Global crises are linked to wealth destruction in many countries – Natixis

Sandeep Kanihama FXStreet Contributor

Global crises (financial crises and recession) are linked to wealth destruction, due to the correction of the price of an asset simultaneously in many countries, according to Patrick Artus, Research Analyst at Natixis.

Key Quotes

“This wealth loss leads economic agents to save more and deleverage, may make them insolvent, and therefore gives rise to a recession.”

“This happened in 2000 with the bursting of the equity market bubble, and in 2008 with the bursting of the real estate bubble.”

“Could we see another global crisis of this type in the future? The bursting of a bubble would have to lead to a sufficiently large wealth loss. An obvious candidate is the bond bubble; and another - perhaps in the future if the corresponding bubble continues to grow - is the Bitcoin.”

Author

Sandeep Kanihama

FXStreet Contributor

Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.

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