{"id":308,"date":"2018-09-24T13:29:00","date_gmt":"2018-09-24T13:29:00","guid":{"rendered":"http:\/\/thefreezoneblog.com\/blog\/2018\/09\/24\/settlements-bank-predicts-economy\/"},"modified":"2018-09-24T13:29:00","modified_gmt":"2018-09-24T13:29:00","slug":"settlements-bank-predicts-economy","status":"publish","type":"post","link":"https:\/\/thefreezonechannel.com\/old\/settlements-bank-predicts-economy\/","title":{"rendered":"Settlements bank predicts economy relapse"},"content":{"rendered":"
\n<\/a><\/div>\n
\n<\/div>\n
\nThe Bank of International Settlements has
\n warned that global economy risked a \u201crelapse\u201d of the crisis that rocked
\n it a decade ago.<\/u><\/u><\/div>\n
\n<\/u> <\/u><\/div>\n
\nIt therefore, warned that there was little \u201cmedicine\u201d left to treat the patient a second time.<\/u><\/u><\/div>\n
\n<\/u> <\/u><\/div>\n
\n\u201cThere is little left in the medicine chest to nurse the patient back to health or care for him in case of a relapse.<\/u><\/u><\/div>\n
\n<\/u> <\/u><\/div>\n
\n\u201cThings look rather fragile,\u201d BIS chief economist Claudio Borio told reporters in a conference call,\u2019\u2019 it warned.<\/u><\/u><\/div>\n
\n<\/u> <\/u><\/div>\n
\nThe Basel-based BIS, considered the
\ncentral bank for central bank, warned in its annual report that the
\nrecovery after the 2007-2008 global financial crisis had been \u201chighly
\nunbalanced\u201d, with emerging economies especially facing
\n mounting pressure.<\/u><\/u><\/div>\n
\n<\/u> <\/u><\/div>\n
\nBorio pointed out that central banks
\naround the world had for years been administering \u201cpowerful medicine\u201d to
\n counter the effects of the crisis, with \u201cunusually and persistently low
\n interest rates.\u201d<\/u><\/u><\/div>\n
\n<\/u> <\/u><\/div>\n
\nThis, he said, had helped boost economic activity, \u201cbut some side effects were inevitable.\u201d<\/u><\/u><\/div>\n
\n<\/u> <\/u><\/div>\n
\nHe pointed for instance to the crises
\nthat have recently erupted in Argentina and Turkey, describing them as
\n\u201cwithdrawal symptoms\u201d as the central banks start cutting back the
\ndosage.<\/u><\/u><\/div>\n
\n<\/u> <\/u><\/div>\n
\nAfter years of ultra-accommodating
\nmonetary policy, the US Federal Reserve has begun hiking interest rates,
\n while the European Central Bank (ECB) recently announced it would end
\nits stimulus programme at the end of this year.<\/u><\/u><\/div>\n
\n<\/u> <\/u><\/div>\n
\nBut amidst this normalisation process,
\nBIS noted a stark divergence between growth in the US market and the
\nsituation in emerging economies especially.<\/u><\/u><\/div>\n
\n<\/u> <\/u><\/div>\n
\nOn average, Borio said, global financial markets were doing well.<\/u><\/u><\/div>\n
\n<\/u> <\/u><\/div>\n
\nBut, he warned, \u201cthe average was not particularly meaningful.<\/u><\/u><\/div>\n
\n<\/u> <\/u><\/div>\n
\nIt was a bit like that proverbial person
\nwhose temperature, on average, was fine, except that their head was on
\nfire and their feet freezing.\u201d<\/u><\/u><\/div>\n
\n<\/u> <\/u><\/div>\n
\nAsset prices in emerging economies have been hit by a stronger dollar, as well as growing global trade tensions, BIS said.<\/u><\/u><\/div>\n
\n<\/u> <\/u><\/div>\n
\nSigns of a slowdown in the Chinese
\neconomy, which has become increasingly critical for commodity producers,
\n were also hitting emerging economies hard, it said.<\/u><\/u><\/div>\n
\n<\/u> <\/u><\/div>\n
\nAt the same time, risky lending similar to what landed the world in the global financial crisis a decade ago is on the rise.<\/u><\/u><\/div>\n
\n<\/u> <\/u><\/div>\n
\nBorio pointed out that US-dollar-lending
\nto non-banks in emerging economies \u201chas actually more than doubled since
\n the Great Financial Crisis to some $3.7 trillion.\u201d<\/u><\/u><\/div>\n
\n<\/u> <\/u><\/div>\n
\nAnd he pointed out that this number does
\nnot even include borrowing through so-called foreign exchange swaps,
\n\u201cwhich could easily be of a similar order of magnitude.\u201d<\/u><\/u><\/div>\n
\n<\/u> <\/u><\/div>\n
\nBorio also voiced concern about the
\nsituation in the United States, pointing to the \u201cred-hot\u201d leveraged loan
\n market, with banks \u201coff-loading their loans onto an eager investor
\nbase.\u201d<\/u><\/u><\/div>\n
\n<\/u> <\/u><\/div>\n
\nSome of the loans, he said, were
\noff-loaded via collateralised loan obligations (CLOs), which are \u201cclose
\ncousins\u201d of the infamous instruments known as collateralized debt
\nobligations, or CDOs, and securities backed by residential
\n mortgages, which sparked the 2008 crisis.<\/u><\/u><\/div>\n
\n<\/u> <\/u><\/div>\n
\nBut Borio stressed the future was hard to foresee.<\/u><\/u><\/div>\n
\n<\/u> <\/u><\/div>\n
\n\u201cWill the patient continue to mend, as
\nlooked likely until the first quarter of this year, or will there be a
\nrelapse?\u201d he asked.<\/u><\/u><\/div>\n
\n<\/u> <\/u><\/div>\n

<\/p>\n

\n\u201cWhat one can say is that the patient\u2019s
\nfull recovery will not be smooth\u2026 Policymakers and market participants
\nshould brace themselves for a lengthy and eventful convalescence.\u201d<\/div>\n","protected":false},"excerpt":{"rendered":"

The Bank of International Settlements has warned that global economy risked a \u201crelapse\u201d of the crisis that rocked it a decade ago.   It therefore, warned that there was little \u201cmedicine\u201d left to treat the patient a second time.   \u201cThere is little left in the medicine chest to nurse the patient back to health […]<\/p>\n","protected":false},"author":1,"featured_media":1349,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[80],"class_list":["post-308","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized","tag-finance","has-post-title","has-post-date","has-post-category","has-post-tag","has-post-comment","has-post-author",""],"yoast_head":"\nSettlements bank predicts economy relapse - The Freezone Channel<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/thefreezonechannel.com\/old\/settlements-bank-predicts-economy\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Settlements bank predicts economy relapse - 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