Submitted by Taps Coogan on the 26th of September 2018 to The Sounding Line.
The former President of the ECB, Jean-Claude Trichet, recently spoke with Bloomberg about his outlook for the global economy and monetary policy, warning of ‘absolutely obvious’ over-leverage that exceeds levels from before the financial crisis.
“The over leverage is absolutely obvious. Fancy that we are now, in terms of public and private debt outstanding at a global level, at a level which is largely superior to what we had observed at the eve of the last crisis of ’07-’08. So if (debt) is an indicator of a vulnerability that is pertinent, and I trust that it is…, we have… a lot of issues that have to be tackled not only by the central banks. The central banks have done a lot. They were really the only game in town during that period. So I would say governments, parliaments, the private sector, have to be fully aware of the fact that it is profoundly abnormal that we continue to (increase) financial leverage at a global level.”
“Financial markets have a tendency to act and behave on a short term basis. It is very very difficult to incorporate or price in the financial risk of today with what would happen in the medium and long term. Unfortunately we learned that. We know that.”
There is much more to the interview so enjoy it above.
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