By Zhong Sheng
September 15 marked the 10th anniversary of bankruptcy of Lehman Brothers Holdings Inc.–then one of the world’s largest investment banks. Its failure, a rare disaster in history, soon set off banking crisis in over 20 countries and left millions of people out of their jobs and properties, bringing a crushing blow to the world economy.
Its fall dragged many countries into slump of economic growth and even sovereign debt crisis. With the international financial market thrown into turmoil, various forms of protectionism staged on.
The crisis fully exposed the system deficiency of the West, arousing global condemnation against the capitalism “without enough restraint and supervision”.
The world has never ceased retrospection on the crisis, and it is especially of vital significance in today’s world, as the aftermath of the international financial crisis has become a new challenge of the international society, such as inward-looking policies, as well as the rising trend of anti-globalization and trade frictions.
As pointed out by Financial Times, the wave of populism and protectionism that have spread across western countries, especially the principles that the US government follows today in issues concerning foreign relations, pointed to the wider long-term consequences of the crisis.
The structural contradiction that had long existed in the western world was revealed by the international financial crisis.
The world renowned economist Raghuram Rajan once compared the cause of the crisis to “fault line”, a term used in geology.
He explained that the rocks in the earth’s crust would break apart and generate fault lines in them when they born too much pressure, and earthquakes usually occurred along fault lines.
Rajan attributed the causes of the US financial crisis to the collision between the income inequality and domestic politics in the US, the imbalance of international payment, as well as the friction among different financial systems were, saying the crisis further led to the global financial tsunami.
Now here comes the question: Are those fault lines closed and disappearing now?
The US Congress spent years blaming and vilifying “Wall Street,” only to restrict its critical market-making and liquidity-providing functions while leaving the credit-rating firms and their conflict-laden model untouched, said a Wall Street Journal report.
“Lawmakers achieved nothing meaningful in the eight following years,” added the article.
“We are now facing new, post-crisis, fault lines—from the potential rollback of financial regulation, to the fallout from excessive inequality, to protectionism and inward-looking policies, to rising global imbalances.” Managing Director of the International Monetary Fund Christine Lagarde warned in a recent blog article.
As a matter of fact, the restless US is now agitating the world. The increasingly polarized politics, falling Rust Belt, shrinking middle class, widening wealth gap, surging number of illegal immigrants, and the abuse of opioids are mounting in the US society.
The improper moves of the US on global stage have made “uncertainty” a regular thing. The US has impacted the international political and economic order by pulling out of international organizations and multilateral agreements, making enemies on trade issues, and deviating farther and farther from the traditional path.
Because of such practices, the global business circle is worrying that the next round of crisis is possibly around the corner.
History shall never be forgotten. Ten years ago, the international community stood together to tide over difficulties and finally realized economic recovery.
In today’s world, people should be clear that only with cooperation, win-win strategies, and coordinated action, can the world achieve stable and sustainable economic development and realize common development and prosperity.
Zhong Sheng is a Public Affairs Analyst.