In a spate of weeks, Central Banks in New Zealand and South Korea have reduced their interest rates to help overcome a slowdown in their respective economies. Australia and China too have indicated they might have to do the same in order to bolster growth as recent economic indicators have shown continued weakness.
It is indeed an irony because on one hand, there is a need to control the escalation of corporate and consumer debt levels, but now in order to bolster growth the Central Banks are releasing more liquidity into the market by lowering the interest rates to prompt more borrowing and spending. This also runs contrary to the objectives of the various governments to reign in property speculation.
Already, the debt bubble in most Asian economies is at a very dangerous level. And when it burst it can cause great financial damage to the economies concerned. Economic growth cannot be in a straight line, sometimes you have to allow market forces to play their role. Rather than propping up a bubble and inflating it, perhaps it pays to manage the economy towards a soft landing.
My guess? There is a reason why this cannot be done. The bubble has gotten too big to manage.
Let's take a look back into the past and see where we are heading:
1987 Global Recession and the infamous Black Monday
1997 Asia Financial Crisis
2007 US Sub-prime Mortgage Crisis
2017 ????
I am not saying that definitely a major crisis will happen in 2017, but looking at the trends, you have to be vigilant. So it pays to prepare yourself by making the right financial decisions in investments and savings, besides managing your personal debt levels well.
Here's an interesting article:
http://www.bloomberg.com/news/articles/2015-06-11/there-they-go-again-asian-central-banks-cut-rates-spur-bubbles
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