Forces that caused the world economy to collapse, including income inequality and debt, are again in action, and could drag corporations down in their wake
Our macro models at the Levy Economics Institute are showing that the US economy is about to face a repeat of pre-crisis-style, debt-led growth, based on increased borrowing. Falling [...]
The future might very soon remind us that, for over a quarter of a century, a major financial and economic crisis has occurred every seven years:
• In October 1987, the Dow Jones industrial average lost 22.6% of its value in a single day; …
• In December 1994, while a euphoria (“bubble”) of internet-based [...]
Five years later, the effects of the financial crisis are still with us. The question is whether they always will be.
It’s called hysteresis, and it’s a simple, if terrifying, idea: A deep recession can cause irreparable damage to the economy. That’s because an anemic labor market can turn into a persistently smaller one. The [...]
The world has known since Reinhart and Rogoff’s classic “This time is different” that financial crises are likely to cause persistent damage to economies. Even if growth returns to pre-crisis rates (and that is a big if), the level of output is generally lower. Persistently lower output is horrible [...]
A financial crisis in China has become inevitable. If it happens soon, its effects can be contained. But, if policy makers use further doses of stimulus to postpone the day of reckoning, a severe collapse will become unavoidable within a few years.
The country is in the [...]
With the 2008 financial crisis is still fresh in the mind of many investors, it would appear that the world is setting itself up for another collapse. However, this time it could be much worse.
A seven-year high
One of the root causes of the last financial crisis, was the use and availability of collateralised [...]
WE LIVE in a world riddled with black swan fatigue, and this piece does not propose to add to it. Still, the recent financial crisis and its continuing implications have invited hyperbolic comparisons, most notably with the 1930s. That decade is seared in cultural memory as the Great Depression – a traumatic time of economic [...]
We’re relearning an old lesson: History, culture, geography, religion and pride often trump economics. The nation-state remains, reminds Harvard political scientist Jeffry Frieden, author of “Global Capitalism: Its Fall and Rise in the Twentieth Century.” It defines its interests on its terms. Putin, not illogically, sees Russia threatened on its borders by an American-led coalition [...]
Causing concern both at home and abroad, the Chinese company Zhejiang Xingrun Real Estate recently collapsed under the weight of 3.5 billion yuan ($566.6 million) of debt.
The announcement comes just one week after China’s first onshore bond market default in over a decade, which investors already suggested might be the country’s [...]
The scars are still raw five years after one of the worst financial crises in modern memory came to an end. Ever since the Dow Jones Industrial Average (DJINDICES: ^DJI) bottomed out in 2009, investors have been bombarded by warnings and predictions of imminent collapse from every corner of the punditsphere, and millions have listened, [...]