Without real reform, the world is doomed to more crises

• Source: Global Times
• [00:46 October 26 2009]
• Comments

 BY Tian Wei

I know it is no longer trendy to quote Alan Greenspan, the former head of the US Federal Reserve, whose reputation has been badly hurt by the financial crisis.

But he did say something I feel is still worth repeating, "Crises are all different but they have one fundamental source and that is the unquenchable capability of human beings when confronted with long periods of prosperity to presume that that will continue. Unless somebody can find a way to change human nature, we will have more crises."

Pretty fatalistic, isn't it? But he is right – at least, for the next round of fi nancial crisis.

Some would argue, "What next round? We haven't fi nished this one yet!"

However, the US economy expanded signifi cantly from July to September. Unless something drastic happens, it is very likely that the upward momentum will carry over into the fourth quarter of the year.

According to textbook economic theories, two successive quarters of economic expansionalready qualifi es as the end of the recession. Voila! If that is really likely to be the case, all of us will soon go back to the good old days.

But all the causes and symptoms of this round of crisis remain. Without solving them, surely, we are just waiting for the next crisis.