Lessons We Should Have Learned from the Global Financial Crisis but Didn’t
Levy Economics Institute, Working Papers Series No. 681
23 Pages Posted: 19 Aug 2011
Date Written: August 18, 2011
In this paper, I first quickly recount the causes and consequences of the global financial crisis (GFC). Of course, the triggering event was the unfolding of the subprime crisis; however, I argue that the financial system was already so fragile that just about anything could have caused the collapse. I then move on to an assessment of the lessons we should have learned. Briefly, these include: (a) the GFC was not a liquidity crisis, (b) underwriting matters, (c) unregulated and unsupervised financial institutions naturally evolve into control frauds, and (d) the worst part is the cover-up of the crimes. I argue that we cannot resolve the crisis until we begin going after the fraud. Finally, I outline an agenda for reform, along the lines suggested by the work of Hyman P. Minsky.
Keywords: Global Financial Crisis, Subprime Crisis, Hyman P. Minsky, Galbraith and the Great Crash, Control Fraud, Underwriting, Deregulation, Financial Reform
JEL Classification: E3, E11, E12, E32, E44, G01, G21, G38
Suggested Citation: Suggested Citation