?Toxic influences [By Jiao Haiyang/China.org.cn]

The 2008 Wall Street subprime mortgage crisis quickly snowballed into a global financial "tsunami" which caused real damages to the economies of the developed world, triggering the most severe economic crisis since the World War II.

It is important to remember the original cause of the financial crisis — a slew of dazzling but fundamentally groundless financial derivatives that attracted substantial investments from across the world, and bankers incorrectly believed illusionary prosperity to be the same as innovative investment. Despite its capacity to generate real wealth, Wall Street financers made the mistake of attempting to fill its insatiable appetite for ceaseless gains.

Loose management and monitoring guidelines for the "innovative" derivatives also contributed to the severity of the ensuing crisis.

Rampant expansion of financial sectors in Western economies such as the U.S. and EU contributed to the marginalization of traditional industry. How would capital continue to appreciate without the support of a real economy? It was only a matter of time before the bubble burst.

The financial crisis was unprecedented in modern history in terms of its depth and width, and Western de-industrialization has reduced the competitiveness and sustainability of affected economies. Employment in such countries struggles to recuperate.

Iceland and Germany are useful examples in demonstrating this contrast. Iceland was heavily dependent on its financial services sector and continues to suffer from the global financial downturn, while Germany's belief in an export-led economic model has allowed it to maintain economic stability.

The author is the deputy director of the European Department of the International Trade and Economic Cooperation Research Institute of Ministry of Commerce.

The article was first written in Chinese and translated by Wu Jin.

Opinion articles reflect the views of their authors, not necessarily, those of China.org.cn.