Originally published March 12 2015
Global debt rose $57 trillion since 2007; economic implosion now unavoidable
by Daniel Barker
(NaturalNews) Global debt has soared to dizzying levels since the "Great Recession," according to a new report from the McKinsey Global Institute. The study estimates that overall global debt since 2007 has increased by a staggering $57 trillion, outpacing world GDP growth and raising the debt-to-GDP ratio by 17 percent.
Considering that high levels of debt were a significant contributor to the last crisis, these recent spiraling debt increases on the global scale are an indication that an even bigger crisis is likely to occur soon. McKinsey based its report on financial data from the world's 47 most important economies, including households, governments, corporations and the financial sector in the equation.
Despite the lessons that should have been learned from the bursting of the credit bubble in 2007, all of the major economies have increased their debt in the period since:
The study identifies three areas of "emerging risk":
[T]he rise of government debt, which in some countries has reached such high levels that new ways will be needed to reduce it; the continued rise in household debt--and housing prices--to new peaks in Northern Europe and some Asian countries; and the quadrupling of China's debt, fueled by real estate and shadow banking, in just seven years.
Government debt levels are increasing at an unsustainable rate in some countries, according to the research. Nearly half ($25 trillion) of the total global debt increase since 2007 is attributable to government borrowing, some of it nearly out of control.
Household debt is increasing sharply in many economies aside from the "core crisis" countries of the USA, the UK, Ireland and Spain -- many of them advanced economies, including Denmark, Sweden, Australia and others.
China's debt has almost quadrupled since the crisis, and the bubble in their real estate market may prove disastrous, along with potential dangers looming in other sectors of their economy:
Three developments are potentially worrisome: half of all loans are linked, directly or indirectly, to China's overheated real-estate market; unregulated shadow banking accounts for nearly half of new lending; and the debt of many local governments is probably unsustainable.
These levels of debt leave many of the world's economies extremely vulnerable to the next global economic crisis, one which seems all but inevitable at this point.
Other recent indicators of a looming global economic implosion include the nose dive of the Baltic Dry Index (BDI), a key economic indicator that has decreased in value by more than 90 percent in the last few months, and the collapse in oil prices, which is having an enormously negative effect on many of the world's economies.
The importance of the Baltic Dry Index and it's recent plunge is explained in a recent article from SHTFplan.com:
The index tracks in US dollars and measures global supply and demand for commodity shipments among bulk carriers including raw materials like lumber, coal, metallic ores, and grains. What makes this particular measurement so distinct from others, according to economic Howard Simmons, is that the BDI "is totally devoid of speculative content" because "people don't book freighters unless they have cargo to move."
In other words, the BDI offers a rather objective and reliable measure of true economic health and can be used to predict a crisis. Right before the stock market crash of 2008, the BDI collapsed, and its current plunge is likely to precede another economic crash, based on past examples.
A number of experts are predicting the worst. Businessman and financial expert Karl Denninger said in a 2013 interview:
We are setting up for a collapse that is going to be worse than 1929, and it's going to come sometime within the next two years. It could come as soon as the next couple of months, but it is going to happen, and there's nothing that is going to stop it.
Although it's impossible to predict exactly when the collapse will come, most of those with any understanding of global economics agree that it's not a matter of if, but when. And the fact that many pundits incorrectly predicted that it should have already happened doesn't mean that it won't.
In fact, the longer the global debt bubble continues to grow, the more disastrous it will be when it finally bursts.
Sources:
http://www.shtfplan.com
http://www.nytimes.com
http://www.mckinsey.com
http://www.shtfplan.com
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