In the wake of the financial crisis Iceland refused to listen to the bad advice of the bankers who caused the mess and locked them up instead. This let them recover their economy instead of falling deeper in to the bankers debt.

Correlation and causation is distinguished by controlling for variables directly where the list of possible covariates or confounders is known & limited, or when it is not, using say machine learning techniques to infer a model from the data and repeatedly cross validating it with different test and training samples to ensure that it is rigorous. Read:

https://en.wikipedia.org/wiki/Correlation_does_not_imply_causation

There is nothing about repeatability.

Also: https://en.wikipedia.org/wiki/Cross-validation_(statistics)

Repeatability has nothing to do with testing for correlation / causation. Okay, you repeat an experiment. It looks like X causes Y, like in the first test. But it turns out that Z (that you didn't consider or can't measure) is acting on X & Y at the same time, creating the appearance of a relationship between X & Y where none exists. Read:

https://en.wikipedia.org/wiki/Confounding

If anything the political hype is underblown. Politics deals with the immediate, tangible and the "what directly helps me now." With the financial crisis, politics in the US has decreed that any action on climate change that might marginally impact wages or living standards is out of bounds.

If we assume the risks are real - polluting has specific benefits (cost reduction to polluters) and incredibly dispersed costs which are almost imperceptible for decades while the damage is being done. It requires global coordination for a cost on carbon to be politically feasible. And the effects are seen at least 40 years into the future:

http://www.skepticalscience.com/Climate-Change-The-40-Year-Delay-Between-Cause-and-Effect.html

That's the problem, by the time the effects are obvious, it will be too late to react. In the meantime, you have massive amounts of money, interest groups, politics and delayed effect all acting against any action being taken.

And then there was this one - http://www.theguardian.com/world/2015/jul/16/angela-merkel-comforts-teenage-palestinian-asylum-seeker-germany

Really there was no way to come out of that one looking good... although I do give her points for at least showing up and talking to the girl. Our own local version of the CDU would have locked her up in the Gulags of Nauru or Manus Island, and prevented any interviews or reporting punishable by 2 years gaol http://gu.com/p/4abgf/stw

Something else from Australian politics, the speaker of the house has come under fire for her travel expenses - http://gu.com/p/4akdp/stw - strangely not so much for the $A90,000 on a trip to Europe, but instead for the $5,000 for a helicopter trip to Geelong for a party fundraiser... go figure.

This one was just funny - our chief lizard trying to stay on message seems to have suggested that a grocery code would have prevented the Greek financial crisis - http://gu.com/p/4ae24/stw

Understanding the Financial Crisis in Greece has been added as a related post - related requested by notarobot on that post.

Your video, Understanding the Financial Crisis in Greece, has made it into the Top 15 New Videos listing. Congratulations on your achievement. For your contribution you have been awarded 1 Power Point.

Thought you might be interested http://videosift.com/video/Understanding-the-Financial-Crisis-in-Greece

Understanding the Financial Crisis in Greece has been added as a related post - related requested by RFlagg on that post.

This is depressing to read. It is under the watch of capitalism that we have been led directly over a cliff into the financial crisis that did and still is causing untold harm to ordinary working people across the globe. It has all but destroyed a number of nations who are teetering on the edge of annihilation.

I can't understand your reasoning. The capitalism experiment has been done, and it has shown itself to have failed and let everyone down, starting with the most vulnerable.

China is the most successful nation on this planet right now, even the most die hard murrican patriot must accept that fact. They are COMMUNIST, and they are doing better than the rest of us put together. How long can you sit, neck deep in water, still insisting that the boat isn't sinking?

Now tell me, Picard.... how many lights do you see?

@radx

The liquidity/insolvency line is just a fancy way of asking for more money than is being provided. As I said, I expect once structural reform is fully implemented, the ECB (tacitly instructed by Germany et al) will take a much more active role in buying the debt of these countries but it's not at that stage yet. The problem is they've been slow to sell off assets, reform government and reduce public employment to levels demanded.

Again what you propose is easing that eliminates the pressure to reform, which is the intent of the troika/Germany as I see it. I just don't see any of those things happening. As I mentioned before, Greece's debt has largely stopped rising and GDP has been edging upwards since 2010 and is now positive:

http://www.tradingeconomics.com/greece/government-budget-value
http://www.tradingeconomics.com/greece/gdp-growth

As far as running surpluses, I would argue if everyone was nearly as zealous as Germany, then the deficit/surplus gap between countries would narrow - which would be the best outcome globally. As you'd probably know Germany's attitude towards fiscal stability and inflation is fairly hawkish given its history with hyperinflation. But it has clearly served them well when their bond yields didn't spike during the euro crisis because of a shortage of funds.

I wouldn't characterise it as beggar thy neighbour, that's generally reserved for active measures to prevent trade from other countries (such as through tariffs or subsidies). Instead Germany from what I've read, has carved out a competitive niche for itself with it's Mittelstand. I don't know Germany history particularly here, but I assume it led to companies in industries like retail which can't compete globally reducing or being bought out.

I would compare it to what happened here in Australia with the car industry when government support for it vanished. In our case at least, the only reason the industry existed for the past couple of decades is because of that support and it should never have been propped up by the government in the first place. I don't see that really being any different to typewriters being replaced by computerisation, whale oil being replaced by fossil fuels or US manufacturing going to China (and now leaving to other areas of Asia).

Coming back to trade surpluses, for similar reasons to Germany, most Asian countries also run large trade surpluses because of their history with capital flight in the Asian financial crisis of 97. This is despite many of them developmentally being far behind Greece let alone Germany or France. There has been no Asian crisis this time around and investment into these countries (like Malaysia, the Phillippines, Vietnam and China) has hardly been low over the past 10 years.

I'm not a huge fan of QE as a policy either. Part of the problem is central banks like the ECB weren't designed with the intent of using QE, merely adjusting interest rates, let alone any direct purchases of bonds. I was a big fan of what they did here in Australia where they just gave a one off wad of money to everyone who is earning an income. We ended up avoiding a recession entirely, although our economy was doing quite well at the time.

In effect that's more fiscal policy and I can imagine it being difficult to implement in the EU across countries in an even way. Merkel is certainly too hawkish overall. Policy along those lines, unbiased investment via the EIB or let alone just implementing QE earlier (like the US did) would have helped everyone.

Two wars started by.... neocons. Huge tax cuts by .... neocons. Financial crisis that brought us to the brink of worldwide collapse narrowly averted -- caused by policies written by members of all parties.

Sure, yeah, it is allllll the progressives' fault.

(I think the most frustrating thing about politics these days is the paucity of facts on the ground. There has always been political posturing and political gamesplaying, but this noise is just STUPID.)

Capitalism is nearing the end of its useful life. Indeed, it has improved the lot for billions world wide but the wealth gap trend is concentrating power and money into a tiny and untouchable group if power elitists. I don't think we're heading for a USSR/China model of communism, but based on this repeating cycle of boom and bust where the oligarchy always comes out well ahead and the vast majority are left to suffer.

I heard throughout the talk that "Capitalism is stagnant," and "the problem is productivity." These points really ignore that those at the top of the heap actually profited during the financial crisis. I don't think this is simply a complaint about "fairness." I think this is the central issue.

Those with real wealth can leverage it to not only stay wealthy, but grow that wealth continuously. Since money begets influence, no significant change will take place until some major upheaval forces the masses into action. If Capitalism can keep adding bandage "corrections" after every recession, the status quo will probably continue.

Amazing. Every time you think you've heard the whole story, you find there's another layer.

The contrast between the Government response to financial crisis and terrorism is telling. We'll be back here in ten years.

Olli Rehn is still using that faulty study as a basis, same one that "justifies" EU as whole being sold to banks (it claimed that 90% debt rate slows down economy, which is not true). And no doubt, now that it's proven to be faulty, they still use that since news agencies are not reporting the truth. Privatization and austerity will only help the very rich, it has zero to do with debt.. The stuff that's being sold, is going to be sold for pennies.

The most stupid thing about EU financial crisis is that all of those countries owe to each other, ie Italy owes to Spain and Spain owes to Italy. And funnier still: all the countries in EU that has long record of democratic socialism, ie nordic countries, are doing the best. The places where privatization hasn't accelerated are doing the best in all criterias..

This woman has wreaked havoc in our societies, her teachings are what has lead to "financial crisis" where few people who have it, are pure selfish asshats and continue to steal as much as they can and no matter what it does to others.. She teaches that Darwinism is the only way, helping the poor is unnatural etc etc. If we would be strictly a "biological" society (bacteria..) instead of this highly cultural and basically altruistic one, she would have a point. She did not know what love was and never understood what it's powers are. And her followers are in power. That is scary, bunch of people whose ideology is "justified" by Rand: "Be selfish, it's the best thing you can do!"

So, would you like to tell us which jobs we should get which are sure to be safe for the next 18 years? You know, the ones where it's impossible for the company to go bankrupt or suffer some other financial crisis?

Huh?

To think that someone's fate is entirely in their own hands is naivety at it's worst. When you're talking about a country like america, if just one percent of the population loses their jobs without it being their fault that's still over 3,000,000 people. That's a hell of a lot of people to condemn for what, not trying hard enough? Being wasters?

I'm british and I live in a welfare state. My wife and I pay a good chunk more in taxes than the average person in the UK. I've never claimed any welfare and with a little luck I'll never have to. But I'm proud to live in a country where caring for those less fortunate than ourselves is deemed important.