Why am I writing about the next financial crash?

Gordon Brown has spoken, on the tenth anniversary of the 2008 financial crash, of his fears that another such event could happen sometime soon. Some say he was responsible for the downturn in the first place. I say Gordon Brown did not cause Lehman Brothers to go under. Even George Osborne commends Brown for his handling of the crisis when it occurred.

Why does he expect another crash?

Most governments have not learned the lessons of the last one, or not acted upon them, anyway.

  • Governments have still not regulated the banks closely enough
  • Many of the regulations don’t apply to other financial institutions
  • Some banks are still too big to be allowed to fail
  • Property prices still affect economies disproportionately

In addition, a lot of people are worried about the economic woes of Turkey: they could be contagious!

How will it compare with the last crash?

It would, in Gordon Brown’s opinion, be worse than the previous one for several reasons.

  • Governments can’t cut interest rates much more.
  • They won’t be able to throw such huge sums at the banks.
  • International cooperation is less likely, given the populist, nationalist politics of many countries.

I haven’t even mentioned the effects of Brexit!

So what’s that got to do with you?

Ask yourself a few questions.

  • Have you any plans for such a crash?
  • What did you do last time?
  • What did others in your industry do?
  • Did you learn any lessons?
Wouldn’t a crash be as bad for everyone?

No! Some people were better prepared than others last time. Some even saw and took opportunities.

  • People looked for more low-cost/low-quality products and services.
  • Investors desired cash more than equities, generally.
  • It was a good time to buy, if you could afford to wait it out.
Masks: happy and sad. Which will suit you if there's a crash?

Masks: happy and sad. Which will suit you if there’s a crash?

Have you a strategy for survival? Perhaps now is the time to produce one. Have a chat with me, if you want an independent opinion.