Bank For International Settlements (BIS): Global Economy Situation Similar To Pre-2008 Crash Era

At the end of last week I left readers with that post about individuals credited with publicly predicting the 2008 global economic crisis.

Yesterday, I learned that some organizations correctly forecast the carnage. In particular, the Bank for International Settlements (BIS). Phillip Inman reported on The Guardian (UK) website Sunday:

The BIS was one of the few organisations to warn during 2006 and 2007 about the unstable levels of bank lending on risky assets such as the US subprime mortgages that eventually led to the Lehman Brothers crash and the financial crisis.

Curious to know what the “central bankers’ bank” thinks about the state of the global economy these days? Inman revealed:

Investors are ignoring warning signs that financial markets could be overheating and consumer debts are rising to unsustainable levels, the global body for central banks has warned in its quarterly financial health check.

The Bank for International Settlements (BIS) said the situation in the global economy was similar to the pre-2008 crash era when investors, seeking high returns, borrowed heavily to invest in risky assets, despite moves by central banks to tighten access to credit.

The BIS, known as the central bankers’ bank, said attempts by the US Federal Reserve and the Bank of England to choke off risky behaviour by raising interest rates had failed so far and unstable financial bubbles were continuing to grow.

(Editor’s note: Bold added for emphasis)

I’m not going to steal The Guardian’s thunder here, so head on over to the article on their website for the full story.

By the way, Inman noted the following about the BIS chief economist who was around during those alarms sounded in 2006 and 2007:

William White, who now chairs the OECD’s review committee, warned last year that global debt levels had escalated to unstable levels largely in response to almost zero interest rates to create a situation that was “worse than 2007”.

(Editor’s note: Bold added for emphasis)

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

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