Be prepared … a new global financial crisis on the doors
Be prepared … a new global financial crisis on the doors
20 October 2014
By Steve Kean Editor’s Note: Professor Steve Kean is head of the Department of Economics, History and Policy at the University of Kingston, London, and author of several books dealing with the Strategic Studies. What is contained in the article is exclusively expressed his opinion and does not reflect the viewpoint of CNN pushed the signs of vibration in the capital markets in recent times a lot of investors to ask the question about whether there is a financial crisis on the doors. From the beginning, I can confirm that this is not true simply because we did not emerge from the crisis first. Financial crises of the caliber of those that shook the world in 2007 is endless really, unless were processed files bankruptcy and write off bad debts and debt rescheduling and paid and inflation. On holding the thirties of the century the past, there was a lot of aspects of these four files and the result was that ended the matter is that the debt of the American private sector decreased by 100 per cent of the total crude product from 130 percent in 1933 to 35 percent by the end of the Second World War. For comparison, the decline in the debt did not exceed the rate now only 20 percent from what it was in 2010 when he reached 175 per cent of the total crude output. This means that we are trying to rescue the economy from the worst level of debt exceeds the level reached during the universe and hold the thirties of the last century. And we believe that it will succeed? succeed Yes, of course, and for a period. Fmadinma want to further indebtedness more than that what we Aqtrdhanah, there will be growth. The increase in borrowing means that there is money in the system, which will push the economy forward and testify that since 2010, when it disappeared signs of crisis in 2007, and accordingly resumed Americans borrowing. However, because private debt is still at levels make appearances held in 1920 a period of recovery more than to be Great period of deflation, it simply means that there is no ceiling limit of indebtedness. Therefore, budgets recovery evaporate faster pace than holding the nineties of the last century when it reached the level of borrowing 120 per cent of the total crude product. and mark the clearest of this is what is witnessing a casino on Wall Street where he arrived margin debt to the same level reached during the largest market crisis in history The well-known technology bubble. The increase at the time was an exhibition, after that they do not exceed half a percentage point by 1990, the total in eight years, at least 2.75 percentage points from GDP. In March / March 2014 reached the same point again and whether we thought that it might be able to continue to increase? course not occurred to us like that scenario, Fbalalaat accepted in the economy, which we knew, we convinced ourselves that the impact would not include stock prices, and that instead of Therefore, those prices will reflect what is known as “fundamental value.” In my view, the “core value” is a real desire in indebtedness for the purchase of one asset. And that desire increases as increasing debt pushed asset prices up. But it should also be noted that the disadvantages deadly as debt rises faster pace of re-payment of financial dues. there we find ourselves in front of the base of the financial markets: the debt will not remain the case in only a slight increase, but it will grow very fast pace so keep stock prices high. So any delay in the acceleration of the debt, would be enough to impact negatively on the market. The index acceleration in my opinion, was the likely collapse of the stock markets since mid-2013, but the policy of the American Federal Reserve based on “quantitative easing” made the market can continue to defy gravity slow the pace of debt for a long time. has been “quantitative easing” to buy distressed assets, program to inflate asset prices, including make of plane Fed full of money landing on the “Wall Street” and not on “Main Street” (any ordinary street Bonash ordinary who buy those assets, and that they put their money in banks and markets or borrowed ones). , but now with the decline in program quantitative easing and a decrease in the light of what was apparently an improvement in economic performance, as the proportions of pumping money into the markets to finance acquisitions began to decline, the financial markets and the stock is beginning to return now to the base recognized that remain at the mercy of private debt huge. so it’s not the only ready to face the new crisis that would be similar to the old crisis is likely to continue to ship Lost in the rotation.
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