Fund Managers Fear Another Lehman Event – -From Massive Central Bank Intrusion

BERLIN (MarketWatch) – Negative interest rates, ultracheap loans and aggressive quantitative easing – central banks are doing everything they can to prevent another financial crisis, but their unconventional measures are instead creating a massive risk to the global economy, top money managers say.
Gathering for the international FundForum in Berlin this week, more than 1,300 fund managers spent three days discussing the current investment outlook and the central banks’ monetary ‘experiment’ emerged as a major concern for the industry.
‘I think it’s fair to say it is an experiment because it hasn’t been done at this magnitude of negative interest rates. So many sovereigns have negative interest rates,’ said Alexander Ineichen, founder of Ineichen Research and Management.
‘In 2008 we had a Lehman moment and central banks stepped in, which was nice. But a lot of the structural issues have not been resolved. A lot of the leverage just went from the private sector to the public sector. My guess is that the next big risk, the next ‘Lehman moment’ is the sovereign. It’s because the problems are now there. The risks are structural,’ he said.

This post was published at David Stockmans Contra Corner on June 8, 2016.