Fifth Anniversary of the Financial Crisis
Yesterday was the fifth anniversary of the collapse of Lehman brothers. The banks and Wall Street investment houses have recovered quite nicely but the rest of the economy is still limping along. Finance is the life blood of the economy, it ensures that capital flows where it is needed, unfortunately in recent times finance has become an end in itself. Like a cancer, it has grown unchecked and has overshadowed the rest of the economy. This has created an economy where the the 1% who have tremendous reserves of capital thrive, while the rest of us teeter on the threshold of perpetual financial instability.
The collapse of Lehman and the ensuing crisis, gave us an opportunity to send the cancer into remission but political will to do so was clearly absent. So instead of ruthlessly irradiating the underlying cancer we stabilized the economy by huge infusions of tax-payer funds to the very banks and investment houses that caused the problem in the first place. We have not dealt with the underlying problem and it is going to come back and haunt us. It is not a question of if but when.
I have blogged about the steps to avoid the next financial crisis earlier here. Also, here is a list of some of the issues around the financial crisis that I am interested in and will be writing about.