Have we learned enough 10 years after the financial crisis?
By Joe Harker
It has been 10 years since the financial world suddenly defecated itself and died, causing economies to go into recession and banks to collapse. The effects are still being felt, with austere economic policies and low growth around the world.
At the time of the financial crash the Chancellor of the Exchequer was Alistair Darling, now Lord Darling. He has warned of "complacency" 10 years after the financial crash, as politicians and economists who worked through the crash retire and open the door for another potential crash in the future. Lord Darling worries that another crash could occur and the warning signs will once again be missed. He said: "The next crisis will probably come from somewhere it wasn't really expected, from causes that haven't yet been identified.
"And of course in a few years when institutional memories start to fade and the people around have all gone and retired, then that is when the risk reoccurs."
Warning signs for the 2007 crash were missed. The BBC reports that a sharp rise in mortgage defaults in the US was observed in January 2007. The Financial Services Authority questioned the business model of Northern Rock at a similar time, and Wall Street bank Bear Stearns stopped customers withdrawing money from two investment schemes in June. All were apparently signs of the impending crisis that were individually ignored.
The Daily Express reports that financial experts are seeing worrying similarities between the US economy in 2007 and the current situation. Similar levels of unemployment, a rise in interest rates and higher house prices are worrying economists. However, house prices in the US are not out of line with household income, which makes a housing crisis less likely. Perhaps there are enough differences to avoid another financial crisis.
Writing in The Guardian, Torsten Bell laments the lost opportunity to enact drastic change following the crash. He believes we have let the crash "go to waste" by not building something new rather than trying to fix and persist with the crashed economy. He wrote: "After the second world war the Attlee government didn't simply try to undo the damage of the war. From the NHS to our national parks, it used the energy from that cataclysm to build a better Britain.
"Franklin D Roosevelt’s New Deal wasn’t simply a response to the Great Depression, but a set of interlocking reforms aiming to build a fairer country."
Have we learned enough from the financial crisis 10 years after it happened, or have we failed to learn from history, instead being destined to repeat it?