Jean-Laurent Rosenthal: Remembrance of Financial Crises Past

As we dig out of the financial crisis we face a daunting problem: how to design financial institutions for the twenty-first century. This talk will explore some valuable cautions provided by Economic History and Micro-economics. To begin, prosperity depends on maintaining a vibrant capital market, for no economy over the last four centuries has acceded to world leadership without finance.

Moreover, financial crises will recur; what the institutions we design today can do is limit their damage. Further, technological change and financial sophistication play a far more limited role in spawning booms and crises than is commonly believed. Instead, the perennial problems of individuals exploiting informational advantages drove us into our current predicament. Rosenthal will argue that a few simple departures from our history would limit the scope of the next crisis.

Jean-Laurent Rosenthal is the Rea A. and Lela G. Axline Professor of Business Economics and the Executive Officer for the Social Sciences at Caltech.

Please Note: This event will be digitally recorded and made available for viewing on the Caltech Theater site. Many past Watson Lectures are available for viewing online on the Caltech Theater site, and are available for purchase: DVD Order Form (PDF)