ArabianMoney: The world’s three economic superpowers are heading for a major
collapse in asset values because their economic models favor consumption
instead of productivity, warns Steen Jakobsen, a chief economist at
Danish investment bank Saxo Bank.
‘We’re still not wise enough to realize that our current model is a ‘Ponzi’ scheme rushing toward its inevitable ‘Minsky moment’, he said in a research note. The term ‘Minsky moment’ refers to a phrase coined for the Asian debt crisis of the late 1990s by Pimco’s Paul McCulley.
Debt mountain
Unsustainable debt will be the cause of the crash, according to Mr. Jakobsen, and will occur when the cash returns on assets become insufficient to service the debt taken on to acquire those assets in the first place. He gives no timeframe for his thesis but says that the problem of huge debts has been swept under the carpet by central bankers and policymakers and will come back as low inflation or even deflation…
‘We’re still not wise enough to realize that our current model is a ‘Ponzi’ scheme rushing toward its inevitable ‘Minsky moment’, he said in a research note. The term ‘Minsky moment’ refers to a phrase coined for the Asian debt crisis of the late 1990s by Pimco’s Paul McCulley.
Debt mountain
Unsustainable debt will be the cause of the crash, according to Mr. Jakobsen, and will occur when the cash returns on assets become insufficient to service the debt taken on to acquire those assets in the first place. He gives no timeframe for his thesis but says that the problem of huge debts has been swept under the carpet by central bankers and policymakers and will come back as low inflation or even deflation…
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