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Political economics professor Robert Wade - Source: ONE News -
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A top expatriate economist believes the countdown to the next financial crash is already under way and financial reform is needed to bring stability to the global financial markets.
While the world may be showing signs of emerging from the recession, Robert Wade, a professor of political economics at the London school of Economics, says the world is setting itself up for the next crash.
"We are back into bubbles in asset markets similar to 2003, 2004 when bubbles really began that have broken in 2008, so there's a very uncomfortable sense around now of deja vu.
"We have been here before, it ended very badly the first time and I don't see any reason why it won't end very badly the second time," he says.
Wade says the economic crisis has been a wake up call for reform, but believes it was not bad enough to prompt the kind of changes needed to deal with the underlying causes of the crisis.
"The reason for that is that the financial oligarchy based in Wall Street and the City of London is so powerful that it has been able to override the efforts of legislatures and others to make these reforms," he says.
Wade believes containing the size of banks is one key way to prevent the same thing happening again.
"No banks should be too big to fail. If a bank gets to be too big to fail - that is where it has an assurance that the government will bail them out - then it is too big to exist," he says.
He also says a distinction must be made between the commercial banks that rely on public deposits and investment banks.
"(Commercial banks) would be rescued by the government...but the investment banks would explicitly not have any government bailout," he says.
He says competition laws should keep the investment banks to a size "such that their bankruptcy couldn't jeopardise the safety of the whole system".
While the finance sector appears unwilling to give up its influence, Wade says a double dip recession may be enough to get reforms pushed through.
