{"id":41725,"date":"2018-12-16T12:50:33","date_gmt":"2018-12-16T17:50:33","guid":{"rendered":"https:\/\/olduvai.ca\/?p=41725"},"modified":"2018-12-16T12:50:33","modified_gmt":"2018-12-16T17:50:33","slug":"the-bubbles-losing-air-get-ready-for-a-crisis","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=41725","title":{"rendered":"The Bubble\u2019s Losing Air. Get Ready for a Crisis"},"content":{"rendered":"<div class=\"lede-text-v2 lede\">\n<div class=\"lede-text-v2__container\">\n<div class=\"lede-text-v2__content\">\n<h3 class=\"lede-text-v2__hed\"><a href=\"https:\/\/www.bloomberg.com\/opinion\/articles\/2018-12-15\/central-banks-have-few-options-to-deal-with-another-crisis\">The Bubble\u2019s Losing Air. Get Ready for a Crisis<\/a><\/h3>\n<div class=\"lede-text-v2__dek\">\n<p><strong>Investors need to focus on their response to financial stresses in an era\u00a0in which policymakers will be constrained.<\/strong><\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<div class=\"content-well-v2\">\n<section class=\"main-column-v2\">\n<figure class=\"lede-small-image-v2 lede figure-expandable\">\n<div class=\"image\">\n<div id=\"lazy-img-333193569\" class=\"lazy-img \"><img decoding=\"async\" class=\"lazy-img__image loaded\" src=\"https:\/\/assets.bwbx.io\/images\/users\/iqjWHBFdfxIU\/idAwHa.yG99k\/v1\/1000x-1.jpg\" data-native-src=\"https:\/\/assets.bwbx.io\/images\/users\/iqjWHBFdfxIU\/idAwHa.yG99k\/v1\/-1x-1.jpg\" \/><\/div>\n<\/div><figcaption>Not much to do once it pops.<\/p>\n<p>Photographer: Spencer Platt\/Getty Images<\/p>\n<\/figcaption><\/figure>\n<div class=\"body-columns\">\n<div class=\"middle-column\">\n<div class=\"body-copy-v2 fence-body\">\n<aside class=\"left-column\">\n<div class=\"bio\">\n<div class=\"bio__author\">\n<div class=\"bio__summary\">Satyajit Das is a former banker, whom Bloomberg named one of the world&#8217;s 50 most influential financial figures in 2014. His latest book is &#8220;A Banquet of Consequences&#8221; (published in North America and India as &#8220;The Age of Stagnation&#8221;). He is also the author of &#8220;Extreme Money&#8221; and &#8220;Traders, Guns &amp; Money.&#8221;<\/div>\n<\/div>\n<\/div>\n<\/aside>\n<p>The \u201ceverything bubble\u201d is deflating. The fact that it\u2019s happening relatively slowly shouldn\u2019t blind us to the real threat:\u00a0The world is dangerously underestimating how hard it\u2019ll be to deal with the fallout once it pops.<\/p>\n<p>Frothy markets can\u2019t disguise the warning signs. The shift to tighter monetary policies in the West is putting pressure on global equity and real-estate values. Even more\u00a0critically, it\u2019s weakening credit markets. Over-indebted emerging markets face headwinds from rising borrowing costs and dollar shortages.<\/p>\n<p>At the same time, investors are underestimating how disruptive\u00a0trade conflicts and sanctions could turn out to be. That\u2019s not to mention rising non-financial risks \u2014 from the legal difficulties of the U.S.\u00a0administration, to the U.K.\u2019s <a href=\"https:\/\/www.bloomberg.com\/news\/articles\/2018-12-13\/may-returns-to-brexit-front-line-after-surviving-ambush-at-home\" target=\"_blank\" rel=\"noopener\">Brexit debacle<\/a>, to\u00a0political instability in France, Germany, Italy and even Saudi Arabia. Uncertainty will impact the real economy, primarily through the wealth effect of declining asset values and a reduced supply of credit.<\/p>\n<p>Investors need to start focusing on how best to respond\u00a0to a new crisis. The choices are more limited than many realize. Historically, central banks have needed to slash official rates as much as 4-5 percent\u00a0in order to offset the effects of a financial crisis or an economic slowdown. That\u2019s why former U.S. Federal Reserve Chair\u00a0Janet Yellen talked about the need to raise rates in good times \u2014 to provide room to cut when necessary.<\/p>\n<p>\u2026click on the above link to read the rest of the article\u2026<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/section>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>The Bubble\u2019s Losing Air. Get Ready for a Crisis Investors need to focus on their response to financial stresses in an era\u00a0in which policymakers will be constrained. Not much to do once it pops. Photographer: Spencer Platt\/Getty Images Satyajit Das is a former banker, whom Bloomberg named one of the world&#8217;s 50 most influential financial [&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":[83,1806,124,195,239,17853,1849,431,534,13639,839,3650],"class_list":["post-41725","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bloomberg","tag-bubble","tag-central-banks","tag-debt","tag-economic-crisis","tag-everything-bubble","tag-financial-markets","tag-interest-rates","tag-monetary-policy","tag-satyajit-das","tag-us-dollar","tag-us-federal-reserve"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/41725","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=41725"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/41725\/revisions"}],"predecessor-version":[{"id":41726,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/41725\/revisions\/41726"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=41725"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=41725"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=41725"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}