Prospect event: On 17th September, Martin Wolf, described in the current issue of Prospect by the economist Kenneth Rogoff as “the world’s premier financial journalist,” will be visiting our London offices to talk about his new book, “The Shifts and the Shocks: What We’ve Learned—And Have Still to Learn—From the Financial Crisis“. To book tickets, click here.
In this brief extract from the conclusion to the book, Wolf assesses the political, as well as economic, damage caused by financial crises. Perhaps the most “insidious” legacy of the crash of 2008, Wolf argues, is a crisis of democratic legitimacy that breeds “outraged populism, on both the left and the right.” Recovering from the massive shock administered to the global financial system six years ago requires more than restoring western economies to growth. Political leaders need to learn the lessons of 2008 and act on them. If they don’t, Wolf concludes, “next time a big crisis arrives even our open world economy could end in the fire.”
Financial crises do more than impose huge costs: they have bigger and more insidious effects. Inevitably, such crises help undermine belief that a globalising econo…