The World’s Next Credit Crunch Could Make 2008 Look Like a Hiccup!

• The world’s next credit crunch could make 2008 look like a hiccup! 
  by Ben Wright, http://www.telegraph.co.uk/ 
  Is this why central bankers are so scared of raising interest rates?
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  A solar eclipse, a super moon, the FTSE 100 breaching 7,000 and the US Federal Reserve speaking in tongues – truly some kind of financial apocalypse must be nigh. Well, maybe.
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  We are certainly living in strange times. An unprecedented monetary experiment is coming to a staggered end and no one knows the potential repercussions – a plague of frogs cannot be entirely ruled out.
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  For the time being, the markets remain sanguine, expecting, for example, a gentle increase in the Bank of England’s main interest rate to just 1.5pc by the end of the decade. And, who knows, maybe the markets are right.
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  But maybe it’s too quiet. Last week, Ray Dalio, the founder of the $165bn (£110bn) hedge fund Bridgewater Associates, wrote a widely-circulated note warning his clients that the US Federal Reserve risked setting off a 1937-style crash when it starts raising interest rates again.
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  Then, as now, the central bank had spent years printing money in order to help the American economy recover from the 1929 crash. But the side effect was a stock market bubble, which promptly burst when the Fed prematurely increased rates. Mr Dalio is worried about a repeat performance: “We don’t know – nor does the Fed – exactly how much tightening will knock over the apple cart.”
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