Dr John Hewson bearing it all up today:
What if governments and policy authorities are unable to handle the next global financial crisis? Indeed, what if their declared strategy of “normalising” interest rates actually triggers the next GFC and leaves them powerless to respond?
Rather than deal with its structural causes, the response of authorities to the last crisis 10 years ago was to flood the world with liquidity – key central banks launched QE (quantitative easing) and aggressive bond-buying programs which pushed interest rates down to near zero, even negative, levels, and then held them there, supported by all sorts of budgetary injections to avoid a recession or stimulate growth and/or to bail out certain financial institutions and companies. All this has now been magnified by massive (and unparalleled) leverage, with grossly overvalued stock and bond markets.
