Exactly 15 years ago, on September 15, 2008, the fourth largest bank in the United States, Lehman Brothers, declared bankruptcy.
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HOW THE UNITED STATES BULLYED A BUBBLE
Exactly 15 years ago, on September 15, 2008, the fourth largest bank in the United States, Lehman Brothers, declared bankruptcy. This date is generally considered to be the exact day of that crisis. The collapse of one bank, although a large one, caused a chain reaction around the world and caused an economic recession in almost every country.
“The cause of the crisis is unsecured mortgage loans that American banks, including Lehman, began to issue,” Georgiy Ostapkovich, director of the Market Research Center at the Higher School of Economics, told KP.RU. – Banks began to grant loans at a very low interest rate, often without collateral, everyone took them and when it came time to repay them, the banks faced a large number of defaults.
Banks began to issue cheap money not out of sudden kindness, but because the US Federal Reserve System (FRS) slashed the rate to 1.75% in 2001. This is what allowed banks to offer cheap loans. Having received the money, American citizens began to buy apartments. Real estate became more expensive and interest rates also increased, but around 2006 the real estate market became saturated and prices dropped. It turned out that the apartments that the bank received from debtors who defaulted on payments did not cover the cost of the loan when they were sold. Back then it was called the mortgage bubble. In addition to the real estate sector, the US mortgage-backed bond market also collapsed.
“These phenomena affected many banks, they began to burst, and since the United States, especially then, was the main player in the global financial system, the crisis spread throughout the world,” Ostapkovich continued. – Furthermore, it was not an economic crisis, the economy more or less maintained itself, but the financial system collapsed. Commodity prices fell immediately, and these are mainly raw materials. And since raw materials (oil, gas, metals, grains, primary chemicals) occupied an important place in the Russian economy (80% of exports), this decrease led already in 2009 to a decrease in GDP by 7.8 %. Of the G20, we had the biggest decline. And this is after 5 or 6 years of abundance, when we grew an average of 7% annually. Not only we, but also other countries with a predominantly market economy suffer losses: for example, Venezuela, Qatar. And in countries with diversified economies, the decline was much smaller.
In addition to the real estate sector, the US mortgage-backed bond market also collapsed.
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IS IT POSSIBLE TO REPEAT THE CRISIS?
Well, okay, these are things of the past, but will the crisis be repeated in the near future? Of course, the economist “calmed down”, at least based on the principle of the cyclical nature of a market economy: growth and decline. It’s like the changing of seasons.
“The fact that there will be a financial and economic crisis is not something to turn to a fortune teller,” Ostapkovich is convinced. – But when – no one can say for sure.
It is generally accepted that a crisis occurs once every 12 to 13 years. But 15 years have passed since 2008 and it seems that the time has come. But there is no crisis yet…
“Here Covid intervened in the calculation of the cycles,” says Ostapkovich. – In 2020, a semi-crisis decline occurred in almost all countries. But $10 trillion not backed by assets was printed and distributed to people and businesses worldwide. Therefore, the deadline was extended.
That is, the crisis received a preventive blow. And now economists can’t really understand from what date to count. Since 2020, accepting that the crisis attacked, but was repelled, or since 2008-09, but with a longer period.
Ostapkovich leans towards the second option. Does it really portend something?
“The crisis is being shaped by large economies, mainly the United States, the European Union and China,” says the expert. – I see a slight rocking movement, not dangerous yet. There are no particularly alarming signs coming from strong economies. America is fine. Germany, Europe’s largest economy, has entered recession, but similar phenomena are not visible in other European countries. China feels worse: huge bills to pay, public debt. It’s running out of that high 10% growth rate. There is a recession rate, essentially a crisis rate, which is now 56%. This can be interpreted as follows: yes is more likely than no, but this is not exact. So if a recession occurs, in my opinion it will be by the end of 2024-25.
How this will manifest itself in Russia: according to the expert, this cannot be considered a crisis.
“A crisis is when industries collapse,” says Ostapkovich. – For us it will be stagnation, that is, stagnation. The economy will function and even grow by 1 to 1.5% annually, people will have jobs, but real wages will not grow for several years. The situation is a haven of tranquility without ups and downs, but also without ups and downs.
