Columbia International Affairs Online: Policy Briefs

CIAO DATE: 05/2009

The Crisis and Fix Cycle

John H. Makin

February 2009

American Enterprise Institute for Public Policy Research

Abstract

The global financial and economic crisis that emerged in August 2007 has entered a dismaying fourth phase. The January 17-18, 2009, weekend edition of the Financial Times, which has been a major chronicler of the crisis and its many aspects, laid out a frightening timeline of an accelerating and intensifying oscillatory cycle of crisis and failed policy response that started just fifteen months ago.[1] Each phase begins with a shock and ends with a seemingly decisive policy measure meant to contain or "fix" the crisis. Each phase is shorter than the previous one and culminates in a much larger policy response.