Is Brexit the Lehman Moment for the $100 Trillion Global Bond Bubble?
Is Brexit the Lehman Moment for the $100 Trillion Global Bond Bubble?
Most economies have barely recovered from the 2008 subprime mortgage fiasco that was caused by sloppy lending practices at banks, overextended them and compromised essential liquidity to pay their own debts. Investopedia.com reports that Lehman Borothers, the fourth-largest investment bank in the United States, was forced to declare bankruptcy with $619 billion in debt versus $639 billion in assets in 2008. A vast number of defaults caused this razor-thin margin of debts-to-assets to become unsustainable, so the company filed for bankruptcy in the largest case of its kind in history. This bankruptcy snowballed …show more content…
recession in 2016 or 2017 at 23 percent. When this is added to the severe financial consequences of the Brexit vote and Europe 's weak banking system, where interest rates are already at zero, the possibility of a global meltdown becomes even more likely. That 's not even considering further catastrophes, European high-risk bonds, natural disasters and possible decisions by other countries to leave the European Union after Britain 's defection. A global financial meltdown on top of weak global economies and high deficits could easily stimulate a financial Armageddon according to many analysts. Another Bloomberg.com report offers the following …show more content…
That 's despite desperate government efforts to privatize public assets, cut work forces and reduce spending on public services, so there 's essentially nowhere to raise money in a crisis situation without implementing austerity measures that would rival the Great Depression in the United States.
Another big worry is that most of the economy is fueled by technology and digital services that could easily disappear when basic services like food production and manufacturing no longer comprise most of the world 's economic output. Brexit could easily trigger economic pandemonium by forcing the European Union to allow its members to write off debt to prevent further defections. This could trigger a catastrophic meltdown in the $500 trillion derivatives market and pop the $100 trillion debt bubble in a situation that mirrors 2008 and the Lehman bankruptcy’s chain of
Is Brexit the Lehman Moment for the $100 Trillion Global Bond Bubble?
Most economies have barely recovered from the 2008 subprime mortgage fiasco that was caused by sloppy lending practices at banks, overextended them and compromised essential liquidity to pay their own debts. Investopedia.com reports that Lehman Borothers, the fourth-largest investment bank in the United States, was forced to declare bankruptcy with $619 billion in debt versus $639 billion in assets in 2008. A vast number of defaults caused this razor-thin margin of debts-to-assets to become unsustainable, so the company filed for bankruptcy in the largest case of its kind in history. This bankruptcy snowballed …show more content…
recession in 2016 or 2017 at 23 percent. When this is added to the severe financial consequences of the Brexit vote and Europe 's weak banking system, where interest rates are already at zero, the possibility of a global meltdown becomes even more likely. That 's not even considering further catastrophes, European high-risk bonds, natural disasters and possible decisions by other countries to leave the European Union after Britain 's defection. A global financial meltdown on top of weak global economies and high deficits could easily stimulate a financial Armageddon according to many analysts. Another Bloomberg.com report offers the following …show more content…
That 's despite desperate government efforts to privatize public assets, cut work forces and reduce spending on public services, so there 's essentially nowhere to raise money in a crisis situation without implementing austerity measures that would rival the Great Depression in the United States.
Another big worry is that most of the economy is fueled by technology and digital services that could easily disappear when basic services like food production and manufacturing no longer comprise most of the world 's economic output. Brexit could easily trigger economic pandemonium by forcing the European Union to allow its members to write off debt to prevent further defections. This could trigger a catastrophic meltdown in the $500 trillion derivatives market and pop the $100 trillion debt bubble in a situation that mirrors 2008 and the Lehman bankruptcy’s chain of