Skip to search.

Next Meltdown Will Be Driven by "Big Collapses in Emerging Markets"

Posted Apr 01, 2010 11:56am EDT by Heesun Wee in Investing, Recession, Banking
Related: ^dji, ^gspc, dia, spy, euo, fxi, uup

With Greece's rescue plan in jeopardy as bonds fall, nations' ability to pay back debts are raising concerns around the world. Of course, in this case, European Central Bank and Greece officials were trumpeting optimism.

But Greece needs a "much more dramatic fiscal program, which is going to be awfully painful and I doubt that will work politically, or debt restructuring. And no one wants to talk about debt structuring yet," says our guest Simon Johnson, an economics professor at MIT and former research director for the IMF. 

Is America the next Greece?

With America's debt rising (as Aaron discussed earlier this week with budget hawk David Walker), it's only natural to wonder if America is headed down a similar Greek path. "Absolutely not," Johnson tells Aaron and Henry in the accompanying clip.

America's debt is denominated in dollars that we control, Simon notes, unlike Greece's fate that's tied to the European Union. With the right tax reform, the U.S. can steer clear of a debt crisis, adds Johnson, co-author of "13 Bankers: The Wall Street Takeover and the Next Financial Meltdown." The new book chronicles the rise of concentrated financial power and its threat to our economic well-being. 

So what's the next shoe to drop?

Hint: Markets that are getting too hot now. "The next crisis, the next meltdown I think will be driven by some big collapses in emerging markets including China," Johnson says. "Everyone tells you that China can only go up. That's when you know it could get worse."

Click on the player to get Johnson's take on big banks and creditor rescues, and to embed and share the video.

Earlier:

Go to Tech Ticker

There are no comments yet

Post a comment

Sign in to post a comment, or Sign up for a free account.
Quotes delayed, except where indicated otherwise. Delay times are 15 mins for NASDAQ, NYSE and Amex. See also delay times for other exchanges.

Quotes and other information supplied by independent providers identified on the Yahoo! Finance partner page. Quotes are updated automatically, but will be turned off after 25 minutes of inactivity. Quotes are delayed at least 15 minutes for NASDAQ, NYSE and Amex. See also delay times for other exchanges. Real-Time continuous streaming quotes are available through our premium service. You may turn streaming quotes on or off. Fundamental company data provided by Capital IQ. Financials data provided by Edgar Online. Historical chart data and daily updates provided by Commodity Systems, Inc. (CSI). International historical chart data, daily updates, fund summary, fund performance, dividend data and Morningstar Index data provided by Morningstar, Inc. Analyst estimates data provided by Thomson Financial Network. All data provided by Thomson Financial Network is based solely upon research information provided by third party analysts. Yahoo! has not reviewed, and in no way endorses the validity of such data. Yahoo! and ThomsonFN shall not be liable for any actions taken in reliance thereon. All information provided "as is" for informational purposes only, not intended for trading purposes or advice. Neither Yahoo! nor any of independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. By accessing the Yahoo! site, you agree not to redistribute the information found therein.