRISIS

Abstract

The crisis began with the abolition of the Gold Standard in 1971, since when the unlimited emitting of the dollar has begun. Besides, the dollar has begun a global currency, and the United States have gained the status of a hegemonic power. The United States have acquired the concept of entirely free market and neo-liberalism with the presumption that every potential financial and economic problem will be solved by the free market. By following this concept, every kind of control of the behavior in the market has been abolished, which is, directly or indirectly (through International Monetary Fund and The World Bank) supported in all world's countries.

Since profit is significantly higher in financial sector than in real sector, the capital from the latter is moving to the former. The increase rate of salaries in the USA in the period of 2000 - 2007 was in average .01% per annum and therefore the demand was being stimulated trough liberally granted loans, especially to physical persons. The receivables based on the loans granted were transformed into bonds, and the number of securities and their derivatives on other bases also increased, which had been introduced into the market without strict control of the issuer's solvency. When the loans, securities and their derivatives became due, the loan givers and buyers of securities and their derivatives were not able to make the recovery, which resulted in a massive bankruptcy of banks, decrease of economic activity and increase of unemployment.

In Republic of Srpska and Republic of Serbia, a significant capital has been generated owing to the privatization process. Due to the global financial crisis, the inflow of foreign capital will decrease, and there is also a risk of withdrawal of already invested foreign capital, either because financial problems of foreign parent companies, or because the decrease in profit of their daughter companies in our countries.

The global crisis has shown that the leading model of capitalism must transform into a model in which citizens will have the same social and democratic rights, which is closest to the model of capitalism in Scandinavian countries.