The Financial Crisis as Manifestation of the so Called “The Political Trilemma of the World Economy”

Abstract

Over the centuries, have been many financial crises, which occurred in cycle shaken the world's largest economies. In general, crises are more or less similar in appearance, the appear occasionally. The same case is also the recent financial crisis of 2008, known as the global financial crisis, considered biggest crisis since 1930s, which create financial, economic and social problems. Financial and economic crisis later was transformed into a social and political crisis. Macroeconomic indicators analysis shows that the economic crisis has interrupted the positive trend of development. The most important lessons that the financial and economic experts and the biggest political leaders of the world took out of this unprecedented crisis, is that the “phenomenon of globalization” already is a constant challenge, whose economies of countries should adopt and also create mechanisms to deal with it. Through this paper, referring to scientific literature I will analyze what are the main causes of the financial crisis and what are their effects on the economy. Will be treated consistently as well as political trilemma, which shows the need of sacrificing one of the three pillars of Trilemma as: economic globalization, political democracy and national sovereignty who are reciprocally incompatible with one another.

DOI: 10.5901/ajis.2014.v3n2p379