Alternative Visions - Global Financial Instability Warnings on the Rise - 10.13.17
Dr. Rasmus dedicates today’s show to examining the condition of financial bubble and growing instability in global financial markets. Recent reports and studies warning of bubbles, debt, and financial instability are reviewed, including the IMF, Bank of International Settlements, the just released report by Deutschebank economists, ‘The Next Financial Crisis’, and key financial players like Bill Gross, Wolfgang Schaubel, and others. Rasmus explains how it is not debt levels alone but the causal relationships between debt, income and liquid assets to ‘finance’ the paying of principal and interest on the debt, and changing terms and conditions of debt repayment together explain financial fragility that lead to financial instability crises. (see the 2016 book, ‘Systemic Fragility in the Global Economy’ by Rasmus). The fundamental forces that have created $134 trillion in excess non-financial corporate debt alone in the G 20 economies, and emerging financial instability, are described--as well as the ‘triggers’ or ‘precipitating events’ that may set off the next financial crisis. Rasmus identifies the financial markets most prone at present to bubbles and financial price contractions, including global stock markets, crypto-currencies, leveraged loans, junk bond markets funding zombie companies, ETFs and passive investing which will exacerbate stock and bond crashes, the big banks in Italy and Japan, and the US strategic ‘Repo’ bond market with its problem of insufficient liquidity.
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