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62 Money matters 05 LANGUAGE SKILLS EXPLORE LOOK AGAIN EXTRAS Have you heard about the financial crisis that reached its peak in 2009? What is it? When did it start? Which countries were or still are affected? Did you notice signs of a crisis where you live? Read the article about the financial crisis and underline three facts that you knew and three facts that are new to you. Is the author of the article in favour of neoliberalism? Find three expressions in the second paragraph that indicate the author’s point of view. READING 6 a b c Aer World War II, western industrialised countries experienced years of continuous economic growth. is meant full employment, rising living standards and wealth, which led to increasing consumerism , more holidays and long-distance travelling. Inpostwar Europe many countries set up so-called welfare states to look aer the weaker members of society – the unemployed, the sick and the old. e oil crisis at the beginning of the 1970s and the period of stagation 3 that followed, brought about a change in economic systems. e model on which the welfare state had been based, called Keynesianism 4 , was replaced by neoliberalism . Industries were privatised, state-owned utilities sold o , unprotable enterprises closed or relocated to cheap labour countries. e deregulation of nancial markets in the 1980s, together with a blind belief in free-market economy, gave rise to a period of nancial gambling and greed, inwhich everything revolved around quick personal enrichment and shareholder value . ere was no limit to speculation, more and more complex ‘nancial products’ were invented, and there was an increasing divide between the real economy (based on goods and services) and a ‘virtual economy’ based on littlemore than the transfer of gigantic sums of money per mouseclick. e ones who proted from this were bankers, company bosses and everyone who beneted from their wealth, like the luxury goods industry. e losers were, for example, the ‘working poor’ su ering from social exclusion . When, due to the failure of many home-owners in the USA to repay their mortgages , several big banks in the USA collapsed, this did not only a ect the poor but also the middle classes. Many of them found themselves homeless or ‘half-homeless,’ which meant that whole families started living in their cars, in cheap motel rooms or in shantytowns. Globalisation meant that the crisis quickly spread to other economies, andEurope andAsia, for example, were a ected too. In Europe, many governments had made debts and lived beyond their means for decades. When these countries introduced austerity measures 5 to reduce their debts, this – together with the slow- down in economic growth and the euro crisis –meant an increase in unemployment gures. Especially in Southern Europe unemployment rose, and even well-trained young people could no longer nd jobs. Doing unpaid internships or working in precarious employment, the ‘lost generation’ – as they have come to be called – oen cannot a ord to leave home. Even in rich countries like Austria, every sixth inhabitant is threatened by poverty. e middle class, too, which traditionally has been the motor of growth and seemed immune to nancial worries, is beginning to be a ected. Aer what looked like a brief recovery in 2010, the situation worsened again and, as the economist Stieglitz puts it, the ‘Great Contraction’ continues. e nancial crisis Match the highlighted words in the text with these definitions. a an economic system based on privatisation, free trade and open markets b the increase of world-wide trade and business c an organisation that supplies the public with water, gas, electricity, etc. d the total worth of a company to those who own shares in it e a state in which buying and selling goods is of the highest importance f the feeling of being cut off from society, due to poverty or unemployment g money that you borrow from a bank to buy a house or other property 7 3 stagflation: ‘stagnation’ and ‘inflation’– a combination of high inflation and rising prices with low economic growth and high unemployment 4 Keynesianism: an economic system that relies on government programmes to encourage employment and spending 5 austerity measures: action taken by a government to reduce its deficit e.g. by spending less or increasing taxation Nur zu Prüfzwecken – Eigentum des Verlags öbv