Chapter 3 Financial crisis

Abstract

A comment by an analyst-cum-investor reads, “A year ago, I didn't expect the U.S. economy to fall into recession in 2008 because I was confident consumers would continue to do what they do so well: spend money. I had plenty of company, and ultimately we were all wrong.” During the Fall of 2007, while working in Tokyo to prepare a manuscript for publication, I wrote, “I come to a rather disturbing prognosis about the U.S economy: high likelihood of a recession” (Azis, 2008). Indeed, it is always tricky to predict crisis and recession, let alone to comprehend how a small segment of a financial market, that is, subprime credit, could bring down the world's largest economy into the worst recession since World War II. Every Spring semester on the first day of my class on “Economics of Financial Crisis,” I always cautioned students that financial crisis is explainable but not predictable.

Citation

Azis, I.J. (2009), "Chapter 3 Financial crisis", Azis, I.J. (Ed.) Crisis, Complexity and Conflict (Contributions to Conflict Management, Peace Economics and Development, Vol. 9), Emerald Group Publishing Limited, Leeds, pp. 25-54. https://doi.org/10.1108/S1572-8323(2009)0000009006