The Great Crisis of 2008

Abstract

Sub-prime loans and the bankruptcy of Lehman were the biggest headlines of the 2008 Greet Crisis. There was in fact a global credit bubble and bust of which these were just one element. The origins of this bubble were monetary—the inflationary policies pursued from at least the mid-1990s onwards (albeit with a temporary remission in 2000–2002). That remission though did not effectively break the momentum of an asset inflation which became increasingly virulent and indeed the 2001–2002 recession has been largely revised away by subsequent data. In this chapter, the authors balance much of the literature about failings in the global banking industry with the deep-seated monetary malaise.