FINANCE & COMMERCE — Indicators warn America could face a recession in the next year or two, Federal Reserve Bank of Minneapolis President Neel Kashkari says, and the country is not as prepared to weather a downturn as it should be.
Speaking Wednesday to the Minnesota chapter of the National Association of Corporate Directors, Kashkari said there are multiple warning indicators suggesting a recession is on the horizon. He pointed in particular to the so-called inverted yield curve, in which bond markets offer better rates for two-year Treasury bonds than 10-year notes. That signal, which occurred briefly in August, shows bond traders looking for safer long-term holdings and has been a reliable predictor of a recession, Kashkari said.
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“[The bank bailout] was the right thing to do, but we never ever, ever want to have to do it again. And the single best way to prevent that is to make sure that the big banks have enough capital to be able to bear their own losses when they make mistakes,” Kashkari said. “… So I’m not confident that if there’s another AIG or a giant bank or another systematic crisis, I think we’re going to have to bail them out again, and I’m not happy about that.”
That frustration also colored Kashkari’s response when event moderator and St. Cloud State School of Public Affairs Dean King Banaian asked him to comment on new corporate governance principles released last month by the U.S. Business Roundtable. After decades of advocating for the primacy of shareholder interests, the Roundtable’s new principles put shareholders on a level with employees, customers and other stakeholders.
Read more: https://finance-commerce.com/2019/09/economy-not-ready-for-recession-kashkari-says/
