September 2018 marks the 10-year anniversary of the collapse of global financial services firm Lehman Brothers, often portrayed as the starting point of the 2008 crash. At the time, Lehman was the fourth-largest U.S. investment bank, with over USD 600 billion in assets diversified globally. Its bankruptcy had a ripple effect on the global economy the likes of which the world hadn’t seen since the 1929 Great Depression.
Then Brazilian President Luiz Inácio Lula da Silva downplayed the 2008 crash, as the U.S. and Europe were engulfed by crisis. “There, the crisis is a tsunami,” he said in October. “Here, if it hits us, it’s going to be a little wave, not even big enough to surf on.” In 2010, Brazil’s GDP growth was of 7.5 percent and the country lived in a state of economic euphoria.
Fast forward ten years, and the roles have been reserved. While GDP growth in the U.S. is hovering around 3 percent and the country is roughly at full employment, Brazil’s sluggish economy is still struggling to claw its way back from the country’s worst recession on record. Part of the blame for this desperately slugging recovery can be placed on the measures that actually helped Brazil dodge the crisis a decade ago.