Soaring Global Debt Sets Stage For “Unprecedented Private Deleveraging”
The UK’s Telegraph just published an analysis of global debt that pretty much sums up the coming crisis. Here’s an excerpt with a couple of the more hair-raising charts:
These numbers are astounding. Emerging market debt was $7.4 trillion in 1996, and today it’s $55 trillion. US and UK government debt has doubled – from already historically-high levels — since 2006.
And there’s no end in sight. Japan just passed a record-high government budget, 35% of which will be borrowed. The US added $1.3 trillion to its federal debt in 2016 and is debating massive increases in defense and infrastructure spending. China’s corporate debt alone exceeds 170% of GDP.
Which leads to three inescapable conclusions:
1) Interest rates can never rise because rolling over this much debt at historically-normal rates would blow up the budgets of both the developed and developing worlds.
2) The only solution – if you can call it that – is massive currency devaluation to make these debts manageable.
3) Since the debt binge has apparently gone parabolic, the reckoning is fairly close at hand. 2018 might be one for the history books.
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