The world is facing economic challenges on multiple platforms in 2016. Many similar patterns preceded the 2008 financial crisis happening all over again history is indeed repeating itself, but most people are oblivious to what is going on. In case you do not believe that we are already in another global financial crisis, below are five signs that the financial crisis was just years in the making. These signs are similar to what happened before:
Stock market bubble
In the years 2013 and 2014, the stock markets all over the world went back to an average of 18%, unlike a normal year when the stock market average is 30%. However, most companies that announced their results in 2014, the stock market had made an adverse impact on their annual earnings. This was as a result of lack of alternative opportunities and excess liquidity in the market. According to Robert Shiller, an economist at Yale University, the gap between corporate earnings and stock prices is larger that it was in the 2008 financial crisis, and if the markets are to return to the normal level, the stock market will have to fall by up to 30%.
Scarcity of energy sources does not cause the current energy crisis, on the contrary, the growing gas supply in the US and the development of fracking techniques have turned the natural gas into a powerful geopolitical weapon. If the US allows gas exports, then there would be a significant fall in the prices of gas all over the world which would be great to companies, but it would lead to geopolitical problems in West Asia and Russia.
Real estate bubble
The conditions that had led to the 2005-2007 real estate bubble are back; increasing prices of real estate in the stock market, low interest rates, and growing demand.
According to data that was released by the Bank for International Settlement in 2013, residential property prices increased by 60% in China, 80% in Brail and 15% in Canada. Similar to other bubbles, it will only affect the economy when it bursts but unlike in 2008, the Central Bank now has tools to prevent it.
The world has become more prosperous and richer in the recent decades. While the percentage of the living in abject poverty has reduced, the number of poor people has continued to rise due to income inequality.
There is just too much money concentrated in financial and non-financial firms. As of 2013, Apple has over $150 billion and Citigroup has more than 487 billion dollars in cash. If the corporate sector attempts to unload the huge financial resources, it would certainly lead to hyperinflation hence a financial crisis.