The next financial crash is coming as we have not fixed the problem
Adam Pike, News Editor
9 Oct 2015, 11:18 a.m.
Debt levels are unsustainable, the so called recovery has yet to materialise and cheap money is causing massive distortions in the global economy, according to IMF’s latest global stability report.
The funds report is a sobering read for central bankers and finance ministers as they assemble in Peru’s capital Lima for their yearly meeting.
Unprecedented amounts of money printing stopped the global economy falling into the abyss in 2008, but a solid recovery has failed to materialise. Cheap money has spilled out into the emerging markets causing asset prices to rise and encouraged governments and corporation’s to borrow unprecedented amount of money. As balance sheets become stretched banks will become more exposed to financial stress.
The IMF warns that as shocks occur in emerging markets asset prices across the globe could fall causing market liquidity to dry up. The IMF is joined by UN’s Trade and Development department, The Bank of International Settlements and former Bank of England chief economist, Andy Haldane, to warn that the financial system could fracture at any time.
The message coming out of Lima appears to be, batten down the hatches.