What We Still Have to Learn From the Financial Crisis
Martin Wolf told The Chicago Council Tuesday evening that the Great Recession revealed a flawed economy guided by a now-discredited “old orthodoxy” of economic thinking. Unhappily, he said, the “new orthodoxy” reforms the old system, but doesn’t transform it, and new crises seem certain.
The Recession, he said, was “a gigantic disaster with a very weak recovery”—even weaker in Europe than here. Seven years later, “we have basically the same financial system,” mildly reformed but still too highly leveraged, too concentrated, and too global, with the same international imbalances that led to the implosion of 2007-08.
Wolf, a regular Council visitor, is the chief economics commentator for the Financial Times. His latest book, The Shifts and the Shocks: What We’ve Learned—and Have Still to Learn—from the Financial Crisis—is a sweeping probe into where the economy is now and where it’s going.
His speech summarized the book’s conclusions and recommendations. He urged major reforms, not to undermine capitalism and globalization but to save them from themselves. As in the book, he held out little hope these “radical” reforms will be adopted.