It would take too long in this context to analyse what conclusions should be drawn for the future, and it is probably too early to do so yet, but I shall nevertheless share my impressions this far. In conclusion, I shall discuss how monetary policy can complement the more acute financial measures taken, and alleviate the effects of the financial crisis on the real economy. Acute financial crisis… The turn for the worse can be clearly dated to the middle of September when US investment bank Lehman Brothers was forced to file for bankruptcy protection. Money market participants had not expected such a prominent bank to default. When the bank nevertheless defaulted, fears grew that more participants risked the same fate. This was when the confidence crisis broke out in earnest. No one dared to lend money to anyone else because of fears that the other party could become insolvent and the money that had been lent would disappear. Investors preferred to put their money in government securities. One result was that interbank lending around the world more or less ceased. The difficulties the banks had experienced earlier with financing at longer maturities were intensified. The banks’ borrowing costs increased further and companies outside of the financial sector also experienced financing difficulties. At the same time, the large US commercial paper market suffered substantial disruptions. This market is an important source of financing, both for financial companies and ordinary industrial companies.
3  See, for example, Press Briefing on Q4 2012 Household Debt and Credit Report; Meta Brown and Sydnee Caldwell, “Young Student Loan Borrowers Retreat from Housing and Auto Markets Liberty Street Economics  4  BIS central bankers’ speeches  close look at the question of just how weak today’s labor market is for new college graduates by putting their recent experience into context using some hard data. It is important for us to undertake this kind of analysis because, as we’ll show, newly minted graduates always take some time to transition into the labor market and find jobs that utilize their education. And young people with college degrees still fare far better than those without. At the same time, with the sluggish jobs recovery from the recession, it’s clear that the transition of recent graduates into the labor market is taking longer, and they’ve experienced higher unemployment and higher underemployment than in years past.4 Still, while times have gotten tougher for recent graduates, we shouldn’t be too hasty in concluding that getting a college education won’t help people find good jobs. I will now ask Jason Bram to present an update of economic conditions in our region. Blog Post, April 17, 2013; and Andrew Haughwout, Donghoon Lee, Wilbert van der Klaauw, and Joelle Scally, “Just Released: The Geography of Student Debt,” Liberty Street Economics Blog Post, May 14, 2013. 4  Underemployment, for purposes of this presentation, refers to college graduates working in jobs that typically don’t require a college degree.