City Research & Enterprise Review 2011
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  1. Decoding the crisis
City Research & Enterprise Review 2011

Decoding the crisis

Dr Anastasia Nesvetailova is Reader in International Political Economy in the Department of International Politics. Her primary research interests are in financial crisis and governance.


In her research Dr Nesvetailova draws heavily on the heterodox tradition in political economy, bringing together various approaches to the politics of finance and critical studies of the economic system. Her policy-related and media work translates theoretical narratives of international political economy into the current language of policymaking and governance.

Dr Nesvetailova's first monograph Fragile Finance: Debt, Speculation and Crisis in the Age of Global Credit (2007. Palgrave Macmillan) advanced the Hyman Minsky's framework for analysing the wave of financial crises in the late 1990s and early 2000s, which included the East Asian crisis, Russian default, the fiasco of the US-based Long-Term Capital Management and the bursting of the Dotcom bubble.

In Fragile Finance Dr Nesvetailova developed the concept of progressive illiquidity, arguing at the time that the apparent 'liquidity glut' in the world economy was in fact illusionary. She placed the retreat of the state from control over the credit creation process and the privatisation of credit at the core of the problem and warned against the tendency of the global financial system towards progressive illiquidity, determined by the process of private financial innovation.

The monograph came out in October 2007, just a month into the global credit crunch, and was subsequently featured in the Financial Times ('Insight', 7 November 2008). Dr Nesvetailova's second book on the global credit crunch Financial Alchemy in Crisis: The Great Liquidity Illusion (2010. Pluto) builds upon her concept of progressive illiquidity. Gary Dymski, Professor of Economics in the University of California Riverside, says:

Anastasia Nesvetailova shows how fraud, gaps in regulation, unchecked risktaking, the sheer complexity of contemporary markets, and hubris by financial 'masters of the universe' have all played their part in the ongoing financial and economic crisis. She demonstrates that ready liquidity became a defining feature of the financialised global economy - but in the end, liquidity proved fragile, a point of entry for crisis which no amount of financial engineering could paper over.

Dr Nesvetailova has been advising research departments of government bodies, international financial institutions, and journalists worldwide on the issues of financial crisis management.

More research outcomes from City University London.