It is also quite possible that the crisis – and the eurozone crisis that followed soon after – paved the way for the political upheaval that afflicts us now. Youth unemployment in Europe, stagnant wage growth and flatlining productivity in the UK, and crumbling infrastructure in the US (which I bore witness to on my travels to New York this week) have contrasted with ever-rising levels of executive pay everywhere to suggest to many that the global neoliberal system is working for the few and not the many.
Such is the scale and complexity of this dark moment in history that hundreds of books have been published to understand it. Similarly, there has been no shortage of commentary across the financial press in the lead up to this unwelcome anniversary. In both cases, much of it has focused on whether the lessons of the crisis have been learned, whether anything has really changed, and whether we will be able to cope when the next financial crisis inevitably comes.
Certainly, the last decade has seen an explosion in regulation and compliance designed to curtail the same excesses that caused the credit crunch, not least among the banks for whom solvency has become the watchword. The real estate market, where the 2008 crash began and which counted numerous casualties, has settled into a far more prudent groove.
Nevertheless, as a brilliant article and video by the Financial Times’ Gillian Tett – who found herself front and centre of the crisis as one of the few journalists to spot it coming – suggests, the animal spirits that caused the crisis can never really be suppressed, forever swinging between euphoria-induced greed and fear-induced panic. And those spirits have seen debt levels rocket since the crisis; encouraged by the ultra-low interest rates government, corporate and household debts have reached record levels – $247 trillion according to the Institute of International Finance.
The corollary of that borrowing binge are, of course, the soaring stock markets that many of us have been enjoying. And while the ‘apocaholics’ who have interpreted every wobble of the last decade as a sign that the end is again nigh have been largely silenced by the relentlessly upward march of markets, it is still too soon to say that they have been wrong – especially as the debt boom means less room to manoeuvre out of the next crisis. If investors should have learned anything from the crisis, it is to always expect the unexpected.
