Munchau: Next Crisis Coming Sooner Than You Think

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xraymike79
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Munchau: Next Crisis Coming Sooner Than You Think

Munchau: Next Crisis Coming Sooner Than You Think

10-19-2009

Wolfgang Munchau has a solid, thoughtful piece at the Financial Times which argues that the widely applauded rallies in stock and commodity markets are already looking very much like bubbles, and the efforts to contend with them (either directly, or as a result of the need to start reining in liquidity) is likely to kick off another crisis.

That much had been said in various ways in other venues, although Munchau does offer valuation data to back up his views. The more novel part of his argument is that instability is the inevitable result of an overly-large financial sector, and the result is bigger and bigger swings in output (meaning GDP growth) and prices.

Ouch. And the two scenarios he sets forth are not pretty either.

From the Financial Times:.....

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