The University of Chicago’s Booth School asks a panel of Economists for their opinion on a variety of topics.  The IGM Economic Experts Panel was asked to rate a list of factors that were potentially behind the 2008 financial crisis.  Below is this list of factors in the order the Economists ranked them as important.

1. Inadequate or flawed regulation, supervision, or both with respect to the financial sector (which includes financial infrastructure, banks, shadow banks, and interconnections in the system)

2. Underestimation of the riskiness of securities created with financial engineering

3. Bad incentives, fraud, or both in mortgage issuance and securitization

4. Funding runs involving short-term liabilities financing long-term assets

5. Failures by rating agencies

6. Inflated beliefs about housing prices

7. Elevated levels of US household debt as of 2007

8. A belief by bankers that their institutions were Too Big to Fail

9. Government involvement in subsidizing mortgages, homeownership, or both

10. Imbalances between global savings and well-functioning channels for investing those savings

11. Loose monetary policy by the Fed, by central banks around the world, or both

12. Fair value or mark-to-market accounting for financial assets held by banks

The first thing I noticed about this list is factors 1-5 are symptoms of opacity.  So despite never having said so directly, the Economics profession appears to have concluded opacity was behind the 2008 financial crisis.

Regular readers know for years I have said opacity is the necessary condition for a financial crisis to occur.  It appears the Economics profession finally agrees with me.