SUERF's Strauss-Kahn: The current Polycrisis versus the Global Financial Crisis
13 September 2023
The update of my May 2020 note confirms three major similarities between now and the “Global Financial Crisis” (GFC) starting around 2008: persistent uncertainty, analogous economic ups and downs, and growing public debt to GDP.
This Policy Brief updates and enriches my Policy Note that was published in May 2020, titled “Can we compare the COVID-19 and 2008 crises?”. Since then, we have been living in a “polycrisis” adding economic and geopolitical wars to the pandemic. The update confirms three major similarities between now and the “Global Financial Crisis” (GFC) starting around 2008: persistent uncertainty, analogous economic ups and downs, and growing public debt to GDP. It details more differences: the role of finance hitherto, dissimilar recession shapes and fiscal/monetary supports, fragmentation instead of cooperation, and a resurgence of stagflation. It concludes that “some GFC lessons have been learned”. Yet, it adds that “central banks were perceived as key firefighters against crises and may now be criticized by some as pyromaniacs regarding their missions of monetary and financial stability.” (See my forthcoming Policy Note).
In May 2020, SUERF published my Policy Note #164: “Can we compare the COVID-19 and the 2008 Crises?” (hereafter my
2020 paper). Therein, I called the shock that had just erupted in China the “Global COVID-19 Crisis” (GCC), while “Global Financial Crisis” (GFC) is the generic name of the 2008 crisis that started in the USA. Now, mid-2023, “GCC” could well mean “
Global Crisis Cocktail”, as we are living a “
polycrisis” going well beyond the pandemic and its aftermath. Indeed, the polycrisis also includes several economic shocks and geopolitical wars, spanning from Ukraine to the US-Chinese tensions.
To assess whether lessons learned from the GFC have been applied in 2020-23, the question remains relevant as to how much history repeats itself or if this time is really different. Toward this aim, this update compares the current polycrisis to the GFC, confirming and enriching some persistent economic similarities but also more and sharper differences. It reveals how much we have learned …or not!
History tends to repeat itself: three major similarities between the Polycrisis and the GFC...
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