Ten Years On: The Financial Crisis and the State of Modern Capitalism

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Filmed at the Emmanuel Centre on 5th February 2018.
It’s been ten years since we saw suddenly unemployed Lehman Brothers bankers carrying their possessions out of their offices in boxes; since whole neighbourhoods in suburban America turned into empty ghost towns; since the British and American governments pumped trillions into the banking system, saving some institutions and abandoning others. The crash of 2008 and 2009 shook the very foundations of modern capitalism.
So where are we today? Although we may have been spared a second Great Depression, post-crisis productivity has flatlined and the last decade has seen Britain’s worst pay squeeze since the nineteenth century. And according to some, the seeds of today’s political upheavals, from Brexit to Trump to the Corbyn surge, were sown during the 2008 crash, which irreparably damaged public trust in the establishment and its institutions.
To look back at this critical moment for the global economy and examine its repercussions today, Intelligence Squared brought together a panel of the country’s top economic experts: Mervyn King, Governor of the Bank of England during the crash and its aftermath; acclaimed UCL Economics Professor Mariana Mazzucato, who recently advised Jeremy Corbyn on industrial strategy; and Torsten Bell, Director of the Resolution Foundation, a think tank focusing on improving the living standards of those on low incomes. Chairing the discussion will be the BBC’s economics editor Kamal Ahmed.
Has enough been done to regulate the banks and protect our economy from future shocks? Is it only a matter of time before we face a new, even worse crash? And did we let the crisis go to waste by failing to rethink the system and rebalance the economy away from financial services?

[@Alkalite]

Mariana is smart, she explained herself very well and was spot on about everything she talked about. Capital gains tax needs reform, businesses need incentives to re-invest in the capital as opposed to their own stock prices, the financial system needs to be restructured, and governments should be subsidizing sectors of industry that address society's greatest concerns. I also agree with what Mervyn said about needing global cooperation on the regulation and taxation of industry. The key to getting this stuff done starts at the voting booth guys. Consider especially the words of Mariana and do your research before going to the polls.

[@planetbizzaro1839]

And, shes sexy AF too...

[@harshitmadan6449]

Subsidies are immoral and inefficient. Market allocates resources most efficiently. It is wrong to penalize one industry to subsidize another.

[@jamesavenell2368]

Governments only subsidize with the peoples taxes. Along with the rest of the Establishment they are the biggest thieves & confidence tricksters in the land

[@danielhutchinson6604]

The understanding that Democracy in Contemporary terms, allows Citizens the opportunity to decide what particular choice of the Wealthy Members of Society allow as Candidates? The names selected to appear for Citizens to choose from, reflect the Servants of the Wealthy as they are presented for Citizens to approve. The concept has been sold...... How do you suppose the changes you propose can be enacted? If the members of a Representative Government only represent the needs of the Rich, what form of Democracy do you call that? Monarchy has been replaced by Oligarchy...... Go ahead, prove me wrong?

[@vhawk1951kl]

f only she were not so normative/religious she would not be so eisegesistic(if there is such a word which I doubt) eisegis certainly but eissgistic I rely on my betters to correct me.

[@will4274]

Oh my god... The host really likes the sound of his own voice ... Smh

[@Johnconno]

He was built in Oxford.

[@JoePalau]

By far one of the best public conversations on economics in a very long time. Mariana’s emphasis on the failure of public ideas is key. We’re stuck in worn, tired dichotomies of the public vs private, for example, when we need to frame our political economic concerns in terms of the socio-economic problems we face domestically and globally. Much might be said about what keeps us locked in thread bare dichotomies (fear of scarcity / winner take all responses). Better to ask how we might redirect our politics toward, say, green technologies, affordable housing, public infrastructure / transportation investments than to rail on about the failures of capitalism or the vices of socialism. No need to rehearse these 19th C debates. Time to address and solve the political-economic problems we face. Political change, new vantage points on public issues and international multilateral cooperation are very much in need. Time to get to work. There is much to do. Whining is such as waste of time.

[@danielhutchinson6604]

As Nations around the Globe report economic difficulties, and guys like Rickards report shortages of Liquidity, the appearance of the ability to exceed the limitations of Fiat Dollars, rears the ugly head of a Dragon like obstacle to Capitalism? How far can you spread the use of Fiat Dollars and not exceed the ability to cover the actual Promises that using Promissory Notes provides? The US appears to dance along the edge of an economic cliff that looks like a Roadrunner Cartoon? How many falls from the edge can a Coyote endure without some effects? 2008 provided a economic preview of failure, that Bernanke and Paulson prevented by convincing the Big Banks to provide a Blizzard of Credit Cards. Now consumer debt seems to limit the ability to take spending in support of Capitalism over that cliff? We discussed the effects of replacing the Gold Standard in 1970, after Economics Classes. We considered the implications of scenarios the seemed impossible to sustain, that resemble the ones we now face. The image of a Woodstock Nation that provides free entertainment, may not have been so far from the eventual result of extending Capitalism to the limits? "For some of you who do not think Capitalism is all that bad." That line was from Wavy Gravy asking for support at Woodstock. We may be reaching the limits of the use of an institution that has endured Monarchies, Oligarchies and various alternatives that all used Capital. What do you do when the Capital is all hidden in Cayman Island Banks?

[@vhawk1951kl]

"We" being you and which direct immediate identifiable interlocutor? So it is just you eh titch?

[@MrMarinus18]

I like to call it market magic. The idea that the market can fix anything if we just let it loose. This idea is silly but the idea that the government taking over everything will fix it is just as silly. Capitalism is just a tool, one that works for some situations but not for all. I think we just need to decide on a case by case basis if it should be private, heavily regulated, have both a private and public option or be completely nationalized. The idea that a strong private and a strong public sector are mutually exclusive is a leftover from the cold war that we really should abandon. We are now falling into the same trap the Soviet-Union did where they trusted their public sector over reality itself, we are doing the same with the private sector.

[@MrMarinus18]

I agree with your statement but I think it will remain difficult as long as we keep up being trapped in the cold war mentality. BTW: The whole private vs public debate had little to do with the actual cold war as that was just a confrontation between two expansionist empires. It would be like if in the 100 years war the French waged an internal war on archery and the British on horseback riding.

[@danielhutchinson6604]

@@MrMarinus18 The Cold War ideology that said "Commie Bad ,,,,Capitalism Good" appears to demonstrate that the Commies were forced to use Capital to get stuff to keep the Citizens Fed and Housed. Now we see the Currency distributed between a smaller group of individuals in the same manner as when the Monarchs regulated what amount was distributed to the Citizens, and what remained under their Royal Mattress. As the Oligarchs dictate reality through their control of media, like they do, the distribution of actual thought appears to be dimmed by consumption of pleasing entertainment. Like a drug we are entertained with propaganda that dims the potential for change that provides an ounce of threat to the security of the small group of Oligarchs, who almost exactly like the Monarchy, use the power of money to appoint their status as eternal..... The designation of Money as a Deity, is as false as the Monarchs use of their designation as rulers, Money designates Power. If we stop using the currency that most do not possess, we remove the Oligarchs power.....

[@JustMe-uc1lt]

Very interesting, thank you.

[@budawang77]

Mervyn King: "The problem in the Euro area is not that they had austerity as such". How can this guy justify austerity? Austerity when incomes are falling and unemployment is going up while at the same time giving countless billions to the banks was sheer lunacy. King doesn't have a clue.

[@robertholland8283]

Interesting conversation.

[@davidwilkie9551]

Mariana Mazzucato promotes the idea of missions to align common values and objectives, directed more by what governments are not doing and saying because they are not doing and saying what is required for serving the common good. Simply put.

[@PurushaDesa]

Mazzucato's right about most things but especially the obscene practice of the share buybacks.

[@craigross341]

What's inherently wrong with using cash you've earned in (for example) selling fried chicken in buying and cancelling some shares, so that each share is a bigger slice of the company? The shareholders owned the cash, and used it to provide an exit for a subset of the owners. They can go and invest in something else, or buy jam, just as they could have done had they sold their shares into the market to any other buyer. I fail to see the issue.

[@brianarps8756]

The problem of listening to people who freely admit that they had no idea what was happening ten years ago and had no idea what would happen next, but were in any event proven wrong, is that you have no reason to take much notice of what they think now.

[@GonzoTehGreat]

This doesn't apply this panel as it assumes they've not admitted as much, apologised and are now trying to warn against repeating their mistakes.

[@intlprofs]

Sadly, too true. Income inequality still continues to grow in the era of financialising most people must endure -- until they don't!

[@TheLivirus]

It seems ironic, yes, but it is well established that confidence and ignorance go hand-in-hand. It seems to follow that it is rational to offer more trust to humble forecasters than to confident ones.

[@michaeljensen4650]

This entire conversation is completely useless, it's nothing more than propaganda. We are turning to the very people who are responsible for creating the financial crisis of 2008 and asking them to tell us why things went wrong and how we can prevent this from happening again. Laughable! We are about to have a repeat of that great crisis and this time it will be far worse. The same investment practices and strategies used by central banks and private equity that caused the last collapse were never abolished and will lead us into the next crisis as well. This is by design, it is not magic or the invisible hand of the market.

[@michaeljensen4650]

It was all an accident. A big mistake. A policy error. 😉

[@rw2993]

This is like listening to cancer and its opinions on a cure -- and its answer, of course, we should just learn to live with cancer.

[@frenchfree]

Separate the Main Street banks from Investment banks. Banksters should not be allowed to gamble with our savings at a 1: 35 ratio.

[@harshitmadan6449]

Why not? What if I don't mind higher risks on my savings, in exchange for possibility of higher return?

[@dealstogo2649]

NINJA loans were a huge contribution to the "collapse." Fraudulent loans are also a significant cause imo. When you hand loans to people you know will never be able to replay, bad things will happen.

[@danielhutchinson6604]

The production of "Interest" is the objective of a Bankster Empire...... The illusion of prosperity that Banks provide, appears to be what separates Roman theory from Salidin's teachings? Why do you suppose the Crusades continue to rage on? King Richard sought the Gold hidden under Temples in Jerusalem, the US seeks the Oil hidden under the Iran sand. The promotion of Interest, is apparently not worth dying for?

[@rgaleny]

HOW DO WE RECAPITALIZE PENSIONS AND PEOPLE? WE'VE BEEN ROBBED AND LIED TO.

[@intlprofs]

Each could receive a half million pounds, copying the rewards the American banks received for bringing the bottom 80-to-90 percent down, yet again.

[@crewlj]

Always some lame excuse for your failure.

[@danielhutchinson6604]

Remove the Capital and continue without it..... How difficult is that concept?

[@thomaskauser8978]

de-linking was an understatement! Fabric was being torn apart .

[@dimitardrenkarov9281]

the lady's last comment about changing the conversion is so poignant in the super polarized toxic ideological setting we live in...

[@TheDionysianFields]

Right, but anybody can say that. How can there be mutual, symbiotic relationships when the people in power only deal with those who can help increase their power?

[@robertholland8283]

Stagnation occurs within an economy when total output is either declining, flat, or growing slowly. Persistent unemployment, flat job growth, no wage increases, and an absence of stock market booms or highs are evidence of stagnation.

[@danielhutchinson6604]

So we need Cancer like Growth to promote economic distribution of Currency? That appears to be another self defeating method of inflating prices beyond the ability of Humans to participate in?

[@thomaskauser8978]

Interest on excess reserves has got to END. Excess reserves and a full employment recession? Possibly you lot could immigrate to America to concentrate the wealth and good fortune? Because full employment can't solve the business cycle?

[@dickhamilton3517]

who took their kids along to this? instead of a visit to the Nat.Hist.Museum or the top of the Wheel

[@ariellawaltman6693]

Who paid who went prison?

[@vladimir0700]

Mariana--4 kids in 5 years. Obviously doing her part to combat global overpopulation

[@intlprofs]

In the USA wage stagnation began in the early 70s. In New York City from around the Civil War poor and middle-class students could receive a free public education. That ended in the seventies. Why should anyone listen to you all in July 2018?

[@harshitmadan6449]

There were many other factors, such as global competition.

[@lunafringe10]

oh good, I thought this was Trumps fault again

[@loquatmuncher]

The guy on the right sounds like a spokesperson for someone's political campaign. He just rattles off figures about the inequality gaps but doesn't sound like he knows anything about why they exist and how to actually fix them. But im just a hater who knows shit about economy so who am I to criticize. I like Mariana's arguments though.

[@MegzeeR]

Automation isn't really taking the jobs? That's all I needed to hear. If you're going to lie to back your claim then YOU ARE WRONG ON ALL COUNTS and therefore negated.

[@ivandafoe5451]

Perhaps give her point another listen...she said (in affect) that industrial job losses from automation were replaced, though a continuing cycle of industry reinvestment and innovation in their businesses, with new jobs. However, this cycle has been disrupted for decades by many factors, leading to the present difficulties for labor, which hasn't sufficiently benefited from the financial gains created by innovation and efficiency.

[@Edwin-ty1tx]

that voice!!!!!!!!!

[@robertmakins5070]

I think the world knows that it needs a fundamental change. The question is how do we soften the blow. A radical change in economic policy worldwide is going to bring a lot of human suffering. And the rich are going to have to give up some of their wealth. Not all, but some.

[@harshitmadan6449]

Rich people pay already pay most of taxes. Top 1% pay 40% of income taxes. The more you tax them, the more rich people will flee to business friendly countries like Singapore, Hongkong, Dubai, Ireland etc.

[@utubetruthteller]

Consumptions led economy is unsustainable.

[@rgaleny]

GLASS/STIEGEL FOOLS

[@intlprofs1]

USA Income and Wage Inequality since the 1970s until 5 November 2019 continues to expand. We shouldn't be surprised to see revolts around the world, hopefully, of a nonviolent civil disobedience sort by and large.

[@harshitmadan6449]

Source?

[@danielhutchinson6604]

Fiat Dollars need to expand or they die. We need to face the end of Capitalism.

[@theicyridge]

I'm always shocked by how many reactionaries are in the comments section of Intelligence Squared discussions.

[@tyroniousyrownshoolacez2347]

Pontificating arrogant stooge. Out in 10. Painful.

[@vhawk1951kl]

f only there were such a thing as capitalism.

[@danielhutchinson6604]

Fiat Dollars do a lot to preserve the illusion.

[@MegaZenee]

stop blaming the sub-prime mortgages for the crisis. how a $1.3 trillion mortgage debt turned into a Quadtrillion toxic waste,(CDO,MBS,CDS,naked .....)poor people did that???

[@neillioen]

Buy Bitcoin

[@lunafringe10]

seems all the migrants have all the good positions now in the UK.

[@boeingdriver29]

Sorry that should have been peoplekind. Lol

[@oddvardmyrnes9040]

Why the experts don't realize what effect this event had on ordinary people. Ordinary people are voters. Ordinary people are consumers. For the love of god - stay in the EU.

[@MB-xq3ol]

the host talks way too much

[@dannyfergusson3243]

IQ = 2/10

[@carnivaltym]

"I'd had four children and thought my problems were bigger....[ than the 2008 collapse ]" A superb example of why women should NEVER have positions of real responsibility.

[@AmericaFirstRifleman]

Thumbs up if you can't wait until the next financial crisis because you know this time people are going to be a lot angrier than they were the last two times I'm starting a security company for Bankers who wants in!!!

[@intlprofs]

I wonder if we will see again what happened in the French Revolution

[@romanbrandle319]

No Prof. Steven Keen , probably not worth watching , can't expect any real critical thinking from the main stream .

[@GonzoTehGreat]

It's commendable you follow Keen but he'd agree with Mazzucato and recommend you listen to what she has to say. If you don't believe me just ask him! She's the only one addressing how the Financial Crisis was caused by underlying problems with the banking system which continue to persist today, which is something Keen is also trying to highlight.

[@romanbrandle319]

I watched the rest of the discussion , and your right Mazzucato has some commendable things to say , with a Keenzian [I made that up] angle .

[@GonzoTehGreat]

roman brandle Good for you. It's a long discussion but I think it's worth taking time to listen to all of it. Especially now that Keen is retiring, I'm glad her star is rising in academia as hopefully politicians will pay more heed to her message. I was disappointed Corbyn didn't keep her on as one of his advisers.

[@richardmayger2716]

No significant change can happen until the banking system is democratized

[@harshitmadan6449]

Been there. Done that. Doesn't work. What you get is defaults. Lots of them. Private enterprises driven by profit motive tend to allocate capital in the most efficient fashion. Democratic banking sector driven by mob misallocates resources and end up accruing losses.