{"id":38033,"date":"2018-09-20T08:55:13","date_gmt":"2018-09-20T13:55:13","guid":{"rendered":"http:\/\/olduvai.ca\/?p=38033"},"modified":"2018-09-20T08:55:13","modified_gmt":"2018-09-20T13:55:13","slug":"how-the-next-downturn-will-surprise-us","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=38033","title":{"rendered":"How the Next Downturn Will Surprise Us"},"content":{"rendered":"<header class=\"css-dm8bmq e345g291\">\n<h3 id=\"link-25076a8c\" class=\"css-1ixnm1o ejekc6u0\"><a href=\"https:\/\/www.nytimes.com\/2018\/09\/18\/opinion\/economy-debt-markets-crash.html?rref=collection%2Fbyline%2Fruchir-sharma&amp;action=click&amp;contentCollection=undefined&amp;region=stream&amp;module=stream_unit&amp;version=latest&amp;contentPlacement=1&amp;pgtype=collection\"><span class=\"balancedHeadline\">How the Next Downturn Will Surprise Us<\/span><\/a><\/h3>\n<p class=\"css-1fv8d3g ewc5vgb0\">In their campaign to contain the risks that caused the Great Recession, central bankers may have planted the seeds for the next global economic crisis.<\/p>\n<figure class=\"sizeMedium layoutHorizontal css-z723vq toneOpinion\" role=\"group\" aria-label=\"media\">\n<div class=\"css-bsn42l\"><span class=\"css-1dv1kvn\">Image<\/span><img decoding=\"async\" class=\"css-11cwn6f\" src=\"https:\/\/static01.nyt.com\/images\/2018\/09\/20\/opinion\/18Sharma\/merlin_143956587_d9481782-5325-4f68-b78e-befa44bd0c68-articleLarge.jpg?quality=75&amp;auto=webp&amp;disable=upscale\" sizes=\"((min-width: 600px) and (max-width: 1004px)) 84vw, (min-width: 1005px) 60vw, 100vw\" srcset=\"https:\/\/static01.nyt.com\/images\/2018\/09\/20\/opinion\/18Sharma\/merlin_143956587_d9481782-5325-4f68-b78e-befa44bd0c68-articleLarge.jpg?quality=90&amp;auto=webp 600w, https:\/\/static01.nyt.com\/images\/2018\/09\/20\/opinion\/18Sharma\/18Sharma-jumbo.gif?quality=90&amp;auto=webp 1024w, https:\/\/static01.nyt.com\/images\/2018\/09\/20\/opinion\/18Sharma\/18Sharma-superJumbo.gif?quality=90&amp;auto=webp 1200w\" alt=\"\" \/><\/div><figcaption class=\"css-109u0hy emkp2hg0\"><span class=\"emkp2hg1 css-exuwrl e18m0s9i0\"><span class=\"css-1ly73wi e1afaoz0\">Credit<\/span><span class=\"css-1dv1kvn\">Credit<\/span>Ji Lee<\/span><\/figcaption><\/figure>\n<\/header>\n<div class=\"css-18sbwfn StoryBodyCompanionColumn\">\n<div class=\"css-4w7y5l\">\n<p class=\"css-1i0edl6 e2kc3sl0\">After the fall of Lehman Brothers 10 years ago, there was a public debate about how the leading American banks had grown \u201ctoo big to fail.\u201d But that debate overlooked the larger story, about how the global markets where stocks, bonds and other financial assets are traded had grown worrisomely large.<\/p>\n<p class=\"css-1i0edl6 e2kc3sl0\">By the eve of the 2008 crisis, global financial markets dwarfed the global economy. Those markets had tripled over the previous three decades to 347 percent of the world\u2019s gross economic output, driven up by easy money pouring out of central banks. That is one major reason that the ripple effects of Lehman\u2019s fall were large enough to cause the worst downturn since the Great Depression.<\/p>\n<p class=\"css-1i0edl6 e2kc3sl0\">Today the markets are even larger, having grown to 360 percent of global G.D.P., a record high. And financial authorities \u2014 trained to focus more on how markets respond to economic risk than on the risks that markets pose to the economy \u2014 have been inadvertently fueling this new threat.<\/p>\n<p class=\"css-1i0edl6 e2kc3sl0\">Over the past decade, the world\u2019s largest central banks \u2014 in the United States, Europe, China and Japan \u2014 have expanded their balance sheets from less than $5 trillion to more than $17 trillion in an effort to promote the recovery. Much of that newly printed money has found its way into the financial markets, where it often follows the path of least regulation.<\/p>\n<p class=\"css-1i0edl6 e2kc3sl0\">Central bankers and other regulators have largely succeeded in containing the practice that caused disaster in 2008: risky mortgage lending by big banks. But with so much easy money sloshing around in global markets, new threats were bound to emerge \u2014 in places the regulators aren\u2019t watching as closely.<\/p>\n<p>\u2026click on the above link to read the rest of the article\u2026<\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>How the Next Downturn Will Surprise Us In their campaign to contain the risks that caused the Great Recession, central bankers may have planted the seeds for the next global economic crisis. ImageCreditCreditJi Lee After the fall of Lehman Brothers 10 years ago, there was a public debate about how the leading American banks had [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[63,312,5415,500,21762,21167,802],"class_list":["post-38033","post","type-post","status-publish","format-standard","hentry","category-economics","tag-banks","tag-financial-crisis","tag-lehman-brothers","tag-market-collapse","tag-ruchir-sharma","tag-the-new-york-times","tag-too-big-to-fail"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/38033","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=38033"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/38033\/revisions"}],"predecessor-version":[{"id":38034,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/38033\/revisions\/38034"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=38033"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=38033"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=38033"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}