It Has Been Ten Years Since The Financial Crisis. What To Fear In The Future? (Bitcoin On The List) (Article and Video)

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It Has Been Ten Years Since The Financial Crisis. What To Fear In The Future? (Bitcoin On The List)

It has been ten years since the financial crisis. What to fear in the future? (Bitcoin on the list)

Bloomberg surveyed ten economists, banking professionals, and other experts and found out what things to fear soon in the economy.

Among them are volatile oil prices, an unsatisfactory situation in China, and a possible Bitcoin bubble. We also recommend reading Criminal and legal risks of ICO in the USA.

The collapse of quantum funds
When you remember the financial crisis, you will understand that the collapse of quantum funds (investment funds that use quantum analysis in their work; create predictive models to determine how attractive investment is - ed.) Was its harbinger. Quantum funds suffered heavy losses in August 2007 - exactly one year before the financial disaster.

The founder of such a fund - AQR Capital Management - Clifford Asness, says that quantum funds' second collapse is inevitable. Quantum strategies are popular, and popularity is what keeps them going in one direction. Whether it's the path to success or failure, Asness suggests that the second collapse of such funds will happen due to the media's negative influence.

Bill McNabb took over the leadership of Vanguard Group Inc. just after the financial crisis, and he helped the company increase the value of its assets by $ 3 billion. Now he is about to leave his post and says that his main worries are related to cybersecurity: "Our budget for cybersecurity has grown ten times over the past seven years," says McNabb.

Kyle Bass, the founder of Hayman Capital Management L.P., which monitors China's situation, says the country's leadership is hiding the unsatisfactory state of the banking system - for political reasons.

Zhu Ning, deputy director of the National Institute for Financial Research at Tsinghua University, raises the same issue in his book China's Guaranteed Bubble. The huge amount of debt burdening the Chinese financial system, combined with an overheated real estate market, poses great risks to the economy, from which the rest of the world expects to grow, he said.

Stability of exchanges
If you divide the hours of the trading day into quarters, then there is no segment as important as the last 15 minutes. It is at this point that the final prices set that affect trading portfolios and retirement accounts. And if the shutdown of one of the exchanges - due to internal failure or a cyberattack - during the day does not affect the market in any way. Then any mistake in the last 15 minutes will lead to unpredictable consequences.

Formally, there is "plan B", according to which one of the exchanges will become a backup for the other in such a situation. But the fact is that this plan is not tested during such cases - and this leaves many questions unanswered.

According to Joanna Fields, CEO of consulting firm Aplomb Strategies Inc, the lack of the ability to set final prices for shares could affect other types of securities, including options and over-the-counter derivatives. "A chain reaction can happen," Fields says.

Real estate market
Diversification isn't always safe, says Jared Dillian, who previously ran an exchange-traded fund. "Retail investors who buy ETFs or ETFs think their assets are diversified," says Dillian. But, according to him, not everyone understands that a lot of people are participating in these auctions. We can look back ten years and see how things could go wrong.

This practice does not lead to a financial crisis. But Dillian believes that this could lead to the sale of assets - in a year, five or even ten years. "This situation has the potential to reach the scale of a major market crash," says Dillian.

Bitcoin bubble
The debate over whether Bitcoin is a bubble or not continues to divide the financial world. On the one hand, billionaire Mike Novogratz spoke of his intention to make "a lot of money" from the bitcoin boom. In contrast, JPMorgan Chase CEO James Dimon calls people who buy cryptocurrency "stupid."

But the implications of the likely collapse of cryptocurrencies will be limited given their relatively low popularity - though this may change. The entire cryptocurrency market is relatively small - $ 300 billion. However, this is ten times more than at the beginning of the year.

The potential approval of Bitcoin futures trading means that digital assets could soon become quite popular. Joseph Saluzzi, co-CEO of Themis Trading LLC, says cryptocurrency derivatives are risky as they legitimize assets with prices sourced from unregulated exchanges prone to manipulation and fraud.

Salluzzi said the situation looks like the collateralized debt that contributed to the 2008 financial crisis in the long run. "Cryptocurrencies will be made attractive to invest in," he says.

The risks associated with cryptocurrencies could also spread to the entire economy if crypto loans gain popularity. While the idea is still in its infancy, there are already startups offering dollar-denominated loans in exchange for digital assets like Bitcoin. If these assets collapse, then borrowers will also lose the ability to pay off the debt.

One of the favorite charts of Ted Rivell, co-manager of the Metropolitan West Total Return Bond Fund, shows the growing gap between the value of U.S. household assets and GDP growth - a sign that the economy is heading for a decline. This difference is larger than the one before the bubbles that preceded two well-known recessions: the dot-com crash in 2001 and the 2008 crisis. According to him, the most problematic now is the policy of low and negative interest rates, which drives prices up and forces investors to make more risky decisions.

According to David Price, a member of the board of directors of the investment bank Houlihan Lokey Inc., he believes that the next crisis will come from a loss of confidence in a particular region. Pryser believes that such regions could be the European Union and the Eurozone. For a long time, he says, Europeans worked together, but that changed after the U.K. left the E.U. Pricer emphasizes that when the next crisis hits the eurozone, there will be much less confident that the Union will pull together.

Rutaro Kono, senior economist for Japan at BNP Paribas, says Japan's weakening budget carries risks, as always. If not decisive action taken to fix the country's financial problems, Kono said the yen could drop to 150 units per dollar, up from about 111 yen now. Could increase inflation from the current 0.7% to 4-5% or even higher.

The International Monetary Fund estimates Japan has the largest public debt in industrialized countries, equivalent to roughly 240% of GDP. One of the possible reasons for the yen's weakening may also be the downgrade of the country's credit rating. Kono says this will make it harder for lenders to borrow foreign currency, which in turn will force them to "sell the yen to buy dollars, as they did during the 1998 financial crisis" in Japan.

Sir Michael Hintze, Head of CQS U.K. The LLP believes that one thing that could turn all assumptions about global growth is another decline in oil prices. "This situation could have massive consequences," Hintze says, adding that the $ 35 / barrel mark could be a watershed. Hintze says investors will be very unhappy if they ignore this point and its disastrous consequences for the global economy.

No room for error
From mid-2018, only one organization - The Bank of New York Mellon - will be responsible for nearly $ 2 trillion in securities received from so-called repo transactions agreed price - ed.). JPMorgan Chase, its longtime rival, has decided to step out of this space.

Even though The Bank of New York Mellon has invested billions in improving and modernizing its technology, some investors fear that any disruption could wreak havoc on the bond markets. "It's worrying that the market could hurt by just one mistake. This is not an ideal situation," says Adam Dean, managing director of Square 1 Investment Management Inc.

The scale of the next crisis
Deepak Gulati, CEO of investment firm Argentiere Capital AG, said the next crisis would have more repercussions than past ones. While the last crisis "was about greed, the next crisis will be about necessity," he says. "Then we had about 15 investment banks trying to make a profit. Now thousands of market participants are hunting for money," Gulati notes.

Dan Fass, an investor with 59 years of experience, says he is an optimist. But even he began to notice changes in partners' mood - according to him, they became cautious, especially in Asia. "Usually, our clients decide to invest in assets in the U.S., but recently they are investing in other places," says Fass.

Article and video on the topic: It Has Been Ten Years Since The Financial Crisis. What To Fear In The Future? (Bitcoin On The List).

Author: Jonathan Burroughs