The 2008 banking crisis and the collapse that followed could be summed up in a few vignettes:
The two major banks in Iceland, who had invested in two entrepreneurs who were buying up British retailers on the High Streets of Britain, went belly up, leading their Finance Minister to remark some time later that "perhaps we should go back to fishing". The size of the hole was £61 Billion, many times the GDP of that nation.
Then came the blow up of the boiler houses like Bear Stearns and Lehmann Bros, whose chairman Mr Fuld had readied an exit strategy of taking a golden parachute of $300 million, totally oblivious to the small investors in India and Brazil and other places bereft of their investments of lifetime savings.
The stockmarkets at that time plunged hundreds of points.
The next initiative in the Recovery process was the meetings of the G7, then the G20, of discussions of ideas on how to climb out of the mess. A new infusion of approximately $1.5 Trillion was put into the U.S. and European economies, in emergency measures, and slowly, steadily some semblance of normality started to materialise.
Since then, the U.S. has put in a very necessary and prudent stimulus in the form of quantitative easing (QE I, II or III) and likewise the British economy has been blessed with measure of £375 Billion. Currently the Bank of Japan is infusing $85 Billion per month, equalling that of the U.S., who have somehow put in a sequestration of one-twelfth of that, to reduce $85Billion over a year.
Still, there is plenty of money in the system. The British banks like HSBC and Barclays are said to be flush with cash. The stockmarkets worldwide look in a healthy shape, including Kenya and Ghana in the developing nations.
This current week the markets will take a breather, as not much detail is available as to what the G7 and IMF M.D. Christine Lagarde have come up with from their recent meeting in Buckinghamshire.
While there is talk of the stimulus in U.S. being tapered off, the new U.S. Treasury Secretary seems to be calling for a resolution of the Debt Ceiling issue before Labour Day.
Banks seem in robust shape currently, and risk appetite is growing, a good bullish sign in which it is hoped the banks will take courage and loan to small family businesses and young entrepreneurs, and help them transform that mountain of readies into wealth in the long term, creating sustainance for the people and taxes for the nations, and much happiness for all. When people start to practice the law of generosity and become well-wishers to one and all, everyone will prosper. For that I pray.