The journal Nature published an insightful research article on Systemic risk in banking ecosystems that added valuable insight into what went wrong in the 2008 financial collapse. Invited comments on a forum page Financial systems: Ecology and economics added other insights on what did or could go wrong.
My comment pointed out that trying to fix what went wrong in prior financial system failures to prevent the next, is what led to the next not the solution, for a curiously visible reason. A link to Dmitri Orlov’s new video on what happens if these kinds of systemic contradictions are not attended to, and my comment, are below as well.
The curious omission by Haldane and May, as well as by Johnson and Lux in their critiques, is not considering the place of this financial collapse in history.
This was only the biggest and most recent instance of extreme over-inflated financial expectations collapsing the environment they were part of.
It was just one of a great many self-similar panics and collapses, large and small throughout history. It’s been an interest of mine for over 30 years. Continue reading Why fixing what failed before always led to the next