05:40 GMT +322 October 2017
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    Brave New World

    How Bad Will The Financial Crisis Get?

    Brave New World
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    John Harrison
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    Royal Bank of Scotland's economists recently advised clients to ‘sell everything ahead of stock market crash’, indicating a world wide financial crash on the scale of 2008 if not worse.

    But many say that this sort of apocalyptic messages is an exaggeration of a situation that is bad, not catastrophic.

    Two financial experts: Tom Orlik, Bloomberg Intelligence chief Asia, an economist based in Beijing, and Benjamin J. Butler, futurist, writer and financial market commentator, the founder of the Emerging Future Institute and a writer at Dow Theory Letters, view their points of view.

    The current discussion about a new global financial crisis (GFC2) focuses on China, with the world’s mainstream press pointing the finger at China’s slowdown as being the guilty party behind current economic downturn. Tom Orlik refutes that China is in that bad shape, and points to the fact that China is still a developing country, with a lot of room still to grow, unlike well-developed countries like Japan. On the commodities front, Orlik agrees that there is a slowdown, but it is not catastrophic. Benjamin Butler’s analysis of GFC2 is that China is only one of three major fault lines, the other two being: firstly the US Federal Reserve which is easing QE whilst at the same time introducing interest rates even as the world is about to enter severe financial difficulties, as indicated by depressing US economic data. Secondly, Butler sees social and geo-political disorder breaking out around the world, particularly in the EU as a result of the migrant crisis. Butler comments “politicians all over the world have transmuted a lot of problems from the 2008 crisis into geopolitical and social problems.” Orlik agrees that we should not forget about the dynamic that links the social, political and economic, however he does not feel that the world is heading into a systematic economic crash as such.

    Butler also points out in this programme that most people fail to understand the importance of the knock of effect of the collapse of the oil price, “in the same way that people overlooked the importance of the housing market in 2007.”

    Tags:
    economic collapse, financial crisis, China
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