Seven years ago, on August 9, 2007, something unexpected but not unforeseeable happened. On closer inspection, the outbreak of the crisis, initially called "subprime", was a bolt from the blue only for those who did not want to see that we were surrounded by false explanations. From the little story that the Chinese ants saved too much and "forced" Americans to play cicadas, to the one that we were in a new golden age with permanently moderate inflation and no unemployed, to the other one that, by definition, any financial innovation it produced well-being for all. The reality was different. The US was accumulating dangerous imbalances in its external accounts (and not only with China).
Inflation was moderate only due to the beneficial effects of price reductions due to productivity increases and productive globalisation. Financial innovation was only partly good (for example the one that improved our lives by financing information technology) but largely served to create fictitious wealth, which generated real redistributions to the advantage of the financiers themselves and of the wealthier classes and impoverishment for the generality of citizens. This, accompanied by excessively lax monetary policies, also implied the accumulation of excessive private debt which, with the crisis, was largely translated into increased public debt.
The response to the crisis has been very different between the US and Europe. Strengthened by a complete and tested institutional apparatus as well as by their innate pragmatism, the Americans have implemented massive monetary and fiscal expansionary interventions. On this side of the Atlantic, weak due to the lame institutional structure and tarnished by the liberal ideology which in the meantime was no longer so fashionable in America, the Eurozone was slow to launch monetary expansion and became entangled in the hypocrisy of the fiscal austerity. Thus, he scored a terrible Euro-own goal, as the dripping of too fragile shots - or even of economic depression as in Italy - have been telling us for years.
But it would be wrong to give too much weight to the differences between the US and the Eurozone (in some ways Brussels and Berlin, after Frankfurt, appear to be on the way to recovery). In fact, what remains is still a scenario of rubble. The economic recovery is too slow in America too, not just in Europe. The IMF has documented that, within four years of their outbreak, the financial crises of rich countries lead to a loss of between 10 and 20% of jobs. If we recall that the European wave of financial crisis erupted in 2011-12, we could expect declines in employment until 2016. In short, financial crises cause much more serious and lasting slumps and numbness in employment than "normal" cyclical recessions ”.
Is this sustainable? Probably not. There is a risk of jeopardizing social stability. Especially in Europe, but also in the USA, it is necessary to think of infrastructural investments with a high potential to reactivate the domestic economy. Believing that private investments alone are capable of restarting the engine of growth is illusory in a context in which risks and uncertainties of a macroeconomic and systemic nature have become too great to be borne by individual companies. Moreover, the external scenario it is getting more complicated day by day for Europe. Even without considering the possible devastating effects of the new epidemic, North Africa and the Middle East are already on fire.
And the Ukrainian crisis is leading to a stiffening of Euro-Russian relations which could have very negative economic consequences. With an increasingly frayed and selective American protective umbrella, can Europeans realistically do without organizing a defense policy and a common foreign policy worthy of the name? As the experience of the XNUMXs teaches us, the exit from financial capitalism and the return to productive capitalism (which creates "true" values) is difficult and full of uncertainties. But, nevertheless, the exit is necessary. And if you don't govern it, you only end up being dominated by it and increasing the probability of conflicts which, as happened in the last century, can also get out of hand. With all due respect to the Prince of Salina, in the seventh year of the crisis the only sure thing is that nothing will ever be the same again.
