From where blows the wind of the new financial crisis
One bubble had been swelling for years, and then went bang. When will go another? In 2008, the Case-Shiller home price index reported the greatest price drop in its history. The credit crisis resulting from the bursting of the housing bubble in the US was one of the primary causes of the global financial crisis. From which way the wind will blow next time?
Several prophetic economists and distinguished investors warn of a stock market crash. One of the most prominent Société Générale analysts – Albert Edwards – predicts a 75% stock market crash to strike in the forthcoming future. He believes that the US is one recession away from deflation. There is a massive debt on the corporate sector ($5,7 trln dollars in the first quarter of this year, an astounding increase by 63% from $3,5 trln in 8 years), which may lead to the chain of bankruptcies.
Another noted economist – Andrew Smithers – shares opinion of his colleague and warns investors of possible stock market crash. According to him, U.S stocks are grossly overvalued this year. Even James Dale Davidson, famous for his predictions of the 1999 and 2007 collapses, encourages investors to sell their stocks before it’s too late.
Meanwhile, it seems that investors don’t worry too much about aforementioned predictions from the noted doomsayers. S&P 500 futures have already risen by 0,48% after the Bank of Japan made its announcement. The next trigger for a sell-off or rebound may appear today, once we hear the Fed’s decision on the interest rates.