The Global Financial Crisis

The Global Financial Crisis

What Have We Learnt?

Edited by Steven Kates

The Global Financial Crisis is a unique investigation into the causes of the most savage economic downturn experienced since the Great Depression. Employing wide and divergent perspectives – which are themselves critically examined – this study analyses the measures that have been taken to restore our economies to acceptable rates of unemployment and growth.


Steven Kates

Subjects: economics and finance, financial economics and regulation, money and banking, post-keynesian economics


Steven Kates Oh happy people of the future, who have not known these miseries and perchance will class our testimony with the fables. Petrarch on the Great Plague The Global Financial Crisis (GFC) has come and gone, leaving behind a trail of damage and destruction that will take many years to repair. From the latter half of 2008 through until the first few months of 2009, the world’s economy experienced an almost total breakdown of its financial and credit creation system. This was the GFC itself. But even when the financial crisis had departed and receded into history, the resulting recession has left every economy significantly worse off than it had been before. Unemployment is higher, growth is less robust, public debt has increased and the future seems less secure. The basics of what went wrong to set the GFC in motion are now generally accepted. It was the combination of sub-prime mortgages in the United States, the securitization of such mortgage debt, followed by the worldwide sale of such assets which formed a large component of the balance sheets of financial institutions, large and small. When housing prices in the US collapsed, it left many of these assets nearly valueless, some actually valueless. The subsequent seizing up of the global financial system caused trust in even what were formerly the most rock solid financial institutions to disappear. Since no one knew who was solvent and who was not, credit creation across the world ground almost to a halt. With...