Foreseer of Financial Crisis Rajan Warns of Toxic Mix on Trade
- Rajan worried about high levels of leverage and asset prices
- U.S. and China should negotiate, ‘not pull nuclear trigger’
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Raghuram G. Rajan, who warned of a credit crisis in 2005 before it hit, is now cautioning that trade wars when combined with a build-up in leverage and high asset prices could result in a toxic mix that dragged global growth.
“We are all very well aware that two things have built up, which had built up before the previous crisis, leverage and asset prices,” Rajan, a former governor of the Reserve Bank of India, said in a Bloomberg Television interview Thursday. “Trade is an issue for the world to be concerned about. It is extremely important that we have good outcomes there. By all means negotiate, but don’t pull the nuclear trigger there.”