10 years after Lehman

I have been enjoying the live tweeting of the Lehman Brothers failure – with a 10 year delay.

On the day I had this to say.

Then 10 years ago today I tried to provide some predictions.  The terms of trade fell a little more than I expected (to their 2005 levels rather than to their 2007 level), but otherwise they weren’t that bad – credit rationing was predominantly in the construction sector, mortgage rates fell, and in NZ the crisis was nothing like the Great Depression.  But this:

As long as the information transfer between market participants begins to improve again this crisis will be a historical point of interest in a years time – rather than the beginning of the end.

Glad I conditioned it on the idea that there were be a recognition of loss between debtors and creditors – because once that didn’t happen in Europe the crisis just kept on trucking.  With everything calming down by mid-2009 the world was recovering.  Then Greece in May 2010.  Then my goodness just look at this this cluster.  Finally in 2012 there was a recognition of the need for a lender of last resort in Europe.

If you want a retrospective I did one back in 2014 😉