The trigger for the current malaise was the financial crisis that left a hangover of debt and deleveraging amid tighter banking regulations that are exacerbating deflationary pressures.
It’s similar to the kind of shock that preceded the 1930s slump, according to an analysis by Morgan Stanley economists led by Hong Kong-based Chetan Ahya.
Like then, the end result could be a prolonged weak period and subdued inflation expectations, with a risk that those price expectations are un-anchored. The danger is that central banks move too quickly to raise interest rates or governments cut back on spending, triggering an even deeper slowdown. more> http://goo.gl/Btakjd
- The Only Certainty for World’s Central Bankers Is Uncertainty, Rich Miller, Bloomberg
- Negative German Yields Are Evidence of ECB Exhaustion, Mark Gilbert, Bloomberg
- Are negative rates a “calamitous misadventure?” ECB economists say no, Peter Olson and David Wessel, brookings.edu
- The Age-Old Problem Of Low Interest Rates, Jerry Jordan, Forbes