2008 versus 2020 – Reasons for being positive and negative comparing with the Great Financial Crisis

In September 2008, Lehman Brothers filed for bankruptcy; Lehman was one of the biggest investment banks and an icon of the 80s, 90s, and 2000s Finance and Real Estate exponential growth. The fall-down from Lehman Brothers signaled the peak of uncertainty in that global crisis that lasted from late 2007 to 2009. We analyze in this write up reasons for being more positive and more negative this time around

  • Better
    • No signs of over-leverage / healthier banking system
    • No widespread property over-building/Real Estate bubble
    • Fiscal and monetary policy responses were very fast, while in 2008-9 it took some time to get a unified fiscal response and a later entry of quantitative easing
  • Worse
    • From East to West, economic shutdown like in a war
    • Challenge at three levels: economic, sanitary, political
    • The speed of the crisis is unprecedented, in how quick it shut down economic activity, how fast the major stock indices and bond markets reflected the correction and how the whole World entered into a recession

It is too soon to make solid forecasts. The end of the tunnel is not yet in sight and all forecasters lack visibility.

But what we can say for sure is that history doesn’t repeat, but it rhymes. After a gloomy period of companies canceling summer and full time offers, news about people getting fired constantly from banks and funds and an apparently ever-shrinking finance sector, the sun always comes up and the firms need to expand into the most profitable sectors post-crisis, firms that over-fired (like big investment banks tend to do) go into an aggressive re-hiring and new niches grow fast. Let’s hope for a not-so-long “tunnel” and, in the meantime, safety first for you and your family, and then

  • Keep up the work on your story, your profile and your marketing materials
  • Continue your networking efforts
  • Polish your interviewing abilities
  • Be alert and aware and try to seize specific crisis opportunities like joining firms that are actually going to be extremely busy in H2 2020 or H1 2021 (ie. Special lending, distressed investing, restructuring advising)

And let Breaking into Finance help you with that.

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