Can it happen again?

The deep crisis, started with the downfall of subprime mortgages, has reopened the question: can it happen again? The answer given by Minsky almost 30 years ago was a qualified no, provided that sustainable stabilization policies were adopted. However we may say that “it” did happen again. Although the “subprime crisis” differs from the Great Contraction of the 1930s in both its features and effects, the gravity of their consequences on the economic system is comparable. This suggests that the stabilization policies adopted in the recent past were not sustainable.
The Conference aims at evaluating the congruence of the policy interventions adopted during the most recent financial crises with the long-run objective of economic and financial stability. Many observers pointed out that these policies implemented short-run stabilization through myopic measures and so nurtured the subsequent crises. In particular, the worst effects of the recent global financial crisis have been mitigated by massive injections of unprecedented amounts of liquidity to keep virtually bankrupt financial companies alive. These interventions, which may alleviate some of the effects of the financial crisis in the short run, are emergency measures that do not address the main structural weaknesses of the financial system, both at the domestic and at the international level. Since no serious structural reform has been attempted so far, the risk of another grave financial crisis in the near future has been neither removed nor reduced. The Conference aims at focussing on the structural policies that can establish institutions and rules needed to implement sustainable stabilization policies.