Markets Are Restacking the Building Blocks of a Financial Crisis

By William D. Cohan – The problem is that — just as in the year or so before September 2008 — the credit markets are once again badly mispricing risk.

Thanks to the easy-money policies in ascendancy among central bankers around the world, which have pushed down interest rates to historically low levels, investors are desperate for yield, or higher returns on their money. The ensuing feeding frenzy is causing otherwise intelligent people to lose their minds about the risks they are taking with their own and other people’s money.

In sum, in six short years we have rebuilt the proverbial house of cards that many thought could not happen again in our lifetimes, given what we collectively experienced in 2008. more>


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