Another financial crisis is not likely in our “lifetime”, says US Federal Bank chair Janet Yellen.

Pick me up off the floor someone!

Yellen’s somewhat delusional assurances are meant to calm fevered markets and postpone if not avert the next crash. But they’ve rightly been met with scorn.

Warning signals are flashing brightly around the globe, not least in Italy where the threat of a full-blown banking crisis was only temporarily averted at the weekend by the state’s EU rule-breaking, €17bn intervention.

The decade of brutal austerity since the 2007-8 Great Financial Crash has stirred the revolt against the political establishment seen in the vote for Brexit and the election of Trump. Yellen knows that a new crash will propel the growing social movement in unpredictable directions.

In the UK, the Tory/DUP coalition of chaos’ double U-turn over ending/not-ending the cap on public sector pay reveals the destabilising impact of a growing demand for a new election from the millions of Corbyn supporters hungry for a change.

Beyond those imprisoned in low-pay but full-time employment, the proportion of people driven to depend on vulnerable, precarious or insecure forms of attempting to earn a living in the UK has risen to one third – according to a survey carried out for the GMB union.

As many as 10 million now scratch around for work from agencies, on zero hours contracts, in forced self-employment, in the gig economy and the like. More and more, dependent on food banks, are left without rights such as sick or holiday pay.

Personal, so-called “consumer” debt is soaring as millions try to offset the punishing dive in real wages. Bank of England’s governor, Canadian Mark Carney (on a £7 million contract) says real wages will fall further this year as inflation takes off. Now he’s is talking about a possible interest rate rise.

The response from Mike O’Connor, the chief executive of StepChange Debt Charity couldn’t be starker. He warned: “Any increase in borrowing costs could tip households, many of which are already on a financial knife-edge, into serious financial hardship.”

It’s a global trend that’s worrying central bankers everywhere. To such an extent that Australian central bank governor Phil Rowe is, astonishingly, calling on workers to demand wage rises. As ABC news reports

For decades, calling on workers to demand wage justice was the last thing you were likely to hear from the boffins who walk the hallowed halls of 65 Martin Place.

On the contrary, workers and unions were admonished for demanding pay rises and blamed for threatening to fuel inflation, undermine the profit share of national income and ruin the economy.

How times have changed. Today, the wage-price spiral is dead and gone. The economy is facing what the Reserve Bank governor calls “a crisis of low pay”.

The wage-price index, the most reliable indicator of labour costs, is at a record low. The profit share of national income is soaring, while the share going to workers is equal to the lowest level since the Second World War.

Low pay is dragging on economic growth and the stagnation of wages sits uneasily with record household debt levels, creating concerns about what might happen when interest rates begin to rise.

It’s a similar story in Canada where debt of all kinds, soaring faster than in any other developed economy, has reached tipping point according to a new report by David MacDonald, an economist at the Canadian Centre for Policy Alternatives. 

Hong Kong, China and Canada are at the greatest risk of financial crisis – on red alert – because of debt and excessive house prices, says the Bank for International Settlements in its annual report.

So, Janet, open your eyes. The next crisis is brewing up, even as the effects of the last one continue to reverberate. And with central banks lacking funds for a new round of bail-outs, the consequences will be dramatic, if not to say downright revolutionary, in their scope.

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