September 2018 marked the 10th anniversary of the collapse of the investment bank, Lehman Brothers, which is seen as the start of the Great Recession. Apart from the huge loss of wealth, jobs and housing by ordinary people in many developed economies, the recession had a truly profound global impact on the practice of business and government. Developing countries like Jamaica that are part of the global trading and financial system are still adjusting to the fallout from the crisis.
Over the last month and a half, there have been several analyses and reflections abroad on the lessons learnt from the crisis and how it was managed. There was not much by way of local discussion. This is regrettable. It would have been useful to hear the recollections of the policymakers at the time – Bank of Jamaica, Ministry of Finance, ministers, bankers, economists and other market players – about what conditions were like then.
There was a conclusion drawn at the time that Jamaica, having had to deal with its own financial meltdown of the 1990s and the subsequent rescue by FINSAC, did reasonably well in weathering the 2008 global crisis. There is little doubt that policymakers at the time were severely tested and it would be good to understand the decision-making processes.
We believe there are four important lessons from the 2008 global crisis. First, the collapse was not an accident that could not have been foreseen. Data and isolated events were clearly pointing to the emerging crisis. Indeed, many looking back have concluded that sheer greed prevented people from shouting sooner about the excesses of key market players.
Almost every element of the system for checks and balance was found wanting – regulators, legislators, boards of major corporations, international financial institutions, rating agencies, audit and accounting firms, the financial press. It was truly a systemic failure on a global scale.
Leave A Comment