Western financial engineering could lead to Japan-style bust

Donald Amstad of Aberdeen Standard Investments proclaimed the developed world is on the brink of “financial, economic, social and political crisis” on Livewire in August 2019. To Don’s (and our) surprise, the video triggered massive debate ranging from the efficacy of monetary policy in the west to civil unrest and what it means for investors’ portfolios. We invited Don back for a follow-up interview. He says his concerns are still real and that he’s also becoming increasingly worried about Western companies borrowing cheap money to buy back stock and boost profits rather than invest back into the real economy.

“This happened in Japan in the late 1980s and led to the inflation of the Japanese equity market bubble that burst so spectacularly in 1990.”

In this video, Don discusses why financial engineering is unsustainable and could be the next big test for markets.

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