EXERCISE 2
Complete the following dialogue with the words from the table.
Bermudo: Do you believe that we have learned something from the last financial crisis? Elvira: In response to the crisis of 2007-2009, governments in most industrialized countries developed some of the most generous bailouts ever seen for large financial institutions. Bermudo: Of course, but you know it is not politically correct to call them bailouts – the preferred language for politicians is “liquidity support” or “systemic protection.” Elvira: Yes, but it represents essentially the same. When it comes down to it, the goverments deferred again the needs of people who had lent money to bing banks. Bermudo: Yes, it seems that the only important thing is to obey the dictatorship of the financial markets. Not? Elvira: Financial markets have worked hard to create a system that enforces their points of view. With free and open capital markets, a small country can be flooded with investments one moment, only to be charged high interest rates – or cut off completely – soon thereafter. Bermudo: In such circumstances, small countries seemingly have no choice: than obey the financial markets and to cut public expenditure away, financial markets’ diktat on austerity, lest they be punished by withdrawal of financing. Elvira: The finance is not a target itself but a way to come to this target due to the fact that it is supposed that financial markets provide financing. Regulate financial markets through a combination of taxation and regulation – and, if necessary, with a government intervention- is necessary. Bermudo: Then, in short: do you believe that the regulation of the financial markets will avoid a future crisis?
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