Blast From The Past - Financial Crisis

The main goal is to emphasize the role of financial panic as an essential element of the crisis. At the core of the crisis were large-scale foreign capital inflows into financial systems that became vulnerable to panic. The paper finds that while there were significant underlying problems and weak fundamentals besetting the economies at both a macroeconomic and a microeconomic level, the imbalances were not severe enough to warrant a financial crisis of the magnitude that took place. A combination of panic on the part of the international investment community, policy mistakes at the onset of the crisis by governments, and poorly designed international rescue programs turned the withdrawal of foreign capital into a full-fledged financial panic, and deepened the crisis more than was either necessary or inevitable.

Sounds familiar? It should be ... there is hardly an educated person who does not claim some knowledge on the present financial crisis. Only that this is a paper that was written to explain the 1997 Asian Financial Crisis. I just edited out the word "Asian". I picked it up on a random scan of the Internet (no copyright violation is meant).

Humans have not yet become the economic animal it claims to be.

Are we condemned to repeat history for ever?