Uncommon Knowledge: The 2008 Financial Crisis Ten Years Later

 

 

Ten years ago, the worst financial crisis since the Great Depression hit the United States and spread to other countries, including the United Kingdom. Here to discuss what happened then and where the world is now are former Federal Reserve governor Kevin Warsh and former chancellor of the exchequer George Osborne.

Kevin Warsh and George Osborne discuss the 2008 financial crisis, how they dealt with it at the time, what they would have done differently, and whether the economy is headed toward another downturn. Warsh discusses how the United States failed to realize how bad the crisis was until it was already too late. The crisis had a huge impact on Europe and the United States and set off a global panic. However, within two years the economy was already growing by 2 percent and the quantitative easing used by the Fed was no longer needed as the world changed.

Warsh and Osborne analyze the state of the US and UK economies today and the trade war with China. They argue that there are two ways to approach China: either try to contain it or co-opt it. Innovation and growth in the United States are necessary to prevent China from gaining more purchasing power and greater influence on the international market.  Osborne analyzes the effects Brexit could have on the single market and trade with the UK’s geographically closest trading partner, France, and airs his concerns about what Brexit means for the UK’s future. He argues that Margaret Thatcher, who helped create the single market in the EU, would never have voted to leave it.

While a future financial crisis is always possible, Warsh and Osborne end on optimistic notes: that there is still room for growth in the two countries’ economies and that a better financial future for many Americans and British is still possible through good economic policies, including lower taxes and less regulation.

Recorded on September 28, 2018

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  1. DonG Coolidge
    DonG
    @DonG

    Swell interview.   I would like to have seen the two bankers be more critical of Fed actions before/during/after the “panic”.  The captain of the Titanic at least took responsibility for the results of his actions.  The Fed never has.

    • #1
  2. JimmyV Coolidge
    JimmyV
    @JimmyV

    The guests are spot on about Paul Krugman and his ilk treating macroeconomics as if it’s a hard science like physics or chemistry. It’s kind of scary how this small priestly caste (who’s commentary is always dripping with arrogance and overconfidence) seems to have a monopoly on general public opinion and economic policy, with the financial well being of so many people hanging in the balance…

    One thing I find really disturbing 10 years after the crisis is how the general public opinion (at least among my millennial generation) has been shaped to place essentially no blame on government policies, and all of the blame on the private sector. It’s at the point where people are conditioned like Pavlov’s dog to immediately distrust any defense of free market ideas, as if they’re listening to a tobacco lobbyist explain that cigarettes aren’t unhealthy.

    Two examples sum it up for me

    1. Paul Krugman wrote in 2002 that Greenspan “needs to create a housing bubble to replace the Nasdaq bubble” – How on earth does Paul Krugman have so much influence over public policy? Lord knows how he won a Nobel Prize (especially in the year 2008, given the above article), but is this really sufficient for people to so readily accept Krugman’s ideas and reject the ideas of other Nobel Prize winners like Friedman and Hayek?
    2. Barney Frank gave a speech to congress in 2005 arguing that there was no bubble in the housing market, and that the government should continue policies aimed at expanding homeownership  – Why is he being paraded around the Bill Maher show right after the housing collapse? Why is he on VICE News 10 years after?

    I think there’s plenty of material to develop a counternarrative aimed at millennials, not only about the housing crisis but the media in general.

    • #2
  3. Goldwaterwoman Thatcher
    Goldwaterwoman
    @goldwaterwoman

    JimmyV87 (View Comment):

    The guests are spot on about Paul Krugman and his ilk treating macroeconomics as if it’s a hard science like physics or chemistry. It’s kind of scary how this small priestly caste (who’s commentary is always dripping with arrogance and overconfidence) seems to have a monopoly on general public opinion and economic policy, with the financial well being of so many people hanging in the balance…

    One thing I find really disturbing 10 years after the crisis is how the general public opinion (at least among my millennial generation) has been shaped to place essentially no blame on government policies, and all of the blame on the private sector. It’s at the point where people are conditioned like Pavlov’s dog to immediately distrust any defense of free market ideas, as if they’re listening to a tobacco lobbyist explain that cigarettes aren’t unhealthy.

    Two examples sum it up for me

    1. Paul Krugman wrote in 2002 that Greenspan “needs to create a housing bubble to replace the Nasdaq bubble” – How on earth does Paul Krugman have so much influence over public policy? Lord knows how he won a Nobel Prize (especially in the year 2008, given the above article), but is this really sufficient for people to so readily accept Krugman’s ideas and reject the ideas of other Nobel Prize winners like Friedman and Hayek?
    2. Barney Frank gave a speech to congress in 2005 arguing that there was no bubble in the housing market, and that the government should continue policies aimed at expanding homeownership – Why is he being paraded around the Bill Maher show right after the housing collapse? Why is he on VICE News 10 years after?

    I think there’s plenty of material to develop a counternarrative aimed at millennials, not only about the housing crisis but the media in general.

    Agree.

    • #3
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