EFTA Document EFTA01384458

I8 September 2017 Long.Term Asset Return Study: The Next Financial Crisis Figure 9: Populism index 1% of vote across key countries, population weighted, LHS) and DM Financial Crises (FIFIS) 40% 36% 30% 25% 203E 15% 10% 5% 0% EOM DM Shock, Mot Counties, RHSI Poptthzm index 1% vole share, LHSI § § 1, § re, Of '§ 'Fili §§§ § § § R ie San Annen• Bank &Mors Cakuleekat 100% 90% E 70% 00% 50% 40% 30% 20% 10% 0% • We see China's credit growth post GFC as also an area of great concern. As an example, in a recent IMF report they analysed 43 global cases of credit booms in which the credit to GDP ratio increased by more than 30 percentage points over a 5-year period. Only 5 cases ended without a major growth slowdown or financial crisis immediately afterwards. The IMF also caveated that these 5 cases, considering country specific factors, provided little comfort. If that wasn't enough, the fund also points out that all credit booms that began when the ratios were above 100% ended badly. Figure 101 Nonfinancial debt (% of GDP) leading up to key finonciol crises vs. current trend for China 250% US ----Japan Thailand Spain ----• China 230% 210% 190% 170% • 150% • 130% _ • 110% 90% 70% 60% 1980 1984 1988 1992 1996 2000 2004 2008 2012 2016 Sane Onesche Br* Ifni • These are perhaps the main observable risks out there but we go through a list of other potential catalysts in the piece. As we discuss at the top, by their very nature, financial crises or shocks are generally unpredictable. • While we can't be confident of where and when the next crisis will occur we can be pretty confident that the conditions remain in place for a world of frequent crises. Our report also contains all the usual historical data on returns across numerous asset classes and countries through history with data going back over 200 years in many cases. Page 8 Deutsche Bank AG/London CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0084657 CONFIDENTIAL SDNY_GM_00230841 EFTA01384458