When is the Next Financial Crisis?

More than ten years after the 2008 crisis, the question is no longer whether a new financial crisis will occur, but rather when and of which breadth (recession or real crisis). Behaviors remain largely unchanged, and fundamentals subsist: narrow definition of profit, bias in favor of short-termism (accounting and prudential norms, reporting, etc.), large-scale development of automatisms and algorithms, importance of derivatives, remuneration modes, etc.

Debating about the timing of a new crash implies a reflection upon both its structural causes and its potential spark: management concentration, slowdown of emerging countries, low interest rates over a prolonged period, uncertainties as to macroeconomic governance, anemia of the Euro zone, deregulation across the Atlantic, technological innovations (high frequency trading, for instance), the weight of automatisms, among others.

Beyond that, a number of economic and political institutional weaknesses could amplify the effects of a new crisis: debts have increased, shadow banking has developed alongside banks, and actors are now larger and more complex. The tools to respond raise questions: what are our margins of fiscal and monetary policies? Can the states, most of them undergoing a confidence crisis, mobilize their populations? International cooperation, which was key in 2008-2009, is now weaker. What about ‘America First’? What about China as a new systemic actor? What about the fact that Europe is divided?