Martin Wolf Discusses 2008 Financial Crisis, Ongoing Recovery
In the assessment of Martin Wolf, chief economics commentator for the Financial Times, the financial crisis of 2008 was “a gross failure of institutions and economic understanding.”
Unfortunately, Wolf said, he remains unpersuaded by the “new orthodoxy” resulting from policymakers’ response to the crisis. He said that the financial system we have today is still extraordinarily similar to the one that was in place before the crisis.
The crisis, the ongoing recovery, and what it means for today’s economy receive extensive treatment in Wolf’s recently published book, The Shifts and the Shocks: What We’ve Learned—And Have Still To Learn—From the Financial Crisis.
Wolf acknowledged his book’s ambitious scope in a October 13 lecture at SIPA. Ultimately, Wolf suggested, the crisis resulted from interconnected macroeconomic and financial shocks that led to failure at a scale that Wolf, like many others, did not think possible.
Wolf cited and displayed detailed data throughout his presentation, including a series of graphs stretching back decades to highlight a long-range economic picture.
Going back over 300 years, Wolf described how the Bank of England has for centuries kept detailed records that allow for long-term portrait of economic conditions. Before the crisis, the lowest base rate ever offered by the bank was 2 percent; today the rate is 0.5 percent.
Clearly, he said, we are in a completely new monetary world.
Dean Merit E. Janow introduced Wolf along with Peter R. Fisher, a senior fellow at the Center for Global Business and Government at the Tuck School of Business at Dartmouth. Fisher led a discussion with Wolf after the main presentation.
When asked by an audience member about the importance of fraud in the crisis, Wolf answered that he thinks the bigger problem is what was considered legal.
The Shifts and the Shocks: What We’ve Learned—And Have Still To Learn—From the Financial Crisis