Don’t think MPS won’t do the unthinkable
Ten years ago this month, the collapse of Lehman Brothers transformed our world.
There was a foretaste in the UK with the run on Northern Rock, but it was the US investment giant’s fall in 2008 that heralded the start of the Great Recession.
We’re still working out the ways that moment cascaded through all our lives. The impact could be so great as to be measured demographically – studies suggest there are 4.8 million fewer children in the United States, with the economic crisis forcing young people to put off the decision to have a family – sometimes indefinitely.
In purely economic terms, too, the effects are still being felt: those aged between 30 and 39 earned on average £2,000 less per year between 2008 and 2017.
And then there are the effects that are less easy to measure: a generation (my generation) that feels less secure and is less confident that the world can provide a path for them – but more determined, perhaps, to find their own way.
The most interesting analyses of the ten-year milestone have been the ones that have gone back to that moment, to see how it was reported and commented on at the time.
One such exercise reminded me of a detail that offers a worthwhile lesson among all the other lessons, not about our economy and society, but our politics.
In September 2008, in the teeth of the crisis, when it looked as if global financial institutions would topple like dominoes, the US congress actually voted against President Bush’s initial proposal for a $700bn bailout of the nine biggest American banks.
A single vote wiped $1.2tn off the value of the world stock market, in an hour. For good and for ill, the scheme was eventually revised and passed, but for a while, at least, politicians were pushed by fear of their constituents to step off the edge into the unknown.
There is an assumption that MPS would never vote down the Brexit deal Theresa May brings back from Brussels, whatever it is, because the alternative is so stark.
The tenth anniversary of Lehman’s collapse is a reminder that politicians are quite capable of creating the conditions for disaster – and of doing the unthinkable in response.