Ten years ago, the worst financial crisis and recession since the Great Depression rocked America and the world as stock markets plummeted and multibillion-dollar banks were on the verge of collapse. One bank did fail. Lehman Brothers, a 150-year-old firm closed its doors for the final time.
Millions of Americans lost their jobs and their homes. It is an event that has been studied and written about extensively in recent years.
During the last week, it has come to the forefront of not only the business news cycle but news media as a whole remembering the 10th anniversary of the collapse of Lehman Brothers.
The 2007-2009 crisis was not contained to the United States but is often referred to as the 2008 Global Financial Crisis.
Today I want to veer away from the American-Centric view on the period and aftermath proliferated by our typical news sources.
Instead, I want to give a summary of how countries and regions around the world were affected and how they recovered over time.
Great Britain: It was the massive UK financial institution Barclays plc that was supposed to act as the savior for Lehman Brothers and it’s stakeholders by buying the firm and recapitalizing it with the help of the US government.
However, the British regulators decided to kill the deal to protect the bank and their economy from the toxic assets on Lehman’s balance sheet. Lehman went into bankruptcy shortly thereafter, and the event often considered the catalyst of the crisis.
Great Britain still suffered a 20% drop in their FTSE stock market, a reduction in housing valuation, unemployment nearly doubled and the closure of important businesses like Woolsworth in the resulting recession.
China: While China had significant exposure to the global financial system in 2008, in mainly escaped the adverse effects on its economy and population. The critical difference in the state ownership and level of control the government was (and is) able to exert on its businesses and economy.
Following the crash, the government was able to quickly and effectively jumpstart its economy with a massive infusion of cash.
In 2010, only a year after the crisis had finished in the US, China’s economy was rolling with an annual GDP output of more than 10 percent.
Canada: Our neighbors to the North were not as lucky due to their very close trading relationship with the United States. Exports from Canada to the United States shortly after the crisis dried up as American citizens stopped spending. This massive drop in exports shut down Canadian factories and sliced Canadian GDP growth by more than 3 percent.
However, in relative terms, the 2008 crisis was not a “Great Recession” in Canada but more of an economic downturn from which the country recovered relatively quickly.
Overall, the G7 economies (Group of 7 representing the world’s top advanced economies) experienced a downturn in economic production of over 5 percent, and the IMF estimated more than 30 million people worldwide lost their jobs.
As memories of the crisis fade into the past, it is important to remember the increasingly interconnected nature of the world, and we reconsider our title as American citizens to be responsible global citizens in the decades to come.