Alan Kohler appears to have bought his brain today in explaining rising share market volatility:
At the heart of what’s happening is the huge rise in world debt since the GFC coupled with the manifest failure of central banks to stimulate the real economy despite six years of virtually zero interest rates and printing money.
…According to the Bank for International Settlements’ latest quarterly review issued two weeks ago, total debt (household, corporate and government) in the advanced economies is now 265 per cent of GDP, compared with 226 per cent in 2007.
Central banks are now in a bind. Having encouraged a massive increase in leverage and asset prices they can’t raise interest rates without derailing growth.
Yep. One wonders why, therefore, that Mr Kohler remains so bullish on the most leveraged assets of all.
