The next crash: why the world is unprepared for the economic dangers ahead

[Soph0571]

Perhaps the greatest cause for concern is that, when the next recession does arrive, as it will, we will be even less prepared than we were in 2008. Monetary policy is already ultra-loose (UK interest rates stand at 0.75 per cent, compared to 5 per cent before the crash) and national debt levels have significantly risen, reducing the space for fiscal stimulus (public spending and tax cuts). The risk is that in the event we hit an iceberg, there aren’t enough lifeboats to go around, as economists are fond of saying.

This reflects a more profound problem. The reason debt levels are still so high and interest rates so low is that the recovery from the financial crisis has been so weak.

GDP levels may have recovered but growth in investment, productivity and wages has been dismal, especially in the US and the UK. More than at any point in previous history, living standards have become detached from employment growth (currently at an all-time high in the UK). If the recovery has been characterised by stagnant wages and productivity, falling investment and rising poverty, what will the next recession look like?

History teaches us that when the status quo only offers stagnation or decline, voters will look for radical alternatives. So far, discontent has been largely channelled into increasing support for the populist right, whose posturing disguises an essential respect for free market capitalism. But as the sheen falls off the likes of Donald Trump and Boris Johnson, defenders of the status quo face a far more worrying prospect: the election of a cohort of leaders who identify as socialists. The next recession may not be as large as 2008, but it could still represent a far greater rupture.

[link:https://www.newstatesman.com/politics/economy/2019/03/next-crash-why-world-unprepared-economic-dangers-ahead|

Very interesting read - much longer that this excerpt. I would recommend you read all of it....

[no_hypocrisy]

1. This alone should be of concern:

The U.S. is barely paying the interest on its Debt as it is right now and that's with low interest rates. There would be a crisis if interest rates were raised.

[mitch96]

5. "There would be a crisis if interest rates were raised."

So would we default? Who would buy the devalued debt? China? Then again we owe China a shit ton of money and they might just take the value of our infrastructure.. our "stuff".. uff
m

[CousinIT]

2. "a far more worrying prospect: the election of a cohort of leaders who identify as socialists"

If this refers to social Democracy or Democratic Socialists like Sanders, AOC or Warren, then that tosses the entire article for me.

[Soph0571]

3. I read it like the first time of reading it also but that is not what the author is saying

She is talking about the Status Quo being scared of that outcome, not that that outcome is wrong

[Auggie]

4. That's how I read it

History teaches us that when the status quo only offers stagnation or decline, voters will look for radical alternatives. So far, discontent has been largely channelled into increasing support for the populist right, whose posturing disguises an essential respect for free market capitalism. But as the sheen falls off the likes of Donald Trump and Boris Johnson, defenders of the status quo face a far more worrying prospect: the election of a cohort of leaders who identify as socialists. The next recession may not be as large as 2008, but it could still represent a far greater rupture.

[Farmer-Rick]

6. So Funny...Be afraid...socialism

"So far, discontent has been largely channelled (they misspelled that word?) into increasing support for the populist right, whose posturing disguises an essential respect for free market capitalism. But as the sheen falls off the likes of Donald Trump and Boris Johnson, defenders of the status quo face a far more worrying prospect: the election of a cohort of leaders who identify as socialists. The next recession may not be as large as 2008, but it could still represent a far greater rupture."

You shall respect my authority err... my free market capitalism (no matter what idiot the oligarchs put in) or else ...socialism.

You know there are a whole lot more economic systems out there than just free market capitalism and socialism.

To the writer's benefit, she does not see that possible cohorts of socialist leaders as all bad. But that the status quo leaders sees it as bad.