It has been over a decade since the downfall of Lehman Brothers and the financial crisis which left the world struggling for years after the debt bubble burst, however, the next major decline might already be in the making,
Though regulators and banks raced to defend the public from another depression, it appears a lot has slipped through the cracks.
Nowadays, it’s not subprime home mortgages that are threatening to topple markets, the catalysts are far more elaborate.
The existing monetary environment is an absolute minefield of industries on the edge of self-destruction. Ballooning business financial obligation, out of control student credits, and the looming peril of a market disaster all have analysts and economic experts worried.
Investors’ appetite for low-rated corporate bonds is rising, with over $3 trillion in BBB-rated debt outstanding, and 35 percent of that is one downgrade far from being absolute trash, according to Fitch Scores.
Students have doubled their financial obligation since 2008’s financial collapse, with the number now amounting to a staggering $1.45 trillion. And the default rate goes beyond that of credit cards, auto loans, and mortgages.
Equities, regardless of recuperating from the December thrashing which wiped out billions from the marketplaces, are showing considerable indications of economic slowdown, with some even hinting that the longest bull run in history might be coming to an end.
Emerging markets are also walking a thin line, knocked hard by the trickle-down effect of the trade war between the world’s two largest economies and a progressively complex geopolitical situation.
While each of these elements, on their own, may be manageable, together they are building a disastrous tornado, leading the economy into treacherous territory.
And one neglected risk might just serve to obliterate this house of cards.
In fact, the next financial crisis may not even originate from reckless lending or the collapse in global relations; it might come from the States’ most ignored opponents: hackers.
How cyber-attacks might set off the next financial crisis
Cybersecurity has been neglected by federal governments worldwide, with hackers set to cost countries across the globe over $6 trillion by 2021, overshadowing the financial effect of natural disasters.
Beyond information breaches and ransomware attacks, state-sponsored and independent hackers alike are progressively targeting major banks, crucial facilities and other points of support that help the world function as we know it.
Big Finance is already on edge, suggesting that ‘cyber threat’ is the biggest risk to the broader economy.
The Bangladesh Bank Heist is an excellent example of the hazard provided by criminals looking to take advantage of security imperfections in a few of the world’s most used financial operations.
In 2016, hackers issued a sequence of assaults on the global SWIFT payment platform, wrongly submitting guidelines to transfer over $1 billion, and while the majority of requests were denied, the cyber group was still able to get away with over $100 million.
Bank heists are just a little piece of a much larger puzzle, however.
Attackers have likewise taken credit cards, frozen ATMs and even closed down the UK’s whole VISA network. But the most vulnerable systems might just be our infrastructure.
In the series Mr. Robotic and the classic novel Fight Club, the main characters release attacks on key data centers and infrastructure, intending to reset the global financial system, erase debts, and trigger a financial crisis. And while these depictions are imaginary, the threat is very genuine.
In 2015, hackers were able to successfully able to disrupt and infiltrate power grids in Ukraine, leaving over 230,000 customers without electrical power temporarily.
That’s just the beginning.
Over the previous years, attacks on U.S. vital infrastructure has been gradually increasing. From pipelines to nuclear plants, the threat is growing, and according to the U.S. Department of Defense, these attacks are likely to continue for the foreseeable future.
With the U.S. debt bubble set to burst, and stock markets teetering on the edge, it’s safe to state that the international economy remains in a delicate state … and one significant attack might be the catalyst that sends out the world into a brand-new financial crisis.
Cybersecurity is more critical than ever because of this.
In September, previous Treasury Secretary Hank Paulson said “We tend to combat the last war,” and the statement continues to ring real.
The U.S. government continues to overlook its obligations as the world’s biggest economy, and the consequences might be severe.