Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Legacies of the Financial Crisis There's Another One Coming, We May Not See It Coming, and We're Not Going to Be Any Better Prepared, Worries Columnist Robert J. Samuelson

Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Legacies of the Financial Crisis There's Another One Coming, We May Not See It Coming, and We're Not Going to Be Any Better Prepared, Worries Columnist Robert J. Samuelson

Article excerpt

Ten years after the 2008-2009 financial crisis, we're swamped with studies and reminiscences. What are the legacies of the crisis? How long will they endure? Are they accurate - or just a matter of finding convenient scapegoats? Here are three takeaways.

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We can no longer rule out another worldwide depression - something akin to the Great Depression of the 1930s.

The crisis surprised almost everyone. Another worldwide depression was considered an impossibility. Our economic understanding and the government's tools to fight instability had progressed sufficiently to halt any downward spiral before it became a full-fledged depression. True, there was no depression. The unemployment rate peaked at 10 percent, which - though horrific - was well below the 25 percent peak in the 1930s. But if the experts were surprised once, they could be surprised again.

It was a close call and required extreme measures (zero interest rates and hundreds of billions of dollars to rescue fragile banks and financial institutions). Next time, we may not be so lucky. The fears incited by the financial crisis were widely felt, reports a new study, "Public Opinion 10 Years After the Financial Crash," by Karlyn Bowman of the American Enterprise Institute.

Consider: In the summer of 2009, nearly a third of workers feared they would be laid off, a Gallup poll reported. Gallup also reported that in 2009, only 8 percent of respondents thought it was a "good time" to find a "quality" job - an all-time low.

It's doubtful that these severe worries have been forgotten, and they might prompt consumers to cut spending drastically when there's another recession. We don't have a precise definition of what qualifies as a "depression" as opposed to a run-of-the mill recession, but most people can sense the distinction. We were on the edge.

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Americans have long been ambivalent about big business, in particular Wall Street, but the financial crisis deepened the ambivalence and hostility. …

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