Meltdown 2015 – 7 Reasons It May Happen
By Shlomo Maital
IMD (a leading European business school based in Lausanne, Switzerland) Professor Arturo Bris offers eight reasons why a financial and economic meltdown in 2015 is likely. He may be wrong – but we should all be aware of the underlying danger signals. Forewarned is forearmed, or, as the Boy Scouts say, “be prepared”.
- Stock market bubble: equities rose 18 percent between June 2013 and June 2014. Bob Shiller (Yale) says the gap between stock prices and corporate earnings is larger than it was in the crisis periods of 2000 and 2007. Why the bubble? Because there is just so much money, those who hold it are desperate to put it SOMEwhere… no matter what.
- Chinese banking system: Need more be said?
- Energy crisis: If the US Congress allows energy exports, it could crash the price for oil, and sink Russia and other oil-reliant countries. This could lead to violence.
- New real estate bubble: The housing bubble is back – low interest rates, rising real estate prices in many markets.
- Corporate failures: Corporate debt is now rated, on average, BBB. This means that in the next 5 years about 16 companies in the S&P 500 will go bankrupt. This could have major impact.
- Geopolitical crisis: The world is a huge mess, with civil wars raging in the Mideast and elsewhere.
- Poverty crisis: The number of people in the world living in abject poverty grows. This is dangerous; because desperate people may do desperate things.
- Cash crisis: There is simply too much money out there. Central banks have printed enormous amounts of cash, and it is floating around the world. Some banks and some companies are so rich they could buy entire companies (anyone want to buy Israel? Jamaica?). Right now that money is just sitting. If it starts to move, if its velocity rises, we may get huge problems.
- It is possible to prevent a meltdown, if a) politicians are aware it could happen, and b) begin taking action NOW. But both a) and b) are highly unlikely. We the people should therefore try to be aware of the meltdown danger, and begin taking our own steps to protect our families our incomes and our assets