The bank crash that heralded the 2008 financial crisis
10 years on from the collapse of Lehman Brothers
Exactly 10 years ago, Lehman Brothers collapsed into administration. It was the biggest bankruptcy in the history of the United States and the defining event of the financial crisis, which ravaged the global economy between 2007 and 2009. The sight of confused and distraught white collar workers wandering about carrying cardboard boxes came to symbolise the sudden downfall of what was once America’s fourth biggest investment bank.
But far from being an act of spontaneous combustion, a storm had been brewing for months. The world’s banks are all stacked, interweaved and plugged into an opaque Jenga-like financial system: the collapse of Lehman Brothers was that one unpredictable piece that brought the whole precarious thing crashing down.
What followed was a rocky couple of years. In the UK, the new prime minister of a Conservative-Liberal Democrat coalition government David Cameron (remember him?) ushered in an age of austerity as the whole western world seemed to tighten its belt and brace for hard times.
The former masters of the universe
And yet, ten years on, what’s changed? After a few public bashings in front of politicians keen to be seen to be holding evil bankers to account, the men in charge of the bank that was allowed to fail seem to be doing just fine, protected by the collected wealth of their years in charge. There was even a much criticised 10-year reunion for the bank’s former employees in London.
Selling off the scraps
The remainders of the 158-year-old great American financial institution have been turned into a niche eBay memorabilia micro-industry whilst bits and pieces of the empire ripped off the carcasses of Lehman Brothers’ former office buildings around the world were polished up and packaged for auction.
Still confused?
If all this talk of the mechanics of the financial crash has you scratching your head, don’t worry. There are some brave souls out there willing to sacrifice their free time doing some valuable research on our behalf. Conclusion? Economists should have been able to predict the financial crisis. Fingers crossed they’ll shout about it louder next time.
More reading material on the financial crash can be found here and here.
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