Massive money printing to restart the global economy after the financial crisis has blown an even bigger bubble. Ten years after the last financial crisis, is the world due another one and will it be worse?
Despite US Federal Reserve Chair Janet Yellen saying last month that another financial crisis on the scale of the crash that enveloped the world in 2007/8 was unlikely "in our lifetimes", several respected stock market commentators believe a new disaster could happen within months rather than years, DW reported.
Jim Rogers, co-founder of the privately owned Quantum group of hedge funds, told the news website Business Insider in June that a stock market crash would happen "later this year or next". In a separate interview with the business channel CNBC, longtime Swiss investor Marc Faber, who has been nicknamed Dr Doom, predicted some stockholders would "lose 50% of their assets" during what he described as an "avalanche" of selling.
Both investors have accused policymakers of kicking the can down the road by not addressing structural weaknesses in the global economy following the last financial crisis. The Great Recession, as it became known, was triggered by a fall in the US property market which led to mass defaults in the subprime mortgage market, which offered housing loans to high-risk consumers. It then developed into the worst international banking crisis since the Great Depression of the 1930s.
In an attempt to avoid a collapse of the financial system, the US central bank and others printed trillions of dollars by way of quantitative easing schemes, money which has been pouring into stock markets and other assets including property ever since. The Fed's huge spending spree has led to record-high prices and complaints that the gains by most asset holders—in other words the richest 5%—haven't filtered into the real economy.
US Student Loans
Other analysts have pointed to other triggers for a possible new crash, including China's heavily indebted economy, to which the rest of the world is increasingly interlinked, or a potential crisis caused by large-scale defaults on student loans in the US.