By IMD Professor Arturo Bris
In the summer of 2008, the US financial sector suffered one of the most damaging events in its history. The volatile stock market, induced by the subprime market, led to the default of Lehman Brothers, and subsequently to a massive global crisis.
We are now in a post-crisis period. Yet, looking back to between 1945 and 2008, we see that the frequency of financial crises and recessions is quite high: on average, there is one crisis every 58 months (using data from the US National Bureau of Economic Research). In other words, statistically speaking we should expect the beginning of the next crisis in April 2015, which would end by March 2016. So are we in a post- or a pre-crisis period?
I do not want to be the bearer of ill tidings, but I think we should always wonder what the cause of the