Lehman Brothers: 10 years on

Ten years ago, images of employees emerging from banks with cardboard boxes, abandoning houses, unable to pay mortgages and faces of disbelief world over. The collapse of Lehman Brothers, an investment bank, caused the biggest bankruptcy in US history. Ben Bernanke, the then Chairman of the Federal Reserve, confessed this week that they “failed to predict” the financial crisis and especially, the consequences.

A decade later, many things have changed. The US economy is growing at a good pace, there are record-breaking profits, the unemployment rate is below 4% at levels that have not been seen for two decades, and the stock market has reached the highest levels ever, quadrupling its value compared to 2009. “We did not anticipate it, but we moved aggressively to stop it,” Bernanke claimed, to justify the multi-million bailout.

While the figures show the recovery is real, on the street, things are different. Jobs have been recovered but wages have not returned to pre-2007 levels. Risk aversion has left investments in high incomes, partly because small investors lost their savings. Salaries similar to 2007 are common, but family income has stagnated. US households have lost more than €60,00, forever.

The impact has been uneven, mainly affecting the interior and industrial regions; enriching the elitist coasts dedicated to technology and investment. The main result has been the enormous distrust in the market and in government epitomised by the ascension of Donald Trump to the presidency.

Could this happen again? Many experts say yes, but probably not from a sanitised banking sector but instead from a massive debt crisis on all levels which so far shows no signs of slowing down.