10 years (after) Lehman

Monday, September 15th, 2008: Many people still remember well the financial earthquake which sent huge shockwaves into the financial and real economy and destroyed high amounts of wealth and numerous livelihoods. Around 10 million Americans lost their houses in the course of foreclosures. The S&P index, which had already experienced a decline prior to the famous „Lehman-Weekend”, dropped by another 46% by March 2009. 8 million jobs were lost; the US-unemployment rate briefly rose to an incredible 10%.

But the global crisis did not only hit institutional investors all over the world (including venerable conservative German institutions denying all rules of caution in their greedy hunt for yield), but also ten thousands of German private investors who, after the Lehmann collapse, had to learn the meaning of “issuer risk” for the first time in their lives. German politicians had to guarantee the safety of saving deposits in front of running cameras, and finally the global collapse could only be prevented through massive liquidity measures such as QE, low interest rates, and aid funds. 

And today? Did we get back to normal? This conclusion could be drawn, if superficially considered: Booming equity markets, a low US-unemployment rate, strong economic growth. The most visible effect: An almost incredible increase in global debt, representing a ticking time bomb with rising interest rates and a heavy burden for the next generations. 

And under the surface there are tremendous rumblings: The nature of and the way in which support measures were applied combined with the inability to hold those responsible to account (who continued to receive bonuses) was one of the reasons for a creeping radicalisation of the American society. And this profound distrust against the establishment made the later success of newcomers possible.

More than ever it counts: the hub of a successful cooperation between the Government and the people, between Business partners, or between service providers and their clients is TRUST.