Markets and Government before, during and after the 2007-20xx Crisis

When the long rise in US housing prices came to an end in December 2006, the newspapers did not announce with six column headlines that a hurricane was coming. Nor did the crisis units of national or international policy bodies call any emergency meeting to open the sealed envelopes with plans for managing the long-predicted ‘disorderly reversal’. Perhaps the most lucid understanding of the facts could be found among market participants, if anecdotal accounts of some confidential utterances – comments like ‘the gravy train has come to halt!’ or ‘now,  every man for himself!’ – are accurate.

Three and a half years later, the crisis is still with us and, like the HIV virus, it shows a pertinacious capacity to renew its destructive potential through continuous mutation. Unsurprisingly, it still lacks an agreed interpretation: after all it took decades to understand the crisis of the 1930s. It also lacks a name, ‘subprime’ appearing too dismissive; and it lacks precise dates, because we do not see its end. I would call it the 2007-20xx crisis.