Banyan Hill's editor-in-chief Jessica Cohn-Kleinberg returns to the roots of the 2008 financial crisis and reflects on what lessons we had from it ten years after the event.
Source and image of the summary: Banyan Hill, The 2008 Financial Crisis Taught Us This Valuable Lesson
The Lesson of the Decade
In September, we marked a 10th anniversary that may have slipped by unnoticed. On September 15, 2008, a decade ago, the financial crisis erupted and the credit freeze plunged the world into crisis following the collapse of the American firm Lehman Brothers.
Lehman Brothers, a 158-year-old company, was on its own – support was not found from owners or the government. On that September day at 1:45 AM, Lehman filed for bankruptcy, and the event triggered the scariest economic storm in American history since the Great Depression.
Panic swept through the markets. The Dow Jones index plunged 508 points (equivalent to about 1300 points today). The S&P 500 index fell by 4.7%.
This was followed by a global recession and its various consequences for personal finances.
Now, a decade later, Crohn-Kleinberg wonders if the lesson of Lehman Brothers is being forgotten again:
It seems that the possibility of failure is once again not being taken into account on Wall Street. Bankers are receiving similar bonuses to those seen before the Great Recession.
The average Wall Street worker's bonus of $184,220 is the highest since 2006. Commercial banks are making record profits.
According to Crohn-Kleinberg, we are now living through the longest bull market in history, and it seems as if this celebration will never end.
Many companies are rejoicing over the deregulation and tax cuts. Wages have risen quickly and new jobs are being created. So everything seems to be well in America.
Caution is key
But it is precisely at such moments that, according to Cohn Kleinberg, it is wise to pause and apply caution while others are still celebrating. He mentions that the economist Ann Pettifor, who predicted the previous financial crisis, is now sounding the alarm again and warning that the global economy is once again at risk due to corporate debt and rising interest rates. Global debt is now three times greater than global GDP.
The editor-in-chief of Banyan Hill advises caution as a lesson from the bankruptcy of Lehman Brothers and encourages finding ways to grow and protect one's wealth now, while there is still time.
