Nouriel Roubini’s Worries About Another Financial Crash Aren’t Crazy

SectorFinancial Markets
CountryMiddle east

Watching Bill Hwang's Archegos Capital Management hedge fund stumble triggers more traumatic memories than global finance veterans like to admit. For many, parallels between the 1998 blowup of Long-Term Capital Management and Hwang's forced liquidation of more than $20 billion worth of stocks on March 26 were too strong for comfort. The details differ, but the underlying forces—heavily leveraged positions colliding with the hubristic belief that past crises can't happen again—are essentially the same. And, unfortunately, another LTCM-type crash could be next.

That's the message Nouriel Roubini is taking to television screens and podcasts around Manhattan, where the economist teaches at New York University's Stern School of Business. It's not easy to ignore Roubini, who's among a very small group who can credibly claim to have predicted the 2008 global financial crisis. We do often, however, wish he were wrong. Sadly, Roubini seems to be on to something as he warns ultralow to negative borrowing costs across the developed more...