The Next Financial Collapse May Be On The Horizon, Economist Says
In a recent presentation, economist Albert Edwards explained that global debt could surpass global growth in the near future, which will cause the financial system to collapse, Business Insider reports.
Since 2008, emerging-market economies loaded up on debt to produce commodities for Chinese manufacturers. But China's shift away from manufacturing means commodities prices are plummeting—along with the currencies of the countries that had invested in them.
Director of GSU’s Economic Forecasting Center Rajeev Dhawan (pictured) tells Bisnow the real issue is when countries borrow in another currency—and then their currency depreciates—they can never pay back those loans.
Rajeev says the US doesn't normally have this problem, because we trade mostly in dollars. But there could be blowback for US commercial real estate, which relies heavily on this depreciating foreign cash to prop up values. "If the dollar is strong then foreign capital can’t purchase as much," Rajeev tells us. [BI]