It’s something that leaves a mark on you. I remember that at the time it was the opening of any conversation, especially with journalists. When are the skeletons you have hidden in the closet going to come out? The question focused on the potential problems the American bank I was working for at the time had. And that moment was the beginning of the great crisis. No matter how much I explained that there was nothing to hide, but rather the process of asset devaluation that the crisis led to (first financial and then economic), I could not fully overcome my interlocutors’ distrust. Later, once the economic recovery became a fact and the rise of the markets its evidence, the improvement in results definitively buried the previous expression.
Naturally, part of the improvement in results was derived from the strong revaluation of the same assets that no one wanted before. Panic is irrational. And there was much irrationality in the behavior of the markets in the first two years of the crisis. For the rest, you already know that markets go up and down (as the German Finance Minister put it so specifically), anticipating economic recovery.
Although I rather believe that now their appreciation, some call it financial stability, also conditions the course of the economy. This undoubtedly explains the effort central banks make to maintain liquid financial conditions. And it also explains why they combine downward credit measures with interest rate measures. It’s the markets! What is missing in the two previous paragraphs? We have talked about the financial and economic crisis… but not much is said about the crisis of confidence. Really, what the title of this note concealed was precisely the market’s distrust of American financial institutions.
