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Warning Of Great Depression Dangers From Credit Spree - Telegraph

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There is an article in today's Telegraph about a warning by the Bank of International Settlement (the world's most prestigious financial body) that there are ominous signals that suggest we could be heading for another 1930s style slump. As if Monday mornings weren't bad enough already!

"In a thinly-veiled rebuke to the US Federal Reserve, the BIS said central banks were starting to doubt the wisdom of letting asset bubbles build up on the assumption that they could safely be "cleaned up" afterwards - which was more or less the strategy pursued by former Fed chief Alan Greenspan after the dotcom bust.

It said this approach had failed in the US in 1930 and in Japan in 1991 because excess debt and investment build up in the boom years had suffocating effects."

http://www.telegraph.co.uk/money/main.jhtm...24/cnbis124.xml

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"Sooner or later the credit cycle will turn and default rates will begin to rise," said the bank"

Not something you will hear that often from a 'bank'

The levels of leverage employed in private equity transactions have raised questions about their longer-term sustainability. The strategy depends on the availability of cheap funding," it said.

That may not last much longer

Hope so, these PE monsters need to be buried

Edited by Saving For a Space Ship

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