The Great Moderation - Satyajit Das

Forget stock-market ‘FOMO.’ Worry now about ‘NOGO’ — no option but getting out.

The next global financial crisis is already under way. Here is how it will unfold.

All financial bacchanals end when an event, often minor but only obvious in hindsight, sets off an uncontrollable chain reaction. 

Central to this process is the effect of unsustainable valuations and price volatility on the flow of funds. 
Property, the largest concentration of global wealth, is overvalued by up to 50%.

Global stock prices remain elevated. The Shiller CAPE (cycle-adjusted price-to-earnings) ratio is at a significant premium to the 25-year average.
Depending on the indicator used, share prices are anywhere up to two times overvalued.  

Read: Everyone on Wall Street now believes in buying the dip. That is exactly why you should worry.

Debt levels are stretched. Borrowers must refinance in an environment of high interest rates and reduced funding availability. Lender losses drive a contraction of credit availability, the lifeblood of modern economies

The spiral is accelerated by crowded trades and herding behavior, such as exchange-traded funds and quantitative trend-following models.
 
Another factor is retail investors, dazzled by FOMO (fear of missing out), FEMO (fabulous earning momentum) based on the other “EBITDA” (earnings before Iran, tariffs, Donald and AI) and TINA (there is no alternative). 

Eventually, NOGO (no option but getting out) means panic and risk aversion takes hold. 

Satyajit Das MarketWatch 9 July 2026

"The period commencing in the 1990s became known as the Great Moderation, an era of strong economic growth, high production and employment, low inflation, reduced volatility in the business cycle, and self-adulation amongst politicians, central bankers and academic economists." 

 (from "The Age of Stagnation" by Satyajit Das)

 https://www.internetional.se/hedgefunds.htm#dasfebr2015
https://www.internetional.se/nosuchthing.htm#greatmoderation


Satyajit Das Bloomberg Opinion Columnist


Kommentarer

Skicka en kommentar

Populära inlägg i den här bloggen

Pfizer in 2019 sold $20 billion of drugs in the U.S. Its federal tax bill? Zero; Ireland

Trump has already singled out pharma companies and countries like Ireland that reap the benefits of tax-avoidance moves.  Despite its small size, Ireland ran an $87 billion trade surplus with the U.S. last year—larger than any country except China, Mexico and Vietnam. https://www.wsj.com/health/pharma/how-trumps-tariffs-could-upend-pharmas-overseas-tax-strategy-5b8ca758 Is Ireland vulnerable again as the world’s vast shadow banking system starts to crack? Shadow banking is the dog that has not barked during the latest global spasm of financial stress. This is very fortunate, especially for small countries such as Ireland that have bet the farm on this industry. https://englundmacro.blogspot.com/2023/04/is-ireland-vulnerable-again-as-worlds.html Cayman Islands https://en.wikipedia.org/wiki/Cayman_Islands What the heck is happening in the Cayman Islands? A Sunny Place for a Shady Online Business https://englundmacro.blogspot.com/2021/12/a-sunny-place-for-shady-online-business.html Ti...
Läs mer

My blogg short index

Bild
1968 Vojne, vojne, vänsterdårarna kommer AI Artificial intelligence https://englundmacro.blogspot.com/2025/06/ai-artificial-intelligence.html Akvedukten vid Zaghouan, Sven Otto Littorin och Niall Ferguson. Denna vackra betraktelse från 1994 har sedan dess legat i mitt bakhuvud. https://englundmacro.blogspot.com/2024/04/akvedukten-vid-zaghouan-sven-otto.html Alistair Darling, Northern Rock och Royal Bank of Scotland https://englundmacro.blogspot.com/2025/07/alistair-darling.html Bank stress tests https://englundmacro.blogspot.com/2025/06/bank-stress-tests.html Bessent https://englundmacro.blogspot.com/2025/06/bessent.html Gordon Brown https://englundmacro.blogspot.com/2025/07/gordon-brown_5.html Buy the dip https://englundmacro.blogspot.com/2025/07/buy-dip.html Fastighetsbolagen https://englundmacro.blogspot.com/2025/07/fastighetsbolagen.html Tomas Fischer https://englundmacro.blogspot.com/2025/07/tomas-fischer.html James Grant https://englundmacro.blogspot.com/2025/07/james-grant.h...
Läs mer

Cognitive blind spots

Bild
Cognitive blind spots are undermining our ability to see the world as it is, rather than as we would like it to be. At the start of the 21st century, western elites generally assumed that globalisation, democracy and the free market were self-evidently good, and would keep spreading, creating peace. N o longer.  FIS, Swiss Federal Intelligence Service, has published a manual about cognitive blind spots. 18 different cognitive biases that hamper our thinking, such as “group think” (adhering to the cosy assumptions of our tribe), “anchoring” (relying exclusively on whatever information we see first, say on social media),  “confirmation bias” (only seeing data that reinforces pre-existing views),  “mirror imaging” (assuming others think like us),  “absence of evidence” bias (failing to think about the data we lack)  and “survivorship bias” (judging data only with success stories, not failures). Gillian Tett Financial Times 2 January 2026 https://www.ft.com/content/...
Läs mer