Lessons and consequences of the evolving 2007-? Credit Crunch
We are neither economists nor academic scholars; however we are students of the markets having experienced the credit crunch on the front lines as institutional investors from a country that is neither in Europe nor is the United States (i.e. Canada). The credit crunch and related “Great Recession” have instilled havoc on the global economy. The crisis has led to a large contraction of the real economy of approximately 1% of real GDP in 2009, which could have been considerably larger without massive government sponsored stimulus plans. In the aftermath of every crisis there are always lessons to be learned. The main takeaways from the most recent credit crunch centre on risk distortion, the flawed counterparty risk offset model, excessive leverage, inherent conflicts of interest and the legacy of creating “too big to fail” financial institutions. As financial markets appear to have stepped back from the brink of destruction, we believe that there are three major consequences that we are currently facing. First the global financial system will likely be irrevocably changed by new regulations. Second, on the economic front, we are facing a post-recession period of relatively low global growth. Third, developing countries’ governments are facing massive budget deficits and their debt/GDP levels are likely unsustainable and therefore requiring severe fiscal austerity programs.
|Date of creation:||Dec 2010|
|Publication status:||Published in Aestimatio. The IEB International Journal of Finance 1 (2010): pp. 1-18|
|Contact details of provider:|| Postal: Ludwigstraße 33, D-80539 Munich, Germany|
Web page: https://mpra.ub.uni-muenchen.de
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Carmen M. Reinhart & Kenneth S. Rogoff, 2010.
"Growth in a Time of Debt,"
American Economic Review,
American Economic Association, vol. 100(2), pages 573-578, May.
- Carmen M. Reinhart & Kenneth S. Rogoff, 2010. "Growth in a Time of Debt," NBER Working Papers 15639, National Bureau of Economic Research, Inc.
- Reinhart, Carmen M. & Rogoff, Kenneth S., 2010. "Growth in a Time of Debt," Scholarly Articles 11129154, Harvard University Department of Economics.
- Reinhart, Carmen M. & Rogoff, Kenneth, 2010. "Growth in a Time of Debt," CEPR Discussion Papers 7661, C.E.P.R. Discussion Papers.
- Paolo Di Martino, 2010. "This time is different: eight centuries of financial folly - By Carmen M. Reinhart and Kenneth S. Rogoff," Economic History Review, Economic History Society, vol. 63(4), pages 1202-1203, November.
- Mark Billings, 2010. "This time is different: eight centuries of financial folly," Accounting History Review, Taylor & Francis Journals, vol. 20(3), pages 417-420.
- Carmen M. Reinhart & Kenneth S. Rogoff, 2009. "Varieties of Crises and Their Dates," Introductory Chapters, in: This Time Is Different: Eight Centuries of Financial Folly Princeton University Press.
- Carmen M. Reinhart & Kenneth S. Rogoff, 2009. "This Time Is Different: Eight Centuries of Financial Folly," Economics Books, Princeton University Press, edition 1, number 8973.
- Reinhart, Carmen, 2009. "The Second Great Contraction," MPRA Paper 21485, University Library of Munich, Germany.
- Yeva Nersisyan & L. Randall Wray, 2010. "The global financial crisis and the shift to shadow banking," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 7(2), pages 377-400.
- Yeva Nersisyan & L. Randall Wray, 2010. "The Global Financial Crisis and the Shift to Shadow Banking," Economics Working Paper Archive wp_587, Levy Economics Institute.
- Eric Tymoigne, 2009. "Securitization, Deregulation, Economic Stability, and Financial Crisis, Part I--The Evolution of Securitization," Economics Working Paper Archive wp_573_1, Levy Economics Institute.
- Jan Kregel, 2009. "Observations on the Problem of 'Too Big to Fail/Save/Resolve'," Economics Policy Note Archive 09-11, Levy Economics Institute.
- Weidenmier, Marc, 2010. "This Time is Different: Eight Centuries of Financial Folly. By Carmen Reinhart and Kenneth Rogoff. Princeton, NJ: Princeton University Press, 2009. $35.00," The Journal of Economic History, Cambridge University Press, vol. 70(03), pages 766-768, September.
- Eric Tymoigne, 2009. "Securitization, Deregulation, Economic Stability, and Financial Crisis, Part II--Deregulation, the Financial Crisis, and Policy Implications," Economics Working Paper Archive wp_573_2, Levy Economics Institute.
- Jan Kregel, 2010. "Is Reregulation of the Financial System an Oxymoron?," Economics Working Paper Archive wp_585, Levy Economics Institute.
- Teodora Paligorova, 2009. "Agency Conflicts in the Process of Securitization," Bank of Canada Review, Bank of Canada, vol. 2009(Autumn), pages 36-50.
- Alan G. Ahearne & Joseph E. Gagnon & Jane Haltmaier & Steve Kamin ... [et al.]., 2002. "Preventing deflation: lessons from Japan's experience in the 1990s," International Finance Discussion Papers 729, Board of Governors of the Federal Reserve System (U.S.).
- Ranald Michie, 2010. "This time is different: eight centuries of financial folly," Business History, Taylor & Francis Journals, vol. 52(4), pages 689-691. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:35912. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter)
If references are entirely missing, you can add them using this form.