Making Money
Top economist: The next global crash is inevitable
Aug 12, 2024
In this discussion, Linda Yueh, a Professor of Economics at London Business School and Fellow at Oxford, unpacks the telltale signs of impending global crashes. She examines how emotional factors like FOMO contribute to financial bubbles, drawing parallels to historical downturns such as the dotcom bubble. Yueh also highlights the consequences of the Silicon Valley Bank crisis, the complexities of China’s economy, and the intertwined risks of climate change and economic stability, offering lessons from the past for a resilient future.
01:18:48
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Quick takeaways
- The interplay of excessive debt and emotional investment significantly contributes to the severity of financial crashes and market bubbles.
- Historical banking crises typically lead to prolonged economic downturns due to credit restrictions, underlining the need for systematic financial reforms.
Deep dives
Understanding Great Crashes
The notion of a 'great crash' involves significant financial downturns marked by excessive debt and emotional investment, notably through fear of missing out (FOMO). The historical context demonstrates that while crashes can be anticipated, they cannot be wholly prevented, as various psychological and economic factors continually interplay. Analyzing crashes over the past century reveals patterns that can help in recognizing when market instabilities may escalate into more profound crises. Insights gathered from these instances underscore the critical role human behavior plays in fostering such economic bubbles.
