Copying and distributing are prohibited without permission of the publisher
Guest view: Lehmans one year on
15 September 2009
The most lasting legacy of the demise of Lehmans will probably be a high level of state intervention. This is a dramatic turnaround from the free market doctrines of the 1980s and 1990s, says Chris Oulton, chief executive of Prime Rate Capital Management
Read more:
[Oulton]
[Prime Rate Capital]
[Lehmans]
The events of 2008 were both unprecedented and, in their severity, probably unexpected. While the sub-prime crisis started in 2007 the effects were really seen from the summer of 2008 onwards. When liquidity completely disappeared from the money markets became inevitable that, without state intervention, there would be banking collapses. With the collapse first of Bear Stearns and Northern Rock, then of Lehmans it rapidly became clear that this was a systemic crisis and that governments had to stand behind their financial institutions in order to avert a complete breakdown of the global financial system.
Governments took drastic steps to support their banks, ranging from state guarantees for certain asset types to the direct injection of equity. They soon realised, however, that the initial actions taken were not enough and more support rapidly followed, as well as dramatic cuts in interest rates, bringing the Fed Funds rate...
Access to this content is denied because you are not logged in. Please login to view this content
Already have an account?
Subscribe
Subscribers have unlimited access to all current and archive content. Start your
subscription today - click on the button below.
Free trial
Taking a free trial will give you access to the current issue for two weeks (excluding
some surveys and articles). Start your free trial today.
