Lehman's collapse a decade ago might have ushered in a fairer world
It has been almost 10 years since investment bank Lehman Brothers filed for bankruptcy on September 15, 2008.
The collapse of an institution that had lasted more than 150 years was not the exact moment when the financial crisis began – it had been simmering for months and rival Bear Stearns had already failed in March of that year. However, Lehman’s collapse was the point at which no one could deny any longer that we were in the throes of something significant.
For many people, the day Lehman went under and the images of thousands of its New York staff carrying their personal items in cardboard boxes after being fired is when the reality sank in and panic ensued.
In all honesty, the Lehman bankruptcy feels like it happened a lifetime ago, because we were all different people back then.
I don’t mean different in terms of the natural changes wrought by time as we go through life. I actually mean that the financial crisis effected a profound and sudden change in each of us.
I, personally, was a different person before and after Lehman failed. It boils down to one thing; before September 15, 2008 I – like many others – trusted the manner in which things were run. I don’t mean we were naive. We could tell the difference between honest and dishonest people, leaders, systems, companies and so forth.
But while it wasn’t exactly an age of innocence, we could more or less believe in the integrity of the broader picture. Since then, any sense of trust, whether in financial institutions, policy makers or governments, has been steadily eroded.
I am not alone in thinking this way. The seeds of today’s polarised political landscape were being sown even before the Lehman collapse. Who can forget Sarah Palin’s fractious bid to become the US Vice President in 2008?
Today, surveys show the majority of people no longer trust banks. In any case, these institutions don’t feel as influential as they did. And who wants to be an investment banker these days? When I was graduating from university, many of us were desperate to be.
But technology companies are in the ascendancy now. The likes of Google, if not your own start-up, are the preferred career path for graduates.
However, they too haven’t escaped the post-trust age. Facebook and Twitter are the latest to face a grilling from Congress over their failure to properly protect their users online. The Indian government is considering going after the big US tech firms that dominate its economy.
It appears we are comfortable with the paradox and the contradictions. We inhabit a world of grey hues, despite the loud voices that present every issue as black and white. The lack of trust gives us a certain kind of resilience.
And that is important, because we could be on the verge of yet another economic crisis. Rising interest rates, fears over trade wars, uncertainty ahead of mid-term elections in the US, indebtedness in China and currency crises in Turkey and Argentina – all are familiar precursors to historic asset price crashes.
Yet, we might have finally changed enough that it won’t matter. The erosion of trust in the wake of Lehman’s collapse has not been reversed; if anything, it has been entrenched. Today, no one trusts anything and that is markedly different to 2008.
Back then we thought that the system worked. In 2018, everything is a plot and a conspiracy, especially if you disagree with it. In the days before Lehman, only cranks peddled them; today, it is mainstream thinking.
In the interim, after trust took a walk and never came back, we have seen a number of reactions. The rise of cryptocurrencies like Bitcoin, fintech companies like Square and Paypal developing peer-to-peer apps for sending money, populism and a resurgence of nationalism across the world – they all point to a system that no one has any faith in.
How could they when no-one has been held responsible for the financial crisis? That in itself looks rather like a conspiracy. And the centre-ground has paid the price for it.
However, these are things to be optimistic about. Blindly trusting the system has never done anyone any good. Starting from the opposite position means we have to trust ourselves and also trust the person sitting next to us.
We will seek to transact and interact more with individuals rather than institutions and technology will enable this to happen more quickly and safely than before.
So the real consequence of Lehman’s bankruptcy and the financial crisis could be a more transparent, peer-to-peer world, where equality and justice will be in the individual’s hands.
Mustafa Alrawi is an assistant editor-in-chief at The National
Updated: September 5, 2018 07:38 PM