The collapse of the global financial services firm Lehman Brothers on September 15, 2008 triggered the collapse of financial markets in the United States, but the contagion soon engulfed the economies of the euro zone, including Greece.
What triggered the collapse?
At the center of the crisis were rising debt levels, facilitated by the use of financial products by banks, such as collateralized debt obligations (CDO), whose value was based on another value.
The professor of international politics and studies at Murdoch University, Kanishka Jayasuriya, remembers the day that Lehman Brothers filed for bankruptcy. He said he highlights the problems associated with the lack of regulation for such financial products.
"These packages, filled with securitized asset packages, were then sold to other banks, other financial institutions," he told SBS News, describing how the instability spread throughout the financial system in the US. UU
"And this is really the surprising and surprising thing about the global financial crisis [GFC], the network of debts that the banks themselves did not know. And then the market responded by checking these banks. Everything went into a catastrophic crisis for the financial sector. "
And the damage did not stop there.
Greece became the symbol of countries hit much more deeply, where the debt crisis turned into a political and economic crisis.
The high level of the country's debt, the large budget deficit, the low competitive power and the unstable political structure combined to leave a trail of destruction in society as a whole. Eventually, it became a crisis of the eurozone, and the repercussions continue to sound across the continent a decade later.
Associate Professor of International Business and Strategy Hussain Rammal, of the University of Technology in Sydney, said the impact on Europe was devastating.
"It started from the United States, but then began to expose problems in Europe, because the bad loans were coming to Europe," he said.
"It began to show poor performance on the part of governments, and we saw the case of the Greek government, which had borrowed a lot, spent a lot, but did not have enough assets or guarantees to back it up, so it was just a poorly structured system to monitor the things that had just been exhibited throughout the world. "
What happened in Australia?
In Australia, the effect was muted but extraordinary measures were enacted, including a $ 42 billion stimulus package designed to avoid recession and limit job losses. The Labor government, under the leadership of Kevin Rudd, distributed bonuses to low and middle income workers worth up to $ 950.
And it worked. While economic growth in Australia slowed significantly, the Reserve Bank of Australia said that the country was largely protected from the most serious effects because Australian banks had little exposure to the US market and US banks.
Exports of resources to China, whose economy quickly recovered from the GFC, also protected Australia.
But Professor Jayasuriya said that although Australia was not seriously affected at that time, it has been swept away in a changing global economic and political climate that is partly due to the GFC.
"The problems of wage stagnation that we have seen in Europe and North America are also problems in Australia," he said.
"These kinds of difficulties and economic difficulties are also being reflected in Australia, albeit at a lower level, in the type of fragmentation of political parties, in the emergence of smaller parties like One Nation and in the increase of … as in Europe and North America, the increase in anti-immigrant sentiment. "
& # 39; Move towards nationalism & # 39;
Mr. Rammal describes the result as a move away from a global economy towards a climate of "economic nationalism" that can be attributed to the GFC.
He says it has resulted in an escalation of trade war between the United States and China, for example, or anger over countries forced to rescue others, as Germany did for Greece.
Rammal said the pullback is that countries now try to protect their own economies instead of strengthening the global economy.
"I think the most important thing has been this movement towards nationalism, so we are seeing more borders being closed, more about" countries first "before thinking about global trade.
"And I would say part of that is due to the global financial crisis, and we are seeing the effects of that with Brexit, with nationalism in the US and more and more European countries trying to close their borders for trade. international. "
Could it happen again?
Following the crisis, the Australian Prudential Regulation Authority implemented stronger banking regulations designed to protect Australia's financial sector from global recessions.
Despite that, Rammal said, industry analysts warn that the world could be headed towards a similar crisis in the future.
It is not the lack of strict laws to regulate the lenders, but more a problem with the implementation of the laws, according to Professor Rammal.
"Therefore, as more and more new economies grow, there will be a risk that people will try to take shortcuts and we can end up with a similar situation in the future."