Timothy Geithner: Don’t Lose the Memory of Panic
Former United States Secretary of the Treasury Timothy Geithner explains the recipe for financial disaster and the importance of remembering prior crises. Geithner is the author of Stress Test: Reflections on Financial Crises (http://goo.gl/v0R9pg).
Do you remember when the sky was falling? The newspaper headlines were of epic proportions, announcing another financial institution in ruins, more staggering numbers of layoffs. As the 2008 economic asteroid hit, a beloved financial wizard by the name of Bernie Madoff was exposed, sending further shockwaves.
As much as we would like to forget the “08 crisis,” Timothy Geithner, the former U.S. Treasury Secretary, says that there are important reasons to think back on it now. In his memoir, Stress Test: Reflections on Financial Crisis, Geithner takes us behind the scenes of how he and other public servants worked tirelessly to avoid another Great Depression. The story he shares is a personal one—his childhood living abroad in Africa and Asia; cutting his teeth as a Treasury official during the international financial crisis of the 1990s, serving as president of the New York Federal Reserve during Wall Street’s last Gatsby-esque era—but his story is also an instruction manual for how to contain a financial disaster. (It could have been worse, much worse.) His book has essential insights on how to avoid an economic meltdown in the first place.
“Financial crises that are the most dangerous ones, they follow and they’re caused in effect by a long period of excess confidence where the power of the belief, for example, the house prices won’t fall. That it’s safe to lend a lot of money, take on a lot of risk, because there’s not much risk of recession,” Geithner told Big Think. “When you lose that memory of panic of the crisis that creates the seeds in some sense for the vulnerability. And that’s sort of the central cause of financial crisis.”
The “08 crisis” was caused by a lot of different factors, as Geithner is quick to point out. There was the predatory lending, a revolving door at the SEC that resulted in regulatory failure, and plenty of abuse and excess across the board. No one seemed to think that the party would ever end. “The most damaging thing was the power of that simple belief that because the world had been relatively stable, it would be stable in the future,” he says. "Severe [crises] happen pretty rarely. Again for the United States it wasn’t since the Great Depression. [We had] no living memory of that. And in some ways it’s when you lose the memory of it that you become more vulnerable to it."
In this clip from Big Think’s interview, Geithner discusses decision-making in the darkness of a panic and how to stop a financial stampede headed off a cliff:
Upstreamism advocate Rishi Manchanda calls us to understand health not as a "personal responsibility" but a "common good."
- Upstreamism tasks health care professionals to combat unhealthy social and cultural influences that exist outside — or upstream — of medical facilities.
- Patients from low-income neighborhoods are most at risk of negative health impacts.
- Thankfully, health care professionals are not alone. Upstreamism is increasingly part of our cultural consciousness.
It marks a major shift in the government's battle against the opioid crisis.
- The nation's sixth-largest drug distributor is facing criminal charges related to failing to report suspicious drug orders, among other things.
- It marks the first time a drug company has faced criminal charges for distributing opioids.
- Since 1997, nearly 222,000 Americans have died from prescription opioids, partly thanks to unethical doctors who abuse the system.
A new study shows that some men's reaction to sex is not what you'd expect, resulting in a condition previously observed in women.
The real Game of Thrones might be who best leverages the hit HBO show to shape political narratives.
- Sen. Elizabeth Warren argues that Game of Thrones is primarily about women in her review of the wildly popular HBO show.
- Warren also touches on other parallels between the show and our modern world, such as inequality, political favoritism of the elite, and the dire impact of different leadership styles on the lives of the people.
- Her review serves as another example of using Game of Thrones as a political analogy and a tool for framing political narratives.
SMARTER FASTER trademarks owned by The Big Think, Inc. All rights reserved.