Broadly speaking, financial crises are protracted affairs. More often than not, the aftermath of severe financial crises share three characteristics.
First, asset market collapses are deep and prolonged. Real housing price declines average 35 percent stretched out over six years, while equity price collapses average 55 percent over a downturn of about three and a half years.
Second, the aftermath of banking crises is associated with profound declines in output and employment. The unemployment rate rises an average of 7 percentage points over the down phase of the cycle, which lasts on average over four years.
Output falls (from peak to trough) an average of over 9 percent, although the duration of the downturn, averaging roughly two years, is considerably shorter than for unemployment.
Third, the real value of government debt tends to explode, rising an average of 86 percent in the major post–World War II episodes. Interestingly, the main cause of debt explosions is not the widely cited costs of bailing out and recapitalizing the banking system.
Right after the financial crisis happened in 2008, sociologist Manuel Castells convenes the Aftermath Network, an international group of intellectuals who will analyze the crisis as it is unfolding. They think it is not just a financial crisis, but a social crisis as well, bringing about a fundamental transformation of societies at large.
For three consecutive years, the group meets in Lisbon to discuss the crisis. While banks are back in business, societies are struggling with anger, lack of trust and a budget crisis, bringing about rising unemployment and instability, leading in their turn to social protests and a widespread lack of trust in politcial parties and financial institutions.
In this documentary, thinkers involved in the project present original perspectives on the aftermath of the crisis to recognize its multiple faces. With Sarah Banet-Weiser, Craig Calhoun, Joao Caraca, Gustavo Cardoso, Manuel Castells, Pekka Himanen, Terhi Rantanen, John Thompson, Michel Wieviorka and Rosalind Williams.
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