There was nothing more apparently American in the international banking crisis than the fall of Lehman Brothers in September 2008. And there was nothing more European than its consequences. It was a yo-yo that stretched across the Atlantic to hit the face of the financial system of the EU with rescues from various financial institutions that occurred, mainly, during the following year. But that was only a first entry into the hollow.
When the United States had picked up the thread -initiating a prolonged economic recovery that breaks records today-, the yoyo hit Europe again from 2010 to 2012, when one of the saddest and most intractable realities of the 21st century global economy was discovered. The public debt is acceptable where it is thought that it will always be paid (from Alaska to Florida) and it is scary where some do not want to answer for others (between Cádiz and Upsala).
There are lessons from the crisis learned. Other results are disturbing. We have more solvent banks, but not necessarily a safer financial system. This does not mean that the next crisis is around the corner but there are persistent risks. The turbulences experienced have meant so much control and prudence in the European banking industry that the interconnection that was once defended as an essential element of financial integration has been reduced.
If we take the German, Spanish, French, Italian and Dutch banks together, the investment exposure of each country to the others has been reduced by 1.5 trillion euros between 2008 and 2018, according to the data of the Bank for International Settlements . Then, interestingly, the EU was moving towards an integrated financial system without common protection mechanisms and now that these are being created – with the banking union – mutual distrust seems greater when these investments are crossed.
“10 years after Lehman we have safer financial institutions but a financial system that maintains signs of instability.”
While Europe debates sterilely frequently, the dollar remains the oracle of the markets. Regarding the US currency, there is a paradox of complicated digestion: during the great quantitative expansion, the official liquidity in US notes flooded the emerging markets, which almost did not know about the crisis and forced to remove that hackneyed global name. But now that the experiment is over and interest rates rise in the US, there is a lack of dollars in the emerging countries. Although a large part of the American currency is outside the United States, it moves at an astounding speed and abandons territories where fiscal discipline is doubtful (pain felt in Argentina). The euro, nevertheless, continues in the age of the turkey, powerful in its territory and still adolescent in the international scene.
In short, 10 years after Lehman we have safer financial institutions but a financial system that maintains signs of instability. There is less leverage in banks but more in governments and in some investment funds. As if it were energy, the risk is transformed but it is not destroyed. The goal is to be in the good part of the story but Europe is in limbo.