Anatomy of a Global Financial Crisis: Not Dancing Now

It is an old public policy adage that, before you can decide where you want to go, you first have to understand where you have come from. The present crisis – no longer is this too strong a word – might be taken to imply that the matter is too urgent for the luxury of a post mortem; and certainly, it will be decades before a definitive assessment is in. But at the same time, it was the failure of the $700 billion package designed by US Treasury Secretary Henry Paulson to address even all the known key issues that led investors to judge it inadequate. Once they had reached that judgement, mistrust of the financial system spread so fast, and sentiment deteriorated so substantially, that a basically unified set of policy actions was urgently needed, across all major countries, to address all the main identified causes of the present situation.