With inequality on the rise, global debt higher than ever and international tensions intensifying, the political backlash to the crash of 2008 has only just begun.
This weekend marks the tenth anniversary of the collapse of Lehman Brothers, the once-mighty US investment bank whose dramatic bankruptcy on September 15, 2008 unleashed the worst financial crisis since the Great Depression of the 1930s. A decade on, we commonly hear the complaint that little has changed since then: the banks are still too big to fail, finance continues to dominate productive activity, and ordinary households are yet to feel the impact of a sluggish economic recovery in their pockets. But this perceived continuity, while certainly valid, is only part of the story. In reality, a lot has changed over the past 10 years – much of it, unfortunately, for the worse.
In the years before the crash, the world still reveled in a credit-fueled state of complacency. During this so-called Great Moderation, UK Chancellor and later Prime Minister Gordon Brown even infamously boasted that the endless boom and bust cycles of the past had finally been mastered and overcome. From now on, there would be no more financial crises. This false sense of calm has long since given way to intensifying economic, social and political turmoil. Looking back, it is clear that much of this turmoil can be directly attributed to the disastrous way in which policymakers responded to the 2008 crash.