http://www.ft.com/cms/s/2/b049ce16-230e-11e4-a424-00144feabdc0.html#axzz3ASrTK7CC
Rajan’s key insights:
“ …“Six years since
the financial crisis, central banks still have their foot fully on the accelerator
. . . [pushing] credit into emerging markets,” he says. “We don’t know how
this will end . . . It may end smoothly, if we let the air out of these
inflated markets slowly, or by a series of mini-crises. But it may be more
dramatic if, one fine day, suddenly the world realises the US is going to raise
interest rates quite quickly . . . then the air will go out much faster.”
Even worse, he says,
is a broader pattern of globalisation beset by repeated crises, as developed
and developing worlds fail to co-ordinate, sending capital washing back and
forth between them, violently destabilising their financial systems.”