Warren Buffet has called the Federal Reserve, the US central bank, “The Greatest Hedge Fund In History”. That is because the Fed as it is commonly known has persisted in printing money and buying $85 billion in bonds each month in order to artificially support the US and by extension the global financial markets.
This is quite possibly the recipe for another financial disaster. Continue reading
Posted in Banking, Business, History
Tagged asset prices, bonds, Credit, Federal Reserve, Financial Crisis, financial markets, hedge fund, housing, inflation, Paradigm, Quantitative Easing, stocks, Subprime, Warren Buffet
Are we on the verge of another financial crisis?
It is a question well worth asking as the prices of stocks and property have been sky high by central bankers flooding the markets with cheap money.
What should risk professionals do?
The first question for risk managers, internal auditors and finance professionals is; how much of the cheap and plentiful liquidity provided by Quantitative Easing, or QE as it is known, has gone into inflating asset prices—stocks, bonds and housing?
The second question is: how far will asset prices fall when the Fed and the Bank of England start to “taper” or reduce their QE and how will that impact my institution? Continue reading
Posted in Banking, Business
Tagged asset price, Audit, Bernanke, bonds, economy, Federal Reserve, Financial Crisis, India, Rajan, Risk, stocks, Subprime, Summers, Yellen