In the late 2000s, the world suffered a major global economic crisis that caused “the largest and strongest decline in global economic activity in the modern era,” in where “most major developed economies are in a deep recession,” according to McKibbin and Stoeckel (1). Since its consequences have a very large impact on the whole world, many economists and scientists have tried to find the causes of the crisis; and some of the main causes that have been emphasized are greed, defection of the free market system, and lack of prudent regulation and supervision. This essay will focus on global imbalances, one of the most important causes of the current economic crisis. Many researchers have highlighted that global imbalances are the root of the recent financial crisis. Portes argues that “the underlying problem in international finance over the past decade has been global imbalances, not greed, poor incentive structures or weak financial regulation, serious and important as they may be.” (2). According to him, global imbalances lead to “increasing current account dispersion,” which “places an intermediate burden on financial systems.” . In 2008, the US current account was in a deficit of $600 billion, while the current account of emerging markets/developing countries had a surplus of $900 billion. (sect. 1.1) Furthermore, global imbalances cause capital to flow incorrectly, from developing countries to advanced countries, from advanced countries to other advanced countries. This causes developing countries with rapid productivity growth to exhibit capital outflows and vice versa, leading to developing country surpluses… halfway through the paper… as discussed above. At this time, the global economy is recovering, but the study of the reasons for the crisis still teaches many countries a lesson on how to build a sound financial system and how to deal with other macroeconomic problems. Works Cited Ferguson et al. International financial stability. Geneva: International Center for Monetary and Banking Studies, 2007. Print.Warwick J. McKibbin and Andrew Stoeckel. "The global financial crisis: causes and consequences". Lowy Institute for International Policy 2.09 (2009): 1. PDF file.Richard Portes. “Global imbalances”. London Business School and CEPR (2009): 2. PDF file.Warwick J. McKibbin, Andrew Stoeckel, The Potential Impact of the Global Financial Crisis on World Tradehttp://www-wds.worldbank.org/external/default/WDSContentServer/ IW3P/IB/2009/11/18/000158349_20091118083139/Rendered/INDEX/WPS5134.txt