U.S. Leverage Risks Warn of Third Wave of Financial Crisis

Warnings have emerged that the high leverage in the U.S. financial system could trigger a new financial crisis if it coincides with an economic recession. Professor Tuomas Malinen from the University of Helsinki predicts that the U.S. may enter a recession by the end of this year or early 2027, identifying corporate debt and investor borrowing as leverage factors. Malinen noted that a highly leveraged financial system has not yet experienced a recession, warning that once bad investments are cleared, both financial markets and policymakers could face simultaneous pressure. He described this risk as the 'third wave' of the global financial crisis, with the first wave being the instability in the UK bond market in 2022 and the second wave being the crisis of U.S. regional banks in 2023. The Federal Reserve has reported that vulnerabilities related to leverage in the financial sector remain pronounced. Major tech companies are planning over $700 billion in capital expenditures this year, with a significant portion allocated to AI infrastructure. Malinen pointed out that the balance sheets of central banks in Japan, the EU, China, and the U.S. have increased by a total of $24 trillion over the past 15 years until 2023, warning that the economy has not properly experienced a recession in a liquidity-supplied environment. Bankruptcy filings in the U.S. are on the rise, and some indicators are showing mixed signals. For Korean cryptocurrency investors, the key issue is whether the U.S. economic debate will lead to liquidity conditions for risky assets and pressure to reduce leverage.

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