Assembly Room
Time Slot: 
Wednesday 28th March 09:00 - 10:30
Panel Chair: 
  • Professor Andrew Hindmoor (University of Sheffield)
Panel Members: 
  • Dr Iain Hardie (University of Edinburgh)
  • Dr Johnna Montgomerie (Goldsmiths, University of London)
  • Professor Ben Clift (University of Warwick)

In March 2018 the failure of the Bear Stearns investment bank marked the start of a period of financial panic which reached a crescendo five months later with the collapse of Lehman Brothers. Ten years on, what have we learnt about the financial crisis? What has changed? In this panel, three speakers will talk to various aspects of the legacy of the 2008 crisis.

Reflections on the lost decade for the household sector: debt dependence and the financialisation of everyday life. Dr. Johnna Montgomerie, Goldsmiths. University of London.

 A decade after the 2008 financial crisis the UK household sector has not seen a meaningful recovery like that attributed to the wider macroeconomy. Instead, the household sector is mired in a cost-living-crisis, struggling to cope with stagnant incomes or wage declines in real terms, growing inequality and multiple other indicators of socio-economic decline and growing political discontent. This paper explores how finance has become more deeply embedded in the daily life of many UK households since the 2008 crisis. It begins with a brief outline of finance-led growth then details how this affects the average household in three distinct ways: (1) decimating long-term cash savings in favour of asset-based welfare; (2) transforming housing into a highly leveraged financial asset; (3) relying on debt for economic participation and as a safety-net. The chapter concludes by considering why there continues to be a strategic silence about household debt within public policy when it is clear that current levels of household indebtedness are unsustainable over the long-term.

The IMF and the Politics of Austerity in the 10 years after the Global Financial Crisis.Professor Ben Clift, University of Warwick

This paper situates the Fund’s evolving thinking about sound and desirable post-crash economic policy within the wider politics of austerity. Building on its self-appointed role as a font of economic policy knowledge, the IMF mobilised its knowledge bank and scientific reputation to correct what key Fund figures saw as mistaken premises of austerity policies. In so doing, the IMF sought to increase fiscal space and expand the macroeconomic policy options of advanced economies. Yet the Fund had limited impact on the austerity-centric policy settings of European authorities and governments. Fund actors’ post-crash strategic doctrinal flexibility is operationalised through their use of the notion of ‘fiscal space’ in ways that prioritise particular policy options. Which economic ideas are drawn on, and how, to inform and underpin economic policy commentary couched in terms of fiscal space can have important implications for macroeconomic policy space. Its imprecision notwithstanding, the Fund’s social construction of ‘sound’ economic policy was refracted through the prism of fiscal space. It brought to the fore a broader range of economic policy levers and options for national economic policy-makers to use.  The non-quantifiable, not directly measurable quality of the fiscal space concept provides latitude for Fund staff to define what constitutes economic policy virtue for particular economies. Evocations of fiscal space are built upon views about what the policy priorities for particular governments should be. The fiscal space framing provided licence for Fund staff and missions to adjust how, and how far, debt and deficit reduction should be prioritised over other objectives, such as boosting aggregate demand, and supporting economic growth.Ironically, though, the Fund did not deem these options open to those countries in the Eurozone periphery most in need of them.

The US, the Global Financial Crisis and its Aftermath: Enhanced or Reduced Monetary Power? Dr. Iain Hardie, University of Edinburgh.

For many observers, the Global Financial Crisis served only to emphasise US monetary power. Despite the US being the epicentre of the crisis, international investors flocked to the safe havens of the dollar and the US Treasury market, and the Federal Reserve became even more clearly the world's central bank, providing the necessary liquidity to individual banks and national financial systems. This paper argues, however, that the crisis should be seen from a very different perspective. US Treasury yields indeed fell, but not to any greater extent than yields of other leading government bond markets, and US Treasuries are now amongst the highest yielding developed economy government bonds; the rise in the dollar during and particularly since the crisis has imposed costs on the US and has been largely outside the control of US authorities; and Federal Reserve liquidity provision is a demonstration of US capacity but, with limited scope for autonomous action, not power.