Question: In 2009 Larry Summers former Secretary of the Treasury observed
In 2009, Larry Summers, former Secretary of the Treasury, observed that “in the past 20-year period, we have seen the 1987 stock market crash. We have seen the Savings & Loan debacle and commercial real estate collapse of the late 80’s and early 90’s. We have seen the Mexican financial crisis, the Asian financial crisis, the Long Term Capital Management liquidity crisis, the bursting of the NASDAQ bubble and the associated Enron threat to corporate governance. And now we’ve seen this [global economic crisis], which is more serious than any of that. Twenty years, 7 major crises. One major crisis every 3 years.” How could this happen given the large number of financial and information intermediaries working in financial markets throughout the world? Can crises be averted by more effective financial analysis?
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