Allianz chief economic adviser and noted economist Mohamed El-Erian believes the whole FTX saga is incredible and that only part of it has come to light so far.
“This whole story is already incredible — and I suspect only part of the drama has come to light so far. Will definitely be the topic of someone’s book. The broader questions relate to the scope for contagion and regulatory implications,” he tweeted.
This whole story is already incredible — and I suspect only part of the drama has come to light so far. Will definitely be the topic of someone’s book
— Mohamed A. El-Erian (@elerianm) November 9, 2022
The broader questions relate to the scope for contagion and regulatory implications.
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Crypto giant Binance signed a non-binding agreement on Tuesday to buy FTX's non-U.S. unit to help tide over a liquidity crunch at the rival exchange. The overall cryptocurrency market capitalization dropped on Tuesday on the heels of Binance selling its position in FTX token (CRYPTO: FTT). The price of FTT dropped significantly and led to declines in many of the top cryptocurrencies like Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH).
In June, El-Erian told Yahoo Finance that crypto is in ‘Round 1’ of its development which is characterized by over-production and over-consumption. “We saw lots of people coming in who didn’t quite understand what that crypto space really is. They just saw prices going up and thought they would go forever, so we had a massive speculative demand,” El-Erian had said according to the report.
On Midterm Elections: The noted economist also explained in his tweet how the length and depth of a possible recession would have quite an influence on the next election in two years.
“The conventional wisdom is, understandably, that the consensus forecast of a “gridlock” America after today’s #midterms will keep the government out of the way of markets. Yet, the economic context calls for smart government policies (supply side, fiscal, protection of the most vulnerable segments of the population, global policy leadership, etc.) to help enhance the economy’s ability to grow strongly, sustainably, and inclusively – especially as a late Fed seeks to contain inflation,” he said.
The two combined means that gridlock would quickly shift attention to the next election in two years; and that the length and depth of a possible recession would have quite an influence, he noted.
Price Action: The SPDR S&P 500 ETF Trust (NYSE:SPY) ended Tuesday’s session 0.54% higher while the Vanguard Total Bond Market Index Fund ETF (NASDAQ:BND) gained 0.45%.
Read Next: Alibaba, Nio Fall: Hong Kong Stocks Weaken As China COVID-19 Cases Rise, US Midterm Results Eyed
Photo by International Monetary Fund on Flickr
