The financial services industry has been doing a lot of reflection over the last month, as we hit the 10-year anniversary of the Global Financial Crisis. We’re in a very different financial landscape from ten years ago, particularly in Australia. Interest rates are at an unprecedented low, economic growth is trudging along slowly, and inflation is struggling to reach our targets. We’re hardly as well prepared to weather an economic storm now than we were when Lehman Brothers collapsed. It’s a similar story globally as well.
There have been plenty of valid critiques of government and private sector responses to the crash. Many claim that the federal government threw far too much money at the fire. It has also been argued that interest rates were dropped too low and created the housing bubble we’ve experienced in recent years. Questions about banking regulation arose and have come to a peak with the ongoing Australian banking royal commission. Our financial markets and banking systems are becoming more transparent because of those questions, and that’s worthwhile.
People are wary of another crash and rightfully so. At its peak last year, many labelled Bitcoin and other cryptocurrencies as the subprime mortgage bonds of this decade. They were unfamiliar and made plenty of people a lot of money, but predictably they fell hard. Many feared that the property bubble across Australia in major Australian cities could see similar results to those that we saw a decade ago, and yet in the midst of sinking property prices that doesn’t seem to be the case.
It’s impossibly hard to predict exactly when the next substantial hit to our economy will come and what will trigger it, but experts say another hit is fairly inevitable. It’s all a bit doom and gloom but we’re also living in a time of enormous technical advancements and we’re seeing some huge developments in our industry, so there’s plenty to be excited about too.