Director Reserve Bank of Aust warns of "global bubble that could hit us much harder than the GFC"

And I will add, correctly warns of a "global bubble that could hit us much harder than the global financial crisis". Would have to be the smartest comment to come from the RBA for some time. Interesting that the article points out the following....

An internationally renowned macroeconomist at the Australian National University, Professor McKibbin has been a Reserve Bank board member since 2001. He is not expected to be reappointed by Wayne Swan (Australian Treasurer) when his second term ends in July following his criticisms of Labor's budget stimulus spending and now its flood levy.

So many people have their head in the sand with what awaits. It's not conspiracy or fear mongering, it is economics, the mechanics of the economy in their current condition, probably impacted heavily by policies such as QE and QEII. Time will tell of course.

Read more: www.news.com.au...

Thanks for the link and information... Let me add something to your thread from the link you provided:

Professor McKibbin told The Australian the bubble in global commodity prices and property markets in Asia threatened to dwarf the US housing market bubble that led to the GFC in 2008.

He warned that the inevitable bursting of the bubble would reverse the surge in Australia's record high terms of trade, push down the dollar and leave the Reserve Bank struggling to fight off rising global inflation pressures.

"This is shaping to be much bigger than 2004 to 2007," he said in comparing the new excess of global liquidity with the global financial bubble that led to the worst global financial crisis since the 1930s.

Hope this bit helps your thread out a bit more. There has been much talk about the commodity bubble espcially when it comes to precious metals.

There are hidden wars going on on multiple fronts and there are many people (who are the victims) who don't even know it!

SnF

AS

reply to post by surrealist


I think there are a good deal of individuals in the financial sector stating that a global bubble is going to happen...one would think for some of the more established countries it will happen with the unecessary and hyper inflated gas prices reach critical mass...

reply to post by surrealist


this a newer bubble of an older bubble trying to find more money out the same people, there trying there hardest to break the dam dollar, this where they make the biggest buck from, they want to appear weak to China & Russia or someone plz attack us, so we can start up the ole war machine and keep our cult the brotherhood going, the NWO brotherhood of filling orders for both sides of the war all over again, and re-write the consistution and history, so were the fracking rich hero's running a nazi state. They all ready committed the war crimes and they need to be tried sentanced and hung. You see all kinds of yellow canaries singing all kinds of songs better get some more rope, Same for these exec's and corp's and other indivudals commiting act's against humanity they frightened of people with knowledge, people with records times and dates and footage. put that on the big screen TV!!

Iceland and Ireland so far have catagorically stated that they will not repay the EU debt. so who's left?

reply to post by AeonStorm


Yes thanks for that. Note the reference to 'the new excess of global liquidity' which is a contributing factor to the new problems that would have certain bigger impacts on the global economy that the previous gfc didn't.

We also see this article appearing in UK's The Telegraph:

Inflation as great a threat as European debt crisis, warns IMF

Surging inflation is almost as great a threat to global economic stability as a new Europe-wide sovereign debt crisis, the International Monetary Fund has warned. Soaring oil and food prices are translating into dangerously high inflation in emerging economies, where there are already “signs of overheating in some countries via rapid credit growth or rising asset prices”, the IMF said in its World Economic Outlook update.

“In emerging economies, key risks relate to overheating, a rapid rise of inflation pressures, and the possibility of a hard landing,” the IMF said.

“With emerging markets now accounting for almost 40pc of global consumption and more than two-thirds of global growth, a slowdown in these economies would deal a serious blow to the global recovery.”

The IMF has markedly increased its oil price forecast for 2011, from $79 a barrel in October to $90, and is now forecasting that food prices will remain high until “after the 2011 crop season” as “weather-related crop damage was greater than expected in late 2010”.

“Near-term risks are now to the upside for most commodity classes,” it said.

www.telegraph.co.uk...

Chrismarco I agree there are probably a good number of people in the financial sector who see a bubble and further financial problems but I bet a lot of them remain silent, even overly optimistic, so as not to evade 'group think', the pressure to conform sentiment around those with vested interests.

Who can forget the criticism that IMF came under prior to the gfc, for failing to correctly identify risks leading to the gfc. For example, this is one article amongst many that were published critical of the IMF:

‘Groupthink’ IMF slammed for mistakes before crisis

From the article we read:

The IEO report IMF performance in the run up to the financial and economic crisis, released in early February, covered the work of the Fund from 2004 through 2007. It found that “the IMF’s ability to correctly identify the mounting risks was hindered by a high degree of groupthink, intellectual capture, a general mindset that a major financial crisis in large advanced economies was unlikely, and inadequate analytical approaches. Weak internal governance, lack of incentives to work across units and raise contrarian views, and a review process that did not ‘connect the dots’ or ensure follow-up also played an important role, while political constraints may have also had some impact.”

economiccrisis.us...

Also as interesting was IMF's subsequent warnings following these criticisms were published. The following is from the IMF website with comments from Dominique Strauss-Kahn, Managing Director of the fund, published only a couple of weeks ago:

Toward a More Stable International Monetary System

I take a less sanguine view. While the world as we know it did not end in 2008, it was only through extraordinary international policy cooperation that a far worse outcome was averted. Moreover, the recovery underway today is not the recovery we wanted. Unemployment remains at record highs, with widening income inequality adding to social strains.

And global imbalances are back, with issues that worried us before the crisis—large and volatile capital flows, exchange rate pressures, rapidly growing excess reserves—on the front burner once again. Left unresolved, these problems could even sow the seeds of the next crisis.

In my opinion, reforms to the international monetary system that help us get to the root of these imbalances could both bolster the recovery and strengthen the system’s ability to prevent future crises.

www.imf.org...

Originally posted by BobAthome
Iceland and Ireland so far have catagorically stated that they will not repay the EU debt. so who's left?

Bob do you have a link to any of these statements?

Thanks

Not being an economic wizard,
Would it be correct to assume that all the 'ghost cities' built in China will contribute to the asian property bubble.
It appears they are building these empty cities, to keep their economy running, but when no one buys them......
Whole, Worthless, Cities?

Originally posted by CitizenNum287119327
Not being an economic wizard,
Would it be correct to assume that all the 'ghost cities' built in China will contribute to the asian property bubble.
It appears they are building these empty cities, to keep their economy running, but when no one buys them......
Whole, Worthless, Cities?

The ghost cities are perhaps the most visable and conspicuious symbol of an East Asian overcapacity problem, or perhaps more precisely, a misallocated capacity problem. But when you really get down to where the cheeze binds, from an economic point of view its better to have underutilized spare capacity than to need things and not have them, so that's worth mulling over I suppose.

Double post II: Electric Boogaloo

All you must truly know is that all wealth is flowing "upward" and this is being done as a "divide and conquer" technique. What everyone here reading must do is resist the temptation to divide that you yourself (and everyone else) has been programmed to do! ... In time there will be enough of us to "reset" things. And hopefully that reset will change things for the better.

McKibbon has issued another warning today -

The global economy is facing ''a slow-motion train wreck'' with Greece only the first nation to be hit, Australia's Reserve Bank director Warwick McKibbin says.

Referring to the most recent global economic crisis as a mere ''blip'', he said the coming crisis could undo Australia's mining boom and bring on inflation of the kind not seen since the 1970s.

Professor McKibbin told the Melbourne Institute conference dozens of European countries now had gross government debts on track to exceed 60 per cent of GDP. ''Japan is forecast to be 200 per cent of GDP, the US is forecast to be over 100 per cent of GDP,'' he said.

- www.businessday.com.au...

Countries really need to stop living on debt - people can't do it forever, and you're dreaming if you think a country can too - the current US budget debate is about how much more debt to allow - not about how to pay any of it back - sheer madness!!