BIS warns again of a crash

In a recent interview with Ambrose Evans-Pritchard of London’s Telegraph, and further to our recent article, the head of BIS, Jaime Caruana, said investors were ignoring the risk of monetary tightening in their voracious hunt for yield and the developing economies that got us out of the GFC are no longer removed.  

“Markets seem to be considering only a very narrow spectrum of potential outcomes. They have become convinced that monetary conditions will remain easy for a very long time, and may be taking more assurance than central banks wish to give,”

‘Mr Caruana said the international system is in many ways more fragile than it was in the build-up to the Lehman crisis. Debt ratios in the developed economies have risen by 20 percentage points to 275pc of GDP since then.’

Bank of England chief, Mark Carney has since come out and lambasted Mr Caruana for suggesting they should raise interest rates.  Ironically this blast came just hours after a shock rise in UK inflation (from 1.5% in May to 1.9% in June – the biggest monthly jump in nearly 2 years) led to more calls for an interest rate rise.  Carney argued that BIS acted “in a vacuum” …. “outside political and economic reality”.  Maybe that ‘political reality’ is having to give easy money addicted voters what they want rather than ‘taking the medicine’ so to speak…  

This is just one of a growing number of warnings of a massive crash in the making.  Remember BIS were sceaming of an imminent crash in the lead up to the GFC where again they were ignored by politicians.  If they are right again you’d want to be considering gold and silver sooner rather than later.

You can read the original Telegraph article here.