10 years on, what might cause the next financial crisis?

http://www.dw.com/en/10-years-on-what-might-cause-the-next-financial-crisis/a-40058311

10 years on, what might cause the next financial crisis?
Date 11.08.2017
Author Nik Martin

Despite US Federal Reserve Chair Janet Yellen saying last month that another financial crisis on the scale of the crash that enveloped the world in 2007/8 was unlikely "in our lifetimes," several respected stock market commentators believe a new disaster could happen within months rather than years. Jim Rogers, co-founder of the privately owned Quantum group of hedge funds, told the news website Business Insider in June that a stock market crash would happen "later this year or next." In a separate interview with the business channel CNBC, longtime Swiss investor Marc Faber, who has been nicknamed Dr Doom, predicted some stockholders would "lose 50 percent of their assets" during what he described as an "avalanche" of selling.

Both investors have accused policymakers of kicking the can down the road by not addressing structural weaknesses in the global economy following the last financial crisis. The Great Recession, as it became known, was triggered by a fall in the US property market which led to mass defaults in the subprime mortgage market, which offered housing loans to high-risk consumers. It then developed into the worst international banking crisis since the Great Depression of the 1930s.
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Other analysts have pointed to other triggers for a possible new crash, including China's heavily indebted economy, to which the rest of the world is increasingly interlinked, or a potential crisis caused by large-scale defaults on student loans in the US. According to the Financial Times, the American student loans market is now bigger than spending on credit cards and car loans at $1.4 trillion (1.19 trillion euros), thanks to an increase in university admissions and tuition fees. The FT warned that 8 million of the 44 million student loan recipients are currently in default, a problem that is likely to worsen amid a lackluster economic recovery.

Although other financial analysts aren't so bearish about the immediate prospects for the global economy, they do agree that the current dependence on QE and ultra-low interest rates to keep economies growing is unsustainable. "We're reliant on high asset prices and continuing to inflate those asset prices, coupled with high levels of consumer borrowing, and that's a bit of a toxic mix which leads to financial instability," Fran Boait, executive director of the London-based campaign group Positive Money, told DW.
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