Financial instability has been a recurrent phenomenon in contemporary economic history, affecting countries with varying intensity and resulting in massive unemployment and lost economic output. The financial crisis that broke out in August 2007 crippled the financial system of many advanced countries, and claimed as victims long-established banking and investment banking institutions that were deemed “too big too fail.” Capital markets were frozen, leading to stock market crashes worldwide, wiping out trillions of dollars in share values and in retirement investment accounts, and resulting in massive and persistent unemployment.
