Andy Xie has been warning about the dire consequences of asset bubbles for most of his career. In his latest broadside, about the consequences of the Federal Reserve’s decision to continue quantitative easing, he has raised the volume on his megaphone.
The former Morgan Stanley economist reckons the global flow of hot money into [...]
“Get ready for some scary reading”
Come mid-October, the United States will have only $30 billion of cash on hand. On any given day, its net payments can reach as high as $60 billion. That means that unless Congress raises the debt ceiling, allowing the Treasury to issue new debt, the United States [...]
In other words, the very asset that most people believed led to the credit crisis is also the asset that is pretty much exempt from the new rules! Classic.
On the list of cures for the sick financial system, the concept of “risk retention” ranks right behind capital — but there are a couple of [...]
This is a warning that the entire global economy should take seriously. Not just other emerging markets.
… I argued further that the long prevalence of extremely low interest rates is likely to be creating the conditions for a serious financial crisis; all the economic activities that are profitable due to low rates will [...]
The Swiss-based ‘bank of central banks’ says a hunt for yield is luring investors en masse into high-risk instruments, “a phenomenon reminiscent of exuberance prior to the global financial crisis”.
This is happening just as the US Federal Reserve prepares to wind down stimulus and starts to drain dollar liquidity from global markets, an inflexion [...]
Collateralized debt obligations, the complex financial instruments that cratered disastrously in the financial crisis, are back.
The market for the instruments, which were based on subprime mortgages, shrank from $520 billion in 2006 to just $4.3 billion in 2009 after the housing bust. Warren Buffett once called CDOs “financial weapons of mass destruction” because of [...]
Affordable-housing goals established in the 1990s led to a massive increase in risky, subprime mortgages.
Simply put, the financial crisis of 2008 was caused by a lot of banks making a lot of loans to a lot of people who either could not or would not pay the money back. But this explanation raises two [...]
Wall Street’s biggest banks are currently under the gun for their massive role in global commodities markets. But what many don’t realize is the vast expansion of that role was, in large part, an unintended consequence of the chaos of the financial crisis.
Should we be shocked that the ramifications of the financial crises are [...]
If our leaders could have recognized the signs ahead of time, do you think that they could have prevented the financial crisis of 2008? That is a very timely question, because so many of the warning signs that we saw just before and during the last financial crisis are popping up again. Many of the [...]
This was supposed to be the Asian century, but the Eastern boom is dying of exhaustion
So here’s how it looks. Years of unsustainable, credit-fuelled growth are brought to a halt by a crushing financial crisis which exposes deep structural flaws at the heart of the economy. Rarely has the assumption of ever-rising living standards [...]