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Lessons We Should Have Learned from the Global Financial Crisis but Didn't

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  • L. Randall Wray

Abstract

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.

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Bibliographic Info

Paper provided by Levy Economics Institute in its series Economics Working Paper Archive with number wp_681.

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Date of creation: Aug 2011
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Handle: RePEc:lev:wrkpap:wp_681

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Keywords: Global Financial Crisis; Subprime Crisis; Hyman P. Minsky; Galbraith and the Great Crash; Control Fraud; Underwriting; Deregulation; Financial Reform;

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  1. Dimitri B. Papadimitriou & L. Randall Wray, 1998. "The Economic Contributions of Hyman Minsky: Varieties of Capitalism and Institutional Reform," Macroeconomics 9802018, EconWPA.
  2. Hyman P. Minsky & Charles J. Whalen, 1998. "Economic Insecurity and the Institutional Prerequisites for Successful Capitalism," Macroeconomics 9807001, EconWPA.
  3. Stephanie Bell & L. Randall Wray, . "The War on Poverty After 40 Years: A Minskyan Assessment," Economics Public Policy Brief Archive ppb_78, Levy Economics Institute.
  4. Ferri, Piero & Minsky, Hyman P., 1992. "Market processes and thwarting systems," Structural Change and Economic Dynamics, Elsevier, vol. 3(1), pages 79-91, June.
  5. L. Randall Wray, 1998. "Modern Money," Macroeconomics 9810002, EconWPA.
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