It seems to me that the old age crisis will prompt us to invent institutions to deal with this kind of risk or maybe to create additional investment products. For instance, the increase in life expectancy could generate risks that are not efficiently hedged in the financial markets or that are to difficult to manage by households. Beyond pure demography, some risks could be more efficiently shared between generations. In his stimulating book – “The new financial order”- Robert Shiller suggests to expand the principles of financial management “to include the society as a whole”. For example, he advocates the creation of “macro markets” on which long-term claims on national incomes and occupational incomes as well as for illiquid assets such as real estate would be traded. One of his most thought-provoking ideas is “intergenerational social security”. Current old age “pay-as-you-go” systems do not share risks between generations. In fact, they transfer the income risks of retired people to working people and their dependents who thereby bear the risks of both generations. Intergenerational social security’s defining characteristic would be a plan to pool the risks that different generations hold, including macro economic risks. C  Innovation and risk  Should we be somehow concerned by the speed of this innovation process or, as R. Rajan has put it, "has financial development made the world riskier"? According to a “benign” view, financial innovation has improved the efficiency and increased the resilience of the financial system. Risks are spread among more agents, willing and able to have them.

It was impossible to gain a clear insight into the complicated CDO structures. Consequently the interest rates on the interbank markets soared. Parallel to this, scepticism towards the credit rating agencies' ability to grade structured products increased, and this concerned not only products containing subprime loans. Several central banks decided at this point to intervene in different ways in the interbank market. In general, the interventions contributed to reducing interbank rates towards desirable levels for shorter durations. For the longer durations the difference between the interbank rate and the risk-free rate remained substantial. The unwillingness to lend money was a hard blow to institutions dependent on financing from the market. For example, the British mortgage lender Northern Rock was forced to seek help from the Bank of England to manage its acute liquidity problems when it could no longer obtain financing. The market turbulence during the autumn had relatively limited effects on the Swedish banks. The main effects were higher financing costs, some changes in the value of bond portfolios and less activity on some markets. Here an important factor was the fact that the Swedish banks did not have any significant exposure to securitised subprime loans, neither directly nor indirectly through investment companies. Deficiencies in the functioning of the credit markets have been exposed The rapid developments in the financial system over the past decade have essentially been beneficial. There is no reason to wish we were back in the financial iron age of the 1980s.