Ireland's governing parties are going to spend the time between now and Ireland's general election selling their recovery narrative - but looking at the bigger global financial picture a growing number of voices are warning that a new financial crash is coming.
The latest to air their opinion is the chairman of the OECD’s review committee and former chief economist of the Bank for International Settlements, William White, who says that the global financial system is currently in more danger than it was before the 2008 crisis.
He adds that this downturn will be "worse than it was in 2007."
Grim warnings
These comments come a day after the IMF cut its global growth forecast for the third time in 12 months.
Speaking to The Telegraph Mr White said that our ammunition to fight a coming downturn is almost "all used up."
“Debts have continued to build up over the last eight years and they have reached such levels in every part of the world that they have become a potent cause for mischief.
"It will become obvious in the next recession that many of these debts will never be serviced or repaid, and this will be uncomfortable for a lot of people who think they own assets that are worth something," he continued.
Mr White added that he believes that the US Federal Reserve's decision to raise interest rates in December will prove to have been a mistake and that those policymakers now face a "horrible quandary" as they attempt to foster growth while also tightening their monetary policy.
He pointed to the fact that debt in both emerging and developed markets has surged by 35% to an all-time high.
The current slowdown in China and a falloff in economic activity across the BRICS nations (who's borrowing costs have increased as the US dollar's performance has improved) could lead to a new slowdown across global financial markets.
Turning tide
Last week RBS bank’s Head of Credit, Andrew Roberts, raised eyebrows when he advised institutional clients to brace for a "cataclysmic year" and to sell everything except high-quality bonds.
“Sell everything except high-quality bonds. This is about the return of capital, not return on capital. In a crowded hall, exit doors are small,” the said.
Mr Roberts forecast that European stock prices could fall by 10% and those in the US by 20% while oil prices sink below $20 per barrel.
Société Générale strategist Albert Edwards issued an equally grim assessment of the global economic outlook - predicting that a new financial crisis is coming before the end of this year.
“The financial crisis will reawaken. It will be every bit as bad as in 2008-09 and it will turn very ugly indeed,” he told an investment conference in London last week.
