Identifying potential problems

Risk special
Macro and geo-political risk indicators are pointing sharply upwards this autumn. A review of the macro risks that could upset markets in the months ahead.

The end of cheap money
The financial media has been full of pessimistic articles on the prospects for the global economy this autumn. More than one commentator has made the point that the global financial crisis of 2008 never went away, it was just anaesthetised by cheap credit and central bank money printing.

One of these commentators, Jeremy Warner, makes the point that the global financial crisis was caused by excessive credit. But since then, debt as a proportion of global GDP has continued to rise. Aggregating all borrowing together – public, household and corporate – global debt is today more than a fifth higher than back then at around 250% of GDP, according to estimates by the International Monetary Fund. He says that rising interest rates are beginning to expose the wrecks that were previously hidden by cheap money.

To read more on this story, see the October issue of The NED.