Researchers at the University of Warwick and the Political Studies Association have called an emergency conference amidst fears that new financial crises are about to follow in the wake of the sub-prime mortgages and the credit-crunch.
Many commentators believe an over-reliance on theoretical modelling, too little real-world experience and traders’ greed is leading the financial markets to a rollercoaster ride of successive crises.
Dr Matthew Watson of the University of Warwick’s Department of Politics and International Relations says: "The government will bail out the banks, but they will not bail out individuals who could now lose their homes. There are big bucks to be made by taking risks with other people’s money – there is no incentive to learn from past mistakes.
"These failures will reoccur while policy-makers favour theoretical analysis over real-world thinking. In 1987 the markets crashed because of an over-reliance on automated trading between stocks and cash, the current credit-crunch is the result of ‘sub-prime’ mortgaging – yet both of these look great on paper."
The academics will meet at The University of Warwick on 18 and 19 September where speakers will include journalist Will Hutton, and Warwick Business School researcher Professor Andrew Sentence - a member of the Monetary Policy Committee of the Bank of England.
Matthew adds: "There is a real danger here. We’re still basing decisions of global effect on economic theories that look great in a textbook or on in a computer simulation but have no grounding in reality."
A 15-minute podcast by Dr Matthew Watson can be downloaded at http://www2.warwick.ac.uk/newsandevents/audio/?podcastItem=matthew_watson.mp3
For more information about the conference please contact:
Dr Matthew Watson, University of Warwick, 0247 652 8465
Peter Dunn, Press and Media Relations Manager, Communications Office, University House
University of Warwick, Coventry CV4 8UW
Tel: 024 76 523708 or 07767 655860 email: firstname.lastname@example.org
PR66 PJD 28th August 2008