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“It’s six o’clock on Monday, September 15, you’re listening to the Today program on Radio 4, and here are the headlines…”
So began the biggest week in finance in living memory—and the most significant learning curve most of us will ever experience.
Blinking awake in the North London dawn, I realized this was a moment I would not forget. In 30 seconds, I learned that colossal financial institutions were not as infallible as I’d been led to believe; that a person’s word might be his bond, but this bond was only good if you got your money back; and that as a financial journalist I’d be in for a very long week.
That week, it turns out, has lasted five years—and counting—as the financial crisis, in its various stages and hangovers, is still far from over.
Aside from the bank stress tests, regulation, and innumerable stock market corrections, court cases against banks, ratings agencies, and other service providers in financial markets rumble on with varying degrees of success. The crisis has also stretched far beyond the US and—after delivering hammer-blows to the weakest financial systems in Europe—now has the economies that sailed through the first rounds relatively unscathed in its sights.
For our “Lessons from Lehman,” littered across this edition, we spoke to prominent global academics, investors, and consultants. Throughout the interviews there was a similar refrain: “I knew something was going to happen, but I didn’t know what…” and “I certainly didn’t think it would be this big.”
It isn’t just that the financial institutions they all trusted turned out to be castles of sand. One of the hardest lessons many investors learned was that they knew this and either ignored it or actively covered up the cracks forming in the foundations.
Over the past months, aiCIO has repeatedly heard that investors are now violently aware of risk management within their portfolios and investments, and expect the unexpected—or are prepared for the next black swan to come swimming along.
For us journalists, we have learned that the news stories that happily filled a page in the summer of 2007 will no longer do. There is too much going on, and all of it seems to have weighty consequences.
Since the whole thing began unravelling, we have been “privileged,” if that is the correct word, to sit on the front row and watch the circus show without having to get involved—or be asked for our advice and opinion in how to make reparations.
The only skin in the game we have is to continue to provide you, the reader, with content that is useful, informative, and (hopefully) entertaining—which we hope to do until the next crisis hits, and beyond.