Has the world learned from the financial crisis?

The Lehman Brothers bankruptcy did not trigger the financial crisis, stresses Corriere del Ticino economy expert Lino Terlizzi:

“The Lehman crash was a consequence of a crisis that had already begun. The trigger was real estate. ... The broad distribution of risks tied up with real estate was to blame for other financial and economic sector becoming contaminated. And the resulting slumps on the financial markets had negative repercussions for banks, companies, income, investments and consumption. ... It may seem academic to distinguish between the crisis and the Lehman bankruptcy but it isn't. It's important to expose the true roots of the crisis, particularly if we really want to learn lessons from it, as is so often claimed.”

Ten years after the Lehman bankruptcy we have no idea how to prevent the next financial crisis, Finanz und Wirtschaft laments:

“Perhaps every crisis is so different from all those that preceded it that insights and experiences gleaned from crises and their consequences simply can't be transferred from one decade to the next. That's particularly the case when a crisis is so disruptive and causes such fundamental changes as was the case with the financial market crisis. And in that case the only lesson to be learned from September 15, 2008, is apparently that 'after the last crisis is before the next crisis' - but nothing as to what can prevent the next crisis.”

Jutarnji list looks back on the Lehman bankruptcy and its repercussions with mixed feelings:

“The positive side of the story that began with Lehman and - let's say - ended with Greece's exit from the bailout programme is that people have become a lot more cautious. New financial regulations in the US and the EU give the banks far less scope to go fishing in murky waters. But the big financial crisis has left one question unanswered: has the time come for a world order that is not above all 'finance-centred'? The populist movements whose rise we are now observing are, after all, the direct result of a (hitherto quiet) rebellion by those who feel enslaved in such a system.”

Le Monde is even less optimistic:

“The American banks were never more powerful, the stock markets have gone from one record high to the next. The rich have never been richer. ... But that's not the decisive problem. After ten years of austerity policy and weak income growth, those who bore the brunt of the crisis have turned their backs on the elites and embraced those who promise to topple the existing order. 2008 spread doubt about the superiority of the liberal democracies, the efficiency of open borders and politicians' will to reduce inequality. Since then, frustrations have fuelled identitarian demands, illiberalism has gained ground, and globalism is on the retreat. Confidence in the system has been dashed.”

Europe in particular can't afford a new crisis, Der Tagesspiegel warns:

“Unlike ten years ago, this time the federal bankers have no means at their disposal to combat a crisis. The Eurozone prime interest rate already stands at zero percent. Although lowering it even further is theoretically possible, it would have dire consequences, such as banks punishing small savers with minus interest rates. In political terms something like this is extremely tricky. In other words: while a new crisis is a possibility, we lack the instruments for combating it. And this time no one can pretend they were taken by surprise and say that no one warned them.”

Dagens Nyheter notes with conviction that nationalism offers no protection against a new financial crisis:

“The financial crisis has weakened people's trust in the political and economic establishment. If experts and institutions can't succeed, how can we? The refugee crisis in 2015 fuelled doubts and paved the way for the populists. The market economy and liberal world order have been weak in the last ten years. At the same time, however, international collaboration was an important component of the medicine used against the financial crisis. Nationalism and protectionism are not a vaccination against a new illness, they are poison.”

Without fundamental reform of the economic system another financial crisis will be just a matter of time, The Guardian warns:

“The risks are downplayed. Surely it could not happen again when regulators are more alert and bankers have been required to provide more of their own capital as a cushion against mistakes? Yet just a cursory glance at the markets shows how febrile they are, how exposed to violent movements, how illusory is their much-vaunted liquidity - and how rich the pickings remain for those prepared to take the risks. … We must urgently minimise risk and reshape our economy. ”

The slowness of the decision-making process in Europe renders the EU more vulnerable than the US, El Mundo observes:

“Thanks to its agile administrative and financial institutions, the US was able to free itself pretty quickly from the crisis ten years ago. Things took a lot longer in the EU, where Greece has only just exited its bailout programme. In Brussels, many measures were taken that led to a monumental restructuring of the banking sector as well as international agreements on strengthening the euro. ... But the necessary financial integration is still a very distant goal, and the populist and anti-European wave that is rocking the continent has prevented the strengthening of the mechanisms that would put us in a better position to deal with a new global recession.”

Members of Congress and lobbyists are deliberately keeping the supervisory authorities that are supposed to oversee the financial markets weak, The Washington Post complains:

“The important lesson of the crisis is not that markets are fallible, which every thoughtful person knew already. It is that essential regulations - the sort that the supposedly anti-regulation [former Fed Chief] Greenspan actually favored - are stymied by fractured government machinery and rapacious lobbies. Even today, the financial system has multiple overseers answerable to multiple congressional committees, because all this multiplying produces extra opportunities for lawmakers to extract campaign contributions.”

Even if economic growth is back on track the consequences of the crisis can still be felt across the globe, La Vanguardia points out:

“Global public debt has more than doubled - to 60 trillion US dollars; and the same goes for private debt, which now stands at 66 trillion. This poses a permanent risk of another collapse. ... The banks and major companies returned to making a profit years ago, but the costs of overcoming the crisis were nationalised in most countries, or in other words passed on to the taxpayers. The anger and collective sense of betrayal that this has provoked among the middle and working classes explains the transformations that have taken place in politics, with the rise of populism both on the left and on the far right of the spectrum, and the revival of nationalism.”

The Financial Times is also not surprised that in many countries much of the population has turned its back on the elites:

“The cost of the crash fell largely on the shoulders of those least able to bear it. Fiscal retrenchment focused largely on cuts in public spending rather than higher taxes. In Britain's case, Mr Osborne set the ratio at 80:20. ... The 'hard working classes', so beloved of politicians when they need votes, were the victims. ... Who can be surprised that white, blue-collar Americans turned out of once-secure employment now back Mr Trump? Nor is it strange that similar demographic groups supported Brexit.”

The Guardian complains that the neoliberal capitalist system that made the financial crisis possible in the first place has remained practically unchanged:

“The banks were never broken up. Plans for a financial transactions tax are gathering dust. Politicians toyed with the idea of a green new deal and then promptly forgot about it. There never was a huge swing of the pendulum away from the prevailing orthodoxy, just a brief nudge that was quickly reversed. The brutal fact is that the left had its chance, and it blew it.”

The next financial crisis is looming in Italy, Die Presse warns:

“If the market interest rates continue to rise due to lacking budget discipline, refinancing will be considerably more expensive because of the short-term nature of the credits. The interest burden is already at 40 billion euros. Experts recently calculated that even with a good growth rate the debt burden could increase to 150 percent of the GDP in the next five years because of the rising interest rate. That would be close to Greek levels - with the real possibility of a default scenario. At any rate the government is preparing the population for foreseeable difficulties: several members of government recently warned of 'attacks' by the financial markets against the country. So as a precaution the others are being blamed. ”

Kathimerini also believes a new disaster is looming:

“In the past ten years many things that we in the developed West thought of as facts have lost their validity, while others that seemed unthinkable have become reality. ... And the scariest thing is that this is just the beginning. Competition with the emerging Asian nations will only increase. The technologies of the fourth industrial revolution will bring huge, difficult to manage changes for life and work. In comparison with their successors, today's demagogues will seem rational and even prudent. The next ten years could be far, far worse.”