The Telegraph: The world’s financial system is more stretched, unstable, and dangerous than it was on the eve of the Lehman crisis.

IMF: The World’s Financial System Is Even More Destructive Than in 2008

The Telegraph: The world’s financial system is more stretched, unstable, and dangerous than it was on the eve of the Lehman crisis.

The International Monetary Fund has presented us with a Gothic horror show.  The world’s financial system is more stretched, unstable, and dangerous than it was on the eve of the Lehman crisis.

Quantitative easing, zero interest rates, and financial repression across the board have pushed investors – and in the case of pension funds or life insurers, actually forced them – into taking on ever more risk. We have created a monster.

There are ‘amplification’ feedback loops and chain-reactions all over the place. Banks may be safer – though not in Europe or China – but excesses have migrated to a new nexus of shadow-lenders. Woe betide us if this tangle of hidden leverage is soon put to the test.

 

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