Ten years after the crisis: what have we learnt?
This event is free and unticketed. For more information contact GeoffKidder@academyofideas.org.uk
It is now a decade since the start of the global financial crisis. The collapse of Lehman Brothers, a giant American investment bank, in September 2008 is widely seen as a turning point marking the start of the crisis. There were widespread fears about ‘contagion’ across the financial system and governments took extraordinary emergency to pump money into the economy and even to take over major financial institutions, like federal mortgage providers Fannie Mae and Freddie Mac in the US and the Royal Bank of Scotland in the UK. The crisis was soon followed by economic recession and, a couple of years later, by the emergence of what has become known as economic austerity as government deficits rose.
The subsequent downturn was arguably the worst since the Great Depression of the 1930s, particularly in Greece, where the recession revealed the true state of government finances. This led to the imposition of unprecedented austerity, particularly after the troika – the EU, ECB and IMF – were brought in to bail out the Greek state. In turn, this has led to years of further austerity and political turmoil.
With the benefit of 10 years of hindsight, how should the global financial crisis be viewed? There are questions to be asked both about what happened back then and developments since.
Were the finance sector’s woes the cause of subsequent economic problems or was the crisis a symptom of underlying, structural weaknesses in the economy? What role did bankers play in instigating the crisis? How should the massive bailouts of troubled financial institutions be judged in retrospect? Were they economically necessary and can they be morally justified? Did the design of the Euro common currency system help to create and exacerbate economic problems? Were smaller European states sacrificed to save the big financial institutions elsewhere?
Subsequent developments also demand intellectual interrogation. What was the relationship between the financial crisis and the subsequent recession? How significant was the economic fallout from the crisis as a factor driving the rise of populism?