These conditions laid the ground for the subsequent evolution of the crisis in the euro area, which has unfolded in three main phases, each of which has required a different monetary policy response. The first phase was the immediate liquidity crisis triggered by the turning of the global financial cycle and the subsequent collapse of Lehman Brothers.
We have also been reminded that markets move in cycles, and the fallacy of some people who advocated a “decoupling of emerging markets” or that “the business cycle has been conquered” has been proven to have widely missed the point. What is the lesson to be learnt?