Escaping private debt addiction – Positive Money (UK)
Lord Adair Turner says that escaping the addiction to private debt is essential for long-term economic stability.
Financial reforms introduced since the global financial crisis still have not addressed the fundamental driver of economic and financial instability – continually rising levels of private debt, argued Lord Adair Turner, former chairman of the Financial Services Authority, in a speech at Goethe University in Frankfurt on 10th Feb 2014.
“Over several decades prior to 2008, private credit grew faster than GDP in most advanced economies and lever- age therefore grew. That was a major cause of the crisis and the main reason why the post crisis recession was deep and the recovery so slow and weak.”
“To achieve long-term stability, we will need to address these fundamental drivers of the crisis and the post-crisis recession.”
“It’s very easy for us now looking back to say ‘weren’t our bankers lunatics? They must have been crazy and irresponsible’. But in order to stop it from happening again, we can’t point to individuals; we need to look at why the system pushes them towards it.”
Source: Positive Money (UK); 11 Feb, 2014
More: The Guardian (UK); 10 Feb, 2014