Have we overcome the global financial crisis aftermaths?

17 Sep 2018

The collapse of Lehman Brothers and subsequent global financial crisis sent shockwaves through the world economy, many of which still reverberate a decade later.

The deepest international recession since the Great Depression prompted central banks to deliver massive and unorthodox monetary stimulus, while governments either eased fiscal policy or delivered austerity depending on the country.

Having cut interest rates to almost zero or even lower in some cases, central banks started buying bonds in a bid to reignite animal spirits among companies and consumers. The result? An unprecedented swelling of their balance sheets which while set to peak is unlikely to ever be reversed.

Government Debt

For all the talk of austerity, government debts in most parts of the world are larger now than in 2007, potentially there is a risk for economies in the future as central bankers tighten monetary policy.

Economic Output

The world economy collapsed into its deepest recession since World War II in the wake of the crisis, yet after initially bouncing, most economies showed only moderate growth for most of the past decade.

Unemployment

Some 25 million more people are now unemployed than back in 2007 even as the U.S. jobless rate falls. Particularly eye-catching is the youth unemployment rate in countries such as Greece, where—while down from over 60 percent in 2013—it’s still hovering at 40 percent.

Annual change in average wages

The lackluster recovery is best evidenced by the lack of wage pressures across most of the world even as hiring strengthens.

Robust U.S. Corporate Profits Have Coincided With a Strong Stock Market

If there has been a winner of the past 10 years, it’s the corporate sector, which in an age of easy money has seen its stock prices soar and profits start to rise.

House Prices

At the heart of the crisis, house prices have now recovered in most corners of the world, exacerbating the gap between those with assets and those without.

Populists and Authoritarians Now Oversee the Biggest Chunk of G-20 Output

Voters are hitting back at inequality, frustrated by the lack of jobs or low pay for those who have work. As big business bounces back, there has been a backlash at the ballot box with populist wins.

Can We Survive the Next Financial Crisis?

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