New York Times-16 hours ago
Pessimism emanating from the stock market could leave consumers and ... like the trade war, Britain's exit from the European Union and the debt levels of ... Money in the bank earned next to nothing, so investors eagerly ...
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There is already a crisis of trust — a democracy deficit — in many advanced economies, accompanied by rising political tensions. A loss of faith in the supposed technocratic abilities of policymakers to manage economies will compound these pressures. The political economy could then accelerate towards the critical point identified by John Maynard Keynes in 1933, where “we must expect the progressive breakdown of the existing structure of contract and instruments of indebtedness, accompanied by the utter discredit of orthodox leadership in finance and government, with what ultimate outcome we cannot predict.” Governments that want to avoid that dystopian prospect need to address the key underlying problems now, before it’s too late.
The Bubble’s Losing Air. Get Ready for a Crisis
Investors need to focus on their response to financial stresses in an era in which policymakers will be constrained.
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Investors Have Nowhere to Hide as Stocks, Bonds and Commodities All Tumble
"For the first time in decades, every major type of investment has fared poorly, as the outlook for economic growth and corporate profits is dampened by rising trade tensions and interest rates. Stocks around the world are getting pummeled, while commodities and bonds are tumbling — all of which have left investors with few places to put their money. . .
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The widespread market jitters have accompanied a tectonic shift in the investing world, as central banks have begun to withdraw the extraordinary support provided to the global economy in response to the financial crisis a decade ago.
For nearly seven years, the Federal Reserve kept interest rates near zero and bought trillions of dollars’ worth of government bonds, which pushed interest rates — that move in the opposite direction of prices — sharply lower. Money in the bank earned next to nothing, so investors eagerly bought anything they expected to generate some kind of return: risky debt, real estate, stocks, technology start-ups. ________________________________________________________________
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If this persists, or grows worse, it could create a damaging feedback loop, with doubts about the economy hurting the markets, and trouble in the markets undermining growth.
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