Will the economy collapse in 2016?

[OddTrader]

http://www.theage.com.au/world/new-...and-governor-mervyn-king-20160228-gn5pph.html
New financial crash 'certain', says former Bank of England governor Mervyn King

Date
February 29, 2016

Another financial crisis is "certain" and will come "sooner rather than later", the former Bank of England governor has warned.

Mervyn King, who headed the bank between 2003 and 2013, believes the world economy will soon face another crash as regulators have failed to reform banking.

He has also claimed that the 2008 crisis was the fault of the financial system, not individual greedy bankers, in his new book, The End Of Alchemy: Money, Banking And The Future Of The Global Economy.

"Without reform of the financial system, another crisis is certain, and the failure ... to tackle the disequilibrium in the world economy makes it likely that it will come sooner rather than later," King wrote.

A remark from a Chinese colleague who said the West had not got the hang of money and banking was the inspiration for his book.

King, 67, said without understanding what caused the crash, politicians and bankers would be unable to prevent another, and lays the blame at the door of a broken financial system.

He said: "The crisis was a failure of a system, and the ideas that underpinned it, not of individual policymakers or bankers, incompetent and greedy though some of them undoubtedly were."

Spending imbalances both within and between countries led to the crisis in 2008 and he believes a current disequilibrium will lead to the next.

To solve the problem, King suggests raising productivity and boldly reforming the banking system.

"Only a fundamental rethink of how we, as a society, organise our system of money and banking will prevent a repetition of the crisis that we experienced in 2008."

 

[romik]

Ah Merv on economy, everything will be revealed, where was his wisdom when he was chairing BOE leading to the credit crunch and the aftermath?

 

[Sig]

The US is in a weird place nowadays. The Federal public sector owes more than it can ever hope to pay and borrows to make the minimum payments.... and runs a deficit! About 100 million people stopped even considering working... I think we're in a fugue state or something and headed off a cliff eventually. Collapse in 2016? Don't know, don't care that much. Collapse eventually? Don't see any way around it. I don't want to get trampled by some bail-in, am wondering how to sidestep that s%^t, and they are for sure going to do that and everything else they can think of probably. They do wage and price controls via Obamacare [hasn't worked once in 2500 years of history] so yeah, like Trump says, they are stupid.

I agree, we’re heading for a collapse sometime in the same way that all of us are dying. I don’t go around in a fuge state about either though. The topline number of national debt is meaningless, by that logic I’m drifting further and further into the abyss because I’ve kept buying more and more expensive houses as my income allows and my mortgage total keeps going up and up. Not sure what a bail-in is, are you upset about the economic impacts of the 2008 bail-outs, the ones that netted the taxpayer $15.3B (http://money.cnn.com/2014/12/19/news/companies/government-bailouts-end/)? And “wage and price controls via Obamacare”? First of all, what wage controls? Second, I’ve got news for you. We have had price controls in this country for 100 years. On electricity distribution (and generation still in half the country), a $344B/year industry. Gas distribution. Local phone service. Taxi’s. And yes, insurance has been highly regulated for decades before Obama was even born. They’re not ideal; I love the idea that self-generation and storage may finally give electricity users a choice in who they buy their electricity from for example. But they haven’t led to the end of the Republic either.
Of course if you insist on believing that we’re all doomed, I’d suggest considering a move to a place that has none of the things you listed as the cause of our impending decline and fall. For example, the 10 countries with the lowest debt to gdp ratios are Saudi Arabia, Brunei, Oman, Lybia, Afghanistan, Kuwait, Equatorial Guinea, Uzbekistan, Algeria, and Swaziland (http://www.tradingeconomics.com/country-list/government-debt-to-gdp). You might throw Somalia in there as well, I’m assuming they didn’t make the list because of a divide by 0 error, but with them you get the trifecta of no taxes, no debt, and no gun control. Yay!
Cheer up dude, all is not lost. We’re living in a great country with great opportunities. A country that will still be great even if Trump is elected, or Hillary, or even if we brought back Dick Cheney from his undisclosed location.