A graphical look at the post-Lehman world economic trends

Ananth, John Authers, and JP Morgan have nice summaries of the post-Lehman events and trends. 

The defining feature of the post-Lehman decade has been the zero-bound interest rates, which is still in the negative territory in a few cases.

The central banks embarked on an extraordinary expansion of their balance sheet, buying up more than $10 trillion in bonds. And it remains at historic highs

The ultra-low rates penalised savers, benefited borrowers and corporates, boosted asset prices, and increased the top 1 percent's share of global wealth by 10 percentage points.

One of the most important consequences of the extraordinary monetary accommodation has been a surge in global debt burden. Global debt has surged from $84 trillion at the turn of the century to $173 trillion at the time of the 2008 crisis, and $250 trillion today.

Non-financial corporations (77% of GDP in 2008 to 90% today), governments, and China have been the biggest offenders. Consider this,

China is now saddled with almost $40 trillion of debt, compared with less than $30 trillion for all other emerging markets combined. In 2008, the group had $16 trillion of debt, while China only carried $7 trillion. 

Excluding financial corporations, it was $169 trillion in H1 2017. 

Non-financial corporate bonds outstanding have increased 2.7 times over the past decade to $11.7 trillion.

Governments too have been the big offenders,

The US government has been leading from the front,

The $15.3 trillion U.S. Treasury market, the world’s biggest bond market... has tripled in size since August 2008. For context, in the prior 10-year period, it grew by “only” $1.5 trillion, even amid the beginning of the Iraq War. The totality of U.S. federal debt now makes up more than 100 percent of America’s gross domestic product. 

Student loans have exploded in the US,

The issuance of leveraged, covenant-lite loans and junk bonds by US non-financial corporates has doubled.

Even as wages have remained stagnant, corporate profits have surged,

Irrespective of Dodd-Frank legislation and creation of resolution mechanisms for systematic winding down of failed institutions, markets seem to still believe in the too-big-to-fail (TBTF) subsidy. As a reflection, the difference between the interest rate differential in the borrowings of the parent financial institution and its banking unit has remained stable. Clearly the markets believe that in case of a systemic crisis, the parent units will get bailed out along with the banking units.

The remarkable growth of Chinese banks to top the global banking table adds more to the ever growing concerns about the next crisis being made in China.

A rare encouraging feature has been the reversal of financial globalisation and step fall in global cross-border flows.

Global bonds held by non-bank investors as a percentage of their total holdings of equities/bonds/M2 has risen sharply post-Lehman, reflecting risk reduction, regulatory changes, and demographic shifts.

As to real GDP growth, the US economy may appear to have rebound the most.

But once controlled for working age population, Japan has been the undoubted best performer since the crisis in terms of real output per working age person...

... and in terms of employment creation.