As with 9/11 and, if you are longer of tooth, the assassination of JFK, most of us remember where we were when Lehman Brothers collapsed. It is one of those seismic events that are branded like a hot iron into the collective psyche.
I wasn’t at Property Week at the time. I was at The Grocer and that week happened to be on holiday. It was only when I headed to the nearest internet café to check the news (iPhones had only just come out and I didn’t have one) that I began to appreciate that the collapse of Northern Rock had just been a forerunner to something more cataclysmic and global.
Although there was initially an element of schadenfreude as you saw the images of shell-shocked ‘fat cat’ employees leaving the building with their belongings in Iron Mountain storage boxes, it didn’t take long for that to turn into sympathy and then wide-eyed terror as the realisation dawned that the global markets were plunging into a tailspin from which some are only now recovering. The sense of shock and incredulity was palpable.
Even the property industry did not expect the repercussions to be so severe, as our in-depth 10-year anniversary coverage on Lehman’s collapse reveals. Sure, many of the senior industry figures who shared their (often painful) recollections could see the wheels wobbling dangerously a year before they fell off and understood all too well the role played by the US subprime crisis in Lehman’s downfall. But you didn’t have to have worked at the firm – as Keith Breslauer had a decade previously – to assume the US government would bail it out rather than allow it to fail.
Knowing what it does now, would it have made the same decision today? Perhaps not – after all, Trump is a businessman first and foremost – but back in 2008, let it fail it did and here we are, 10 years on, having emerged bloodied and very much bowed from a journey Nick Leslau will not be alone in never wanting to repeat.
The lessons learned have been tough ones and as Gerald Kaye notes, we haven’t learned them all yet: we won’t know the full implications of the global financial crisis until quantitative easing ends. More worrying are the signs that people may have forgotten some of the lessons learned. David Skinner sees ominous parallels with 2006-07 in a reduction in risk premia applied by investors, for example.
As the UK braces for another seismic shock in the shape of Brexit six months from now, we would do well to remind ourselves by reading the fascinating insights of those who went through the crisis and lived to tell the tale.
The best RESI yet
My predecessor Giles Barrie was at RESI shortly after the news of Lehman’s collapse broke and I can only imagine how bleak the mood was that year as a result. Despite the dark Brexit clouds currently gathered overhead, the mood was inevitably much more positive at this year’s all-new RESI Convention.
I hope this was as much to do with the changes we made as the state of the market. As you know, we went all out to make it the most diverse, interactive and informative RESI yet – and the fantastic feedback we have had suggests we succeeded. Thanks to all who attended and please keep the feedback coming so we can make next year’s better still.