George Soros Warns of Next Financial Crisis


George Soros has issued a warning to the global economic community that there is an eerie similarity between the current situation and the circumstances that led to the financial crisis in 2008.
Debt Crisis
While doomsday predictions from Soros are not that unusual, he is not alone in his predictions that the global economy may not be as stable as many would like to believe. Despite the fact that there have been numerous safeguards put in place since the subprime mortgage collapse to prevent a meltdown of the scale of 2008, many point to the fact that once again, governments are looking to stimulate growth through easy money.
However, the banking structural reforms that have been implemented in recent years should prevent the domino effect that triggered the failure of so many major institutions within a short period.  Not only that, but in general, both corporations and the public as a whole are more wary of taking on large amounts of debt. This in itself should be enough to prevent another collapse in the banking sector.
Economic Rumblings
Despite this, China is still causing significant issues globally with the performance of the Chinese markets last week causing problems as its markets tumbled again and reduced demand pushed oil prices to multi-year lows. As China struggles to regain some control over its economy, its currency is falling ever lower, causing concerns that China may not be able to dig itself out of its current hole anytime soon.
There are also issues in other economies, as despite the recent increase in U.S. interest rates, global interest rates are still heading downwards which could potential lead to a negative interest rate environment. Since interest rates are used to price risk, this could create a new situation, as it could end up making the normal risk-pricing mechanism redundant. If that happens, it would certainly put the global economy into uncharted waters.


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