epa07019186 (FILE) - A Lehman Brothers employee outside the Lehman Brothers London offices with the contents of his desk in a box in London, Britain, 15 September 2008 (reissued 14 September 2018). Ten years ago on 15 September 2008, US investment bank Lehman Brothers filed for Chapter 11 bankruptcy protection, triggering a worldwide financial crisis. The bankruptcy of the bank with more than 600 billion USD in assets is until today the largest bankruptcy filing in the history of USA.  EPA/ANDY RAIN *** Local Caption *** 01488976
An employee outside the Lehman Brothers London offices with the contents of his desk in a box on September 15, 2008. So how has the financial community moved on from that moment? Photo: EPA

Are we ready to handle the next financial crisis?

Ten years after the failure of Lehman Brothers nearly caused the international financial system to collapse, the US stock market is now in the midst of a record bull run.

After the global recession passed, the subsequent period was characterised by slow, unspectacular growth, but at least a great depression was avoided. Panic in 2008 and 2009 largely gave way to frustration at the slow pace of recovery giving rise to frequent doubts about its sustainability, and yet the US economy is now in its 10th year of expansion.

Forecasting the next meltdown became almost commonplace, but just as the optimism before the great financial crisis proved to be wrong, so the bouts of pessimism in its aftermath were also misplaced.

Not surprisingly the anniversary of such momentous events has given rise to numerous retrospectives about what has been learnt and how such events can be avoided in the future. While commentaries are littered with warnings that financial crises are becoming more frequent, this is only natural as financial markets deepen and spread into more parts of the world.

So, while the US stock market is scaling new heights, some emerging markets are currently experiencing bear markets. But 30 years ago many of the emerging markets - where bear market behaviour is being observed today-  did not exist, just as the financial market instruments that contributed to the Lehman Brothers failure were unheard of only a few years before it happened.

Global economic imbalances also develop and change over time, and with growth they almost inevitably get bigger and more complicated, constantly posing even bigger challenges and risks to policymakers. Even 10 years on from Lehman the transmission of news and information is much quicker due to technology, which can also contribute to the frequency of financial market turbulence, bubbles and crashes.


Read more from Tim Fox:

Risk of escalating emerging market pressure looms

Markets on edge amid monetary tightening and trade war uncertainty

Saudi Arabia ramps up its widening global relevance


Thankfully, with time and experience the ability of policymakers to respond to crises has also got better. The salient policy response of the last 10 years has been the reliance on monetary policy, with zero interest rates, even negative ones, and ‘quantitative easing’ all entering the lexicon of even casual commentators in such a relatively short space of time.

A decade ago this kind of vocabulary was largely the preserve of academics and historians. What we now know is that it works or can work in ‘real time’, not only theoretically or in the relatively abstract historical context of the 1930s. What we tend to forget is that what now feels like an unqualified success felt like a great experiment 10 years ago.

However, we may also have learnt that the persistent reliance on QE and zero/negative rates may also have some counterproductive aspects, as they can exacerbate or extend crises by inducing fear that ‘emergency’ measures are necessary, thus dampening consumption by ‘deflating’ expectations.

Fiscal policy was perhaps overlooked during the crisis, possibly for understandable reasons given abiding concerns about expanding budget deficits and debt-GDP ratios. But the perceived wisdom of the need to balance budgets before they get out of control could have contributed to the relatively patchy nature of the recoveries, at least in the early post-Lehman years.

The world is also more aware of the role of regulations, the stress-testing of banks and the capital ratios that should be maintained to ensure corporate and financial stability. However, as with monetary policy there are some arguments that these may have gone too far, and may in fact be creating the conditions for future crises. Regulatory overkill for example may inhibit risk taking, while the risk there still appears to reside in some of the biggest global institutions which may still be "too big to fail".

Financial crises and the business cycle have not been abolished, and debt, the principal cause of the Lehman collapse, has actually got bigger in the wake of the crisis, not smaller, with the persistence of low interest rates encouraging this. Fortunately our ability to deal with crises has also improved, a skill that will no doubt be tested again when they emerge, as they surely will, sooner or later.

Tim Fox is chief economist and head of research at Emirates NBD

Company Profile

Company name: Namara
Started: June 2022
Founder: Mohammed Alnamara
Based: Dubai
Sector: Microfinance
Current number of staff: 16
Investment stage: Series A
Investors: Family offices


Alisson Becker, Virgil van Dijk, Georginio Wijnaldum, James Milner, Naby Keita, Roberto Firmino, Sadio Mane, Mohamed Salah, Joe Gomez, Adrian, Jordan Henderson, Alex Oxlade-Chamberlain, Adam Lallana, Andy Lonergan, Xherdan Shaqiri, Andy Robertson, Divock Origi, Curtis Jones, Trent Alexander-Arnold, Neco Williams

The five pillars of Islam

1. Fasting

2. Prayer

3. Hajj

4. Shahada

5. Zakat 

Difference between fractional ownership and timeshare

Although similar in its appearance, the concept of a fractional title deed is unlike that of a timeshare, which usually involves multiple investors buying “time” in a property whereby the owner has the right to occupation for a specified period of time in any year, as opposed to the actual real estate, said John Peacock, Head of Indirect Tax and Conveyancing, BSA Ahmad Bin Hezeem & Associates, a law firm.


Display: 6.1" Super Retina XDR OLED, 2532 x 1170, 460ppi, HDR, True Tone, P3, 1200 nits

Processor: A15 Bionic, 6-core CPU, 5-core GPU, 16-core Neural Engine 

Memory: 6GB

Capacity: 128/256/512GB

Platform: iOS 16

Main camera: Dual 12MP main (f/1.5) + 12MP ultra-wide (f/2.4); 2x optical, 5x digital; Photonic Engine, Deep Fusion, Smart HDR 4, Portrait Lighting

Main camera video: 4K @ 24/25/3060fps, full-HD @ 25/30/60fps, HD @ 30fps; HD slo-mo @ 120/240fps; night, time lapse, cinematic, action modes; Dolby Vision, 4K HDR

Front camera: 12MP TrueDepth (f/1.9), Photonic Engine, Deep Fusion, Smart HDR 4; Animoji, Memoji; Portrait Lighting

Front camera video: 4K @ 24/25/3060fps, full-HD @ 25/30/60fps, HD slo-mo @ 120fps; night, time lapse, cinematic, action modes; Dolby Vision, 4K HDR

Battery: 3279 mAh, up to 20h video, 16h streaming video, 80h audio; fast charge to 50% in 30m; MagSafe, Qi wireless charging

Connectivity: Wi-Fi, Bluetooth 5.3, NFC (Apple Pay)

Biometrics: Face ID

I/O: Lightning

Cards: Dual eSIM / eSIM + SIM (US models use eSIMs only)

Colours: Blue, midnight, purple, starlight, Product Red

In the box: iPhone 14, USB-C-to-Lightning cable, one Apple sticker

Price: Dh3,399 / Dh3,799 / Dh4,649


Company name: ASI (formerly DigestAI)

Started: 2017

Founders: Quddus Pativada

Based: Dubai, UAE

Industry: Artificial intelligence, education technology

Funding: $3 million-plus

Investors: GSV Ventures, Character, Mark Cuban

Most Read
Top Videos

On The Money

Make money work for you with news, features and expert analysis

      By signing up, I agree to The National's privacy policy
      On The Money