Yellen Says New Financial Crisis Probably Won’t Happen ‘In Our Lifetimes’ But BIS Says One Could Hit Soon

Federal Reserve Chair Janet Yellen is quite convinced that the United States will not experience another financial crisis for a very long time to come.  In fact, she is publicly saying that she does not believe that another one will happen “in our lifetimes”.  But there are other central bankers that see things very differently.  In fact, a new report that was just released by the Bank for International Settlements is warning that a new financial crisis could soon strike “with a vengeance”.  So who is right?

It would be nice if it turned out that Yellen was right.  Nobody should want to see a repeat of what happened in 2008, and Yellen seems extremely confident that she will never see another crisis of that magnitude

“Would I say there will never, ever be another financial crisis? You know probably that would be going too far but I do think we’re much safer and I hope that it will not be in our lifetimes and I don’t believe it will be,” Yellen said at an event in London.

Even though the U.S. national debt has roughly doubled since the start of the last financial crisis, and even though corporate debt has roughly doubled since then as well, and even though U.S. consumers are more than 12 trillion dollars in debt, and even though the top 25 U.S. banks have 222 trillion dollars of exposure to derivatives, Yellen believes that our financial system “is much safer and much sounder” than it was in 2008…

“I think the system is much safer and much sounder,” she said. “We are doing a lot more to try to look for financial stability risks that may not be immediately apparent but to look in corners of the financial system that are not subject to regulation, outside those areas in order to try to detect threats to financial stability that may be emerging.”

I have a feeling that these words may come back to haunt her, and the fact that she has more power over the performance of the U.S. economy than anyone else does is more than just a little bit frightening.

The truth is that signs of a major new economic downturn are emerging all around us, and many are warning that the next great financial crisis is just around the corner.  For example, just consider what a new report from the Bank for International Settlements is saying.  The Bank for International Settlements is widely regarded as “the central bank of central banks”, and this new report is warning that we could be heading for “a financial boom gone wrong”

A new financial crisis is brewing in the emerging economies and it could hit “with a vengeance”, an influential group of central bankers has warned.

Emerging markets such as China are showing the same signs that their economies are overheating as the US and the UK demonstrated before the financial crisis of 2007-08, according to the annual report of the Bank for International Settlements (BIS).

Claudio Borio, the head of the BIS monetary and economic department, said a new recession could come “with a vengeance” and “the end may come to resemble more closely a financial boom gone wrong”.

And of course many of the most trusted analysts in the financial world agree with the BIS.  In fact, Dr. Doom Marc Faber is predicting that stocks could soon decline “by 40 percent or more”

If the man often hailed as the original “Dr. Doom” is right, the stock market could see another “lurch” higher — at which point investors may want to cash out quickly and run for cover.

Marc Faber, the editor of “The Gloom, Boom & Doom Report’ and a perennial bear, isn’t backing down from his latest dire prediction that would send stocks plummeting by 40 percent or more.

A drop of that size could take the S&P 500 Index down from Friday’s closing price of 2,438 to 1,463.

In the end, we shall see who is right and who is wrong.

And let us certainly hope that another crisis like the one we saw in 2008 does not happen any time soon, because tens of millions of Americans are completely unprepared for one.

According to a brand new survey that was just released, almost half the country currently spends as much or more money than they make each month…

Nearly half of Americans say their expenses are equal to or greater than their income, according to a new study from the Center for Financial Services Innovation. And for those 18 to 25 the percentage is over half, up to 54%.

“Half of America has no financial cushion,” says Jennifer Tescher, president and CEO of CFSI, which released the study. “They are living really close to the edge.”

And another recent survey discovered that 69 percent of all Americans do not have an adequate emergency fund.

With so many of us living on the edge, our society is extremely vulnerable to a major financial shock.  And when one finally does happen, a lot of people are going to get knocked out of the ranks of the middle class very rapidly.

Even though things seem relatively stable for the moment, poverty is on the rise all over the country.  For example, according to the Daily Mail the number of homeless people in Los Angeles has risen by 23 percent over the last year…

According to a new count released in May, the number of homeless people in the Los Angeles area jumped by 23 percent in the last year to reach nearly 58,000. Of those, some 5,000 are veterans, the highest number of homeless veterans of any city in the country and a near 60 percent increase over the previous year.

And we are seeing similar things in cities all over the nation.

The United States is in the midst of a long-term economic decline that goes back for decades.  Our economic infrastructure has been gutted, our middle class is now a minority of the population, and we have piled up the biggest mountain of debt in the history of the world in a desperate attempt to maintain a standard of living that we have not earned.

Hopefully Janet Yellen is right and hopefully the next major financial crisis will be put off for as long as possible.

But whether the next financial crisis comes quickly or not, the truth is that the U.S. economy is going to continue to decline if we continue to make the same kinds of incredibly poor decisions that we have been making for a very long time.

Photo: “Janet Yellen, Chair of the U.S. Federal Reserve System” by University of Michigan’s Ford School is licensed under CC BY-ND

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About the Author: The Economic Collapse Blog

  • daniel1154

    You epitomize the Democrat party; Old, failed, bitter and dying. Negative and hateful. You are a perfect liberal in other words.

  • JohnDille

    YOU ARE A CHILDISH ARROGANT SELF CENTERED JERK.. A REPUBLICAN IN OTHER WORDS… AND YOU DISPLAY YOUR SELF CENTEREDNESS EVERY TIME YOU POST MORE OF YOUR CHILDISH DRIVEL!!! THE WORL IS NOTHING LIKE YOU THINK IT IS… OR AM I!!! NOW GO SOMEWHERE AND GROW UP… WHILE ALL THE REST OF US ENJOY THE 4TH OF JULY!!!

  • daniel1154

    You are a bitter, hateful, and failed man Dillie. You display it everyday with your internet rants. Your mental stability is not good.

  • JohnDille

    SO… WHEN I TELL THE RUTH… IDIOTS REPUBLICANS LIKE YOU INTERPRET THAT AS HATE??? WELL… YEAH… WE DEMOCRATS DO HATE RIGHT WING FASCISTS AND THEIR BRAIN WASHED PUPPETS LIKE YOU!!! WE DEMOCRATS DO NOT WANT AMERICA TO BECOME LIKE NAZZZI GERMANY… AND WE WILL DO WHATEVER WE NEED TO DO TO DEFEND OUR NATION FROM YOU FASCISTS AND RIGHT WING PUPPETS!!!

  • daniel1154

    You spew hate everyday just like Hodgekinson and Hitler. The only difference between their hate and yours is that they acted on it violently. You just post insane rantings on a constant basis.

  • JohnDille

    WHAT MAKES YOU ANY DIFFERENT THAN ADOLPH HITLER??? BOTH YOU AND HE ARE AND WERE FILLED WITH HATE AND CONTEMPT FOR EDUCATED PEOPLE AND ACTUAL THINKING PEOPLE… AND FOR PEOPLE WHO BELIEVE IN FREEDOM AND LIBERTY FOR EVERYONE!!! NOW GO KISS UP TO A NAZZZI LOVING REPUBLICAN BEFORE THEY GET MAD AT YOU FOR NOT SUCKING UP ENOUGH!!!

  • daniel1154

    Dillweed. Serious question. What make you any less insane than James Hodgekinson? I don’t see a difference, except you are older than him and less capable to act on your intense and unhinged hatred.

  • JohnDille

    SO… DO NOT USE GOVERNMENT SERVICES!!! SIMPLE SOLUTION TO YOUR PROBLEM!!! ALL YOU HAVE TO DO IS TO NEVER DRIUVE ANYWHERE, NEVE USE THE WARTER OR SEWER SYSTEM OR GARBAGE COLLECTION SERVICES, NEVER USE THE POST OFFICE, NEVER SEND YOUR KIDS TO SCHOOL, PAY WHAT YOU OWE TO THE SCHOOL SYSTEM FOR YOUR PIZZ POOR EDUCSTION, AND BE DONE WITH ALL OF THAT! SO… GO TO SOME 3RD WORLD COUNTRY WITH NO REAL GOVERNMENT, FIND A PATCH OF UNINHABITED JUNGLE OR SAND DUNE…. AND ENJOY LIFE WITHOUT GOVERNMENT AND WITHOUT ANY UNION MEMBERS!! MEANWHILE, ALL OF US REAL AMERICANS WILL CONTINUE TO ENJOY ALL THE MANY SERVICES THAT ALL THOSE UNIONIZED GOVERNMENT WORKERS PROVIDE TO US… WHILE THEY THEMSELVES MAKE GOOD LIVINGS FOR THEMSELVES AND THEIR FAMILIES BY DOING SO! THAT SEEMS TO BE WHAT BUGS YOU… THE IDEA THAT WORKING PEOPLE SHOULD GET PAID DECENT WAGES! MAUYBE IF YOU HAD EVER HAD TO WORK A DAY IN YOUR LIFE, YOU WOULD THINK DIFFERENTLY ABOUT ALL THAT SORT OF THING!!! DANIEL… THE DEMOCRAT UNIONIZED WORKING STIFF…. WORKING HARD AND EARNING A GOOD LIVING!!! NAH… YOU ARE TOO LAZY AND STUPID FOR ANYONE TO WANT TO HIRE YOU… OR FOR ANY UNION TO ACCEPT YOU AS A MEMBER!!!

  • daniel1154

    The New Face of the Union Movement: Government Employees

    The 7.6 million union members who work for the government make up 51.7 percent of all union members in the United States. The new face of the union movement is the clerk at the Department of Motor Vehicles, not the worker on the assembly line.

  • JohnDille

    THE VAST MAJORITY OF GOVERNMENT WORKERS ARE IN THE MILITARY, WORK FOR THE POST OFFICE, ARE SCHOOL TEACHERS, OR ARE JANITORS, COMPUTER OPERATORS, OR SECRETARIES!!! AND MOST OF THOSE FOLKS WORK FOR WAGES THAT ARE SOMEWHERE BETWEEN 33% ABOVE TO DOUBLE THE FEDERAL MINIMUM WAGE… WHICH IS BARELY ENOUGH TO LIVE IN IN MANY PARTS OF THE USA!!! I SHOUL KNOW… MY FAMILY HAD TO GET FOOD STAMPS TO LIVE ON THE ENTIRE TIME I WAS IN THE NAVY! WITHOUT THEM, THEY WOULD HAVE GONE HUNGRY MOST OF THE TIME! THAT IS STILL TRUE TODAY…. MOST OF THE PEOPLE ON FOOD STAMPS AND WELFARE ARE LOW WAGE WORKING PEOPLE WHO WORK 30 AND MORE HOURS PER WEEK… LARGE NUMBERS OF THEM FOR SOME BRANCH OR LEVEL OF GOVERNMENT!!!

  • winmeer

    Just print more fiat money.American banks
    • Money is anything which the parties to a transaction agree shall act as money for the purpose of their transaction. The Federal Reserve Note (FRN) is the official money of the government of the United States, not the money of the people of the nation. Nobody is obliged to accept or use the FRN nor to agree that it shall act as money for the purpose of any transaction except for transactions with the government ( transactions which are voluntary, such as paying personal income tax). What nobody talks about is that which is right under our noses; that the FRN is considered by the people as it being their money, money they are stuck with using and suffering under simply for the fact that they accept it for those purposes. It is money of the people only to the degree that the people consider it being money. The FRN is nothing but a circulating evidence of a money concept as established under a piece of legislation. It is “legal tender” because it pays nothing but acts as an idea, an offer that its potential receiver may accept it as and in lieu of real wealth money. Think of the FRN as Monopoly game money which can also serve as money like the FRN if people were to likewise think of and use it as money in the manner we use the FRN. It truly is all an illusion, but one we impose upon ourselves. It is our own damned fault that we accept and use the FRN and suffer the consequences. It is a banking industry product which has a toxic effect, so why do we continue to consume / use their crappy product ? Those who hate liverwurst have little right to complain about its taste if they elect to continue to eat it instead of eating something else. Shut up and stop eating the damned liverwurst ! Shut up and stop using the FRN and stop using the derivative systems and products which cause the very same problems and potentiate the very same banking cartel power of which we complain. To be blunt, if you do not like the effect of the use of FRNs, stop your bitching and use something else. Reject it. Lawful money has always been available for the use of the people, and yet the people preferentially use the toxic product. It is provided under the mandate of the Coinage act. Silver coin of governmentally guaranteed weight and purity is provided by the government of the United States, and yet, folks continue to use and bitch about the FRN. Silver is touted as having medical healing powers. Well, it also has financial healing powers if folks would just use it instead of the toxic paper “DOLLAR”, the FRN. It is not that silver in particular is a magical money form. The important issue is that silver is wealth money owned only by he who holds it, and he who holds silver (coin money) is beholden to no bank or banker who owns and regulated the paper money, the FRN, which we foolishly adopted and continue to kill ourselves with. Wake up !

  • JohnDille

    I AM AN ECONOMIST!!! I AM STATING FACTS! FALSELY BLAMING PEOPLE FOR PROBLEMS IS A REPUBLICAN THING, AND I AM NO REPUBLICAN!!!

  • mgv

    Well its good to see you’ve been taught the blame game

  • MGV

    We’ll forget our history and get careless, drop our due diligence on some new product…. thinking Index funds myself will somehow become the darling that creates a disproportionate tumble unexpectedly and a new collapse will spring up. Never say never

  • daniel1154

    Democrats unionized the public sector. That is why states are going broke and taxes are breaking the backs of people who work in legitimate jobs in the private sector. Unionized government workers, who produce nothing but beauracracy, are getting filthy rich on the backs of taxpayers just like the crroked Democrat politicians they elect.

  • JohnDille

    REPUBLICANS BUSTED ALL OF THE UNIONS… DECADES AGO… AND DEMOCRATS HAVE NOT HAD TOTAL CONTROL OF THE FEDERAL GOVERNMENT SINCE LYNDON JOHNSON WAS IN THE WHITE HOUSE… ALMOST 50 YEARS AGO!!! PRETTY MUCH EVERY PROBL;EM WE FACE IS DUE TO REPUBLICAN GREED SELFISHNESS ARROGANCE AND STUPIDITY!!! AND YOU HAVE SUPPORTED ALL OF THAT!!! IDIOT!!!

  • daniel1154

    All of these problems are because of Unions, Goverment, Government givaway schems like Obamacare, and crooked politicians like the Clintons, McCauliff Corzine, Reed, and Pelosi.

  • JohnDille

    NOPE… MOST OF OUR PROBLEMS ARISE DIRECTLY OUT OF STUPID GREED AND SELFISHNESS DRIVEN REPUBLICAN POLICIES!!! TAXES ON THE RICH ARE A FULL THIRD LOWER THAN WHAT THEY USED TO BE… AND WAGES EARNED BY THE BOTTOM HALF OF ALL AMERICANS ARE MUCH LOWER THAN THEY USED TO BE… ALL BECAUSE OF REPUBLICAN POLICIES. AND THOSE 2 FACTORS… ALL BY THEMSELVEDS… ARE DIRECTLY RESPONSIBLE FOR MOST OF THE PROBLEMS THIS NATION FACES!!! AND REPUBLICANS HIRING SO MANY ILLEGALS… AND REPUBLICANS ESTABLISHING DEEP BUSINESS TIES WITH COMMUNIST CHINA… ARE RESPONSIBLE FOR MOST OF THE REST OF OUR PROBLEMS!!! ALL OF WHICH YOU WOULD KNOW IF YOU KNEW THE ACTUAL TRUTH ABOUT ANYTHING!!!

  • daniel1154

    That is because of big government, big entitlements, and big taxes that cripple working people. All thanks to 100 years of left wing activism.

  • JohnDille

    Nearly half of Americans say their expenses are equal to or greater than their income, according to a new study from the Center for Financial Services Innovation. And for those 18 to 25 the percentage is over half, up to 54%.

    “Half of America has no financial cushion,” says Jennifer Tescher, president and CEO of CFSI, which released the study. “They are living really close to the edge.”

    And another recent survey discovered that 69 percent of all Americans do not have an adequate emergency fund.

    With so many of us living on the edge, our society is extremely vulnerable to a major financial shock. And when one finally does happen, a lot of people are going to get knocked out of the ranks of the middle class very rapidly.

    SO… WHAT THEY ARE SAYING HERE IS THAT REPUBLICANS HAVE DRIVEN DOWN WAGES FAR TOO MUCH… BY BUSTING ALL THE UNIONS, HIRING MILLIONS AND MILLIONS OF ILLEGAL IMMIGRANTS, BY OFFSHORING TENS OF MILLIONS OF JOBS OVERSEAS… ESPECIALLY TO COMMUNIST CHINA… AND BY BLOCKING NEARLY EVERY MINIMUM WAGE INCREASE THAT HEY COULD POSSIBLY BLOCK!!! AND ALL OF THAT HAS IMPOVERISHED TENS OF MILLIONS OF PEOPLE, HAVE DESTROYED MUCH OF THE MIDDLE CLASS, AND HAVE MADE THE TOP 1 OR 2% SUPER RICH!!! HEY… FOR ONCE… SNYDER IS RIGHT ON THE MONEY!!! AS FOR POTENTIAL ECONOMIC CRISIS… WELL… THE FED IS RUN BY COMPETETENT PEOPLE, FOR THE MOST PART… SO THEY MAY BE ABLE TO STOP THE CATACLYSM ARISING FROM TRUMP’S TOTAL INCOMPETENCE… ALTHOUGH THAT MAY BE HARD GIVEN TRUMPS DICTATORIAL CONTROL OF SIGNIFICANT PARTS OF THE WHOLE SYSTEM! BUT… AT LEAST IN THEORY… THE FED CAN DO LIKE ANY EQUIPMENT OPERATOR WOULD DO IF THE MACHINERY MALFUNCTIONED IN A BIG WAY! THEY WOULD JUST TURN IT OFF… OR UNPLUG IT… OR HIT THE BREAKER… AND THEN ISOLATE THE FAULTY EQUIPMENT AND FIRE THE FAULTY OPERATORS… AND GET THINGS BACK TO NORMAL ASAP!!! THE KEY TO THAT KIND OF THING IS… OPERATORS NEED TO DO WHAT THEY ARE TRAINED TO DO, AND NOT PANIC!!! MUCH TO HIS CREDIT… GEORGE BUSH JUNIOR DID NOT PANIC WHEN THE STUFF HIT THE FAN BACK IN 2007 AND 2008… AND HIS BAIL OUTS AND OTHER SUCH ACTIONS HELPED SAVE THE SYSTEM LONG ENOUGH SO THAT OBAMA COULD GET THINGS BACK TO NORMAL WHEN HE TOOK OVER!!! RIGHT WING REPUBLICANS MAY WHINE AND CRY ABOUT THOSE NECESSARY ACTIONS AND THEIR NOT SO WONDERFUL IMPACTS… BUT WHAT SHOULD WE EXPECT FROM IDIOTS???