Ten years ago today, the Wall Street bank, Lehman Brothers, collapsed. But this event wasn't about a 150-year-old bank. Lehman was a key part of a chain reaction, one which ultimately threatened to unravel the global financial system.

Banks across the United States had been offering housing loans to people with bad credit for years, so-called "subprime mortgages". Those loans were packaged into risky products and sold onto global institutions with very little or no regulation. Lehman triggered widespread panic over fears that the system was riddled with bad debt. Thus, credit dried up and banks stopped lending to each other. Governments had to bail out banks and enact emergency measures.

Taxpayers money was pumped into the global financial system to keep it alive. The loss of confidence in the system led to a global recession and a huge collapse in consumer wealth, with after effects still being felt today.

So, what's changed since Lehman's collapse?

Global growth has recovered since the great financial crisis and the recession that followed. The world is on track for 3.9 percent growth in 2018, according to the IMF. But that recovery is very uneven.

We've seen a decade of record-low interest rates and new rules and regulations to shore up the banking system. But the emergency measures used to stimulate the economy and bring it back to life has been in use for much longer than intended. Quantitative easing or government buying of assets helped preserve wealth for those that had it. But young people today can't afford to acquire assets. That wealth gap is on the increase.

Globally, total debt is now worse than before the collapse of Lehman Brothers. The global economy currently has a $237 trillion total debt, some $70 trillion higher than before the Lehman Brothers collapsed, according to the Financial Times.

Addressing income inequality is something which will help to save the current system, rather than undermine it.

Russell Jones, partner, Llewellyn Consulting and ex-employee of Lehman Brothers

Those record-low interest rates in the developed world meant it was cheaper for developing nations or emerging markets to borrow in dollars or euros. About $40 trillion was added to the debts of emerging markets since 2008, according to the Institute of International Finance. And we're now entering an era in which central banks like the US Federal Reserve aren't keeping rates low any more, thus lending support to the dollar. So as the dollar rises, it's now costing those emerging markets a lot more to repay their debts.

"Although the international financial system is a lot safer than it was in 2007, or at least better equipped to deal with the sort of crisis which began in 2007-2008, there are still some outstanding problems - not least in the area of economic policy," explains Russell Jones, a partner at Llewellyn Consulting and an ex-employee of Lehman Brothers.

"We are overly dependent upon the monetary policy. The mix of fiscal and monetary policy is still too skewed in favour of what central banks have to do. There's been a lot of shortcomings where structural or supply-side policy is concerned and that's left us with a lower potential rate of growth in the advanced economies."

"I am also concerned there's an element of backtracking on some of the financial sector reforms in the United States. This is something we see quite often: the desire to reform the financial sector after a crisis tends to weight-in the longer we're in the recovery ... and you can see that in some of the things the Trump administration's done recently."

Jones expressed concern that "the cooperation between the major economies is under a great deal of pressure at the moment. Mr Trump has launched quite an attack on the international financial institutions and it was through the guise of those financial institutions (IMF, World Bank, OECD) that a lot of policy measures that were taken at the depth of the crisis were conducted through or with the help of, and we're now in an environment where there's a lot more bilateralism, there's a lot less multinationalism because the American government is undermining these institutions and that's extremely troubling."

On ways to bridge inequality, Jones says, "There have to be some innovative responses to this. Income and wealth inequality are huge issues. There's an increasingly intergenerational element to this with the young feeling they're getting the thin end of the wedge. Politicians are going to have to be agile and innovative, we need to become more interventionist. We don't have to abandon the capitalist model, but in order to make that capitalist model well, we're going to have to redistribute more and think of new ways of doing that. Higher taxation on the wealthy is unavoidable and that more transfers from pensioners back into the younger generation is unavoidable.

"We are going to have to do this, otherwise the political environment we face, which is already pretty fraught, is going to become even more unpleasant and even more to difficult to deal with. Addressing income inequality is something which will help to save the current system, rather than undermine it," says Jones.

Australian economist Tim Reardon says that, today, regulatory bodies and banks are pursuing a variety of lending mechanisms to enable first-time buyers, or young people and low income earners, to buy into the housing market.

"That’s not the same as the sub-prime market we saw prior to 2007.. From a government regulatory perspective, we are starting to see, for the first time, really, since the second world war, global money supplies starting to tighten from what has been an incredibly lax position.

"You can see that through practices in different countries. The build-rent markets in a variety of other countries are transitioning to other models that allow owners to either lease land, rent land or purchase their house through other mechanisms."

Meantime, in the United States, Freddie Mac reported that first-time home buyers accounted for 46 percent of mortgages during the first quarter of 2018. The median age for first-time buyers was 32, according to Bloomberg and the National Association of Realtors. Millennials, aided by an improved jobs market and lower interest rates, but burdened by rising prices and student loan debt, may well have identified 2018 as their last chance to get into the housing market.

Also on this episode of Counting the Cost:

US housing crisis: While the great financial crisis played out on Wall Street and in government ministries, its roots lay in small towns and cities across the US. Families pursuing the dream of home ownership fell victim to unscrupulous banks and predatory lending schemes, as Rob Reynolds reports from Perris, California.

China debt: So if another financial crisis is brewing, where will it come from? Scott Heidler reports from Hangzhou, where part of China's massive shadow banking system has recently faced a crisis of its own. And some aspects are similar to what happened in 2008.

Germany crisis: Ten years after the financial crash of 2008, Germany still stands accused of helping to wreck the Greek economy by demanding punitive austerity measures. But inside the German government, there is no remorse, as Laurence Lee reports from Berlin.

US food insecurity: A new report says more than 40 million Americans are struggling to pay for enough food month-to-month. While that is a small improvement on recent years, it still means many people are forced to rely on handouts, as Kristen Saloomey reports from a New York City food bank.

Source: Al Jazeera