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housing sector. It spread rapidly to affect credit his election. The appointment as Energy Secre-
markets, banks and insurance, snowballing into tary of Nobel Prize winner Steven Chu, known
a major financial crisis. According to some esti- for his interest in renewable energies, was a
mates the crisis destroyed about 45 per cent of clear sign that a radical shift was underway in
global wealth by March 2009.

The financial cri- US environmental policies with a real effort to
sis is affecting the real economy too. The World fight climate change.
8

Bank estimates that this is the worst global re-
cession since the 1930s and that the global econ- It remains to be seen whether the post-indus-
omy will shrink by 1 to 2 per cent this year.

trial world will seize the opportunity offered
by the financial crisis and the investment of
The economic meltdown has reversed several public money in the financial and industrial
decades of neoliberal policies inspired by Chi- sector, to really push for reform and moderni-
cago School precepts, returning to Keynesian zation, and achieve a more sustainable eco-
doctrine and state intervention to bail-out fi- nomic system. It also remains to be seen how
nancial institutions risking bankruptcy. Some the crisis will affect the developing world, and
see the current financial crisis as an oppor- to what extent it will shake the foundations of
tunity to reform the social as well as envi- fragile economies and political systems. There
ronmental shortcomings associated with the is growing evidence of a fall in remittances, of
free-market economy. In October 2008 UNEP migrant workers returning home from crisis
called for a rethink of the predominant eco- hit economies, of falling prices for raw mate-
nomic model of the 20th century. It advocated rials and dwindling exports, declining foreign
a Global Green New Deal to redirect the global investments and a lack of liquidity in many
economy and re-invest in clean energy, rural emerging countries. These developments could
energy (biomass), sustainable (organic) agri- cripple the economies of developing countries,
culture, ecosystem infrastructure and sustain- and have a dire effect on their social and politi-
able urban infrastructure.
6
Similarly the US cal stability. Several African countries, already
President Barack Obama insisted on “Ameri- hard hit by rising food prices in 2008, risk dev-
ca’s leadership on climate change”

soon after astating famine.

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