What Lehman wrought

No one saw the ZIRP* boom coming. When Lehman Brothers was allowed to go bankrupt, it was clear that the crisis was entering a new and much more dangerous phase and there would be a lot of financial carnage.

The big picture: But bears didn't make the really big money. Bulls did. Central banks slashed the cost of capital to zero and kept it there for the best part of a decade, encouraging capital-intensive investment. Austere governments demurred, but the private sector made trillions of dollars.

One sector outperformed everything else: companies with slim or negative cashflows, which need extended investment on their way to multibillion-dollar valuations. Some of the biggest examples:

• Tesla raised $19 billion and has an enterprise value of $67 billion.
• Uber raised $22 billion on its way to a $72 billion valuation.
• Ultra-luxury residential construction boomed around the world.
• The entire fracking industry was built on cheap capital. As Amir Azar of TD Securities wrote in a 2017 report:

The real catalyst of the shale revolution was ... the 2008 financial crisis and the era of unprecedentedly low interest rates it ushered in.

The bottom line: We may never again see rates this low for this long — and frankly, we should have reaped greater benefits. Still, many thanks to WeWork (funding: $9 billion, valuation: $35 billion) for the delicious coffee at Axios NYC!

*(Zirp = zero interest rate policy, for non-econowonks).