{"id":86646,"date":"2025-10-12T09:28:35","date_gmt":"2025-10-12T08:28:35","guid":{"rendered":"https:\/\/www.taxresearch.org.uk\/Blog\/?p=86646"},"modified":"2025-10-12T09:28:35","modified_gmt":"2025-10-12T08:28:35","slug":"how-big-might-the-crash-be","status":"publish","type":"post","link":"https:\/\/www.taxresearch.org.uk\/Blog\/2025\/10\/12\/how-big-might-the-crash-be\/","title":{"rendered":"How big might the crash be?"},"content":{"rendered":"<p>I have <a href=\"https:\/\/www.taxresearch.org.uk\/Blog\/2025\/10\/12\/is-the-crash-happening\/\" target=\"_blank\" rel=\"noopener\">already noted<\/a> that the cryptocurrency market is crashing this weekend.<\/p>\n<p>The risk of contagion into other financial markets is high because:<\/p>\n<ul>\n<li>The risk of Trump imposing unsustainable tariff rates of the sort he announced on China on Friday, triggering major market disruptions, is high.<\/li>\n<li>Far too many large companies now hold crypto assets.<\/li>\n<li>So too do some pension funds, utterly recklessly.<\/li>\n<li>By their very nature, crypto investors are volatile and prone to panic, and that sentiment is contagious. The flight for safety can very rapidly create broader financial instability.<\/li>\n<\/ul>\n<p>These are the basis for my fears.<\/p>\n<p>How far could markets crash? By a very great deal, I suggest.<\/p>\n<p>The S&amp;P 500 already reacted on Friday afternoon:<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-large wp-image-86648\" src=\"https:\/\/www.taxresearch.org.uk\/Blog\/wp-content\/uploads\/2025\/10\/Screenshot-2025-10-12-at-09.05.34-550x444.png\" alt=\"\" width=\"550\" height=\"444\" srcset=\"https:\/\/www.taxresearch.org.uk\/Blog\/wp-content\/uploads\/2025\/10\/Screenshot-2025-10-12-at-09.05.34-550x444.png 550w, https:\/\/www.taxresearch.org.uk\/Blog\/wp-content\/uploads\/2025\/10\/Screenshot-2025-10-12-at-09.05.34-372x300.png 372w, https:\/\/www.taxresearch.org.uk\/Blog\/wp-content\/uploads\/2025\/10\/Screenshot-2025-10-12-at-09.05.34-768x620.png 768w, https:\/\/www.taxresearch.org.uk\/Blog\/wp-content\/uploads\/2025\/10\/Screenshot-2025-10-12-at-09.05.34-496x400.png 496w, https:\/\/www.taxresearch.org.uk\/Blog\/wp-content\/uploads\/2025\/10\/Screenshot-2025-10-12-at-09.05.34.png 1366w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/p>\n<p>That was a 2.7% loss on the day.<\/p>\n<p>But the capacity to fall a lot further is enormous. Nothing has justified the increase in value since mid-2023, and all of that is AI-based hogwash that is now more than ready to fall apart:<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-large wp-image-86647\" src=\"https:\/\/www.taxresearch.org.uk\/Blog\/wp-content\/uploads\/2025\/10\/Screenshot-2025-10-12-at-09.06.20-550x440.png\" alt=\"\" width=\"550\" height=\"440\" srcset=\"https:\/\/www.taxresearch.org.uk\/Blog\/wp-content\/uploads\/2025\/10\/Screenshot-2025-10-12-at-09.06.20-550x440.png 550w, https:\/\/www.taxresearch.org.uk\/Blog\/wp-content\/uploads\/2025\/10\/Screenshot-2025-10-12-at-09.06.20-375x300.png 375w, https:\/\/www.taxresearch.org.uk\/Blog\/wp-content\/uploads\/2025\/10\/Screenshot-2025-10-12-at-09.06.20-768x615.png 768w, https:\/\/www.taxresearch.org.uk\/Blog\/wp-content\/uploads\/2025\/10\/Screenshot-2025-10-12-at-09.06.20-499x400.png 499w, https:\/\/www.taxresearch.org.uk\/Blog\/wp-content\/uploads\/2025\/10\/Screenshot-2025-10-12-at-09.06.20.png 1376w\" sizes=\"auto, (max-width: 550px) 100vw, 550px\" \/><\/p>\n<p>That market would easily fall by 40 per cent in that case.<\/p>\n<p>This has been waiting to happen. It might not all do so this week, but such a fall is now possible. And so far, the UK media is almost entirely ignoring this.<\/p>\n<p>I am not. And although I stress this might all blow over, the fundamentals very strongly suggest otherwise, with even the Bank of England<a href=\"https:\/\/www.theguardian.com\/business\/2025\/oct\/08\/bank-of-england-warns-of-growing-risk-that-ai-bubble-could-burst?utm_term=68e736c71dedc1022f6e7b756ca716a9&amp;utm_campaign=GuardianTodayUK&amp;utm_source=esp&amp;utm_medium=Email&amp;CMP=GTUK_email\" target=\"_blank\" rel=\"noopener\"> suggesting<\/a> that was the case last week.<\/p>\n<p>I am worried, not because we do not need a correction, but because of the ramifications.<\/p>\n<p>And the question is, have we got a government <a href=\"https:\/\/www.taxresearch.org.uk\/Blog\/2025\/10\/10\/talking-the-language-of-courage\/\" target=\"_blank\" rel=\"noopener\">courageous enough<\/a> to deal with this?<\/p>\n","protected":false},"excerpt":{"rendered":"<p>I have already noted that the cryptocurrency market is crashing this weekend. The risk of contagion into other financial markets is high because: The risk<br \/><a class=\"moretag\" href=\"https:\/\/www.taxresearch.org.uk\/Blog\/2025\/10\/12\/how-big-might-the-crash-be\/\"><em> Read the full article&#8230;<\/em><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[35,106],"tags":[],"class_list":["post-86646","post","type-post","status-publish","format-standard","hentry","category-economics","category-politics"],"_links":{"self":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts\/86646","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/comments?post=86646"}],"version-history":[{"count":1,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts\/86646\/revisions"}],"predecessor-version":[{"id":86649,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts\/86646\/revisions\/86649"}],"wp:attachment":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/media?parent=86646"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/categories?post=86646"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/tags?post=86646"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}