Where is the next financial crash in America & Europe coming from? The problems with forecasting a financial crash.
By Sikander Hayat The problem with forecasting a financial crash is that no two crashes are the same. Causes could range from bingeing on collateralised debt obligations (CDOs) as the largest banks and insurance companies did before the crash of 2007/2008 (which lead to the collapse of Lehman Brothers and countless smaller market players) to run on the banks to rigidly sticking to Gold standard in the early 1900s. It is possible that remedy for one disaster results in another disaster which was not envisaged at the time of enacting such remedy. We know crashes do happen and will continue to happen despite our efforts to contain the risk. It is also true that we can moderate the risk but we cannot hope to eliminate the risk. We can shift the risk from highly regulated markets to markets where attitude to regulation is blasé and sometimes actively risk seeking in order to snatch the business from other parts of the world. This is where the world of...