Global Debt Crisis Is Booming (In Charts)
McKinsey report concluded that total global debt was $199 trillion (equivalent) as of 2nd Qtr of 2014 – now that figure has been re-calculated at between US$220 trillion to US$ 230 trillion as of now July 2015. With a global population of 7.3 billion this works out at over $31,000 of debt for every man, woman and child alive in the world today !
The attempt to solve what was essentially a global debt crisis of 2007 to 2009; the remedy was mountains of more debt concluding with another global financial crisis – the question is when; rather than if.
This will have an impact on our economic recovery and on asset prices and hence the importance of diversification – both in terms of asset diversification but also in terms of geography and where and how your assets are owned.
McKinsey Institute says global debt is $199 trillion and unsustainable
- All major economies have “higher levels of borrowing relative to GDP” than in 2007
- 3 risk areas - rising Chinese debt, government and household debt
- Debt report ignores U.S. unfunded liabilities of over $100 trillion
- Major cause of risky, unprecedented debt levels - QE and ultra loose monetary policies not acknowledged
- Risk of new global financial crisis - wealth taxes, currency wars and devaluations and bail-ins
This chart below is now out of date considering World debt has now increased by over US$ 78 trillion (estimated) since 2007 to today.
The latest data from Eurostat confirms, as of Q1 2015, European debt rose to €9.4 trillion from €9.3 trillion, which is a new record high debt/GDP of 92.9%, up from 92.0% the previous quarter.
Of course, none of these numbers include total government pension benefit and retirement liabilities. Adding those would push the ratios higher by another 200-300%.
Also remember these are just headline Government on-balance sheet debt and is non-inclusive of off-balance sheet debt, future liabilities, household, corporate, banking & financial institution debt.
According to Bloomberg, debt levels in China have risen to levels never recorded before…
While China’s economic expansion beat analysts’ forecasts in the second quarter, the country’s debt levels increased at an even faster pace.
Outstanding loans for companies and households stood at a record 207 percent of gross domestic product at the end of June, up from 125 percent in 2008, data compiled by Bloomberg show.
Remember, that doesn’t even include government debt. When you throw all forms of debt into the mix, the overall debt to GDP number for China is rapidly approaching 300 percent.
So Gold ? :
The only “solution” under our current system is to kick the can down the road for as long as we can until this colossal debt pyramid finally collapses in upon itself.
The extreme undervaluation of Gold can only last for so long. Sentiment is at extreme negativity. This is how great bull markets form a base.
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