Good Debt! Bad Debt!
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A Global Problem: Worldwide debt is nearly $200 Trillion. Since 2007 few countries have reduced their debt-to-GDP ratios.
Change in Debt to GDP ratios:
Saudi Arabia = 0
India = +3%
Germany = +11%. Germany didn’t have alarming debt levels before the financial crisis and it managed to keep debt in check during the recession.
US = +17%. A drop in borrowing by US households during the crisis ws offset by debt to fund government stimulus.
Brazil = +35%
UK = +38%
Russia = +42%
Japan = +67%
China = +78%. Fueled by borrowing to buy real estate and so-called shadow banking. China’s debt is growing at an unsustainable rate.
Ireland = +154%. Ireland’s whopping corporate debt – 179% GDP – is due in part to tax loopholes that make it easy for foreign firms to borrow via their Irish subsidiaries.
In other words, debt, caused the last crash, and it’ll likely cause the next. To understand the volatility,uneasiness and outright fear in the global economy these days, you have to follow the debt.
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