Investment History Episode 16: Quantitative Easing and Ultra-Low Interest Rates After the Financial Crisis, How Was the Long Bull Market That Began in 2009 Created?
Investment History Episode 16: Quantitative Easing and Ultra-Low Interest Rates After the Financial Crisis, How Was the Long Bull Market That Began in 2009 Created? The 2008 financial crisis was not merely a problem involving the U.S. housing market and a few financial institutions. Losses from mortgage lending spread throughout the global financial system through complex securities, excessive leverage, and short-term funding markets. After the collapse of Lehman Brothers, banks, corporations, and investors stopped trusting one another. Stock markets plunged, companies reduced investment and employment, and households experienced falling home prices and rising unemployment at the same time. Yet the history of financial markets after the crisis developed in a direction that many investors had not expected. Stock prices began recovering before the economy had fully healed, while large-scale liquidity support and ultra-low interest rates strongly supported the recovery in asset prices. Go...