Coming dramatic decline of US stock prices would trigger global recession, finds grim forecast to be explored at roundtable hosted by British financial services think-tank.
By Nafeez Ahmed and cross-posted from Insurge Intelligence
A new analysis published on the website of a London-based think-tank, funded by the world’s biggest banking and financial services institutions, warns that the US stock market is on the brink of an imminent crash that could trigger another global recession.
The document by a senior US economist and former Houblon-Norman Fellow at the Bank of England is published on the website of the Centre for the Study of Financial Innovation (CSFI), which runs around 100 roundtable events a year involving financial services insiders from the UK and beyond.
The document forecasts that in 2018, US stock prices are likely to plummet by as much as “forty to fifty percent” — compared to the less than five percent plunge in early February. The document was published weeks before the recent stock market volatility.
The warning of a forty to fifty percent drop points to the prospect of a global financial crash worse than the 2008 banking collapse.
It comes at a time when the Federal Reserve, Bank of England and other authorities are looking to tighten up their cheap money policies, as economic growth is at its highest levels since the 2008 slump.
The new analysis is an ‘open letter’ by US economist Robert Aliber, Professor Emeritus at the University of Chicago Booth School of Business, a world renowned authority in identifying the source of shocks behind over forty banking crises that have occurred since the 1970s.
The ‘open letter’, dated January 21st 2018, is published on CSFI’s website at this link http://www.csfi.org/s/QUARTERLYJAN12018.docx, and mentioned in an announcement of a forthcoming breakfast conversation with Professor Aliber in late February.
In the event announcement, CSFI director Andrew Hilton explains that Aliber is:
“… deeply gloomy about the outlook for global markets — and recently sent us an open letter (here) dated January 21, in which he predicted a fairly imminent decline in US stock prices of ‘forty to fifty percent’. That is even gloomier than his message five months ago — when he also told us that he had shifted his own personal holdings into cash in anticipation of a market bust. I am delighted (though apprehensive) that Bob has agreed to speak again — against a backdrop of ever-advancing Armageddon.”
Professor Aliber’s analysis is not officially endorsed by the CSFI. However, the institution clearly took his ‘open letter’ seriously enough that it saw fit to host a discussion around his forecast. He is due to speak at the CSFI on February 22nd.
CSFI’s programme coordinator, Angus Young, told me that:
“Prof Aliber is a respected economist, who kindly spoke at an event for us last year. He is visiting the UK this spring, and shared his open letter with us, on the back of which we agreed to coordinate a discussion of the argument laid out.”
CSFI’s supporters include around 80 financial services institutions including Barclays, Citigroup, City of London, HSBC, JP Morgan, the Bank of England, Bank of Italy, Bank of Japan, Lloyds Banking Group, the Financial Conduct Authority, UBS, the Swiss embassy in the UK, HM Treasury, among others.
In his ‘open letter’ Professor Robert Aliber notes that while the US and other major economies are performing on “nine cylinders” with numerous positive indicators from growth, employment, and investment, the global economy suffers from a “catalog of non-sustainable imbalances”…