More Crises Brewing?

Abstract

Many fear the possibility of another global debt crisis in the post-subprime years, triggered by the US and the UK, where public sector borrowings have risen most significantly to fight the subprime impact. Others fear that China may be next to fall into a debt crisis, setting off another round of seismic waves to wreak havoc in the global system in the coming years. Still others fear that the Chinese will soon abandon the US dollar as their reserve currency, prompting other sovereign and private investors to follow suit, and leading to a US dollar crisis that will crush the global economy.