5 Years On: The State of the Global Financial System

M&G’s Richard Woolnough takes a critical look at where we are at in terms of clearing up the banking crisis

M&G Investments 10 October, 2012 | 5:16PM
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This article is part of Morningstar's "Perspectives" series, which is a series of articles written by third-party contributors.

On the 9th October 2007 the totem pole of capitalism, the S&P 500, peaked at 1,565. Last night it closed at 1,441. So, five years into the crisis, where are we in terms of clearing up the banking crisis?

There’s good news in the US. We have commented on the initial driver of the crisis in the world’s largest economy – the boom and bust of the housing market – on many occasions. Recently, we’ve noted that we’re beginning to see improvement here. This is an important sign that the US is moving on from the financial crisis. Although unemployment remains stubbornly high, it is moving in the right direction and the financial system is looking sound once again. The government’s combination of supportive measures – such as taking equity stakes in banks – and allowing some pain to occur – in the case of Lehman Brothers and housing repossessions – seems to have been largely successful.

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M&G Investments  is a leading retail and institutional fund manager.

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