Displaying items by tag: crisis

(New York)

If you are not worried about markets and the global economy at the moment you should be. At least according to legend George Soros. The hedge fund manager thinks that the world is headed for “another major financial crisis”, this time spear-headed by politics. Soros believes the epicenter of the crisis will be the EU. “The EU is in an existential crisis. Everything that could go wrong has gone wrong”, said Soros, continuing that “it needs to reinvent itself”. Soros believes the problems in Europe have three facets: “the refugee crisis, territorial disintegration exemplified by Brexit and an austerity policy, prompted by the financial crisis”.

FINSUM: We sort of feel like we are in a time warp that loops back to the summers of 2011 and 2012. We do not believe the whole EU project, and the Euro will fall apart now.

(New York)

One of the financial industry’s most astute crisis callers has just told Barron’s that she thinks we are in for another financial crisis. Sheila Bair, former head of the FDIC, has successfully called the Enron scandal and the subprime crisis, and now she sees another one looming. The context is that Trump and the White House are leading the charge for less bank regulation, which Bair sees as crazy given this point in the cycle. According to her, “To loosen capital now is just crazy. When we get to a downturn, banks won’t have the cushion to absorb the losses. Without a cushion, we will have 2008 and 2009 again.”.

FINSUM: We are not supportive of too much loosening of bank regulation. Banks have been very profitable since the Crisis, and it is not as if the current regulatory paradigm is over-constraining them