10 years from Lehman: Reality check
The missed deleveraging: If the pace of debt accumulation has slowed down, deleveraging in absolute terms has hardly happened at all post crisis. The prospect of higher rates and the exhaustion of the cyclical upswing open up questions about debt sustainability. Assessing areas of vulnerabilities that could translate into idiosyncratic risks will be key to preventing capital impairment.
The two sides of liquidity: Despite the macro excess of liquidity in the balance sheets of Central Banks (CB), we are facing a micro deterioration of market liquidity due to post-crisis regulations. The challenge for asset managers is to implement strategies to deal with this liquidity paradox.
A medicine with uncertain collateral effects: The response to the crisis was a massive (cyclical) stimulation of growth, mainly through monetary policy, then followed by the fiscal arm – even in the Eurozone. But the nature of the crisis and its genesis in the credit cycle significantly prolonged the healing process. New imbalances emerged in the form of asset price inflation. Unless some form of productivity shock materialises, in the long term markets will tend to readjust to their fundamentals (for example, equity markets to return to earnings growth) and lower returns.