For more than two years, economists in the alternative media have been warning of a coming economic meltdown that would be worse than the Credit Crisis of 2008 simply because the debts are much bigger, and the underlying problems that led to that crisis have never been addressed. And now in early 2016, more and more mainstream analysts are jumping onto this bandwagon, with the former Chief Economist for the Bank of International Settlements (BIS) stating on Jan. 20 that the economy is now worse than it was in 2007.
The BIS is known as the central bank of central banks, and plays a key role in facilitating global currency exchanges between nations and economies. And what gives economist William White credibility in his current assessment of the global economy is the fact that he forecasted and warned of the 2008 economic collapse that led to the death of Lehman Brothers and Bear Stearns.
The financial situation in the world has become so unstable that a new wave of defaults and bankruptcies will soon emerge, says William White, the chairman of the OECD’s review committee and former chief economist of the Bank for International Settlements (BIS).
“The situation is worse than it was in 2007. Our macroeconomic ammunition to fight downturns is essentially all used up,”the economist told the Telegraph newspaper before the World Economic Forum in Davos.
White is one of a few bankers who warned about the rising crisis in the Western financial system before the financial crash eight years ago
“Debts have continued to build up over the last eight years and they have reached such levels in every part of the world that they have become a potent cause for mischief,” said White.
“It will become obvious in the next recession that many of these debts will never be serviced or repaid, and this will be uncomfortable for a lot of people who think they own assets that are worth something,” he added. – Russia Today
These debts White is referring too includes over $11 trillion loaned out to emerging markets following the 2008 crisis which are now finding difficulty in being repaid due to the massive drop in oil prices, and the absolute slowdown in the global economy. In fact, emerging market capital outflows by investment banks to secure their own liquidity problems are helping to increase the problem as the decline in commodity and production revenues are making these nations unable to pay the debts owed for their previous growth and expansion.
Had the world in general been willing to do the ‘Iceland Initiative’ and let bad institutions fail while at the same time letting toxic debts default, the global economy would be in the process of a real period of growth, instead of experiencing the consequences of five years of debt and artificial stimulus. And William White is without a doubt correct in saying that the economy is far worse now than in 2007, and is just beginning the collapse where defaults and bankruptcies will this time not be able to be covered up with trillions in government or bank bailouts.
Kenneth Schortgen Jr is a writer for Secretsofthefed.com, Examiner.com, Roguemoney.net, and To the Death Media, and hosts the popular web blog, The Daily Economist. Ken can also be heard Wednesday afternoons giving an weekly economic report on the Angel Clark radio show.