Policy Paper: The Financial Crisis - A Gigantic Failure of Politics

The publication is written by Johnny Munkhammar, EEI Research Director, and Nima Sanandaji, Managing Director for Captus. They describe how politicians, not free markets, created the crisis and argue that the world needs freer financial markets.

The financial crisis has shaken the global economy. Policymakers have had to focus on short-term crisis management. As time goes on, it becomes increasingly important, however, to analyze the long-term picture.

Many have argued that this is a crisis of the free-market economy. Some hope that the liberalizations of the last 25 years will be rolled back and that governments will become more interventionist.

This publication provides the opposite analysis and message. The main conclusion is that the core of the crisis is rather a failure of governments and politicians. The US government required massive lending to people who could not afford to pay.