The Globe and Mail reports in its Wednesday, Nov. 4, edition that investors are getting nervous about market resiliency. A Reuters dispatch to The Globe reports that President Donald Trump's erratic trade policies and the Iran war's energy shock have revived inflation worldwide, putting pressure on central banks to raise interest rates. Economists say risks to the global economy are mounting.
Former Goldman Sachs economist Jim O'Neil says: "Rising rates always seem to sniff out and expose the most vulnerable time after time. Countries and businesses too exposed suffer the most."
He says if inflation does not ease, the risks stemming from the vast amount of debt-financed investment flowing into the artificial intelligence sector will grow. Mr. O'Neil says, "It's surprising to me there haven't been more bumps in the AI trade already."
Economist Paul Krugman says persistently elevated inflation that prompts significant rate increases, rising government bond yields and cracks in the AI boom are major concerns for the U.S. economy. "There are troubling aspects of the current economy that could potentially be harbingers of the crisis to come," Mr. Krugman wrote in an Oct. 25 column on on-line newsletter platform Substack.
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