Unravelling of the crunch

In the immediate aftermath of the collapse of Lehman Brothers in September 2008, American economist Leigh Skene addressed a lunch organised by Investment Week for family offices and their advisers.

He told the audience to have a drink before they listened to his post-meal speech – he got a laugh for what they thought was a joke. But he repeated his comment, adding: “Because you might need it after you hear what I am going to say.” Over the following 20 minutes, he clearly outlined why Lehmans and what we all came to call the credit crunch was not just a one-, two- or even three-year situation – it would take a lot longer to unravel. Skene, who has worked in the markets since the 1960s, said he thought it would take in the region of 14 years for the debt crisis to unravel and ...