Wednesday, September 24, 2014

Coming crisis will be different from last

Margin Debt level is at very high as a percentage of stock market capitalization, its essentially up to 2007 high and we have of-course a lot of leverage in the government sector, we have a lot of leverage in the corporate sector. And unlike the crisis in 2007 - 2008 when at that time the recovery came in 2009 emerging economies had a lot of momentum and they were still buoyant in terms of consumer expenditures increases, and notably China was very strong.

Now the emerging market complex is slowing down and isn't going to grow nearly as much as everyone have expected. If emerging economies overall can grow next year at say 4 percent, that would be actually an optimistic scenario, I think it could be even lower.