New financial crisis would emerge from unexpected place

According to Peeter Koppel, private banking strategist at SEB Estonia, there are great political risks in the world economy, and a new crisis would likely emerge from an unexpected place.
“Lightning doesn’t usually strike in the same place twice, which means that crises are so severe because they come from an unexpected place, at least partially, or are unexpectedly large,” Koppel said in a press release. “This results in the need or want of economic agents to change their approach to a lot of things, they will do it at once, and their behavior will further fuel the crisis.”

According to Koppel, it can be seen historically that financial crises generally emerge when someone has been given a loan who should not have been. “Personally, I would include several eurozone countries on this list,” he added.

The most complex component in the emerging of a new crisis are the political risks. “Currently, a political crisis can be somewhat felt in Italy,” he noted. “All developments that lead to an increase in the likelihood of the eurozone falling apart are actually really dangerous, even if a scenario isn’t realized. In the meantime, markets would have time to factor dramatic scenarios into their tests, considerably change several force lines and patterns, and destroy that which most of us like — stability.”

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