Credit and Crisis

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for 7th Pan-European International Relations Conference ’Politics in Hard Times: International Relations Responses to the Financial Crisis
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Central to an understanding of the global financial crisis 2007-2009 are both economic and epistemic forms of credit. Economic credit, on the one hand, has taken both new dimensions and forms: high levels of economic credit and debt are both a cause and consequence of the crisis – from the credit expansion through sub-prime mortgages, to highly leveraged banks and hedge funds, to the international credit imbalances and large fiscal deficits due to wide-spread state intervention. New forms of economic credit through securitisation and credit derivatives such as Collateral Debt Obligations (CDOs) and Credit Default Swaps (CDSs) also played a critical part. The importance of epistemic credit, on the other hand, is evident from the central role played by credit rating agencies, whose ratings proved to be a false security for investors. The credit of rating agencies has been called into question, as have the feasibility of the monetarist edifice behind central bank governance and the risk management of modern finance theory. At the same time both risk models and credit ratings persist, and the effect on their credibility is ambiguous. This section aims to investigate how the different aspects and dynamics of economic and epistemic credit relate to one another, and what particular modes of governance they represent. The crisis of credit has already brought about a peculiar reconfiguration of the private and public domains, with a large section of private debt now underwritten by the state. The section welcomes both established and young researchers and seeks to explore different manifestations of credit and credibility and their role in the crisis in the following 5 panels:

• Keynesianism/ monetarism – the credit of economic theory
• Public debt – the credit of the state
• Central bank credibility – the governance of expectation
• Epistemic security – the credit of facts
• Roundtable on credit and crisis

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