US Treasuries are no longer as safe as they were
By partially retreating from the imposition of retaliatory tariffs, Mr Trump has for now managed to defuse the doom loop of selling that last week engulfed US Treasury markets.
But it’s an uneasy quiet that has descended, and he may already have done irreparable damage.
With a president as unpredictable as Trump, and the prospect of fiscal deficits of 6pc of GDP or more stretching as far as the eye can see, renewed trouble is likely to come soon enough.
There used to be an old rule of thumb in financial markets that really serious financial crises only happen once every 40 years, which is about as long as it takes for all institutional knowledge of the last one to die out.
As memories fade, and those who were involved in the crisis retire or die, guardrails are lowered, excess once more takes hold, and eventually it all blows up in everyone’s face anew.
But in today’s world, everything has been speeded up, and in any case, there is a sense of the root causes of the last crisis – the fault lines created by excessive debt – never having been properly addressed in the first place.
The truth is that the whole system is fundamentally unstable; it’s a castle built on sand with the US as its epicentre.
For sure, the banking system has been made safer than it was, but that’s not where the problem chiefly lies.
The explosive growth in money in recent years has been in public and non-banking forms of finance and credit.
Negative real interest rates have added rocket fuel to the mix
Jeremy Warner 13 april 2025
“Dad, what’s a financial crisis?”
One of Jamie Dimon’s daughters called him up from school with a question more than a decade ago: “Dad, what’s a financial crisis?”
The billionaire who runs JPMorgan Chase & Co. tried to put her at ease. “It’s the type of thing that happens every five to seven years,” he told her, he later testified to the Financial Crisis Inquiry Commission.
Bank of England warns of risks from non-banks in future markets crisis
Tillbaka till Rolfs länktips 13 april 2025
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