Here Is The IMF’s Global Financial Crash Scenario
The comments above & below is an edited and abridged synopsis of an article by Tyler Durden
Hidden at the end of the first chapter of the IMF’s latest Financial Stability Report is a surprisingly candid discussion on the topic of whether rising medium-term vulnerabilities could derail the global recovery, which is a politically correct way of saying, “Is the financial system on the verge of crashing?”
The IMF uses a DSGE model to project the current global financial situation, and admits that concerns about a continuing buildup in debt loads and overstretched asset valuations could have global economic repercussions. It conducts a scenario analysis to illustrate how a repricing of risks could lead to a rise in credit spreads and a fall in capital market and housing prices, derailing the economic recovery and undermining financial stability.