"Extreme forms of credit excess across the world have reached or surpassed levels seen shortly before the Lehman crisis five years ago, the Bank for International Settlements has warned. "
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| Link to web site |
"... William White, the BIS’s former chief economist, said the five years since Lehman have largely been wasted, leaving a global system that is even more unbalanced, and may be running out of lifelines. 'The ultimate driver for the whole world is the US interest rate and as this goes up there will be fall-out for everybody. The trigger could be Fed tapering, but there are a lot of things that can go wrong. I am very worried that Abenomics could go awry in Japan, and Europe remains exceedingly vulnerable to outside shocks.'
"Mr White said the world has become addicted to easy money, with rates falling ever lower with each cycle and each crisis. There is little ammunition left if the system buckles again. 'I don’t know what they will do: Abenomics for the world I suppose, but this is the last refuge of the scoundrel,' he said.
"The BIS quietly scolded Bank of England Governor Mark Carney and his eurozone counterpart Mario Draghi, saying the attempt to use 'forward guidance' to hold down long-term rates by rhetoric alone had essentially failed. 'There are limits as to how far good communications can steer markets. Those limits have become all too apparent,' said Claudio Borio, the BIS research chief."
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| The Observer: Five years after Lehman, could a collapse happen all over again? "When Lehman Brothers went bust, it seemed to represent an unforgettable public humiliation for the banking sector. But key figures at the heart of the rescue operation in 2008 fear that the risk of another meltdown is still very real." |
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