The industrial companies tried to make use of their promised loan facilities with the banks, but the banks were not able to lend money as usual. This resulted in a credit gridlock, which severely limited the access to loans. The problems spread from the United States to Europe and the European credit system also essentially ceased functioning. This meant that the Swedish banks and the Swedish financial system also suffered problems. BIS Review 149/2008  1  …followed by countermeasures and stabilisation In this situation governments, central banks and other authorities were forced to intervene to avoid a collapse in the global financial system. Without these measures the financial markets would most probably have ceased functioning – things were so serious. The measures have taken different forms in different countries, but two main types can be identified. The first is that the banks have been offered risk capital or other guarantees so that they can survive the crisis. The aim is to avoid more defaults like Lehman Brothers occurring when the financial market is so vulnerable. Those who lend money to a bank should be able to feel certain that the bank will still be there when it is time to repay the loan. The second type of measure is that the central banks have continuously supplied the banks with the short and medium-term loans they have not been able to obtain in the usual way on the market.
We at the Dallas Fed have investigated the links between wage inflation and the unemployment rate using the aggregate data that are available for the U.S., and also using state-level data. These investigations have led us to three main conclusions. First, wage growth responds to the unemployment rate with a lag. That’s no mystery: Many employers adjust wage and salaries just once each year. Second, wage growth becomes increasingly sensitive to the unemployment rate as the unemployment rate reaches lower and lower levels. A drop in the unemployment rate from 9 percent to 8 percent may not do much for the negotiating leverage of the typical worker. But the story is different when the unemployment rate drops from 6 percent to 5 percent or below, for example. Finally, taking these two factors into account, there’s been nothing at all unusual about the behavior of wage growth over the period since the national unemployment rate peaked nearly five years ago. We went through a deep recession. Coming out of a deep recession, it takes time for the unemployment rate to reach levels where wage growth picks up noticeably. Wage growth was about 1½ percent in both 2010 and 2011 – not too surprising, given that the unemployment rate was 9.9 percent in the final quarter of 2009 and, at 9.6 percent, nearly as high in the final quarter of 2010.