Thursday, June 1, 2017
Global Economic Crisis in 2020? A Dialogue on Linked-In
This interesting discussion started with Derick Tan (an active trader and investor in the stock, commodities, currencies, bonds and property) saying that there will be a sovereign debt crisis in the world. So I asked him to elaborate:
LSR: Sovereign debt crisis in southern Europe?
Derick Tan: Sovereign Debt Crisis (SDC) not only in Europe, also in Japan & later on U.S.
LSR: Not in the near term of next three years at least for the US. Yields may be rising but its a mistake to ignore the fact that GDP will rise too. Its the latter that pulls up interest rates.
Derick Tan: Personally, I feel Janet Yellen is stuck between a rock and a hard place. If she doesn't increase interest rate fast enough, there will be a pension fund crisis, which is already starting to hit some pension funds in U.S. If she does increase interest rate at a faster pace, it is going to bring the world down on its knee. Donald Trump can say all he want about bringing U.S.'s GDP to 4%, I seriously doubt he is able to do it. There will be a global monetary crisis 2020-2022, because of SDC in Europe, Japan & U.S. Just my personal view. Thank u.
LSR: It is true that the world is in an economic and political crisis. If we can see the factors that caused this crisis (not just one factor alone), then we can analyse what are the changes happening today.
1. The low interest rate era is ending with rates in the process of rising. Whether it is on a real or nominal basis depends on the next chairman of the Federal Reserve.
2. The leaders who caused a widening of the rich and poor gap are being replaced. Just ask anyone who is lower economic class than yourself....Just today I spoke to a Singapore taxi driver and after telling him the Spore markets went up this year, he replied only the rich benefited from stock markets. And several taxi drivers I spoke to are critical of their self-serving governments, even in a corruption free place like Singapore.
3. If you agree that the one and key solution for the US economy to grow faster but that the chances are very slim, I think we should all give Trump a chance to bring about that economic miracle.
4. The character assassination and attempts at impeaching Trump is driven by spurious reasons. He overcome all odds to win the election. That alone takes tremendous genius and energy. He needs all our support, esp to restore peace in the Middles East and destroy or weaken at least ISIS, even if it means colluding with the Russians.