Can Finance Save the World?

CHAPTER 2

The 2007–2008 Financial Crisis

Modern economic history is clearly divided into a pre-subprime and a post-subprime era. In 2007–2008 the world experienced the worst financial crisis since World War II, or maybe even since the 1930s. We are still not completely over it. And we are still uncertain as to whether the center—understood as our ability to make the system work—will hold, at least in its current shape. How can a financial system that seemed so solid reach the brink of collapse? We need to understand the sequence that occurred before bringing the common good into our reasoning. The Tower of Babel was so beautiful, why not build it higher? We can draw many lessons from this major crisis, and those lessons deserve serious consideration ...