So the banking system is still prone to runs.Īnd now countries are competing with each other to push down their exchange rates and stimulate growth. when they take risks and lose, they are too big to fail, and the taxpayer foots the bill.when they take risks and make money, they keep it.The big banks have an asymmetrical risk position: King believes that it’s virtually certain that we’re heading for another crash though it may be 10 or 20 years before it happens. lots of people are angry because the people who are suffering (for example cash savers from low- interest rates) weren’t the people responsible for the crisis, and the people who did cause the crisis weren’t punished.the fundamental problems haven’t been fixed.He thinks that governments and central banks did the right thing in cutting interest rates, boosting employment and increasing spending, because in the short run that prevented a re-run of the great depression of the 1930s, with mass unemployment.īut there are three problems with the 2008 “solution” King also notes a lack of international leadership, with G20 politicians focused on their home constituencies and domestic politics rather than facing up to global challenges.Īnd the large financial institutions have an influence on the politicians, particularly where the politicians rely on financial institutions for funding.

The crisis was not just the result of failures by individuals or institutions, but of the ideas behind banking and economic policy. King is not convinced that the world has been saved.He notes that most books about the 2008 crisis have the invisible subtitle: “how I saved the world”.King sees the 2008 financial crisis as merely the latest in a long series of crises.

The End of Alchemy by Mervyn A. King