Why the next financial crisis could be much worse
Saturday was the 10th anniversary of the Lehman Brothers collapse that led to the 2008 global financial crisis whose impact is still being felt today.
I watched CNN’s Fareed Zakaria “GPS” show on Saturday morning in which he raised a very worrying point. He observed that the reason the US was able to respond very quickly with unorthodox damage-control measures was due to the strong trust that existed between the US and the rest of the free world, especially the EU. Even China chipped in to avoid a global meltdown that would have had a cataclysmic impact on everyone.
Zakaria’s concern is that President Donald Trump’s style of alienating US allies because he doesn’t like the post-World War II trade order means the next crisis will be very hard to manage due to lack of trust among the key players.
With tariff wars raging between the US and its major trading partners both across the Atlantic and the Pacific, the next global financial crisis may erupt without a strong and trusted leader at the centre to engineer unconventional rescue measures to avoid a complete meltdown.
The reason the world avoided a financial meltdown in the 2008 crisis boils down to the mutual trust between the key players on the stage.
The next time around it won’t be that easy.
Anan Pakvasa
Bangkok
