Economy
Related: About this forum10 years on, what might cause the next financial crisis?
http://www.dw.com/en/10-years-on-what-might-cause-the-next-financial-crisis/a-4005831110 years on, what might cause the next financial crisis?
Date 11.08.2017
Author Nik Martin
Despite US Federal Reserve Chair Janet Yellen saying last month that another financial crisis on the scale of the crash that enveloped the world in 2007/8 was unlikely "in our lifetimes," several respected stock market commentators believe a new disaster could happen within months rather than years. Jim Rogers, co-founder of the privately owned Quantum group of hedge funds, told the news website Business Insider in June that a stock market crash would happen "later this year or next." In a separate interview with the business channel CNBC, longtime Swiss investor Marc Faber, who has been nicknamed Dr Doom, predicted some stockholders would "lose 50 percent of their assets" during what he described as an "avalanche" of selling.
Both investors have accused policymakers of kicking the can down the road by not addressing structural weaknesses in the global economy following the last financial crisis. The Great Recession, as it became known, was triggered by a fall in the US property market which led to mass defaults in the subprime mortgage market, which offered housing loans to high-risk consumers. It then developed into the worst international banking crisis since the Great Depression of the 1930s.
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Other analysts have pointed to other triggers for a possible new crash, including China's heavily indebted economy, to which the rest of the world is increasingly interlinked, or a potential crisis caused by large-scale defaults on student loans in the US. According to the Financial Times, the American student loans market is now bigger than spending on credit cards and car loans at $1.4 trillion (1.19 trillion euros), thanks to an increase in university admissions and tuition fees. The FT warned that 8 million of the 44 million student loan recipients are currently in default, a problem that is likely to worsen amid a lackluster economic recovery.
Although other financial analysts aren't so bearish about the immediate prospects for the global economy, they do agree that the current dependence on QE and ultra-low interest rates to keep economies growing is unsustainable. "We're reliant on high asset prices and continuing to inflate those asset prices, coupled with high levels of consumer borrowing, and that's a bit of a toxic mix which leads to financial instability," Fran Boait, executive director of the London-based campaign group Positive Money, told DW.
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Rincewind
(1,203 posts)republicans.
Turbineguy
(37,343 posts)Still, the student loan situation could be resolved. The loans could be re-structured. Right now they are set up more like Germany's war reparations after WWI.
Cicada
(4,533 posts)SWBTATTReg
(22,137 posts)already came to Japan, probably on it's way here...lots of cash sitting out there, making what, .0035% a year? high stock market prices, high real estate prices, same w/ other assets, isn't going to be too many places to run when ceiling starts falling in
HeartachesNhangovers
(814 posts)my credit union paid from 0.05% APR (regular savings) to 0.15% APR (money market savings). Very little, but at least 42 times higher than 0.0035%. This is splitting hairs though, since even the higher rate is much less than inflation.
I don't think we'll see negative rates in the US anytime soon (since this seems to be taboo among US policy-makers), but I agree that Japan's fate - low growth, low interest rates, low inflation - may well be the fate of the US in the long-term. It's very difficult for a very large, developed country to sustain growth.
SWBTATTReg
(22,137 posts)Thanks for pointing out. MY CU (credit union) MMA pays
$100,000 & Higher 0.35% $100,000
or $350 year, hence the .0035...
I shouldn't put the % on it, e.g., instead of .0035%, should have put .0035 only
thanks for catching...