The prior crisis always leads to the next one, it’s just not always clear how.
The sin that could sink the global economy might be China’s enormous stimulus efforts at the height of the crisis, argues the FT’s Josh Noble. The moves spurred massive credit growth in Asia both in governments and households.
“All this QE money has lead to a massive credit inflation bubble in Asia,” said Kevin Lai, chief regional economist at Daiwa Securities. “The crime has been committed, we just have to deal with the aftermath. During that process there will be a lot of damage . . . It’s like a margin call. Households will need to sell their assets. There will be a lot of wealth destruction.”
The market is targeting India and Indonesia at the moment but it could spread into a regional crisis.
Jakarta composite index – not pretty
