THE world economy is on the brink of the worst financial crash since 2008, the International Monetary Fund has warned.
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| Experts fear another major global crash is on the way |
With global debt levels well above those at the time of the last major crisis, the risk of global panic remains.
A massive rise in lending by Chinese “shadow banks” and the failure of governments to crack down on dodgy practices were highlighted by the international body.
In a report released today, it said: “Large challenges loom for the global economy to prevent a second Great Depression…
“The aftershocks and policy responses that followed the Lehman bankruptcy have led to a world economy in which the median general government debt-GDP ratio stands at 52% - up from 36% before the crisis.”
The warning comes ten years since the collapse of Lehman Brothers - a major finance firm that’s decline signalled years of global panic.
A fatal combination of “record-high debt, risky corporate bonds, and inflated share prices” could bring the world to its knees, they say.
Daily Star Online reported on the risks of a second global financial crash just last month.
Economist and stockbroker James Stack, 66, was one of the few to predict the 2008 crash almost three years ahead.
He told Daily Star Online another crash is just around the corner: “It is 2005 all over again in terms of the valuation extreme, the psychological excess and the denial.
“People don’t believe housing is in a bubble and don’t want to hear talk about prices being a little bit bubblish.
“If we see mortgage rates at more historical levels, house prices can’t stay where they are.”
The pair join ex-British Prime Minister Gordon Brown, who warned another crash was coming and that “we are not ready”.
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