Capitolo 1
When Financial Titans Fall: A Global Reckoning
In September 2008, as Lehman Brothers collapsed and financial markets froze worldwide, a tsunami of economic destruction began rippling across the globe. At the United Nations, world leaders voiced their alarm. Philippines president Gloria Arroyo described America's financial crisis as a "terrible tsunami" spreading uncertainty globally. Argentina's Cristina Fernandez pointed to the irony of the US implementing "the largest intervention in memory" after decades of lecturing Latin America about fiscal discipline. French president Nicolas Sarkozy declared "the world is no longer a unipolar world," calling for expanded global governance. Adam Tooze's "Crashed" has been hailed as the definitive account of this pivotal moment, with Nobel laureate Paul Krugman calling it "the most comprehensive and detailed account" of the crisis. The book has become required reading at central banks worldwide and topped The Economist's best books of 2018 list, offering an unparalleled window into how our modern financial system nearly collapsed-and why its aftershocks continue to shape our world today.
Capitolo 2
The Crisis That Defied Expectations: A Transatlantic Financial Earthquake
For decades, economists had warned about America's growing trade deficits and dependence on foreign funding, particularly from China. The feared crisis, they predicted, would come from a collapse in foreign confidence in the dollar, forcing painful adjustments to American living standards. But when crisis struck in 2008, it wasn't the long-feared meltdown of American public finances. Instead, a crisis triggered by "humdrum" real estate threatened the entire world economy.
What made this crisis so different from expectations was its nature and transmission. Rather than foreign creditors dumping Treasury bonds, the system collapsed from within through the complex web of transatlantic banking. European banks had become deeply entangled in America's mortgage securitization machine. When housing prices fell and subprime borrowers began defaulting, the crisis spread like wildfire through a globally integrated financial system.
"The 2008 crisis wasn't simply an American event," Tooze explains. "It was a transatlantic crisis that revealed both the reality of multipolarity and the deep interconnection of global finance." European banks had accumulated a staggering $1.1-1.3 trillion "funding gap" in dollars by 2007, borrowing short-term on Wall Street to finance long-term investments across America. When these funding markets seized up, European banks faced existential threats despite their home countries having nothing to do with American subprime mortgages.
Most critically, what threatened the North Atlantic economy wasn't the predicted dollar glut but an acute dollar shortage. As trust evaporated between financial institutions, European banks couldn't roll over their dollar borrowing, creating a liquidity crisis that threatened to collapse the entire global financial system. The Federal Reserve responded with unprecedented international intervention, establishing currency swap lines with foreign central banks that would ultimately provide trillions in dollar liquidity.
This crisis revealed something profound about our interconnected world: national borders had become almost meaningless in finance. A mortgage default in Nevada could threaten banks in Frankfurt and London just as directly as those in New York. The global financial system had become so tightly integrated that problems couldn't be contained within national boundaries-a reality that would shape the politics of crisis response for years to come.
Capitolo 3
The Mortgage Machine: How Wall Street Engineered a Catastrophe
The 2008 crisis emerged from America's housing market, but its roots went much deeper into the transformation of global finance. Since the 1930s, America's housing finance system had relied on fixed-rate mortgages funded by deposits at regulated banks and savings institutions. This system expanded homeownership dramatically but was devastated by the high interest rates of the Volcker shock in the early 1980s, which left most savings and loans insolvent.
Rather than simply bailing out these institutions, the Reagan administration chose deregulation and market-based solutions. This opened the door to a revolutionary new approach: securitization. Instead of holding mortgages on their balance sheets, banks would package loans into pools and sell shares to investors nationwide. Government-sponsored enterprises (GSEs) like Fannie Mae and Freddie Mac pioneered this model, but private banks soon followed with even more complex innovations.
"The mortgage market underwent a fourfold transformation," Tooze writes. "Securitization of mortgages, incorporation into high-risk banking strategies, mobilization of new funding sources, and internationalization." This created a system where mortgages originated in California could be packaged, sliced into tranches, and sold to investors from Germany to China.
The final burst of mortgage expansion reached grotesque proportions between 2004-2006. While the GSEs maintained relatively high standards, private securitization exploded, with $1 trillion in unconventional mortgages issued annually-ten times the 2001 level. Investment banks built complete mortgage pipelines, originating loans specifically to feed their securitization machines.
"The message down the chain was clear," Tooze observes. "More mortgage debt was needed, and worse quality was better." Through financial engineering, substantial portions of undocumented, low-rated debt emerged as AAA securities. By 2004, half of subprime mortgages had incomplete or zero documentation, and 30% were interest-only loans to borrowers with no prospect of repayment.
This system created perverse incentives throughout the chain. Mortgage brokers were paid for volume, not quality. Investment banks collected fees for securitization regardless of future performance. Rating agencies, paid by the banks whose bonds they rated, had incentives to provide favorable ratings. And investors worldwide, hungry for yield in a low-interest environment, eagerly purchased these supposedly safe securities.
When housing prices began falling in 2006, this entire structure began to unravel. As adjustable-rate mortgages reset from 7-8% to 10-10.5%, defaults became inevitable. The financial engineering that was supposed to distribute risk instead concentrated it in vulnerable parts of the shadow banking system, setting the stage for catastrophic failure.
Capitolo 4
Transatlantic Finance: Europe's Fatal Embrace
When the mortgage meltdown spread across America, European commentators framed it as a uniquely American crisis. German Finance Minister Peer Steinbruck declared America would soon forfeit its role as financial superpower, while French President Sarkozy proclaimed "laissez-faire is finished." Italian Finance Minister Tremonti boasted that Italy's banking system would survive because "it did not speak English."
This narrative of American exceptionalism was convenient but deeply misleading. America's securitized mortgage system had been designed from the outset to attract foreign capital, and European banks had eagerly participated. By 2008, approximately 25% of all securitized mortgages were held by foreign investors, with Europeans dominating the riskiest segments of the market.
"European banks held about 29% of high-risk, non-conforming mortgage-backed securities," Tooze notes. "At the 2006 peak of the US mortgage securitization boom, British and European banks backed a third of newly issued private label MBS." Most critically, European banks dominated the weakest link in the securitization chain-asset-backed commercial paper (ABCP), with two-thirds of commercial paper issued having European sponsors.
How did European banks end up owning such a large slice of American mortgage debt? Unlike China's currency-stabilizing purchases of US Treasuries, European banks simply borrowed dollars to lend dollars, operating exactly like their American counterparts. The transatlantic financial system functioned as a circulatory system independent of trade connections, with dollars flowing both ways across the Atlantic.
The City of London emerged as the crucial second node in this North Atlantic financial system. Dating back to the 1950s, London had developed as a center for unregulated dollar transactions that sidestepped Bretton Woods constraints. By 2007, London handled 35% of global foreign exchange ($1 trillion daily) and 43% of interest rate derivatives, outpacing New York's 24%.
Regulatory differences exacerbated the problem. While European banks eagerly embraced Basel II rules allowing them to set their own capital requirements, American regulators were more cautious. This created a substantial leverage gap, with Deutsche Bank, UBS and Barclays operating with leverage exceeding 40:1 (reaching 50:1 by 2007), while American competitors averaged only 20:1.
This competitive disadvantage prompted aggressive lobbying by American banks to "level the playing field." In February 2007, major American banks began shifting global management roles to London-based executives to take advantage of lighter regulation. The search for profit, played out through financial engineering, transnational capital movement, and regulatory arbitrage between Wall Street, London and Basel, drove continuous expansion-until it all came crashing down.
Capitolo 5
The Eurozone's Hidden Vulnerabilities
The euro project, launched between 1999 and 2002, represented an ambitious political and economic experiment born from the collapse of the Bretton Woods system in the early 1970s. When Nixon abandoned the gold peg in 1971, Europe faced a dilemma: fluctuating exchange rates would disrupt integrated trading networks, but creating a European Monetary System raised the question of whose currency would replace the dollar as the anchor.
The fall of the Berlin Wall in 1989 and German reunification accelerated monetary integration. Helmut Kohl and Mitterrand saw currency union as the best way to secure a larger Germany within a stable Europe. Germans demanded that the new European Central Bank continue the Bundesbank's conservative approach, but a joint central bank board would give voice to all member states.
The monetary union, fully implemented in 2001, included a single central bank and fiscal rules limiting deficits and debt (the Stability and Growth Pact). However, it lacked unified economic policy, banking regulation, or mechanisms for fiscal redistribution. Despite initial success-accelerated growth and moderate inflation-experts worried about two problems: whether trade imbalances between member states would widen over time, and how the eurozone would handle asymmetric external shocks without the flexibility of independent currencies.
"The eurozone created a unified financial market without the governance institutions needed for a banking union," Tooze explains. European banks had grown to gargantuan proportions, far exceeding their American counterparts in relation to their home economies. By 2007, the three largest banks globally were all European-RBS, Deutsche Bank, and BNP-with combined assets equaling 17% of global GDP. Each bank's balance sheet nearly matched its home country's entire GDP.
The situation was even more extreme in smaller countries: Irish banks' liabilities reached 700% of GDP, while French and Dutch banks approached 400%. Every eurozone member was at least three times more "overbanked" than the United States, with greater dependence on volatile wholesale funding. This massive banking sector required collective action capacity that Europe lacked.
When Larry Summers once asked European officials about handling a Spanish banking crisis, he was met with embarrassed silence and chaotic argument. The difference between Europe and America wasn't awareness-neither wanted to contemplate bank failures-but that when crisis struck, the U.S. had federal structures to improvise responses while Europe lacked such frameworks.
Capitolo 6
"The Worst Financial Crisis in Global History"
Tuesday, September 16, 2008-the "day after Lehman"-marked the moment global money markets seized up. As the Federal Reserve scrambled to funnel billions into world central banks and Wall Street watched AIG teeter on collapse, a shock wave began rippling through factories and markets worldwide.
Northern Rock exemplified the modern highly leveraged bank that collapsed not from bad loans but from funding problems. Created through mergers of building societies and converted to a public company in 1997, it had quintupled its balance sheet between 1998-2007. Unlike traditional banks, 80% of its funding came from wholesale global money markets rather than deposits.
While Northern Rock had minimal exposure to US subprime, it sourced funding from markets heavily used by banks that did. When BNP Paribas's announcement on August 9, 2007 shut down interbank lending markets, Northern Rock notified the Financial Services Authority of an impending crisis just two working days later.
Bear Stearns, the smallest US investment bank, reported its first-ever loss in early 2007 due to mortgage securitization exposure. Though its ABCP issuance plummeted from $21 billion to $4 billion, Bear initially compensated by increasing repo funding from $69 billion to $102 billion, maintaining an $18 billion pool of liquid securities.
But then the unthinkable happened-the "run on repo" surprised everyone. Despite legal protections giving repo collateral holders priority in bankruptcy, counterparties avoided Bear entirely. Even Treasury securities couldn't save them. By March 13, 2008, Bear's liquidity reserve had plummeted to $2 billion, with $14 billion in repos not rolling over the next day.
After Lehman's collapse, AIG became the next domino in the shadow banking chain. Through aggressive expansion, AIG's Financial Products division had amassed $2.7 trillion in derivatives contracts by 2007, including $527 billion in credit default swaps. The crisis came from the anticipatory market reaction-as AIG lost its top-tier credit rating, counterparties demanded immediate collateral to secure their positions.
The final link to snap was money market funds. The Reserve Primary Fund, with $62 billion under management, announced on September 16 it could no longer guarantee the dollar-for-dollar return investors expected. Though eventual losses were minimal (99.1 cents on the dollar by 2014), the psychological impact was devastating-half a trillion dollars fled from money market funds to Treasury securities in the days following.
Beyond Manhattan and London, the economic devastation was profound. World leaders at the UN General Assembly responded forcefully, with Philippines president Gloria Arroyo describing America's financial crisis as a "terrible tsunami" of uncertainty spreading globally. Argentina's Cristina Fernandez pointed out the irony that after decades of lecturing Latin America about fiscal discipline, the US was now implementing "the largest intervention in memory."
Capitolo 7
Global Liquidity: The Fed's Secret Weapon
In the depths of the 2008 crisis, the Federal Reserve transformed itself into a lender of last resort for the world, providing trillions in liquidity tailored to banks across the US, Europe, and Asia. This unprecedented intervention redefined the relationship between financial systems and national currencies, yet remained largely hidden from public view.
The European funding crisis began in August 2007 when wholesale funding markets seized up, prompting the ECB's emergency provision of 95 billion euros in overnight liquidity. By autumn 2008, both the ECB and Bank of England were pumping unprecedented amounts of liquidity into markets. But while central banks could provide unlimited domestic currency, they couldn't conjure foreign currencies-specifically dollars, which European banks desperately needed.
The scale of the dollar shortage revealed the dangerous mismatch in European banking. While Germany's monthly trade surplus with the US was roughly $5 billion, European banks needed to refinance over $2 trillion in dollar funding that had previously come from US money markets ($1 trillion), interbank markets ($432 billion), foreign exchange swaps ($315 billion), and monetary authorities ($386 billion).
European central banks' dollar reserves were woefully inadequate-the Bank of England had as little as $10 billion on hand. As Geithner bluntly told the FOMC, Europeans "ran a banking system that was allowed to get very, very big relative to GDP with huge currency mismatches and with no plans to meet the liquidity needs of their banks in dollars."
The Fed deployed an array of liquidity facilities that mapped directly onto each key element of the shadow banking system. This wasn't conventional monetary policy but rather an "emergency replacement of lost private sector balance sheet capacity by the public sector." The Fed inserted itself into the very mechanisms of market-based banking, becoming the hub of a reorganized money market.
The scale of intervention was staggering. The Term Auction Facility provided banks with short-term funds they could no longer acquire on the ABCP markets, with total lending reaching $6.18 trillion in 28-day loans. Foreign banks, particularly European giants, took over 50% of these funds. The Fed's swap lines with foreign central banks reached $10 trillion at various maturities, equivalent to $4.45 trillion in standardized one-month loans. The ECB was by far the largest beneficiary.
What made this intervention so remarkable was not just its scale but its secrecy. The Fed shrouded its emergency liquidity provision from public view. When challenged by Congressman Alan Grayson in July 2009 about who received the swap line money, Chairman Bernanke could truthfully reply "I don't know," as the ultimate recipients were not under direct American oversight.
The Fed fought vigorously against transparency, using every legal means to prevent disclosure. Only after the Dodd-Frank legislation and a Bloomberg Freedom of Information lawsuit that went to the Supreme Court were the full records released in late 2010 and early 2011.
This hidden support contradicted widespread discussions about reforming the dollar system. While critics from China, Russia, and even Europe called for reducing dollar dependence, the Fed was quietly proving the dollar's continued centrality to the global financial system. In fact, the crisis resulted not in the relativization of the dollar as many claimed, but rather in a dramatic reassertion of the Fed's pivotal role.
Capitolo 8
From Banking Crisis to Sovereign Debt Crisis: The Eurozone's Tragedy
If Europe downplayed its role in the "American" financial crisis of 2008, it was partly because from 2010 onward, Europe faced its own "authentically" European crisis. While the US crisis centered on overextended banks and mortgage borrowers, the eurozone crisis appeared to revolve around public finance and national sovereignty, pitting Greeks against Germans and reviving World War II memories. But was it mere coincidence that the same banks were involved in both crises?
By early 2010, Greece's debt crisis presented a stark choice: restructuring or bailout. With 90 billion held by European banks and another 90 billion by pension and insurance funds, restructuring would relieve Greece's burden but humiliate the country and trigger market panic. Yet mathematics made it inevitable-Greece's debts were too heavy and growing heavier.
The stakes extended far beyond Greece. European banks had $2.5 trillion in loans to the eurozone periphery, with France and Germany each holding about $500 billion. Officials feared contagion spreading from Greece to other vulnerable countries-first Portugal, then the real estate crisis victims (Ireland and Spain), and finally the truly massive debtors like Italy.
What emerged was a prolonged "extend and pretend" strategy. At the March 25, 2010 EU summit, Merkel forced through IMF involvement over French and ECB objections. A "troika" of the EU, ECB and IMF would dictate policy to Greece, with existing debt paid off through new loans regardless of sustainability.
Greece agreed to slash its deficit and aim for surplus-an 18 percent GDP turnaround with 7.5 percent coming in 2010 alone. In exchange, Greece would receive 110 billion (80 billion from EU, 30 billion from IMF). On May 5, as Merkel declared the rescue "alternativlos" to the Bundestag, Greece erupted in general strikes and riots that left three bank employees dead.
The IMF ultimately approved the risky Greek bailout not because it made sense for Greece, but because of fears about "international systemic spillover effects." Instead of restructuring Greece's unsustainable debts, they would restructure its entire public sector and economy, making heroic assumptions about cost-cutting and efficiency gains.
By 2011, it was clear Greece couldn't access capital markets as planned, requiring either more European loans or debt restructuring. At a G7 meeting in April, German Finance Minister Schauble insisted private investors couldn't simply be bought out with public money. But the EU Commission, France, and especially ECB President Trichet fiercely opposed restructuring.
The ECB finally lost patience. In a disastrous move, it raised interest rates in April and July 2011 despite the crisis. It also quietly stopped purchasing eurozone sovereign bonds and imposed higher haircuts on lower-rated bonds. Markets soon reacted with massive selloffs, with Greek spreads reaching 1,200 points.
By summer 2011, confidence had collapsed so completely that a secret Eurogroup meeting was hastily convened in Luxembourg. The meeting became a disaster when Schauble insisted on discussing restructuring and private sector involvement, causing Trichet to storm out in protest.
Capitolo 9
"Whatever It Takes": How Mario Draghi Saved the Euro
By July 2012, the eurozone crisis had reached a breaking point. Spain's looming crisis forced comprehensive eurozone reform back onto the agenda after Merkel had blocked it over winter 2011-2012. By June 9, 2012, eurozone ministers agreed to provide Spain with 100 billion for bank recapitalization, but this risked amplifying the crisis by adding to sovereign debt.
When Moody's downgraded Spain to just one notch above junk status on June 14, Spain's foreign minister warned that when the Titanic sinks, "it takes everyone with it, even those travelling in first class." The crisis triggered intense diplomatic activity, with Tim Geithner's phone log showing dozens of calls to European officials.
Draghi's "whatever it takes" speech on July 26, 2012 became the turning point of the eurozone crisis, though its impact wasn't immediately certain. The speech itself was improvised-Draghi later confided he "got fed up" with stories about euro dissolution while speaking in London. He emphasized that Europe was undergoing qualitative change, with leaders committing to "more Europe, not less Europe," and delivered his famous line: "Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough."
The speech caught everyone by surprise-even ECB officials in Frankfurt hadn't known it was coming. Jens Weidmann of the Bundesbank, European capitals, and the EFSF head all learned about it through the news. One ECB official called it "a rash remark" with "nothing precise in mind." What mattered was who rallied behind Draghi: Juncker quickly supported him, while Merkel, Monti, and Hollande issued joint statements affirming their commitment to the euro.
The eurozone crisis ended through two different narratives. In Draghi's telling, it was resolved through Europe's governments' massive political investment in new governance structures-Greek restructuring, fiscal compact, banking union, ESM, and the ECB's OMT facility. This state-building project, despite its delays and costs, demonstrated Europe's commitment to "ever closer union."
But financial markets heard something else: a powerful central banker finally speaking their language-the "financial Powell Doctrine"-promising to do "whatever it takes." This alternative narrative saw Draghi's speech as Europe's surrender to American economic wisdom. Had the ECB adopted the Fed model earlier, as Obama suggested at Cannes, much suffering might have been avoided.
By autumn 2012, the crisis narrative could be reframed as American hegemonic leadership prevailing. The Obama administration had shown leadership through domestic stimulus, monetary policy, discreet diplomacy, and Fed liquidity programs. But this narrative of successful crisis management would soon be challenged by political upheavals that revealed deeper fractures in the global order.
Capitolo 10
The Populist Backlash: From Occupy Wall Street to Trump
The 2008 financial crisis and its aftermath fundamentally transformed the political landscape across Western democracies. While technocrats celebrated their success in preventing another Great Depression, millions of ordinary citizens experienced a profound sense of betrayal. The banks that had caused the crisis were bailed out with taxpayer money, while ordinary people lost homes, jobs, and savings. This disconnect between Wall Street's recovery and Main Street's suffering fueled a populist backlash that would ultimately reshape global politics.
By summer 2011, a profound crisis of legitimacy had engulfed the global financial system. Trillions in sovereign debt were losing their "safe asset" status. Germany accused the US Treasury of communist-like interventionism. NATO squabbled over Libya. The Fed's loose monetary policy was blamed for Middle Eastern revolts. The EU was trapped in self-deception over Greece. Washington flirted with bankruptcy. Ratings agencies couldn't do basic arithmetic.
Against this backdrop, protest movements gained momentum worldwide. On August 19, the FBI alerted the New York Stock Exchange about a planned "Occupy Wall Street" protest. Though initially ignored by US media, the small Zuccotti Park encampment near Wall Street soon captured global attention. A New York Times/CBS poll revealed that nearly half of Americans felt Occupy reflected mainstream views. Two-thirds believed wealth should be distributed more evenly, while trust in government had collapsed to just 11 percent.
In Europe, the perception that the welfare state was being dismantled to satisfy bankers provoked widespread outrage. Stephane Hessel, French resistance fighter and Holocaust survivor, became a bestselling author with his manifesto "Indignez-Vous!" On May 15, 2011, twenty thousand Spanish protesters occupied Madrid's Puerta del Sol, declaring "we are not goods in the hands of politicians and bankers." The movement grew, with June 19 witnessing perhaps 3 million people demonstrating across Spain.
This new politics of resentment would eventually find expression in electoral outcomes that shocked the establishment. In 2016, British voters defied all expert warnings to choose Brexit, while Americans elected Donald Trump despite (or perhaps because of) his rejection of political norms. Both campaigns successfully channeled popular anger against elites and globalization, with Trump declaring "Americanism, not globalism, will be our credo."
Trump's cabinet selections confirmed Wall Street's return to power. Despite his campaign rhetoric against Goldman Sachs, he filled key positions with Goldman alumni-Steve Mnuchin and Jim Donovan at Treasury, Gary Cohn at the National Economic Council, and others from the bank's orbit. This wasn't contradiction but triumph in Trump's worldview-he could criticize Wall Street elites then hire them as subordinates, demonstrating his raw power.
While domestic policy implementation proved complex and protracted, Trump moved swiftly and decisively on foreign economic policy. Within 48 hours of his inauguration, he announced plans to renegotiate NAFTA. The next day, he withdrew from the Trans-Pacific Partnership, effectively killing Obama's signature trade initiative and shocking Asian allies.
This wasn't merely a break with Obama but a reversal of America's decades-long commitment to multilateral trade dating back to the 1940s. At Treasury Secretary Mnuchin's first G20 meeting in March 2017, the group couldn't even reach agreement on a simple pledge to "resist all forms of protectionism"-a stunning departure from previous consensus.
Capitolo 11
The Shape of Things to Come: A New Global Order
On January 17, 2017, as the World Economic Forum gathered at Davos to consider Brexit and Trump, China's President Xi Jinping delivered the opening plenary speech, widely interpreted as announcing China's new role as an "anchor of globalization." Unlike Trump, Xi projected sophistication, and unlike Merkel, he commanded the authority of someone who could act on a scale commensurate with China's global position.
The 2008 crisis and its aftermath had fundamentally altered the global balance of power. China's massive stimulus response to the crisis had accelerated its rise, while Western economies struggled with slow growth, political polarization, and mounting debt. Russia had pivoted toward China, with the $400 billion, thirty-year Sino-Russian gas deal signed in May 2014 marking the beginning of this strategic relationship. The symbolic shift was unmistakable at the 2015 World War II victory commemorations, where Putin and Xi Jinping were guests of honor at each other's celebrations in Moscow and Beijing.
Yet China faced its own challenges. In June 2015, China's stock market began to plunge, falling 30% in three weeks. Despite massive state intervention, the Shanghai Composite Index collapsed from 5,166 to around 2,737 by February 2016-nearly halving in value. This was politically devastating for Xi's regime, which had tied the "China Dream" narrative directly to stock market performance.
Unlike 2008, the source of trouble was clearly inside China. Years of explosive growth, supercharged by post-2008 credit expansion, had created massive industrial overcapacity, an overbuilt real estate sector, dangerous margin lending in the stock market, and a shadow banking sector reminiscent of pre-crash Western financial systems. Most alarming was the flood of capital fleeing China-hundreds of billions of dollars monthly seeking safe haven abroad.
By early 2017, the controls and stimuli had worked-capital flowed into local property, commodity prices rebounded, and manufacturing surged across Asia, pulling China back from the brink and reducing the threat of global deflation.
The 2015-2016 Chinese economic setbacks highlight a recurring theme: global financial integration produces not just slow-moving structural tensions but sudden, unpredictable ruptures. These crises-whether called panics, freezes, implosions, or sudden stops-cannot be fully anticipated or regulated by law. They demand urgent counteracting intervention and political action.
The financial crisis has severely strained the relationship between democratic politics and capitalist governance, manifesting primarily as a crisis in political parties that historically mediated between them. In many countries, moderate Left parties were swept away (Greece, France), while in the US and Britain, mainstream Right parties fractured, leading to Brexit and Republican incoherence despite their vote-winning capabilities.
Despite fashionable theories about "postdemocracy," the crisis revealed that political choice, ideology and agency remain consequential. Pivotal "moments" like the "Lehman moment," Deauville, Cannes 2011, "whatever it takes," Brexit, and Trump's election demonstrate how modern history turns on instances of decision and contingency. The questions we now ask about 2008 mirror those we've asked about 1914 for a century: How does a great moderation end? How do massive, poorly understood risks accumulate? How do tectonic shifts in global order trigger sudden earthquakes?
These are the questions that haunt the great crises of modernity-and will continue to shape our uncertain future in the years to come.
