The Origins Of The Next Financial Crisis

Recently I was reading an a Forbes Polish edition article regarding the upcomming financial crisis.

The article quotes the German minister of finance Wolfgang Wolfgang Schaeuble, who in the course of his interview with Finnacial Times, criticized the quantitative easing policies (FED, ECB) and the skyrocketing sovereign debt of the USA.

Also, according to Christine Lagarde (IMF), the skyrocketing sovereign debt of many countries constitute a big problem.

Further, the autor quotes the Deutsche Bank report "Long-Term Asset Return Study: The next financial crisis" dated 18 September 2017 (link: http://www.tramuntalegria.com/wp-content/uploads/2017/09/Long-Term-Asset-Return-Study-The-Next-Financial-Crisis-db.pdf).

The report focuses on the possible triggers of the next financial crisis:

• central banks: The danger is that central banks will continue the quantitative easing policy, keeping the interest rates at the low level and turning a blind eye on the increasing debt levels. In case of the next financial crisis, the interest rate cuts would be impossible leaving central banks out of ammo.

• China. The debt fueled developement and investment policies could backfire big time.

• Italy:The rising sovereign debt, the weak banking system and the slow economic growth could result in a real witch's brew.

Comment

Until recently, the next finnacial crisis was considered a further conspiracy theory of the alternative media. However currently, we can see the mainstream media picking the story. What triggered this change of attitudes?

Well, it does not matter. What matters is, how this next financial crisis will play out:

• the big correction: The current everything bubble will burst. Expect a big value drop of stocks, real estate, cryptocurrencies and various currently popular financial products.

• the interest rate hike: The interest rate hikes are to be expected. The current zero interest policies are an abberation, which will not last forever.