World crisis of 2008 and its economic, social and geopolitical consequences

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WORLD CRISIS OF 2008 AND ITS ECONOMIC, SOCIAL AND
GEOPOLITICAL CONSEQUENCES
Fernando Alcoforado1
ABSTRACT
This article aims to identify the causes of the global economic and financial crisis of
2008, tracing the economic and social scenarios and global geopolitical changes
resulting from the crisis. The methodology consisted in the analysis of publications
related to the global economic and financial crisis and its consequences. The result of
the studies indicated that the global economic and financial crisis of 2008 will be
prolonged and that it may result in the advent of a new world order, the decline of the
US and the rise of China as a major economic power in the world.
Keywords: Origins of the economic and financial crisis of 2008. Scenarios of the world
economy. Scenarios in the social world. Geopolitical changes in the future.
1. Origins of the global economic and financial crisis of 2008
In early August 2008, a financial crisis arose in the mortgage lending industry in the
United States who immediately spread to other parts of the world financial system, with
rapidity and amplitude that surprised the market. According to Gillian Tett2
(2009), the
major Western banks threw the world into a recession. The Bank of England said that
the losses of the banks that had to adjust their investments to market prices are US$ 3
trillion, equivalent to about a year of economic production in the United Kingdom. The
Asian Development Bank, in turn, estimated that financial assets worldwide may have
been dropped by 2009 to more than US$ 50 trillion - a number equivalent to the total
annual production.
According Gillian Tett (2009)
the current crisis is a product of changes that are taking root in the West silently for several
years. Half a century ago, the banking appeared to be a relatively simple art. When commercial
1
Fernando Alcoforado , member of the Bahia Academy of Education, engineer and doctor of Territorial
Planning and Regional Development from the University of Barcelona, a university professor and
consultant in strategic planning, business planning, regional planning and planning of energy systems, is
the author of Globalização (Editora Nobel, São Paulo, 1997), De Collor a FHC- O Brasil e a Nova
(Des)ordem Mundial (Editora Nobel, São Paulo, 1998), Um Projeto para o Brasil (Editora Nobel, São
Paulo, 2000), Os condicionantes do desenvolvimento do Estado da Bahia (Tese de doutorado.
Universidade de Barcelona, http://www.tesisenred.net/handle/10803/1944, 2003), Globalização e
Desenvolvimento (Editora Nobel, São Paulo, 2006), Bahia- Desenvolvimento do Século XVI ao Século XX
e Objetivos Estratégicos na Era Contemporânea (EGBA, Salvador, 2008), The Necessary Conditions of
the Economic and Social Development-The Case of the State of Bahia (VDM Verlag Dr. Muller
Aktiengesellschaft & Co. KG, Saarbrücken, Germany, 2010), Aquecimento Global e Catástrofe
Planetária (P&A Gráfica e Editora, Salvador, 2010), Amazônia Sustentável- Para o progresso do Brasil e
combate ao aquecimento global (Viena- Editora e Gráfica, Santa Cruz do Rio Pardo, São Paulo, 2011)
and Os Fatores Condicionantes do Desenvolvimento Econômico e Social (Editora CRV, Curitiba, 2012),
among others.
2
Gillian Tett, PhD in social anthropology from the University of Cambridge, is assistant editor of the
Financial Times where does the global coverage of financial markets.

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banks extended loans, they typically kept those operations within their own accounting systems
- and used rudimentary calculations (combined with information about their customers) when
deciding whether to lend or not. However, from the seventies onwards, two revolutions
occurred: banks started to sell their credit risk to other investors in the prosperous capital
markets and adopted complex computer-based systems to measure credit risk that were often
imported from sector of pure science - and prepared by luminaries of statistics, as Den Braber
of RBS.
Not only the financial system is embittering damage on a scale that no one ever predicted, but
the pillars of faith on which the new financial capitalism was also built virtually collapsed.
This made all of the finance ministers to central bankers, from retail investors to pensioners,
stay devoid of an intellectual compass, bewildered and confused. "Our world is broken - and I
honestly do not know what will replace it The compass by which we conducted the United
States disappeared", says Bernie Sucher, head of Moscow operations at Merrill Lynch. "The
last time I saw something like that in terms of sense of disorientation and loss, was among my
friends in Russia when the Soviet Union collapsed".
Until the summer of 2007, the majority of investors, bankers and governments believed that
these revolutions represented "progress" real that benefiting the economy as a whole.
Regulators loved the fact that banks are expanding credit exposures, since crises such as
savings and loans in the United States, in the eighties, showed the dangers of banks being
exposed to a concentrated loan type. "The dispersion of credit risk helped to make more
resistant banking and financial system", proclaimed in April 2006 the International Monetary
Fund (IMF), expressing a widespread western belief.
As innovation in the financial sector has become more intense, she also began to be permeated
with a terrible irony. In public, the financial experts at the forefront of the revolution depicted
the changes as measures that would promote a superior form of free market capitalism. When a
JPMorgan team created credit derivatives in the 1990s (a contract set between two parties
which define future payments based on the price behavior of a market asset, usually the calls
"commodities"), a favorite keyword in their market literature was the claim that these
derivatives would promote "market completeness" - or more perfect free markets.
In July 2007, the blind faith began to suffer cracks. In the United States defaults began
to increase in the mortgage industry "subprime" which is a credit risk, granted to a
borrower that does not offer sufficient guarantees to benefit from the more
advantageous interest rate (prime rate) or to designate a form of mortgage for real estate
intended to borrowers presenting the highest risk. This mortgage was to guarantee the
borrower's residence and was often coupled to the issuance of credit cards or car rentals.
Agencies such as Standard & Poor's reduced product classifications linked to mortgages
and admitted that their mathematical models were presenting defects.
But when the default rates of the "subprime" rose, accountants demanded that banks
revalue the instruments used. By the spring of 2008, Citi, Merrill and UBS had
collectively embittered a loss of US$ 53 billion. Gillian Tett (2009) states that banks
tried to plug this hole with obtaining more than US$ 200 billion in new capital. But the
hole continued to increase. As a result, faith in the ability of regulators to monitor banks
collapsed. Faith in banks also ended. Then, when the mathematical models lost
credibility, investors disregarded all forms of complex finance.
In September 2008, the last pillar of faith came down. Most investors admitted that the
United States government would never let a large financial group fail. But when
Lehman Brothers went bankrupt, distrust and bewilderment increased exponentially.
Most credit markets collapsed. The prices went crazy. Banks and asset analysts found
that all your financial models fragmented up. "In the capital markets, nothing worked",
said principal analyst risk of a large West Bank. As noted a few weeks later Mervyn
King, governor of the Bank of England, "the system was on the precipice".

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According Gillian Tett (2009)
while currently seeking new pillars of trust for finance, governments are stepping in to replace
many functions of the market. The United States Treasury is conducting "stress tests" on the
banks, in order to increase investor confidence. In the United Kingdom the government is
providing to banks guarantees against the "toxic" assets. Banks and credit agencies are -
belatedly - revamping their models. Companies in the financial sector and regulators also
promised to make industry more transparent and standardized.
Gillian Tett (2009) asks how the world get here?
A large part of the answer is that the era of liberalization contained the seeds of its own
downfall: this was also a period of huge growth in the scale and profitability of the financial
sector, of frenetic financial innovation, of growing global macroeconomic imbalances, high
indebtedness of households and bubbles of asset price, ie, a deviation from the fair price or an
exaggeration on the part of investors who would be willing to acquire assets for prices
inconsistent with the cash flow that these assets generate promise. By intervening to keep their
exchange rates low and accumulate foreign currency reserves, governments of emerging
economies generated huge current account surpluses, which recycled along with private capital
inflows in official capital outflows. Between the late 90s and the peak in July 2008, only the
currency reserves of emerging countries grew by US$ 5.3 trillion.
These huge flows of capital, added to the traditional surpluses of several rich countries
and growing surpluses of oil exporters, ended up largely in a small number of rich
countries and particularly in the United States. At the peak, United States absorbed
about 70% of the surplus spared of the rest of the world. Meanwhile, within the United
States, the debt ratio of households to GDP rose from 66% in 1997 to 100% a decade
later. Even bigger jumps in indebtedness of households occurred in the United
Kingdom. These increases in the debt of households were supported, in turn, by highly
elastic and innovative financial systems and, in the United States, by government
programs.
Gillian Tett (2009) states that
we are witnessing the financial crisis deeper, large and dangerous since the 1930s. As Reinhart
and Rogoff argue in other work, "banking crises are associated with profound declines in
output and employment". This is due in part to the balance sheets extended beyond the limit: in
the United States, the overall debt hit a record peak of just under 350% of GDP - 85% of it
private. This compared to just over 160% in 1980. Among the possible results of this shock are
immense and prolonged fiscal deficits in countries with large external deficits, as they try to
maintain demand, a prolonged global recession, a brutal adjustment of the global balance of
payments, a dollar collapse, high inflation and protectionism. The transformation is sure to be
deeper in the financial sector.
According Gillian Tett (2009), the bright new financial system - for all its talented
participants, for all its rich rewards - has failed in the market test. In a recent study,
Andrew Haldane, executive director for financial stability of the Bank of England,
shows how little banks understood the risks that are supposed to administer. He
attributed these failures to "disaster myopia" (the tendency to underestimate risks), a
lack of awareness of "network externalities" (contamination from one institution to
others) and "misaligned incentives" (the positive side for the employees and the
negative side to shareholders and taxpayers).
Gillian Tett (2009) also states that

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after the crisis, we certainly "we will see a less proud financial sector". Markets will impose a
brutal discipline, even if temporary. Government regulation also hardens. Less clear is whether
policymakers will contemplate structural solutions with a separation of commercial banking
system of bank investment system or a forced reduction in the size and complexity of
institutions deemed too big or too interconnected to fail. You can also imagine a return of
much of the banking to the domestic market, as governments increasingly impose their rules.
In this case, there would be a "de-globalization".
Another conclusion of Gillian Tett (2009) is that the financial collapse would trigger a
global industrial slowdown. It also is spreading across significant sector of the real
economy, much of which is crying out for assistance and that the search for security
will strengthen political control over markets. A shift in policy focus means a change to
the national and far from global. This is already evident in finance. It is also seen in the
determination to rescue national producers. But protectionist intervention is likely to
extend far beyond the cases seen so far that is just the beginning.
Paul Krugman3
(2009) states that,
the fact is that recent economic numbers are scary, not just in America but around the world.
The manufacturing sector, in particular, is collapsing everywhere. Banks are not lending,
companies and consumers are not spending. We will not save words: This looks a lot like the
beginning of the second Great Depression.
The French economist François Chesnais4
(2008) states that the effect of the financial
crisis on the real economy hit emerging markets harder than the developed economies,
with the collapse of trade flows and a dramatic drop in the prices of "commodities". It is
clear that those hardest hit will be the most poor-especially in Africa-that have less to
tell. After these, the hardest hit will be the producers of "commodities" that have always
faced great social and demographic problems, such as those high in energy (Russia,
Iran, Nigeria and Venezuela). Even the Gulf oil producers were affected. Everyone got
used to export and swollen revenue and are facing adjustments.
Gillian Tett (2009) states that
the West's capacity in general and the United States in particular to influence the course of
future events will also be compromised. The collapse of the western financial system, while
China flourishes, marks a humiliating end to the "unipolar moment", that is, the United States
domination. While the authors of Western policies face difficulties, their credibility is ruined.
Who still trusts the teachers? These changes will endanger the world ability not only to manage
the global economy, but also to deal with the strategic challenges represented by fragile states,
terrorism, climate change and the rise of new great powers. In the extreme, the integration of
the global economy on which almost all depend now can be reversed.
Gillian Tett (2009) states that the era of financial liberalization over. But unlike the
1930s, there is no alternative in sight to the market economy. According Tett (2009), to
find out where capitalism is heading, it is imperative to understand more clearly what
went so wrong with the financial system of the century 21. Certainly not lacking are
potential culprits: unbridled greed, regulations devoid of rigor, monetary policy
excessively loose, fraudulent loans and managerial failure.
3
Paul Krugman, economist, columnist for The New York Times and Professor of Economics and
International Affairs at Princeton University, holds the 2008 Economics Nobel.
4
François Chesnais, specialist in industrial economics and economy of technological innovation, member
of Larea-Cere Research Laboratory at the University of Paris X Nanterre-and professor at the University
of Paris XIII-Villetaneuse, was economist of Direction of Science, Technology and Industry (DSTI) of
the Organization for Economic Cooperation and Development (OECD).

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All this played a role - as occurred in previous periods of prosperity and crisis. Another
issue that influenced the crisis was the extraordinary complexity and opacity of the
modern financial system. In the last two decades, a wave of innovation has reshaped the
way markets work, in a way that seemed to result in great benefits to all parties. But this
innovation became so intense that challenged the ability of the most common bankers to
understand - not to mention regulators.
Michel Chossudovsky5
(2009) states that
the joint reading of Paul Jorion books - Vers la crise du américain capitalisme? - And Aglietta
and Berrebi (Désordres dans le mondial capitalisme Paris. Odile Jacob, 2007) is very useful.
The first allows us to understand why it was almost inevitable that the clash occurred in the US
mortgage industry.
Paul Jorion launches a well frown on financial practices that he does not hesitate to
characterize as almost permanent and intrinsically fraudulent, even where, as in Enron, did not
open any criminal proceedings. Aglietta and Berrebi, in turn, explain how the current phase of
capitalism can only generate, at close intervals, financial crisis whose epicenter is the United
States.
A major problem faced by the world capitalist system is the need for expansion of
demand to sustain the production of goods and services. Chossudovsky (2009) states
that
to maintain a high level of activity on the planet, "a dynamic approach is necessary". At least
for now, she is not from emerging countries (China, India, Brazil), where the distribution of
income and the relationships between town and country stunt the growth of domestic
consumption and where external surpluses ensure the financing of US deficits. The demand
cannot be read by wage income, whose growth is weak. She comes from income distributed to
shareholders and the ruling elite, but its overall mass is insufficient to sustain aggregate
demand growing rapidly. The answer to this dilemma lies in the power of credit expansion.
This is where contemporary capitalism is the demand to perform the requirements of
shareholder value.
The French economist François Chesnais (2008) states that
one of the means used to overcome the limits of the capital of the central economies was that
they all appealed the creation of completely artificial forms of expansion of effective demand,
which, added to the other forms of creation of fictitious capital, generated the conditions for the
crisis financial that is developing today.
For Marx, fictitious capital is the accumulation of securities that are "shadow of investments"
have made but as a bonus securities and stock appear in the form of capital to its owners. They
are not for the system as a whole, for the accumulation process, but they are for their holders,
and customary closing conditions of capital recovery processes, yield to their owners dividends
and income. But his fictional character is revealed in crisis situations. When befall crisis of
overproduction, breaking companies, etc, it warns that capital did not exist.
Is due to the fictitious capital that can read sometimes in the newspapers that the amount of
capital disappeared in some "crisis of the market”. These sums had never existed as capital
itself, though, for the owners of these shares, represented shares carrying rights to dividends. A
major problem today is that in many countries pension systems are based on fictitious capital,
with claims of profits of capitalist production that can disappear in times of crisis.
5
Michel Chossudovsky, Canadian economist, visiting professor of academic institutions in Europe, Latin
America and Southeast Asia, has served as economic adviser to developing countries and international
organizations as consultant.

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The process of financial liberalization and globalization of the 1980s and 1990s was based on
fictitious capital accumulation, especially in the hands of investment funds, pension funds,
financial funds. And the great news since the end or mid-1990s and throughout the 2000s was
in the United States and Britain in particular, the extraordinary impulse that gave the creation
of fictitious capital in the form of credit. Credit to companies, but also and above all, housing
loans, consumer credit and mostly in mortgages.
This contributed to leap in the mass of fictitious capital created, causing even more acute forms
of vulnerability and fragility, including against minor bumps, including front of absolutely
predictable episodes. For example, we knew that a "boom" real estate ends inexorably and that
in the stock market there was the illusion that there wasn´t limit to the rise in the stock price.
Based on all previous history was known that the expansion would not be sustainable nor in
real estate neither in the stock market. When dealing with buildings and houses and the stock
market is inevitable that the time comes when the "boom" is over.
The end of prosperity, which was a normal and predictable fact, has become a tremendous
crisis. Added to all this, the fact that during the last two years, the loans were made in the
United States to families without the least ability to pay. And besides, everything was
combined with the new financial "technical" allowing so that banks sell bonds in such a way
that no one could know exactly what was buying up when there was a loud explosion of
"subprime" in 2007.
François Chesnais (2008) raises a big question whether in the short term, domestic
demand in China may become the place that ensures that moment of realization of
surplus value (exploitation rate, according to Marx, which is the difference between the
value produced by labor and the wages paid to the employee) that occurred in the
United States. The accumulation of capital in China was made based on internal
processes, but also based on something that is perfectly documented, but little
discussed: the displacement of a major part of Sector II of the economy, the sector of
the production of consumer goods, from United States to China. And this has much to
do with the volume of United States deficits (fiscal and commercial), which could only
be reversed through a re-industrialization of the United States.
This means that established new relations between the United States and China. It is no
longer the relationship of an imperialist power with a semi-colonial country. The United
States created relations of a new type, which now have difficulties to recognize and take
over. Based on the trade surplus, China accumulates millions and millions of dollars,
which immediately lends to the United States. International relations are of an entirely
new type.
In Europe there is a clear trend towards accelerating the destruction of productive forces
and jobs to move to the unique paradise of the capitalist world today that is China. In
China, there was an internal process of competition between capitals, which combined
with processes of competition in the Chinese political apparatus and competition to
attract foreign companies, which resulted in the creation of huge production capacity
process. Besides the ability to violence to nature on a massive scale, also in China
focuses one over accumulation of capital that at any given time will become
unsustainable.
According Chesnais (2008), the phases of this crisis are distinct from those of 1929,
because the US crisis of overproduction was found from the first moments. Just as
happened with the crisis of 1929 and in the 1930s, albeit in different forms and
conditions, the crisis will combine with the need for capitalism to carry out a complete
reorganization of its relations of economic forces on the world, marking the moment
that the United States will see that its military superiority is only one element, and a

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very subordinate element, to renegotiate its relations with China and other parts of the
world. Or the time will come in which it will jump to a military adventure with
unforeseeable consequences.
Chesnais (2008) also notes that
we face the risk of a catastrophe, but no longer of capitalism, but of a catastrophe of humanity.
In a way, if we take into account the climate crisis, possibly already exists something like this.
Occurred in 2008, a real break that leaves behind a long phase of expansion of the world
capitalist economy; and the fracture marked the beginning of a crisis process with features that
are comparable to the 1929 crisis, although it may even develop into a very different context.
We are facing one of the times when the crisis comes to express the historical limits of the
capitalist system.
Entered a phase where it is placed the real possibility of a crisis of humanity within of complex
relationships which are also the warlike events, but the most important is that, even excluding
the possibility that a large-scale war that in this could only be an atomic war, we are facing a
new type of crisis, a combination of this economic crisis that began with a situation in which
nature, treated without regard and struck by the man in the framework of capitalism, reacts
now brutally. This is something almost excluded from our discussions, but that will be imposed
as a central fact.
The process of liberalization and deregulation that it has taken on a global scale, with the
incorporation of the former Soviet camp and the development and modification of production
relations in China meant the dismantling of the few regulatory elements that was built broadly
after World War II, to enter in a totally unregulated capitalism. Not only deregulated, but also a
capitalism that really created the world market in the full sense of the term, turning into reality
what was for Marx an intuition or anticipation.
Chesnais (2008) advocates the thesis that
during the last fifteen years have developed in certain parts of the system, industry groups that
could join up as full members to global oligopolies. Both in India and in China were made true
and strong capitalist economic groups. And in financial terms, as an expression of pure
profiteering and parasitism, the so-called sovereign wealth funds (financial instrument adopted
by some countries that manage the huge foreign exchange reserves of the exporting countries
that had their revenue multiplied formidable way in recent years and has been used, most of the
time, to acquire shares in foreign companies with financial and strategic goals) became
important centralization points of capital in the form of cash, which are mere satellites of the
United States, have strategies and their own dynamics and modify many ways geopolitical
relations of the key points in the life of the capital is made and will make.
Chesnais (2008) believes that we are facing an imminent danger. The fact that all this
happens after such a long phase, without parallel in the history of capitalism, 50 years of
uninterrupted accumulation (except a tiny break in 1974/1975), as well as all that the
capitalist ruling circles, and in particular central banks. learned from the 1929 crisis, all
this makes the crisis go quite slowly.
Central banks and governments can proclaim that agree with each other and work
together to prevent the crisis, but Chesnais (2008) does not believe that one can
introduce cooperation in world space converted to the scene of a tremendous
competition between capitals. And now, the competition between capitals goes well
beyond the relationship between the capital of the oldest parts and developed of the
world system with sectors less developed under the capitalist point of view. Because in
particular forms and even very parasitic in the world occurred capital centralization
processes outside the traditional framework of the imperialist centers: in relation to

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them, but under conditions which also introduce something completely new on the
world scene.
2. Scenarios of the world economy
Occurred in 2008, a real break that leaves behind a long phase of expansion of the world
capitalist economy and the fracture marked the beginning of a crisis process with
features that are comparable to the 1929 crisis, although it may develop in a very
different context. Just as in 1929, banks were at the epicenter of the crisis, and earlier of
this year it seemed that many of them could fail as Lehman Brothers or be nationalized,
as indeed occurred with some of them. This picture is reflected in sharp decline on the
stock markets, a record increase in "spreads" of risk in lending operations, including the
interbank loans, and a trail for government bonds.
The year 2009 began under the threat of new economic depression that the world
economy did not suffer from the 1930s. The world capitalist system just did not go into
depression after the crisis of 2008 thanks to government interventions worldwide.
Unlike what happened in the 1930s, the public sector reacted quickly to the drop in
demand and private credit, expanding its activities with spending packages, tax breaks
and abundant supply of credit, including through the central banks as in the United
States, the euro area and the United Kingdom. Together with Japan, these countries also
started the year with interest rates close to zero. In China, the government not only took
a big tax package as well as expanded credit on a scale never before recorded.
The financial collapse of the world capitalist system led to a global industrial slowdown
in 2009. She is also spreading throughout the real economy, much of which is still
calling for assistance. Security for search is strengthening the political control of
national states on the markets. The world ends in 2009 with the world economy into
recession accounting for very large accumulated losses. In its forecast, the International
Monetary Fund (IMF) predicted that in 2009 the world GDP would fall and
international trade would contract as actually happened.
The year 2010 was a year with unemployment rates still high in the global economy and
volatility above normal in the global financial market. With world GDP growing below
potential, job creation has been insufficient to absorb all unemployed and new entrants
into the labor market. Doubts about the financial health of companies, especially banks,
and, increasingly, of the public accounts are still many. The persistent high
unemployment worldwide and slow growth of the world economy may even threaten
globalization itself.
The fundamental weaknesses of the global financial sector have not yet been resolved.
Questions also remain about the functioning of the international monetary system based
on the dollar whose value is falling, the right targets for monetary policy, the
management of global capital flows, the vulnerability of emerging countries, as
demonstrated in central Europe and eastern, and also the financial weakness
demonstrated over the last three decades. Are still waiting for a solution the problems
related to the regulation of the world economy. Without this adjustment, the world
capitalist system will always be subject to successive crises.
There is much speculation as to the future development of the world economy. Some
analysts have advocated the view that the world economy would have an evolution in
"V", that is, present at first recession with falling growth whose recovery would happen

9
immediately after reaching the lowest point. Others felt that the increase would be in
"U", that is, there would be recession with the fall in economic growth followed by a
long period of depression after which there would be recovery of growth and the most
pessimistic, defended an evolution in "L", that is, then there would be depression
without growth prospects. In the latter case, the return to growth only happen with the
building of a new world economic order.
Nouriel Roubini (2009) presented a new form of evolution of the world economy, "W",
in his article "Growing the risk of further contraction." In this article, Roubini says,
There are two reasons why there is upside risk of a double-dip recession, in the form of W. At
first, there are risks associated with exit strategies for great relaxation of monetary policy and
fiscal stimulus: the authorities are criticized for acting and also not to act. If they decide to take
seriously the large fiscal deficits and enact tax increases, spending cuts and reduction of
excessive liquidity may undermine the recovery and lead the economy to a estagdeflação
(recession and deflation).
The newspaper Folha de S. Paulo (2009) reported that the International Monetary Fund
(IMF) said the world has ever practiced go out of the worst recession of the post-World
War II, but a firmer recovery may take longer than expected. According to the IMF the
good news is that the forces that were pushing the global economy down are losing
strength. But the bad news is that it is too weak to force that pushes us up, said the chief
economist of the Fund, Olivier Blanchard, in announcing the new provisions contained
in the "Panorama of the World Economy". This means that the IMF advocated a
evolution between "V" and "U" for the world economy.
The future of the world economy depends on the solution that is given to economic
relations between the United States and China, the gigantic public debt of the United
States, the recovery of the global financial system, the regulation of the world economy
and potential social conflicts. The first problem that needs to be solved is that of
economic relations between the United States and China. This problem stems, on the
one hand, the fact that the Chinese currency reserves are decisively financing the US
deficit growth and on the other, the US market represents the main destination of
Chinese exports. With the revenue generated by huge trade surpluses with the United
States - and policies that keep its currency artificially low - Beijing is the largest
investor in US Treasury securities.
Apparent China's financial control over the United States has gained great prominence.
It should be noted that the accumulation by China of huge foreign exchange reserves
(US$ 2 trillion) is a side effect of an economic model too dependent on exports. The
huge trade surplus of China is the result of an undervalued Yuan that has allowed other
countries to consume Chinese goods at the expense of own Chinese population. China
cannot sell its Treasury reserves without triggering the collapse of the dollar itself that
seems afraid. A key consideration is that if the United States adopts policy to reduce
their deficits would lead the country to buy less Chinese products.
The summit between the Chinese and US governments held in 2009 aimed to initiate
talks to seek joint solutions, despite differences on the currency to the US budget deficit
and the trade gap (exports - imports) between the two countries among others. The
Obama administration has maintained the intention to focus on the difference in the
trade balance stressing that China should not rely on US consumers to the global
economy go out of recession, because the consumption of US households was in
contraction. This means that China would have to necessarily boost domestic

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consumption to maintain economic growth and contribute to a faster but more balanced
and sustainable global recovery.
The United States is facing a heavy current account deficit, making it the largest foreign
debt holder in the world. If the United States did not “tighten their belts”, jeopardizing
the "American way of life", and begin to pursue smaller deficits in the current account
and trade balance surplus will have to declare moratorium. It should be noted that the
obligations of the United States should add an amount exceeding US$ 3 trillion.
However, if the United States adopts the policy to “tighten their belts”, reduce deficits
and make its trade balance surplus would be the commitment of international trade
given the weight of the US in the world economy. This means that, whatever the
solution to the US economy, the current global crisis will continue advancing from the
recession to chronic depression. The evolution of the world economy would therefore
be "L".
Martin Wolf (2009), writer for the Financial Times, asked whether "the world economy
is coming out of the crisis? The world has learned the right lessons? The answer to both
questions is: to some extent. We did some things right ones and learn some of the right
lessons. But not done enough nor learned enough". Wolf also says that we must put this
news, however welcome they may be, in context. The worst of the financial crisis may
be behind us, but the financial system remains undercapitalized and carrying a burden of
doubtful assets still unknown. Rather, it is anchored by a massive explicit and implicit
taxpayer support. The probability of injury to the front is close to 100%.
The capitalization of the financial system has a negative impact on the real economy
inhibiting the financing of productive sector and international trade. Many countries are
experiencing sharp declines in their export earnings due to reduced global demand
resulting from the global recession, but also because of the credit crunch for export. It is
feared that in an attempt to stimulate each country its own economy in the current
situation associated with the adoption of protectionist measures, leading to a chain
reaction. This would reduce international trade, increase unemployment and would feed
the crisis in each country and on a global scale. The search for advantages in each
country would take the worst case scenario for everyone: the depression of the world
economy. Many analysts feared a repeat of what happened during the Great Depression
in the 1930s. A return to protectionism would be a serious risk to the continuity of the
process of globalization.
Martin Wolf (2009) also stated that behind the excess of capacity and of huge increases
in fiscal deficits was the disappearance of consumer who spends a lot, especially in the
United States. Prudence of private sector probably will endure in a post-bubble world
characterized by mountains of debt. Those expecting a quick return to 2006 custom
business are fantasizing. A slow and difficult recovery, dominated by deleveraging and
deflationary risks, was the most likely prospect. Fiscal deficits will remain huge for
years. Alternative - liquidation of excess of debt through higher inflation or bankruptcy
in mass-will not be allowed. The high dependence of a huge monetary expansion and
fiscal deficits in countries which previously consumed much will be unsustainable in
the end. Wolf's view is that the evolution of the world economy would occur in "U".
According to Martin Wolf (2008),
the world is no takers willing private loan and credible. The spectacular collapse of the western
financial system is a symptom of this great fact. In the short term, governments will replace

11
private sectors as borrowers. But this cannot last forever. In the long term, the global economy
will have to rebalance. If the surplus countries do not expand domestic demand relative to
potential output, the economy of the open world can even break. As in the 30s, this is now a
real risk.
Looking at the world economy, Chesnais (2008) found that
it would need to find remedies for the savings rate. She is too low in some countries, too high
in others. The United States, where she became negative, and China represent the extreme
poles of this distortion. The reconstitution of a savings rate that failed to make America the
seat, if not the most immediate transmitter of successive financial crises "requires a budget
consolidation incompatible with the policy guidelines of the conservative majority in power.
Mainly involves a considerable recovery of household savings. This supposes a cruel revision
of credit to consumption, combined with the terrifying waste of non-renewable resources,
which is the way of American life.
For Wolf (2009), the stronger the growth in demand in surplus countries, relative to
potential GDP, and more powerful the global rebalancing would be healthier global
recovery. This will happen? Wolf doubts. The persistent high unemployment and low
growth may even threaten globalization itself. The fundamental weaknesses in the
financial sector have not yet been addressed. Questions also remain about the
functioning of the international monetary system based on the dollar, the right targets
for monetary policy, the management of global capital flows, the vulnerability of
emerging economies, as demonstrated in Central and Eastern Europe, and also the
financial fragility demonstrated so often and so painfully over the past three decades.
Paul Krugman criticizes the austerity policy imposed on countries of the European
Union by the European Central Bank and IMF stating that the expansion, not
contraction, is the right time for austerity. So declared John Maynard Keynes 75 years
ago, and he was right. Even if you have a long-term deficit problem-and who does not?
- Cut spending in a period of deep economic depression is a defeatist strategy, because
only serves to worsen depression even more. So what happens if everyone
simultaneously reduces spending in order to reduce their debts? The answer: everyone's
income falls. When the private sector is frantically struggling to pay debts, the public
sector should do the opposite, spending when the private sector cannot or will not do it
[See Article A agenda da austeridade (The agenda of austerity) published in the
newspaper Folha de S. Paulo of 02/06/2012].
In an interview with the Washington Post, the US economist James K. Galbraith
criticizes the orthodox recipe that recommends cutting public spending as a way to face
the crisis. For Galbraith, what is happening in Europe is heartbreaking. The idea that the
financing difficulties (of the state) emanate from public deficits is a argument supported
in a very powerful metaphor, but not in the facts, not in theory and not in everyday
experience. The recipe that is suggested now that it is possible to cut public spending
without cutting economic activity is completely fallacious. This is occurring now in
Europe and is heartbreaking. It is required that the Greeks cut 10% of public spending
in a few years. And it is assumed that it will not affect the GDP. Of course it will affect.
And affect in such a way that they will not have the fiscal income needed to finance
even a lower level of public spending. And are forcing Spain to do the same. The euro
zone is heading towards the abyss [See Article A zona euro está um despenhadeiro (The
euro zone is a cliff) published on the website
<http://www.esquerda.net/dossier/%E2%80%9C-zona-euro-est%C3%A1 -a-cliff%
E2% 80% 9D>].

12
The orthodox recipe cited by James K. Galbraith is dictated by the European Central
Bank and the IMF which along with the banks form the Complex Financial imposing
their will on the governments of the European Union requiring a huge austerity in
public spending, including public social spending what is to mean a huge sacrifice for
the popular classes of the bloc's member countries and, in particular, the peripheral
nations of the European Union - Greece, Portugal, Spain and Ireland - so that these
states can pay the banks of the core capitalist countries public debt with lush and
confiscatory interest. The Financial Complex aims to weaken the state of social welfare,
dilute and reduce the social dimension of Europe and reduce the social and labor rights.
United States, Europe and China have today economic performance that calls into
question the recovery of the world economy. In addition to the deep crisis in the
European Union, the United States do not present signs of recovery with high
unemployment that is taking place there and China shows clear signs of slowing. In
Europe, the euro area labor market is with the worst indicators since the single currency
came. Unemployment in the United States grew this year signaling that the recovery in
the world's largest economy is very small and less reliable. In China, the engine of
global economic recovery, industrial output show the worst result this year fueling
doubts about the ability of the second world economy sustain its growth.
One concern today is deteriorating political and institutional situation with the growth
of authoritarian tendencies in Europe and the United States. Extreme right parties gain
sudden political support of the ruling classes and large segments of the population with
unemployed masses and spread xenophobic discourse in the United States and
throughout Europe, with greater intensity in Austria, Finland and Hungary. Hangs in the
air a politically disruptive syndrome. This is the current unbearable debt of sovereign
states of Europe whose treatment by the European Central Bank and IMF is demanding
more austerity and sacrifices and less economic growth. The huge debt imposed on
Germany by the Versailles Peace Treaty in 1919 was just the broth of culture that
generated Nazism and all that came with it. There is not a Hitler still in Europe and the
United States.
The French economist Jacques Attali, predicted in his work Tous ruinés dans dix ans?-
Dette publique: La dernière chance (Librairie Arthème Fayard, 2010 that in ten years
the economic model that prevails today in the world will be ruined. After the failure of
the Euro and the Dollar and the ruin of Asia, the world will be taken to depression and
world inflation. The American sociologist Immanuel Wallerstein stated in its
Unthinking science social work (Cambridge: Polity Press, 1995) and in his other
publications that systemic crisis currently experienced in the world economy will go
until 2050 or 2075. On the instead, the Russian economist Nikolai Dimitrievitch
Kondratieff presented in his book Les grands cycles of La conjoncture (Economica,
1992) called super cycles,, big waves, long waves or long economic cycles of the
modern capitalist world economy, which applied to the current situation, indicate that
the end of the current general crisis of the world capitalist system will only happen in
2029 or 2049.
The Kondratieff thesis is that cycles consist of alternating periods of high growth and
relatively slow growth ranging from 40 to 60 years. Kondratieff identified three phases
in the cycle: expansion, stagnation, recession In his research on the nineteenth century,
Kondratieff found in 1920 the existence of two cycles (1790-1849 lasting 54 years and
another from 1850 to 1896 with a duration of 46 years). In an effort to expand the

13
Kondratieff cycle of the twentieth century, can be considered the third cycle starting in
1896 and ending in 1945 (end of World War II) for a period of 49 years; the fourth
cycle starting in 1945 and ending in 1989 (fall of the Berlin Wall), with a duration of 44
years and the fifth cycle beginning in 1989 and ending in 2029 or 2049 with duration of
40 or 60 years.
In 1790- 1849 cycle, the expansion of the economy occurred until its collapse or
stagnation in 1815 with the fall of the Napoleonic Empire, when political and economic
structures of the Old Regime were shaken, then the recession until 1849. From
September 1814 to June 1815, the great powers of the big four (England, Prussia,
Russia and Austria) met in Vienna Congress seeking to rebuild the old European order
and redraw the political map of Europe. In 1850- 1896 cycle, the expansion of the
economy happened until its collapse with the Depression of 1873, 58 years after the
1815 crisis, then the recession until 1896. It should be noted that the 1873 depression
contributed to intensify the competition between European imperialist powers that led to
the First World War (1914-1918). In the 1896-1945 cycle, the economy's expansion
happened from 1896 until its collapse in the Great Depression of 1929, 56 years after
the 1873 crisis, then the recession until 1945. The worldwide depression of 1929
decisively contributed to the outbreak of World War II World (1939-1945).
In the 1945-1989 cycle, the expansion of the economy happened until the oil shock in
1973 that shook the world economy, 44 years after the Great Depression of 1929, when
there was a marked decline in capital profitability, economic and political struggles in
all major countries of the world, especially the popular rebellion of May 1968 in France,
and the escalation of the Vietnam War, followed by recession until 1989. The end of
this cycle coincides with the fall of the Berlin Wall in 1989. The subsequent cycle
began in 1989 with its expansion until the current economic crisis of 2008, 35 years
after the 1973 crisis, followed by recession that is expected ending in 2029, after 40
years, or in 2049 after 60 years. In other words, the end of the current general crisis of
the world capitalist system will only have an end in the next 14 or 34 years. From the
above, one can see that by applying the Kondratieff cycles results converge with the
views of Wallerstein and Attali. Attali, in turn, believes that the world economy as it
operates at the moment will be ruined in 10 years, that is, the world depression will
occur until 2020. Anyway, Wallerstein and Attali converge on the conclusion that the
capitalist system as it operates today will disappear.
According to Wallerstein, during this period of systemic chaos in which we live we will
have a few moments of peace, stability and legitimacy of governments. Wallerstein has
the view that failure to comply with social needs of the population and the fiscal crisis
in each country will lead to a mass struggle that could take the form of civil war at the
global level and in each state. This situation has already registered in the Arab world
with the outbreak of the Arab Spring that has brought several dictatorships, and also in
the European Union where the mass struggle intensifies against the austerity policy of
the European Central Bank and European governments to combat the crisis. The
legitimacy of state structures and therefore their ability to maintain order is being and
will be kept in check throughout the world. This whole situation could pave the way for
social revolution and the rise of fascism which, by the way, in several European
countries and even in the United States, the extreme right grows and strengthens.
According to Wallerstein, after the "split" that may occur in 2050 or 2075, we should
not be living in a capitalist world economy.

14
The French economist Jacques Attali published over 50 books translated into twenty
languages, including Tous dans dix ans Ruïnes - Dette publish: La dernière chance
(Librairie Artheme Fayard, 2010). In this book, Attali predicts the occurrence of four
steps to the unfolding of the economic crisis that erupted in 2008 in the United States
and that spreads around the world. These steps are:
Step 1: Public debt become heavier
If nothing is done quickly, the public debt of OECD countries (Organization for
Economic Cooperation and Development), considered developed countries, will
continue to grow massively under the effect of the fall in tax revenue, the inability to
getting back economic growth, losses giant of banks and financial institutions and the
increase in social spending. In these countries, public debt would grow dramatically. In
Japan, the debt ratio is expected to increase from 204% of GDP in 2009 to 245% of
GDP in 2014 and 300% in 2020. Even though Japan accumulates a large stock of
capital, its ability to finance its debt with their own savings runs out. Japanese savers
will no longer finance the Japanese state due to the progressive loss of confidence.
Interest rates are expected to increase, public debt will reach extremely high levels and
the default will come inevitably.
The debt of Italy would increase from 115.3% of GDP in 2009 to 128.5% of GDP in
2014, Germany 78.7% to 89.3% of GDP, France from 83% to 96.3% of GDP, the
United Kingdom 68.7% to 98.3% of GDP. The Greek public debt would be 133.7% of
GDP in 2014. Portugal, Ireland and Spain whose public debt doubled in four years
would be in worse situations. In 2020, the public debt of the United Kingdom would
exceed 200% of GDP and of Belgium, France, Ireland, Greece and Italy would exceed
150% of GDP. In 2011, the US public debt represented 80% of GDP and is expected to
reach 150% of GDP in 2020. Unlike those countries, most developing countries become
fewer debtors. In 2010, public debt was null in China, Brazil went from 68.5% to 58.8%
of GDP, India 84.7% to 78.6% of GDP, Mexico from 47.8% to 44.3% of GDP and
Russia remained unchanged (7.2% of GDP). This trend will continue and in the next 20
years, China will become the world's largest creditor. In 2014, the public debt of the
rich countries could represent 120% of its GDP and the emerging countries 40% of its
GDP.
To cope with the increase of their public debt, governments of indebted countries in the
OECD aimed with its economic policies at obtaining tax surpluses to pay its creditors
(banks) on the premise that the financial system cannot be brought to bankruptcy. In this
sense, they take up of higher taxes policies and privatization of state enterprises,
dismissal of civil servants and reduced government spending in general which are
generating growing dissatisfaction of populations of several countries (Greece, Spain
and Portugal). These policies contribute to constrain economic growth in these
countries.
Step 2: The failure of the Euro and the worldwide depression
For the OECD countries to obtain in 2060 a reasonable level of debt of around 60% of
GDP, would have to reduce public spending to 8% of GDP that would require to reduce
public spending by 300 billion Euros or substantially raise taxes that are almost
impossible perspectives because there would be increased social upheavals and the
peoples of these countries prefer fails to pay the public debt. Given this fact, financial
markets do not believe that European governments will be able to restore your balance.

15
The EU countries hesitate to show solidarity between them to save the economies of
Greece, Spain, Portugal and other countries in difficulty. To slow the default against the
financial system, the European Union will seek all the solutions. Given this situation, in
the absence of real solidarity among EU member countries, the trend is the departure of
its most vulnerable members, starting with Greece. The Euro and achievements
accomplished by European Union countries will be put in check. There will be a rise in
protectionism and depression will extend to the entire European continent. European
democracies will not come out unscathed from this deep crisis.
Step 3: Dollar Bankruptcy and return of global inflation
The US government will be obliged to issue ever more dollars to finance its public debt
making the country is increasingly weakened economically. The United States will be
the next victim of the confidence of creditors’ crisis. The recession with deep EU crisis
will affect the US economic growth contributing to the fall in tax revenues and the
increase in public spending. The US public debt that now exceeds 11 trillion dollars will
increase steeply. The dollar will depreciate in relation to the Chinese currency, Russian,
Indian and Brazilian and especially for gold and raw materials. For a time, the central
banks of Asian countries holding US Treasury bonds have an interest in not allowing
the dollar to depreciate getting them even at high interest rates. The higher the rate of
return on US Treasury securities, the greater the burden on the payment of the public
debt. To address this situation, the US government will have to raise taxes and reduce
public spending that will prevent the resumption of economic growth. To avoid
depression, the US government will choose inflation as a means to promote economic
growth causing the dollar to devaluate more and more. The financial crisis will lead to
loss of confidence in the world in the West that will be replaced by Asia.
Step 4: Depression and Asia ruin
The Chinese government will do everything to discredit the Euro and then the Dollar.
China avoid having reserves in dollars increasingly devalued, believe that their assets
abroad will be devalued, its exports will be exhausted and will not have enough
resource to finance the deficits of Western countries and their own investments in
physical and social infrastructure. As a result, China will redirect your savings and your
industry for the domestic market. None of this will not prevent, however, that the
depression extends to the economy of the entire planet.
According to Jacques Attali, in human history, except in times of total war, the public
debt of the world's most powerful countries never reached as high as the recently
recorded and designed for the future. Never the dangers that may weigh on the living
standards of the world's population and their political systems were so threatening. It is
clearly shown that the current crisis is worse than that of 1929-1933, because it is
absolutely global. The international financial system no longer works. The neoliberal
model that ruled the world in the last 40 years died and there will be depression that will
last many years and not just 10 years as prognostic Jacques Attali. The global crisis that
began in 2008 is, to a market economy, which was equivalent to the fall of the Berlin
Wall in 1989.
To overcome the global economic crisis, Attali proposes the creation of a bank and
financial architecture and policy for management of sovereign debt, among other
measures. It must be remembered that in the past, depression 1870 led to the outbreak of
the 1st. World War and the Depression of 1929 did outbreak of the 2nd. World War. To

16
avoid a new world war as a consequence of the current global crisis, it is urgent to build
a new world order to be able to manage the sovereign debt, but above all ensure
cooperation among all governments in the promotion of human progress .
It is known by all scholars of the world economy that overcome the crisis that erupted in
the United States in 2008 would depend on the recovery of the economies of the United
States and the European Union and the expansion of the Chinese economy. According
to Paul Krugman, the American economist winner of the Nobel Prize in Economics
2008, "the fifth anniversary of the fall of Lehman Brothers, the recession, which was
bad in itself, turned into something much more frightening. Suddenly, we were faced
with the real possibility of economic catastrophe. And the catastrophe came" [See the
article Há cinco anos EUA vivem desperdício trágico by Paul Krugman (Five years ago
US live tragic waste) available on the website <http://noticias.uol.com.br/blogs-e-
colunas/coluna/paul-krugman/2013/09/07/ha-cinco-anos-eua-vivem-desperdicio-
tragico.htm>].
The economic stimulus of Obama government, however inappropriate it was, according
to Krugman, contained the US economic decline in 2009. Despite this, "the American
economic policy since the Lehman Brothers was an astonishing failure, terrifying". An
indisputable fact is that five years after the collapse of Lehman Brothers, the US
recovery is still uncertain. In the article by Denise Chrispim Marin, published on
newspaper O Estado de S. Paulo, under the title A recuperação dos EUA ainda é incerta
(The US recovery is still uncertain), available on the
website<http://www.estadao.com.br/noticias/impresso,cinco-anos-apos-a-quebra-do-
lehman-recuperacao-dos-eua-ainda-e-incerta-,1072442,0.htm>, there is the statement
that, "five years after the biggest financial crisis since the Great Depression of the 30s,
the slow and faltering pace of the recovery reflects the difficulty still present to
overcome the collapse caused by the bankruptcy of Lehman Brothers".
In this article, it can be seen that the United States did not come out of the crisis,
according to Octaviano Canuto, advisor to the World Bank presidency, being far from
its potential GDP. The injection of public funds to bail out banks reached US$ 700
billion, of which US$ 24.9 billion were channeled to the three largest automakers in the
country. The basic interest rate was reduced to between 0% to 0.25% in December 2008
and remains until today. As a percentage of GDP, the investment rate had fallen from
20.5% in 2006 to 14.7% in 2009. In 2013, should reach 16.8%, according to the World
Bank. The debt of American households in the second quarter of 2013 totaled US$
11.15 trillion.
On the world economic front, the year 2011 was marked by the economic crisis in the
European Union. The high public debt, especially in countries like Greece, Portugal,
Spain, Italy and Ireland and the lack of political, economic and monetary coordination
of the European Union to address public debt issues of the bloc's nations were the main
causes of the crisis. EU crisis resulted in the flight of capital, the shortage of credit,
rising unemployment, popular discontent against measures to reduce spending adopted
by countries as a way to contain the crisis, fall in GDP growth in the EU countries due
to the economic slowdown in the bloc and contamination of the crisis to countries
outside the bloc, which has commercial relations with the European Union.
To face the crisis, the actions of the European Union consisted of implementation of
anti-crisis economic package launched on 27/10/2011, on greater participation of the
IMF (International Monetary Fund) and the European Central Bank financial assistance

17
to countries with economic difficulties and the definition of a Fiscal Pact to ensure the
balance of public accounts of the European Union countries and create systems of
punishment for countries that break the pact. The year 2013 did not start well for the
European Union. The GDP of the bloc fell by 0.2% in the first quarter. In the second
quarter of 2013 the bloc's economy showed a slight recovery.
In his article O modelo econômico chinês está prestes a bater na Grande Muralha
(Chinese economic model is about to hit the Great Wall), available on the
website<http://noticias.uol.com.br/blogs-e-colunas/coluna/paul-
krugman/2013/07/20/modelo-economico-chines-esta-prestes-a-bater-na-grande-
muralha.htm>, Paul Krugman says that "now the signs are unmistakable: China is in
trouble. We're not talking about some small setback in, but something more
fundamental. The whole way the country does business, the economic system that
promoted three decades of incredible growth has reached its limit. You could say that
the Chinese model is about to collide with his Great Wall, and the only question now is
how ugly will be the hit".
For Krugman, what immediately jumps out is that "when China is compared to almost
all other economies, except its rapid growth, is the imbalance between consumption and
investment. All successful economies devote part of their income for investment rather
than consumption, aiming to expand its future capacity to consume. China, however,
seems only invest to expand its future ability to invest even more. The United States,
known for its high point, devotes 70% of their gross domestic product for consumption;
in China, the number is only half of that, while nearly half of GDP is invested".
This situation continued in China due to low salary levels. Now wages are rising,
finally, ordinary Chinese are beginning to share the fruits of growth. But it also means
that the Chinese economy is seen suddenly faced with the need, according to Krugman,
a "rebalancing" drastic. The investment now features sharply lower returns and fall
dramatically and consumption should increase dramatically to take his place. The
question is whether this can happen fast enough to prevent an economic downturn
harmful as is already happening.
Krugman notes that an excess peasant is running out in China. This has contributed to
the existence of low-cost Chinese labor and ensures the competitiveness of China in the
world market. While the Chinese economy slows down, the Western economies are
burdened with private debtors that leads them to contain consumer spending at the same
time, and, in so doing, cause a general economic slowdown. In other words, the
economic crisis is presented as insoluble within the framework of the capitalist system
in place.
In the article, published on the website <http://outraspalavras.net/posts/economia-
global-rumo-a-grande-tempestade/> under the title Economia global: rumo à grande
tempestade? (Global Economy: Towards the big storm?) written by Jack Rasmus,
Ph.D., professor of Political Economy at St. Mary's College in Moraga, California and
Labour Economics and Economic History of the United States at the University of
California at Berkeley, the author identifies three phases of the economic global crisis:
the first phase of the global economic crisis had at its core the US economy from 2007
to 2010. The second phase of the global economic crisis was centered in Europe,
following the strong US decline in 2008-09 in addition to face a second recession in
2011-12. The third phase of the global economic crisis began in 2014 with the financial
and economic instability that is happening and advancing in emerging markets such as

18
Brazil, including China where economic growth is slowing. Thus, the epicenter of the
global crisis, which first occurred in 2008 in the United States and moved to Europe
between 2010 and 2013, is now focusing on emerging market economies, including
China.
According to Jack Rasmus, before the global financial crisis and the recession of 2008,
China's economy was growing at an annual rate of 14%. Today, the rate is 7.5%, with a
strong possibility of an even lower rate of growth in 2014. Since 2012, China faces a
growing problem with global shadow banks that destabilize the housing market and the
debt market local public. On the financial side, total debt (public and private) in China
rose from 130% of GDP in 2008 to 230% of GDP, with the participation of the global
shadow banks rising from 25% in 2008 to 90% of the total in 2013. The share of global
shadow banks in the total debt nearly quadrupled and represents virtually all the
increase in the ratio between public and private total debt to GDP since 2008. As a
result, the global shadow banks are the driving force behind the growing problem of
debt and Chinese financial fragility.
Much of the increase in Chinese debt was directed to a housing bubble, accompanied by
a local public debt bubble, since local governments led to limit the real estate projects,
new business loans and infrastructure projects. The increase in private sector debt is
approaching critical proportions in China. An important event of global instability can
easily arise in the event of a default of a bank or financial product. In a way, the current
situation of China seems, according to Jack Rasmus, increasingly with real estate
markets and local and American state public debt of 2006. In other words, China may
be approaching its moment Lehman Brothers.
Jack Rasmus says that the growing financial instability of the local markets of China is
a possible serious problem also for the global economy, since China and the world
economy began to slow down in 2014. In early 2014, the real estate bubble seemed to
gain strength again, while the real Chinese economy showed signs of slowing. Other
factors that contribute even more to the slowdown of the Chinese economy in 2014 is
the industrial sector, an important source of economic growth, specifically the export
industry, which is slowing. The causes of the slowdown of the Chinese economy are the
internal changes of its economy and increasing problems in the economies of the euro
area and emerging markets whose demand is falling. In addition, China is dealing with a
general pay increase and an exchange rate increasingly unfavorable to its currency, the
Yuan. These two factors are driving up production costs and, in turn, making their
exports less competitive. The increasing production costs are causing to an exodus of
global multinational corporations in China, towards economies with even lower costs,
such as Vietnam, Thailand and other places.
Most of China's exports go to Europe and emerging markets, not just to the United
States. And as the emerging market economies slow, demand for products manufactured
by China and exports decrease. On the other hand, while China itself economically
slows, it reduces its imports of commodities, semi-finished products and raw materials
from emerging markets (and on key markets such as Australia and Korea). Now, the
massive influx of cheap capital that migrated to emerging markets like Brazil after 2008
(running from near zero interest rates in the center of the system) is coming back
quickly to the United States, Europe, Japan and the West. As the capital leaves
emerging markets, their currencies are being increasingly at risk of collapse. From the
end of 2013, in a matter of months, the major currencies of emerging countries devalued

19
10-20%. The decline scenario of currencies, capital flight and slowdown in emerging
economies promises to become a spiral of dangerous degradation and self amplifying
for the world economy.
Jack Rasmus summarizes, in his article Economia global: rumo à grande tempestade?
(Global Economy: Towards the big storm?), saying to be three global significant global
economic trends that began to intensify and to converge in recent months: (1) China's
economy slowing along with increased financial instability in its shadow banking
system; (2) a collapse of the currencies of emerging markets (India, Brazil, Turkey,
South Africa, Indonesia etc.) and their respective economic downturns; (3) a continuous
shift towards deflation in the economies of the euro area, driven by an increase
problems in Italy and the economic stagnation that reaches to France, the second largest
economy in the euro zone.
This picture described points in the sense that, in 2015, humanity will continue to be
faced with the huge threat posed by the global economic meltdown if nothing is done to
restructure the world capitalist system. When is subject to "fluctuations", as occurred
after the crisis that erupted in 2008 in the United States, a dynamic system as the world
capitalist system inexorably leads to a bifurcation point from which the system should
be restructured in search of a new dynamic stability or collapses. In other words, in the
bifurcation point, the system has to be restructured or collapse. This is the situation
faced by the world economy and that of many countries, including Brazil, which, after
the global crisis that erupted in 2008, there was no restructuring of the world economic
system and national economic systems.
Immanuel Wallerstein, American sociologist and university professor, says in his article
Crise dos “emergentes” ou do Sistema?, published on the website
<http://outraspalavras.net/posts/wallerstein-crise-dos-emergentes-ou-do-sistema/>, that
"few seem to admit that global effective demand was the real problem. But it is clear
that, below the surface, the longer detected. That's why they are in a panic, because then
all its emphasis on "growth" - a crucial faith - will be undermined. In this case, the crisis
is no longer cyclical and becomes structural: cannot be solved with palliative, but with
the invention of a new system. This is the famous fork in that there are two possible
outcomes - a better and a worse one than the existing system. A game in which we will
all be involved".
Instead of adopting national and global coordinated strategies aimed at overcoming the
global economic crisis with the restructuring of the world capitalist system and of each
country, everything was done to keep the bankrupt economic structure and outdated
policies that led to the outbreak of the 2008 crisis. The neoliberal model that ruled the
world in the last 40 years died and there will be depression that will last for many years.
Given the existence of chaos that dominates the world economy, the hour of each
country and mankind provide themselves as urgently as possible instruments needed to
have control of their destiny. To have control of their destiny, humanity needs to
exercise governance of their economic systems and the world economy. This is the only
means of survival of the human species.
3. World Scenarios in the social field

20
The main social problem resulting from the global economic and financial crisis of 2008
is unemployment that is already assuming gigantic proportions. The newspaper Diário
da Manhã published an article by Marcos Cintra6
(2009) under the title Desemprego no
mundo e no Brasil (Unemployment in the world and in Brazil). The text of the article is
as follows:
The International Labour Organization (ILO) produced the report "Global Employment
Trends" and it estimates that the global recession may generate in 2009, compared to 2007, an
additional number of unemployed between 18 million and 30 million people, but that number
can reach 50 million if the framework continues to deteriorate.
The ILO (International Labor Organization) report points out that in rich economies like the
United States, Canada, European Union, Japan, among others, additional unemployed may
vary between 4 million and 11 million people. In East and South Asia unemployment can reach
between 8 million and 26 million workers. In Eastern Europe, the Middle East and Africa
contingent would be between 3 million and 10 million.
The ILO does not provide in the report data for countries, making it only to regions. In the case
of Brazil the information is contained in Latin America and the Caribbean, where it is
estimated that the unemployed may vary between 2 million and 4 million workers in nearly 50
countries of the region.
ILO data show that the global economic turmoil started in the United States will have a
devastating impact on the labor market in rich countries. In the United States, for example, the
number of unemployed today is 12.5 million people, and this number was just over 7 million in
2007.
In Europe, unemployment reached 8% in December last year, the highest of the last two years,
and in Japan the industry frequently announces job cuts and it is estimated that about 30,000
dekasseguis are returning to Brazil because of that.
The labor market situation in Brazil due to the global crisis is relatively good compared to the
rich countries of Europe, North America and Japan. Unemployment worries here, but the
situation is more dramatic outside like designs ILO.
The federal government is reorienting the guidelines of macroeconomic policy by
strengthening the domestic market to offset the global downturn. But it must dissipate
extremely bad environment that has been created, and that increases the drama of Brazilian
workers, and seek alternatives to avoid job cuts.
An alternative that I put in debate could better distribute the impact of the crisis on the
productive sector. Instead of simply cutting jobs companies could negotiate with the unions a
reduction in wages in proportion of the intended layoffs. If a company concludes that it would
cut, for example, 20% of its payroll, this reduction would take place not with staff cuts, but by
reducing wages in the same proportion.
Certainly, there would be a consensus among the workers who would rather keep their jobs,
even though receiving less than losing a job and live with zero income. In addition, the trend is
that even to find another job, in a crisis, their remuneration for the same position probably be
reduced.
The World Bank President Robert Zoellick told the newspaper El País (2009) in Spain
there was a risk of "serious human and social crisis", because of the current economic
crisis if they are not appropriate measures taken in time. The holder of the World Bank
warned that the current situation was still unpredictable and that it's best "be prepared".
"What began as a great financial crisis and became a deep economic crisis, is now
6
Marcos Cintra, PhD in Economics from Harvard University, is professor and vice chairman of the
Getulio Vargas Foundation.

21
drifting into a major unemployment crisis”. The holder of the World Bank not rejected
the hypothesis of a global economic recovery, as several authorities of the most
developed countries have suggested. But he warned that "it will be a low-intensity
recovery, for a long time", and added, "unemployment will continue to grow". "The
probability of a great depression is low, but never zero," he said.
The Jornal de Notícias (2009) published text on 04/05/2009 under the title Aumento do
desemprego pode provocar crise social (Increased unemployment can cause social
crisis). This paper reported the following:
The President of the Eurogroup, the also Luxembourg Prime Minister, Jean-Claude Juncker,
said that unemployment is growing up "disturbing levels". The finance ministers of the euro
zone (Eurogroup) warned of the risk that the economic and financial crisis affecting Europe
bring with it a "social crisis", caused by the sharp rise in unemployment.
At the end of the monthly meeting of the Eurogroup, its president, also of Luxembourg Prime
Minister, Jean-Claude Juncker, said that unemployment is growing up "disturbing levels" and
considered that the region's governments should address "all his efforts" to combat the
situation.
Under the new economic forecasts published today by the European Commission, the
unemployment rate in the euro zone countries should grow to 9.9 percent in 2009 and should
reach 11.5 percent in 2010. Jean-Claude Juncker also asked "social responsibility" to
companies, warning that in the current context should avoid resorting to layoffs as a cost-
cutting measure.
The President of the Eurogroup stressed that one cannot underestimate the "explosive
character" that has rising unemployment and the problems it may cause, reminding that the
most affected by this element are the lowest social strata. In its meeting today, dedicated
almost exclusively to the analysis of new economic forecasts from Brussels, the leaders of the
economic policy of the euro zone also agreed that at present no need for further cyclical
momentum measures in Europe.
Jean-Claude Juncker insisted that the effort that Europe has made to fight to combat the crisis
is equivalent to the US and reiterated that "does not see the need to increase the volume" of
funds injected into the economy.
The site Terra.com.br (2009) published text on 22 April 2009 under the title Crise
financeira pode levar à crise social na Ásia, diz OIT (Financial crisis can lead to social
crisis in Asia, says ILO). The text is as follows:
The International Labour Organization (ILO) said on Wednesday at a meeting in Manila, the
Philippines, the international economic and financial crisis can bring the risk of a social crisis
in Asia, where the agency predicts there will be more 23.3 million unemployed and more than
140 million poor this year.
"If we face a prolonged financial crisis, there is a danger of falling into a social crisis in the
region," said ILO economist Gyorgy Sziraczki, to participants from 11 countries. The Regional
Director of the ILO, Sachiko Yamamoto said in his speech, which is "a real scenario" that
tends to form with "a magnitude of breathtaking speed" because the impact of the financial
crisis "is being felt deeply in countries industrialized and emerging Asia".
A study of this agency estimates that 23.3 million workers will lose their jobs this year and will
join the 90 million unemployed who had this region of the world in late 2008, and provides for
"a dramatic increase in poverty in more than 140 million people in 2009 ". The report says that
about 60 million workers in the formal sector will go to the informal sector this year, with the
risk of lost of wages and social protection.
The document highlights that Asia will spend 3.9% of their Gross Domestic Product (GDP) in
economic stimulus plans, and yet, Asian governments are those that will allocate less money to

22
social protection worldwide. The report states that "the substantial economic slowdown will
lead to freezing or reduction of wages", and this situation potentially will increase the labor
disputes.
The ILO urged governments in the region to act now to address these problems, and the Asian
Development Bank noted that any measure should include formulas to create jobs and
infrastructure that benefit the poor. The International Labor Organization (ILO) said on
Wednesday at a meeting in Manila, the Philippines, the international economic and financial
crisis can bring the risk of a social crisis in Asia, where the agency predicts there will be more
23.3 million unemployed and more than 140 million poor this year.
The site Rumo Sustentável (Towards Sustainable) (2009) published paper under the title
Crise atual pode ser mais intensa do que a de 1929, diz sociólogo (Current crisis may
be more intense than that of 1929, says sociologist). In this paper, it was presented an
interview with Ricardo Antunes, professor at the State University of Campinas
(Unicamp) and a specialist in labor market issues. In this interview Ricardo Antunes
says that companies, before the current crisis, have undergone processes of
"lyophilization" and “wiped” his "living substances", the workers, through technological
modernization and restructuring process. The result was the growth of so-called
structural unemployment, which can greatly increase the global economic crisis today.
Ricardo Antunes said that the global economic and financial crisis is having a
devastating result for the working class. The International Labor Organization (ILO)
made the forecast of new 50 million unemployed in 2009, which increased the number
of unemployed for up to 340 million people worldwide. This figure was a conservative
estimate. Only China announced that 26 million rural former workers, who were busy in
the cities, have lost their jobs. The tragedy that struck between workers is monumental,
beginning with immigrants in search of work in the northern hemisphere, but also the
working class in general, which was used in the metal industry, textile, in the food
industry, etc. The first thing that business takes on the verge of a crisis is the cut in jobs.
It is emblematic that the United States, Britain and Japan live the highest unemployment
rate in decades.
Ricardo Antunes said that the Brazilian government tried to sell us the idea, completely
false, that we were immune to the crisis. The truth, however, is that we, in late 2009, we
had 640,000 new unemployed. Since then, data have improved, because the government
has taken measures such as the reduction of the IPI (Excise Tax) of cars and white
goods to prevent the recession was tougher. But these measures would have short
breath. The Brazilian economy is much globalized. The Brazil relies heavily on foreign
markets because of the commodities. The outcome of the Brazilian crisis is very tied to
the outcome of the international crisis. We cannot have an illusion that the country is a
pink island in a turbulent sea.
4. Future geopolitical changes
Giovanni Arrighi (1996) states that there were four systemic cycles of capital
accumulation during the evolution of capitalism as a world system: a Genoese cycle,
from the fifteenth century to the early seventeenth century; a Dutch cycle, from the end
of the sixteenth century until the elapsed most of the eighteenth century; a British cycle,
from the second half of the century XVIIII until the early twentieth century; a US cycle,
which began in late nineteenth century and continuing in the current phase of financial

23
expansion. Also according to the author, the Genoese regime lasted 160 years, the
Dutch 140 years, the British 160 years and the US 100 years.
Giovanni Arrighi takes the view that, in each of the capital accumulation cycles,
commercial and production expansion in the beginning gave way in the end a more
concentrated expertise in high finance, that is, on speculation and financial
intermediation. This is the situation that prevails in the world economy today.
According to François Chesnais (2008), the crisis of the world capitalist system that
broke out in 2008 has as another of its dimensions to mark the end of the stage in which
the United States could act as a world power without parallel.
In the opinion of Chesnais (2008), experienced a time when the United States, are being
subjected to the test. In a very short time period, all the international relations of the
United States have changed that should, at best, renegotiate and reorder all its relations
based on the fact that they will have to share power worldwide. The era in which the
United States sought to impose its will on the international stage over. It is what is
already happening from the Obama administration.
There is an assumption in many parts of the world that the general crisis of the world
capitalist system, represented by the freezing of the financial system, accelerates the
long-term geopolitical shift, heralding the decline of American power and European
influence. "The crisis emphasizes the fact that China is a key global player," said Bobo
Lo (2008). According to Bobo Lo, "it may not yet be a world superpower, but
accelerated this trend."
The newspaper Estado de Sao Paulo published on 21/11/2008 article under the title
Força dos EUA no mundo diminuirá, diz inteligência americana (US Force in the world
will decrease, says US intelligence). The text is as follows:
The Board of the US National Intelligence, part of Washington's security apparatus, published
an impressive prediction. The international system as developed after World War II was, as
expected, "unrecognizable" by 2025, thanks to globalization, the rise of emerging powers and
"an historic transfer of relative wealth and economic power from the West to the East". In this
publication we find that "the next 20 years of transition to a new system will be full of risks".
"Strategic rivalries probably will revolve around trade, investments and technological
innovation and acquisition, but we cannot rule out a 19th century scenario of arms race,
territorial expansion and military rivalries”.
This report was written before the full force of financial and economic crisis become
real. However, the authors were convinced that the unipolar moment of unchallenged
US hegemony after the fall of the Berlin Wall was coming to an end. The future world
order would be multipolar. China moves to become a dominant player in an
International Monetary Fund and World Bank strengthened. China is currently the
fastest growing country in the world, therefore, has excelled on the world geopolitical
scene.
China has exercised great political influence, military and economic in the Asian and
international scenario thanks to the great extension of its territory (ranked third in
territorial dimension on the planet), high number of inhabitants (about 1.3 billion, the
most populous the world) and the dynamism of its economy (the economy is currently
showing the highest growth rates on the planet).
Meanwhile, the speed and boldness of China's global expansion follow surprising
analysts and leaders from around the world. The country is becoming the first non-white

24
society and non-European that will turn into a political, economic and global military
superpower. And it seems that there will be no decrease in this trend. The XXI century
will assist certainly the consolidation of the largest national State of the Far East, China,
as the largest economic power, political and military in the world.
Everything suggests that in lieu of US global hegemony, there will be in the short term
the construction of a multipolar world system under the joint leadership of China and
the United States, a balance of power framework. This is because of the accumulation of
capital in China is doing based on internal processes, but also based on something that
is perfectly documented that is the displacement of a major part of the production of
consumer goods sector of the United States to China. And this has much to do with the
volume of trade and fiscal deficits of the United States.
But what happens in the bowels of China? In China internally ocurred a process of
competition between capitals, which combined with processes of competition in the
Chinese political apparatus and competition to attract foreign companies, resulted in the
creation of huge production capacity process. This means that established new relations
between the United States and China. Not already addresses most of the relationships of
an imperialist power with a semi-colonial country. Based on the trade surplus, China
accumulates millions and millions of dollars, which immediately lends to the United
States. This is international relations of a completely new type.
China's economic impact, and now India, with the next combined population of 2.4
billion people, is already evident. China's population only is already higher than in Latin
America and sub-Saharan Africa combined. In addition, the giants are not alone. The
rise of China and also India as world powers is as significant as the US, Germany, Japan
and Russia took place in the late nineteenth century. Historically, the rise of emerging
powers contributed to the intensification of economic competition and contradictions
among the ruling classes of these countries triggering international conflicts as
happened in 1914 with the outbreak of World War I and in 1939 with the advent of
World War II.
The rise of China and India could trigger international insurmountable conflicts as in the
past? The answer to this question depends on what might occur in interdependent
economic relationship between China and the United States and the ability of both
countries have to manage the world power condominium under their leadership and
prevent outbreaks of international conflicts. On the other hand, the emergence of
conflicts can happen if, in the current dominant powers in decline, occur destabilization
policies resulting from the world capitalist system crisis and the rise to power of fascist
warmongers and political sectors of difficult solution for world power condominium led
by China and the United States.
In the contemporary era, the international geopolitical chess indicates the existence of
three major players: the United States, China and Russia. From confrontation between
these three major military powers may result alternative scenarios to the current that is
characterized at the time by the US hegemony on the world stage since the end of the
bipolar world that confronted the United States and the Soviet Union. Based on the
three great protagonists of contemporary international geopolitical chess, it can be said
that the United States aim to maintain its world hegemony in economic and military
plans. To accomplish this, the US government strategies consist primarily of: 1) stop the
rise of China as a hegemonic power in the world; and, 2) prevent Russia could rise to
the status of global power or even regional power. In practice, the US government

25
wants to avoid facing the future of two giants: China as a hegemonic power and
reinvigorated Russia.
To stop the rise of China as a hegemonic power in the world, the US military strategy is
focused on the Asia-Pacific region, without neglecting the Middle East to fight against
terrorism, defend Israel, protect its oil interests and deal with the threat of Iran. As a US
ally, Japan cooperates with the US strategy of "encirclement" of China strengthening its
military power by 2020 [See the article Japão reforça estratégia militar para reagir à
China (Japan reinforces military strategy to respond to China) published at <http: //
www. portugues.rfi.fr/geral/20101217-japao-reforca-estrategia-militar-para-reagir-
china>]. Another goal of the US military strategy is also pressing the alliance between
Russia and China developing the NATO actions in Europe and the strengthening of its
military bases in Japan, South Korea and Diego Garcia and the Pacific Fleet [See the
article under the title Nueva estrategia militar global de Estados Unidos (New US
global military strategy) by Ruiz Pereyra Faget published at
<http://port.pravda.ru/mundo/11-01-2012/32735-estrategia_eua-0/>].
The XXI century is marking a qualitative change in the international system and the
position occupied in it by the United States. No doubt that this change is closely
associated with the emergence of China. To ascend to the hegemonic power condition
of the planet, China will have to adopt 6 strategies: 1) to achieve high economic growth
to overtake the United States; 2) to increase continuously its participation in
international trade to lead it; 3) to remove the economic and military leadership of the
United States in Asia, which means reaching the heart of US power in the region; 4) to
prevent India become an autonomous pole of economic attraction in Asia, possibly in
alignment with the United States; 5) to become essential power for peace in the Persian
Gulf between Persians (Iran) and Arab (particularly Saudi Arabia) with the decline of
US influence in the region; and 6) to strength economic and military alliance with
Russia.
China is building a large naval force to control the Pacific Ocean with the immediate
goal to halt the US military power in the Western Pacific. The Chinese are building a
defensive force, including weapons that can reach US military targets. Chinese military
spending will exceed the combined budgets of the twelve other major powers in Asia-
Pacific [See the article by Michael Wines of the New York Times in Beijing under the
title EUA e China procuram acordar estratégia militar (US and China seek to agree
military strategy) published at <http: // www1 .folha.uol.com.br / world / 944,409-usa-
and-china-looking strategy wake-militar.shtml>]. According to The Economist, China
will surpass the military spending of the United States by 2025 [See the article by José
Eustaquio Diniz Alves entitled EUA, China e Índia: disputa de hegemonia e destruição
do meio ambiente (US, China and India: hegemony dispute and destruction of the
environment) published on the site <http://www.ecodebate.com.br/2012/01/13/eua-
china-e-india-disputa-de-hegemonia-e-destruicao-do-meio-ambiente-artigo-de-jose-
eustaquio-diniz-alves/>].
Two great nuclear powers, Russia and India, may act to strengthen the position of China
and the United States respectively. The military strategy of Russia provides for the
resetting of the Army and Navy with the use of conventional and nuclear weapons in
response to an attack on the country [See the article by Bruno Quadros e Quadros under
the title A nova doutrina militar da Rússia: mais do mesmo? (The new military doctrine
of Russia: more it?) published at

26
<http://www.enciclopedia.com.pt/news.php?readmore=181>]. NATO expansion
towards the Russian borders is the main danger outside the country. Russia would tend
to support China in a conflict with the United States. India invests in the military to deal
with their powerful neighbors, China and Pakistan, and internal security issues [See
Article Índia é o maior importador de armas do mundo (India is the world's largest
arms importer) published at <http://www.forte.jor.br/2011/03/24/india-eo-maior-
importador-de-armas-do-mundo />]. India could come to support the US intervention in
the region in confrontation with China.
On Russia, it is important to note that its strategic objectives are: 1) to defend itself from
the threat to their territory represented by the United States and with NATO forces; 2) to
strengthen its position as a supplier of natural gas to European Union countries; and 3)
to achieve world power status lost with the demise of the Soviet Union. It is important
to note that after the dismantling of the Soviet Union and the Eastern European socialist
system, the US project was the occupation of the border territories of Russia, which had
been under Soviet influence until 1991 [See the article by Numa Mazat and Franklin
Serrano under the title A Geopolítica das Relações entre a Federação Russa e os EUA:
da “Cooperação” ao Conflito (The Geopolitics of relations between the Russian
Federation and the US: "Cooperation" to a conflict) posted on the website
<http://www.revistaoikos.org/seer/index.php/oikos/article/view/293>].
According Mazat and Serrano, the occupation movement started by the Baltic, crossed
Central Europe, Ukraine and Belarus, went through intervention in the Balkans (former
Yugoslavia) and came to Central Asia and Pakistan, expanding NATO's borders. When
finished the 1990s, the geopolitical distribution of new US military bases leaves no
doubt about the existence of a new "sanitary belt", separating Germany from Russia and
Russia from China. The arrival of Vladimir Putin to power would radically change this
geopolitical framework, until then very unfavorable for Russia.
Mazat and Serrano also claim that the NATO intervention in Serbia in 1999, despite
strong opposition from Russia, was perceived by the Russian people and their leaders as
a threat to the security of the country. The bombing of Serbia showed clearly how the
siege strategy organized by the United States and its allies, through the programmed
feed NATO and the European Union in areas formerly controlled by the Soviet Union,
could pose a danger to the sovereignty of Russia. The arrival of Vladimir Putin to power
in Russia in 2000, marked the beginning of geopolitical recovery of Russia, whose
position had been greatly weakened during the Yeltsin government in the 1990s. Putin
is the rise to power of a solid and broad coalition of economic and political interests
who united on the need to restore the operation of basic foundations of a modern
capitalist state that surpass the wild and predatory phase of "primitive accumulation" in
the Russian Federation.
The geopolitical recovery of Russia was made possible by the affirmation of a
nationalist project of recovery of the Russian state by Putin, according Mazat and
Serrano. The Russian leadership over the past decade, decided to concentrate their
efforts on regaining a geopolitical dominion over the area of the former Soviet Union.
They intended to make the old boundaries of the Soviet Union were respected, except
for the Baltic countries. But the biggest concern of the Russians in terms of security
comes from NATO's operations in the former Soviet bloc. Thus, Russia opposed
vigorously in 2007 the anti-missile shield project that the Americans wanted to install in
Central Europe (Poland, Czech Republic), through NATO. This missile shield supposed

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