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Today’s financial fragility far predates the COVID-19 “black swan.”

Given the massive accumulation of debt in both developed and developing countries since the 2008 financial crisis, it has long been clear that even a minor event – some “known unknown” – could have far-reaching destabilizing effects. 

Yet, until recently, rising asset prices – owing to a long period of extraordinarily loose monetary policies in advanced economies – disguised mounting debt levels. 

As the recent scare in global equity markets indicates, asset bubbles cannot last forever. 

By contrast, in the absence of active public pressure or state intervention to facilitate their resolution, debts do not deflate on their own.

Javuati Goshi Ptoject Syndicate  16 March 2020 

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