In a recent interview, James Gorman, CEO of Morgan Stanley, pointed out, that there are practically zero probabilities for a serious global crisis.
Obviously, he quoted, we may see some kind of crisis, even some shocks, but not of the size we saw after the collapse of L.Brothers.
Banks are now well positioned compared to 2008 when their liquidity wasn't sufficient and their lending too high. Nowadays he said, the situation looks much better and our goal is to focus on the quality and not the quantity of the loans we deliver.
My comments
Well, Mr Gorman seems to be right and I agree with him more or less. Still, when he spoke about some future "shocks", to my EYE, those shocks could appear for many reasons.
One of the most significant should be, that the crisis caused by the quantitative easing of the FED, could threaten the emerging markets.
Since 2009, FED started a policy of low interest rates, in an effort to keep lending among banks in low standards. Low interest rates though, pushed investors in the search of higher returns and (among others) into the emerging markets. Huge capitals profiting from low lending, ended in India, Brazil, Turkey in various projects such as building skyscrapers in Turkey, drilling for oil in Brazil or producing steel in India. As a consequence of all above, the debt of those countries, denominated in us.dollars increased so much, that in Turkey for example, reached a 22% of it's GDP!
An other side effect was that the us dollar, despite loosing ground to the euro, strengthened a lot towards the currencies of the emerging countries.
Recent data showed that a trend of repatriation of us dollars, is underway. Studies show that only in August 1/ 3d of the nearly 4 trillion dollars, invested in emerging countries, since 2008, has already returned to the U.S. That means, investors sold state (and corporate) bonds, a fact that sent stock exchanges in countries like Indonesia, Malaysia, Thailand, India, Turkey, Brazil, significantly lower. We also saw a devaluation between 15 and 30 % of their currencies to the dollar.
Obviously, when Mr Gorman spoke about possible "shocks", I'm sure he had in mind all above..........
