The financial reform bill now before Congress may keep the banking system stable in the short term, but another crisis will ultimately come, says New York Times columnist Andrew Ross Sorkin.
“The bill, if signed into law, might help us avoid another sorry episode like that (of 2008),” he wrote.
“But one thing it won’t do is prevent another crisis — if only because the next one probably won’t be like the last one.”
Sorkin cites Harvard economist Ken Rogoff, who says the new law itself will be less important than how regulators enforce it.
“Having a deep financial crisis is the best vaccination for another right away,” Rogoff said.
But the climate will likely change 10 to 15 years from now, or even sooner, Sorkin writes. Regulators will become less vigilant, and bankers will take on more risk.
The result? “The next Great Crash is coming. Guaranteed,” the columnist says.
“Maybe not today and maybe not tomorrow. But, in all likelihood, sooner than we think.”
Some experts go a step further than Sorkin. They say we haven’t yet exited the meltdown that began in 2008.
Hedge fund icon George Soros is one of them.
“The collapse of the financial system as we know it is real, and the crisis is far from over,” he said in a recent speech. “Indeed, we have just entered Act II of the drama.”
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