In the aftermath of 2008 global finance, much like global politics today, the previously unthinkable became commonplace.
Central banks across the world coordinated their actions to an extent that had never been seen before – and, given the current direction of geopolitical events, one that is unlikely to be seen again any time soon. Faced with bankruptcy, the boards of some of the most aggressively capitalist institutions in history mysteriously misplaced their copies of Atlas Shrugged, accepting huge government bailouts that effectively nationalised their firms. Even these were dwarfed by the hundreds of billions provided in special liquidity schemes and the government underwriting of interbank loans.
ECB and the EUR
Ten years later, a common complaint is that legislative reforms have not been sufficient to prevent a similar crisis from occurring in the future. Yet, it is undeniable that both the way financial firms are regulated and the markets in which they operate have changed fundamentally. Millions of paragraphs of new regulation have beefed up the powers of financial watchdogs – and saddled the sector with enormous implementation costs. The use of quantitative easing combined with unprecedentedly low interest rates has altered the way fixed income markets are thought about and modelled, probably irreversibly. Perhaps most significantly, the spotlight the crisis shone on LIBOR, and the manipulation scandal it revealed, showed that “the most important number in the world” had not been fit for purpose for years.
Our timeline below shows some of the key market events that have taken place since Lehman Brothers filed for bankruptcy protection – as well as some of those that are yet to come. Whether the financial crisis is now over or not, is a question for the academics. One thing we can say for certain, though: its repercussions most definitely aren’t.
For further information, please contact Jackie Bowie, CEO of JCRA at firstname.lastname@example.org.