'Look out, we are heading for a crash again', warns William White, the central banker who predicted 2008 crisis
World faces a crunch that could see a collapse in London property prices
Despite 2008 crisis being caused by debt, the levels have since risen
Overall debt has gone from 200% of global GDP in 2007 to 250% now
is facing a new crisis caused by an explosion in debt. So warns William
White, the central banker who famously predicted the crisis of 2008.
financial markets reeled last week and fears of a fresh recession or
even banking crisis sparked panic, White was more than willing to issue
yet another prophecy of doom.
world is now facing a crunch that could see a collapse in property
prices, including those in London; a new global banking crisis; waves of
cheap commodities savaging Western industrial centres; and the need for
debts to be written off on a grand scale.
Predictions: The world is facing a new
crisis caused by an explosion in debt. So warns William White, the
central banker who famously predicted the crisis of 2008
Rather than being better placed to survive, the world is actually worse off than it was in 2008, he argues.
‘At each stage what’s been happening is the imbalances in the global economy have been getting worse and worse.’
his first warning to central bankers in 2003 at their regular meeting
at America’s Jackson Hole. At the time White was economic adviser to the
Swiss-based Bank of International Settlements – often dubbed ‘the
central bankers’ central bank’.
now works part-time at the equally prestigious Organisation for
Economic Co-operation and Development, but Britain has played a
significant role in his life.
Although Canadian-born, he attended the University of Manchester and his first job was as an economist at the Bank of England.
the 72-year-old has particular warnings for the UK, notably on its
property market and the risk to British industries such as steel. But
the picture he paints is of a fresh global crisis.
money has led to an explosion in debt, taken on by governments,
households and companies – and despite the 2008 crisis being caused by
too much debt, the levels have risen since, he says.
Pressure: White says China’s overcapacity in steel is deflationary
debt has gone from 200 per cent of global GDP in 2007 to 250 per cent
now. The deleveraging hasn’t happened,’ he said, by which he means
companies, households and governments have not paid back enough debt to
be ready for the next crisis.
Britain – and London in particular – could be vulnerable in relation to house prices.
‘Property prices particularly in some bigger places like London, Sydney and Paris would be deemed on the rich side.’
His own son, he says, has just moved from Vancouver in Canada to Victoria because he can no longer afford the property prices.
‘I would consider all of these financial and real assets where they have risen to historically high levels, to be vulnerable.’
At the very least he expects the world to ‘hunker down’.
banks are going to say the whole world has got very risky. They will be
biased against lending to anyone who isn’t a number one credit.
Consumers are going to say I may have a job today, but maybe not
tomorrow and they will focus on repaying debt. Everybody tries to save
at the same time,’ he warns.
He worries too about a wave of deflation from China, arguing the world is facing an oversupply of things it does not need.