The end of a journey always comes back to its beginning. Why do financial crises occur? Do they have the same root causes? Are the solutions the same? Ten years after the Asian crisis ended, the U.S. subprime crisis by Christmas 2008 had plunged the world into a deep recession that is still unfolding. Future historians will no doubt compare the 2008 crisis with the Great Depression of the 1930s, which led up to the Second World War and changed the financial landscape for nearly 80 years. Similarly, the present crisis is likely to induce profound changes in economic theory, philosophical outlook and institutional structure.

The famous Mr Yen, Dr Eisuke Sakakibara, pronounced in 1999, after he stepped down as Vice Minister of Finance for International Affairs, that the Asian crisis was not ‘Asian’, but ‘a crisis of global capitalism’. Even then, he understood the inherent instability of liberalised capital markets where sudden reversals of market confidence cause periodic panics of differing magnitudes and durations. Former U.S. Treasury Secretary Larry Summers already recognized as early as February 1998 that ‘It is important to recognize that this is a distinct kind of crisis. It has a common element with almost all financial crises: money borrowed in excess and used badly. But it is also profoundly different because it does not have its roots in improvidence: excessive budget deficits, excess rates of inflation or insufficient rates of saving’.