The next economic disaster could hit the world soon \u2013 and we are not ready for it, warned economic and financial experts at the screening of a new financial documentary in Cape Town this week.<\/p>\n
The world is not ready for the next financial crisis, which could hit us sooner than most people realise, according to Professor David Taylor from the African Institute of Financial Markets and Risk Management (AIFMRM) at the University of Cape Town (UCT).<\/p>\n
\u201cIt is not a question of whether there will be another financial crisis like we saw in 2008 following the US sub-prime mortgage debacle. The question is when and where,\u201d he said.<\/p>\n
Taylor was speaking at the screening of the new documentary film Boom Bust Boom at the Labia cinema. The documentary, described as a \u201cfresh take on global economics\u201d is presented and co-written by Terry Jones of Monty Python fame.<\/p>\n
The documentary is a combination of light-hearted humour and serious commentary. It features interviews with actor John Cusack, journalists Paul Mason and John Cassidy, along with world-renowned experts Andy Haldane, chief economist at the Bank of England and Nobel Prize winners Daniel Kahneman, Robert J Shiller and Paul Krugman.<\/p>\n
Co-producer and writer, Dutch activist Professor Theo Kocken also attended the event.<\/p>\n
\u201cThe film was born out of 25 years of frustration with the business world,\u201d he said. \u201cWe needed to make people aware of the nonsense going on in the financial services industry. And we wanted to do it in a way that was light-hearted and easy to understand for the layman,\u201d said Kocken.<\/p>\n
But the film\u2019s message is serious, containing explicit warnings about human nature and the predictability of the world falling victim to another economic disaster, even as economies around the world appear to be recovering from the last recession.<\/p>\n
\u201cWhenever you hear someone say an economy is strong and robust, a red light should be going off. Stability leads to instability, we know this now,\u201d Kocken said.<\/p>\n
According to Taylor, there are many systems around the world that are at risk of setting off a financial scare. And South Africa, with its large private, corporate and public sector debt burden is at risk.<\/p>\n
He said China may initiate the next economic bust due to the slowdown of its improbably high growth rate in recent years.<\/p>\n
\u201cPeople are always talking about booming growth, but there is not enough talk about what level of growth is sustainable or even real. Very rapid growth often indicates euphoria and increases the risk of a consequential crash. Should a financial crisis occur in China, it would seriously affect South Africans,\u201d he said.<\/p>\n
The film shows with startling clarity how prior to each major global financial crisis – economic experts and even presidents spoke confidently about economic growth and stability. Only two weeks before the 2008 global recession, former US president George W Bush told Americans in his State of the Nation address that the US had a robust economy that was the envy of other industrialised nations around the world.<\/p>\n
Boom Bust Boom was released in 2014 and has been screened selectively around the world. Kocken plans to release the documentary on Netflix and hopes to air it soon on television. Eventually, he would like it to be a free resource that people can access on the internet.<\/p>\n
Kocken said his main aim is to spark debate and discussion especially amongst students and academics, hoping to change the way economics is taught at university, to include more about the history of economic crashes and the way economies \u201creally\u201d behave, as opposed to the models of rational behaviour that students are usually taught and which are demonstrably untrue.<\/p>\n
\u201cFinancial crises affect all life on our planet. All financial crashes are essentially the same. People believe they are wiser or that circumstances are different to prior times, but in essence, it is all about human nature. We tend to forget the previous catastrophe and think it won\u2019t happen again. But it will. And the next one could be worse,\u201d he said.<\/p>\n
Fin24<\/a><\/p>\n Government will wipe R4.1 billion from the SA economy<\/a><\/strong><\/p>\n SA unemployment is the economy\u2019s fault: Zuma<\/a><\/strong><\/p>\nMore on the economy<\/h3>\n