This time is different

Recessions that are associated with systemic banking crisis (A systemic financial crisis affects a large share of a country’s financial system) tend to be deep and protracted.

The key recurring precursors of a systemic financial crisis: a real estate bubble, high levels of debt (depends how we measure this one), chronically large current account deficits, and signs of slowing economic activity.

Now for my friend OSR and zeitgeist etc... US history shows that this time is not different and that the crisis (or debt default) is not different from other times.

four previous systemic financial crises that the US has experienced since 1870. These include:

·         The crisis of 1873 (called the Great Depression until the 1930s),

·         The 1893 crisis,

·         The panic of 1907, and

·         The Great Depression.

Given that all of the earlier crises predate the creation of deposit insurance in 1933, and that three of the four crises predate the establishment of a central bank in the US, one could well quibble about the claim that the relevant institutions are more comparable across centuries in the US than across advanced countries over the last 30 years.

Cyprus is short of data to compare systemic crisis. Cyprus was a developing country until 1980's.. And then we experienced the Economic miracle.  However we should have known that countries experiencing sudden large capital inflows are at a high risk of having a debt crisis. This time is different? No this is the first banking crisis.

Things will change. They always do. But how much we will suffer until this is done nobody knows.

original article of this time is differrent by Carmen M Reinhart, Kenneth Rogoff http://www.voxeu.org/article/time-different-again-us-five-years-after-onset-subprime-0