With the Great Recession of 2007–2014 (and counting), the US appeared once again to be the epicenter of global financial crises as it was in the Great Depression of 1929–1933. Just as the stock market panic in New York on October 29, 1929 is a convenient marker for the start of the Great Depression worldwide, so the bankruptcy of Lehman Brothers investment bank on September 15, 2008 marks when the crisis in pricing sub-prime mortgages in the US caused global financial turmoil. It is natural in both cases to blame the US and the failures of its policy makers for the global economic difficulties that followed. Later analyses of the sequence of events leading up to and following the stock market crash of 1929, however, have painted quite a different picture of the Great Depression. As noted in previous chapters, Britain, France, and Germany all had important roles to play in initiating the Great Depression as well as prolonging it. Subsequent analysis of the sub-prime crisis that brought down Lehman Brothers in 2008 and caused worldwide financial panic may also identify other, deeper causes than simply a series of missteps by US policy makers.
For example, the first signs of trouble in the international financial system in 2007 showed up in Germany, just as they had with the Great Depression of 1929–1933. In early August 2007, IKB Deutsche Industriebank in Germany had to get a capital injection of $4.8 billion from a consortium of German banks. IKB's Special Investment Vehicle (SIV) had invested in an exotic Collateralized Debt Obligation (CDO) created by Goldman Sachs in the US, which it now found was worthless. (Eventually, the Goldman Sachs trader who had sold the CDO to IKB, Fabrice Tourre, was convicted of fraudulent felonies, barred from the securities industry, and fined $825,000 for his misdeeds. Avoiding a prison sentence somehow, he decided to work on a PhD at the University of Chicago as of August 2014.)
The exotic financial product that Tourre had put together to appeal to European investors like IKB combined high yields with certification by a reputable intermediary. IKB, coping with the new financial market created by the EMU, was searching for higher-yielding investments than were available in the European markets.