Short- and long-term propositions for the financial crisis: back to the fundamentals

By Didier Sornette, 14 January 2009 The financial crisis of 2008, which started with an initially well-defined epicenter focused on mortgage backed securities (MBS), is cascading into a global economic recession, whose increasing severity and uncertain duration will lead to massive losses and damage for billions of people. Heavy central bank interventions and government spending programs have been launched worldwide and especially in the USA and Europe, starting to reverse decades of expanding free market capitalism. Here, I stress the decade-long origin of the crisis rooted in several successive bubbles and suggests a few recommendations / solutions that naturally derive.

See complete essay