The Economist suggests that the world has learned few lessons of the global financial crisis from 2008 to 2009.
Becky Berkman

2018-09-07 07:33:00 Fri ET

The Economist re-evaluates the realistic scenario that the world has learned few lessons of the global financial crisis from 2008 to 2009 over the past decade. Good times breed complacency. As the Trump administration rolls back key Dodd-Frank rules and regulations, the Federal Reserve has yet to raise countercyclical capital buffers for most banks. When prudence prevails, no regulator is a perfect judge of financial risk.

The Economist points out that the current news is both good and bad. The good news suggests that most U.S. large banks finance themselves with proportionately more equity. The average bank equity capital ratio increases substantially from 3% to double digits in the decade after the Lehman financial meltdown.

However, the bad news suggests that most U.S. households, firms, and financial intermediaries react slowly to the U.S. subprime mortgage crisis from 2008 to 2009.

Former U.S. Treasury Secretary and Harvard President Larry Summers shares his ingenious insight that the U.S. economy suffers secular stagnation, government debt, and inflation in the recent decade after the global financial crisis. In light of gradual greenback appreciation and national populism, Harvard chair professor Kenneth Rogoff indicates that the Trump stock market rally may be the calm before the next financial storm.

Despite hefty Trump tax cuts and infrastructure expenditures, the U.S. economy operates near full employment with high inflation, currency, and interest rate risks. This trifecta poses a red alert to the Trump administration and its advisory troika (National Economic Council, Federal Reserve, and Treasury).

Both the U.S. Treasury and National Economic Council favor imposing draconian tariffs on at least $200 trillion Chinese imports. This trade tactic aims to help curtail bilateral trade deficits with China. These tariffs may affect Canada, Europe, Mexico, and Japan.

Moreover, the Federal Reserve accelerates the current interest rate hike (with at least one rate increase in September 2018 and another in December 2018). This hawkish interest rate hike is likely to continue until late-2019. All of these fiscal and monetary measures can help contain the high-risk trifecta of inflation, fiscal debt and deficit, and secular stagnation.

 


If any of our AYA Analytica financial health memos (FHM), blog posts, ebooks, newsletters, and notifications etc, or any other form of online content curation, involves potential copyright concerns, please feel free to contact us at service@ayafintech.network so that we can remove relevant content in response to any such request within a reasonable time frame.

Blog+More
Former Vice President Joe Biden enters the next U.S. presidential race with many moderate policy proposals.
Monica McNeil

2019-05-05 10:34:00 Sunday ET

Former Vice President Joe Biden enters the next U.S. presidential race with many moderate policy proposals.

Former Vice President Joe Biden enters the next U.S. presidential race with many moderate-to-progressive policy proposals. At the age of 76, Biden stands ou

+See More
The Trump administration imposes 10% tariffs on $200 billion Chinese imports.
James Campbell

2018-09-19 12:38:00 Wednesday ET

The Trump administration imposes 10% tariffs on $200 billion Chinese imports.

The Trump administration imposes 10% tariffs on $200 billion Chinese imports and expects to raise these tariffs to 25% additional duties toward the end of t

+See More
Is Bitcoin a legitimate (crypto)currency or a new bubble waiting to implode?
Monica McNeil

2017-11-24 08:41:00 Friday ET

Is Bitcoin a legitimate (crypto)currency or a new bubble waiting to implode?

Is Bitcoin a legitimate (crypto)currency or a new bubble waiting to implode? As its prices skyrocket, bankers, pundits, and investors increasingly take side

+See More
Due to U.S. tariffs, Apple, Nintendo, and Samsung start to consider making tech products in Vietnam instead of China.
Jonah Whanau

2019-09-03 14:29:00 Tuesday ET

Due to U.S. tariffs, Apple, Nintendo, and Samsung start to consider making tech products in Vietnam instead of China.

Due to U.S. tariffs and other cloudy causes of economic policy uncertainty, Apple, Nintendo, and Samsung start to consider making tech products in Vietnam i

+See More
U.S. Treasury's proposal for financial deregulation aims to remove key aspects of the Dodd-Frank Act.
Rose Prince

2017-08-25 13:36:00 Friday ET

U.S. Treasury's proposal for financial deregulation aims to remove key aspects of the Dodd-Frank Act.

The U.S. Treasury's June 2017 grand proposal for financial deregulation aims to remove several aspects of the Dodd-Frank Act 2010 such as annual macro s

+See More
The SEC sues Elon Musk for his August 2018 tweet that he has secured external finance to convert Tesla into a private company.
Amy Hamilton

2018-09-29 12:39:00 Saturday ET

The SEC sues Elon Musk for his August 2018 tweet that he has secured external finance to convert Tesla into a private company.

The Securities and Exchange Commission (S.E.C.) sues Elon Musk for his August 2018 tweet that he has secured external finance to convert Tesla into a privat

+See More