…MIT Sloan School of Management professor Simon Johnson didn’t equivocate on the perils of the current global economic environment. “We have built a dangerous financial system in the United States and Europe,” said the former chief economist at the International Monetary Fund….
Professor Johnson cited alarming parallels with October 1931, when “people thought the worst was behind them, but the smart people were wrong and instead the crisis just broadened.”
Later he echoes a sentiment that I wrote about recently:
“Building our societies on debt is very dangerous,” says Johnson. “The asset side fluctuates whilst liabilities are fixed. We need to restructure away from debt and towards greater equity capital.”