The financial and debt crisis of 2008 was not an isolated event, said government professor Peter Katzenstein Oct. 5, speaking to a group of students on West Campus. Rather, it was the result of "decades" of deregulation and progressively easier access to credit -- a mix that, he predicted, may lead to another, more violent economic crisis in the near future.

Speaking at a Professor's Tea in Carl Becker House, Katzenstein, the Walter S. Carpenter Jr. Professor of International Studies at Cornell, pointed to the growing culture of excessive spending, a decline in the American savings rate and more public and private debt as creating an environment that prompted that the 2008 financial crisis as a foregone conclusion.

"We, as a society, are organized in a way that has helped this crisis to happen," Katzenstein said, whose research focuses on political economy, security and culture in world politics. "I and you would be nothing without our credit cards. The notion of savings is alien to much of the American workforce. And looking at the workers who have entered the workforce since 1970, it is a clear intergenerational conflict, which only the political demobilization of America's youth has prevented from flaring up -- in contrast to the demonstrations we have seen in Athens and in Barcelona."

Calling the decline in the American housing market the "last gasp of extending money to people who couldn't repay it," Katzenstein identified the excessive printing of money -- and the concurrent securitization of debt -- as other warning signs.

"Will there be a big crash? That could happen when capital markets refuse to accept the American dollar," Katzenstein said. In such a situation, "I don't think the political class could come together and pass appropriate legislation" -- a scary prospect of our polarized politics, he said.

Financial crises happen "all the time," Katzenstein said. Yet for almost 60 years after the Great Depression, no major financial crises occurred because, he argued, of a strong regulatory hand.

"Those were unusual decades," he said. "First there was World War II, then for a generation and a half, pretty strict financial regulations were put in place; before 1929 there were no such strict regulations. After 1980, regulations became laxer and laxer until the 2000s, when they were pretty much dismantled. So the rapidity of crises has something to do with how closely the government regulates markets."

This deregulation created extremely efficient capital markets, Katzenstein argued, that effectively raised hundreds of millions out of poverty in China and other Third World economies; but he highlighted the "frightening" downsides of this loosening of capital.

Economically, Katzenstein predicted that America would be better placed than other countries, simply because its relatively large youth population can better enable economic growth and recovery.

In a few decades, China will have the most rapid demographic transition due in part to its one child policy. "The Chinese government has no idea what to do about this," Katzenstein said. "This is already happening in Japan, so the U.S. has a leg up over Asia, as its working population will continue to grow."

Shashwat Samudra '14 is a writer intern for the Cornell Chronicle.