When did the financial crisis end?
As I see it there are only a limited number of possible answers:
- There was no financial crisis.
- It ended in 2008 (Hennessey and Lazear’s contention).
- It ended some time after 2008 (at least implied by the president in his remarks on the five year anniversary of the fall of Lehman Brothers).
- It’s still ongoing.
I think the financial crisis is still ongoing. Although a lot of small banks have closed their doors since 2007, the financial crisis wasn’t caused by small banks. The big banks are even bigger than they were five years ago. They still have a boatload of bad paper on their books.
Despite its decrease from its peak, the percent of loans delinquent or in foreclosure is higher than it was five years ago.
If the ratings agencies had been doing their jobs, there would have been no financial crisis but very little has changed with the ratings agencies. Their ratings are still required for publicly-traded companies, their number is still limited by law, and they’re still paid by the companies they’re purporting to rate.
Total consumer credit is significantly higher than it was five years ago. A lot of that is in the form of education loans.
The Federal Reserve continues to apply “extraordinary measures”. Apparently, they’ve now become ordinary.
We have made no structural changes in the financial system over the last five years. The notion that Dodd-Frank has fixed the problem is laughable and even Dodd-Frank is being stripped of its enforcement powers.
If you pump enough air into it, you can keep a balloon with a hole in it inflated. That doesn’t patch the hole.
So, when did the financial crisis end? Please give your evidence.