, 11 tweets, 2 min read Read on Twitter
Thread on my piece this week:

The recovery from 2008 has not just been weak, it has rested on deeply unstable foundations: a massive stimulus in China, rising corporate and household debt, and extremely loose monetary policy 1/9
China is now facing a massive debt bubble – its private debt to GDP ratio is now a staggering 270% GDP - much concentrated in the shadow banking system.

The UK - as host to the Hong Kong Shanghai Bank of China - is particularly exposed. 2/9
The global financial system (other than in the UK) is relatively well insulated from the Chinese debt bubble, but a crash could curtail the country's GDP growth which, for the last decade, has been the main driver of demand in many other parts of the global economy. 3/9
Following a decade of extremely loose monetary policy, the end of QE and potential interest rate rises could massively increase debt distress – especially amongst low income countries in the global South, US corporations, and highly indebted consumers in the global North. 4/9
The Eurozone crisis continues to rumble on, and could only be solved through debt mutualisation and a massive stimulus programme to boost productivity in the southern economies – both of which will be prevented by Germany and its northern allies. 5/9
Absent such structural reforms, the Eurozone will tip into recession, even as disparities between the northern and southern European economies grow.

Over the long term this can only lead to the break up of the currency bloc. 6/9
Slowbalisation poses an existential threat to modern, global capitalism. Financial globalisation proved to be its own undoing, and the backlash against global economic integration poses a significant near-term risk to global growth. 7/9
Even after the crash, private debt in the global north continues to pose a threat to financial stability. US corporate debt is the highest its ever been, Canada and Australia are facing housing bubbles, and consumer debt is extremely high in the UK and the Nordics. 8/9
This reflects a more profound problem. The reason debt levels are still so high and interest rates so low is that the recovery from 2008 has been so weak. If the recovery has been characterised by stagnant wages and productivity, what will the next recession look like? 9/9
History teaches us that when the status quo only offers stagnation or decline, voters will look for radical alternatives. So far, this has benefited the populist right, whose posturing disguises an essential respect for free market capitalism. 10/
But as the sheen falls off the likes of Donald Trump, defenders of the status quo face a far more worrying prospect: the election of a cohort of leaders who identify as socialists. The next recession may not be as large as 2008, but it could still represent a far greater rupture.
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