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All Quiet on the Risky Front

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Larry Summers plus a podium is always an equation for zaniness, whether it’s to discuss the inherent quantitative deficiencies of women, or forecast a global struggle followed by the onset of a worldwide depression. At the 37th meeting of the World Economic Forum in the Swiss mountain resort of Davos this week (not the setup to an Agatha Christie novel, we swear), Summers and financial all-stars like Jean-Claude Trichet (European Central Bank President and quarterback of the Amsterdam Admirals) will serve as resident buzz-kills.
Citing narrowing emerging market vs. government bond yield spreads, historically high leverage multiples on European LBOs and hedge fund leverage reaching 1998 levels, Summers and others are to warn that risk in the current market is “ludicrously underpriced.” This combined with a predicted surge in oil prices and stock market volatility could result in global liquidity issues, a significant market correction and the mobilization of the Serbian army.
Summers, Trichet Warn Davos Party-Goers They Underestimate Risk – [Bloomberg]