Friday, July 11, 2014

The BIS Warns Banks and Investors Again

In 2007, the Bank of International Settlements, the BIS, was the only major institution in the world to accurately predict the impending global financial crisis.  The BIS is the central bank of central banks and they are a voice of reason in a sea of fiat money hyper-liquidity.  See my Sept 2103 blog called  "The Man Who Predicted the Last Crisis Says Excesses Worse Now.

They are back in 2014 with stark warnings against investor complacency, central bank policy errors and the potential for bursting bubbles.  From the BIS (thanks to Zero Hedge),
The Bank for International Settlements has warned that "euphoric" financial markets have become detached from the reality of a lingering post-crisis malaise, as it called for governments to ditch policies that risk stoking unsustainable asset booms.
While the global economy is struggling to escape the shadow of the crisis of 2007-09, capital markets are "extraordinarily buoyant", the Basel-based bank said, in part because of the ultra-low monetary policy being pursued around the world. Leading central banks should not fall into the trap of raising rates "too slowly and too late", the BIS said, calling for policy makers to halt the steady rise in debt burdens around the world and embark on reforms to boost productivity.
 In its annual report, the BIS also warned of the risks brewing in emerging markets, setting out early warning indicators of possible banking crises in a number of jurisdictions, including most notably China.
 "Particularly for countries in the late stages of financial booms, the trade-off is now between the risk of bringing forward the downward leg of the cycle and that of suffering a bigger bust later on," it said.

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