Ten years of financial crisis - what have we learned?
At the beginning of August 2007 the US real estate bubble burst, bringing banks across the world to their knees. A year later the financial crisis came to a head when Lehman Brothers filed for bankruptcy. Commentators doubt the world has learned the right lessons from this experience.
Tech giants are the new danger
Today, just like in the run-up to the financial crisis, too much influence is in the hands of too few, The Times warns:
“Last time it was the bankers. Now it is Google, Facebook, and a few others, with too much power to control and perhaps break, by accident, our economy. There is a different kind of crunch coming. Eventually, we will have to decide how to hem these giants in, to break them up and ensure they operate according to rules set by democratic governments on our behalf to ensure that we rule technology rather than technology, and its owners, ruling us.”
Netherlands has luckily lost its bank appeal
Ten years after the banking crisis the Royal Bank of Scotland is returning to the Netherlands because of Brexit. Fortunately this is an exception to the rule, writes NRC Handelsblad:
“One lesson from the crisis is that a big financial sector is not necessarily a blessing. The more an economy depends on money and capital transactions, the harder the impact when things in this sector go wrong. … But as is so often the case with regulations and supervisory mechanisms, they can't keep up with the practices, innovations and dimensions. … The Netherlands, with its tight caps on bonuses, has lost some of its appeal as a place for financial institutes to locate their headquarters. The anniversary of the crisis raises the question of whether this is really so regrettable.”
No crisis lasts ten years
Tackling the consequences of the crisis will require changes in the system, El Periódico de Catalunya concludes:
“The dominos began to fall one after another, dragging down banks, savings banks, half the planet's building sector and finally the countries drowning in debt they couldn't pay off. … The exceptional measures taken have managed to stop the hemorrhaging but not bring back the levels of prosperity and security enjoyed before the collapse. A crisis that lasts ten years is more than just a negative economic cycle. … For many victims this crisis is not just an emergency situation, but has become a way of life. Their hopes rest not on a recovery but on a complete system change.”
No lessons learned
Ten years later neither the government nor the world of finance have truly learned their lessons, Jyllands-Posten fears:
“The top bosses of the big banks on Wall Street are once again earning salaries of hundreds of millions. … In Europe unemployment is still higher than it was ten years ago, and in many European countries youth unemployment rates are still alarmingly high. … Many urgently needed economic policy reforms have remained nothing but empty promises, for example in Italy and France. … We can rejoice over economic growth and the fact that the possibilities for reacting to crises have been improved. But unrealistically high share prices mean the next crisis could already be on the way - even before the debts from the last one have been settled.”
Limitations hidden by greed
Corriere del Ticino recalls the origins of the crisis:
“Ten years ago globalisation seemed to be a phenomenon without limits. The new financial instruments with exotic names that concealed the risks for buyers were part of it. The real debtor disappeared in the infinite web of securitisation. The end of the distinction between credit banks and investment banks encouraged investors to get involved in the riskiest operations. … High liquidity and low interest rates opened up - in the eyes of the financial dealers - endless possibilities for making profit. But money doesn't grow on trees, neither back then nor today. And not even the most complex algorithms can make it do so.”
A decade of mistakes
In Corriere della Sera economic experts Alberto Alesina and Francesco Giavazzi analyse the worst political mistakes made in the process of overcoming the financial crisis:
“The Obama administration's response to the crisis would have been far more efficient if instead of focussing on big infrastructure projects it had resolutely lowered taxes. In Europe the austerity policy would have been less costly if governments had concentrated on budget cuts, like in Ireland and the UK, instead of raising the tax burden, as Italy did from 2011 to 2012. Not to mention how slow some countries were to realise the importance of stabilising the banks. And last but not least Greece's bankruptcy should have been accepted from the start, rather than dragging out a confused farce for years with the sole aim of helping the German and French banks.”
Still making concessions to the finance lobby
No one in political Europe wants to be reminded of the lessons the financial crisis should have taught us, Le Soir complains:
“The stricter supervision rules [for banks] are now being called into question on the grounds that they are slowing down the extension of credit and putting our 'champions' (the big French and German banks) at a disadvantage vis-à-vis their non-European competitors. Worse still, the Commission wants to revive securitisation - the practice which allows banks to pass on loans (and the resulting risks) to other investors and which caused bad sub-prime loans from the US mortgaging business to spread across the globe. As if the crisis hadn't shown us that what is good for big financial institutions is not necessarily good for our economy.”
Not enough money trickling down
The economic upturn is not on stable ground yet, La Vangardia points out:
“The current growth is based on excessive public and private debt, which entails the permanent risk of relapsing into a crisis. But at least for the time being, the world has grown used to dancing on this volcano. … The problem that remains unresolved is that with the huge amount of financial resources it is receiving almost for free right now, the economy should be growing far more quickly and creating far more jobs than it is. It should also be moving towards improved distribution of wealth to combat growing inequality. A goal on which the world, Spain included, is not moving forwards.”