How The Oil Crash Could Trigger The Next Subprime Crisis

Posted by Business Insider

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shapeimage 22When investors are ‘reaching for yield’, it’s a sure-fire warning sign.

It’s something that financial historian Russell Napier highlights in his interview with Merryn Somerset Webb this week.

Past experience shows that when investors get desperate, they’ll start lending money to any old enterprise with a good story, as long as it promises some sort of ‘real’ return.

When investors become that indiscriminate about where they put their money, you can be sure that something will happen to burst their bubble sooner or later.

And the an oil price crash might just be the thing to do it.

Investors have been lending rather too freely to high-risk companies

It’s been a great few years for ‘junk bonds’. As the name suggests, this is the risky end of the bond market….continue reading HERE