The financial crisis in the US, originated in 2007, but escalated in 2008. This crisis differed from previous ones, because of the mere scale of the financial problems the country faced. Many years of globalization meant, that the crisis was not contained to the US, but spread throughout the entire industrialized world.
When the crisis hit Denmark, the society, the financial sector and the government, was completely taken by surprise. No one seemed to be prepared, for the impact of the crisis, and seemed paralyzed by the situation. The banking sector froze, and the entire loans market went into a complete standstill. This affected households and businesses, and suddenly it was no longer only a financial crisis, but an economic one.
The financial situation after 2007 also came as a surprise to most economists, and still today, we lack a fulfilling and satisfying explanation, to what happened. And when we do not even understand what happened or why, we have absolutely no chance of ever preventing it from happening again.
The purpose of this paper is to consider, the cause and consequences of the financial crisis. We will in this paper, analyze the Danish crisis in a post Keynesian perspective, using theories, where psychology, uncertainty and other non-mathematical issues play a crucial role. We use both old well discussed theories from Keynes and Minsky, and brand new ones, like the one about control fraud by William Black and James Galbraith. The reason for us choosing this approach is mainly, the lack of a proper explanation from the mainstream economists, and a clear idea of, the fact that human behavior cannot always be put into a model. But this does not mean, that we can allow ourselves to completely ignore these factors.