Ten Years On: a Review of the Financial and World Economic Crisis

Although the outbreak of the worldwide financial crisis is often said to be the collapse of Lehman Brothers in 2008 and the subsequent shock waves, the crisis really began in 2007 with the bursting of the real-estate market bubble. This was followed by bank collapses that could only be brought under control with large-scale bail-outs. A worldwide recession could only be averted with unprecedented state bailouts and extremely loose monetary policy on the part of central banks. Many countries nevertheless have not seen their production levels return to pre-crisis levels and the financial markets also remain fragile. The debt crises that broke out in 2010 and 2012 respectively have not been overcome yet either. Ten years after the outbreak of the crisis academics came together at a conference supervised by Wolfgang Quaisser held in the Akademie für Politische Bildung Tutzing on 14-16 July to review it. Several of the conference speeches are published in this issue. Markus Taube, University of Duisburg-Essen, notes that China's economy proved particularly resilient ten years ago. It continued to grow and its steady strong demand represented the main line of resistance to global economic collapse. The reasons for this can be found at different levels and by no means point to particularly mature market structures. Instead, these very structures could make the Chinese economy the seedbed of the next potential world economic crisis. Wolfgang Wiegard, formerly University of Regensburg and German Council of Economic Experts, raises the question of the euro's future and discusses two reform options for the currency union: a fiscal union and/or adherence to a strict subsidiarity principle. Christoph Kaserer, Technical University of Munich, analyses reforms in the banking and financial sector and notes that the very extensive reform measures introduced since the onset of the financial market crisis in September 2008 marked a step forward in financial markets in that banks now require a far stronger equity base. It remains questionable, however, as to whether this alone makes them more resilient than in 2008, given the low levels of profitability that banks are currently suffering from. Daniel Stelter, "Beyond the Obvious" forum, interprets the financial and euro crises as over-indebtedness crises. The debts held by governments, private households and companies have exploded since the mid- 1980s, especially in the USA, Europe and Japan. It is just a question of time "until the next bang."