On this, the fifth anniversary of the Lehman Brothers collapse, millions of Americans will be looking back on that terrible Monday and trying to put a figure on the damage that ensued.
In many instances, it’s difficult to put a number on the cost — millions of lost jobs, broken dreams, missed opportunities and forfeited homes. But there is one number that is hard to dispute, and it’s one worth remembering: $18 trillion.
Yes, that’s 18 with 12 zeroes trailing it, or $10 billion for every day since the financial crisis officially began on Sept. 15, 2008.
Eighteen trillion dollars is the amount of debt added to the world’s monetary system by the US and the six other major industrialized countries. They did it to keep the system afloat in the 1,825 days since Lehman CEO Dick Fuld went into the witness protection program and his neon-draped headquarters in Times Square went to black.
That’s $18 trillion we and our children will eventually have to make good on through austerity or hyper-inflation. And what did we get for that $18 trillion in triage? Subpar growth here at home, and recession in Europe and Japan.
Indeed, all that debt is estimated to have generated just $1 trillion in gross domestic product growth across the globe, according to a chart Deutsche Bank chart published by Zero Hedge. In other words, it is taking $18 in debt to generate $1 of growth.
So where did those trillions go? More than $6 trillion went into the federal deficit, which has grown by that amount since 2009.
Most working Americans know that almost nothing of the borrowed trillions has ended up in their pockets.
Median household income has remained flat since 2008, and the unemployment rate is more than a full percentage point above where it was on that Lehman Monday, while the US workforce has shrunk dramatically.
In contrast, there’s the stock market — up 34 percent since Lehman Monday and more than 100 percent since the March 2009 lows. Meanwhile, silver has more than doubled, while gold is up 73 percent.
Ironically, nowhere have the Bernanke bucks rained down more disproportionately than on the 2-mile radius around Lehman Brothers’ old Midtown headquarters.
Eight blocks to the north, on 57th Street, condos are now priced at $70 million, while a few blocks to the east, at the auction house Christie’s, a Jeff Koons balloon-dog sculpture is priced to sell this fall for as much as $55 million. And the bubble burst when?
In retrospect, the bright-eyed money men from Wall Street and Washington who met at the NY Fed that Lehman weekend must concur that it would have cost a lot less than $18 trillion to have come up with a way to keep Lehman afloat.