Each of the world’s major economies has a serious debt problem caused by too many years of irresponsible budget policies and zero interest rates — and could make it all the more difficult to avoid a recession and renewed financial strain at home.
Take the United States, the world’s largest economy.
At a time of cyclical economic strength, when the country should be running a budget surplus, it’s managing to run a deficit of around 6% of gross domestic product.
Over the next two years, almost $1.5 trillion in commercial-property debt matures.
China, the world’s second-largest economy and until recently its main engine of economic growth, also has a major debt problem. With its property and credit market bubble burst, China could be well on the way to a lost economic decade of its own.
Both Italy and Spain have public-debt-to-GDP ratios considerably higher than at the 2010 eurozone sovereign-debt crisis.
As if this were not enough reason for concern, Japan, until recently the world’s third-largest economy, has a public-debt level exceeding 250% of GDP, around double that of the United States.
With so many major debt problems around the globe, it’s hard to see how we avoid a day of world economic reckoning.
If they don’t, we should brace ourselves for economic turbulence at home and renewed financial-market strains as economic trouble abroad spills over to our shores.
@SwingStatePupConstitution3mos3MO
What? we can no longer cheat savers with depreciating paper?
Gee, what’s this world coming to, when you actually have to pay for something?
@E1ectoralQuailLibertarian3mos3MO
How much was to green energy projects and expansion of government largesse?
@SwingStatePupConstitution3mos3MO
All of it went to government largeass. Bet on it.
@E1ectoralQuailLibertarian3mos3MO
Much of the energy shock could have been mitigated had they not shuttered the thermal plants that provided low-cost and reliable energy. They rushed too fast into intermittent and expensive renewables.
@BasmatiBradLibertarian3mos3MO
Most the world has built their economies around massive debt expansion - basically living beyond their means for decades. It is the Keynesian economists that have taken over the world and touted “stimulus” as a means to grow the economy. Keynes argued for government stimulus during economic downturns in the private sector, to paid back immediately when the private sector recovered. This was essentially dampening the business cycle. The current batch of Keynesian economists have distorted his teachings and advocate for using “stimulus” (debt) to constantly and permanen… Read more
@ChicM4jorityRepublican3mos3MO
Keynes said that cooling down a too hot economy should be accomplished by raising taxes. And this would have the effect of simultaneously paying down debt. As far as I'm aware, it's never been tested in the U.S..
@BasmatiBradLibertarian3mos3MO
In a highly progress tax system, not sure how well that would work. The people paying taxes have more income and wealth and have a lower marginal propensity to spend. So, taking some of their income away may not result in much demand destruction. It certainly would help pay down the debt though. The problem with using rates is that it hits the lower and middle class portion of society, but they are the ones that have a higher marginal propensity to spend their incomes. My point was that the economies of the world have been using massive debt expansion to live beyond our means for decades (sti… Read more
@ChicM4jorityRepublican3mos3MO
Mainstream economists and the Fed are paid by Wall Street to keep the party going. Print money, monetize debt, cut taxes for the wealthiest, rinse and repeat.
@QuickWhitingLibertarian3mos3MO
In California government employees are getting healthy increases in union negotiations. Revenues are below estimates which show a massive deficit. There is a complete disconnect from reality. That is nothing new.
Many government workers are back in office one day a week and they are getting 5% increases plus bonuses. Rumblings are that unions want retirement to
at 48 with 20 years of service, 65% of highest pay with mandatory 3% yearly increases.
There is bill pending to take California’s highest income tax bracket to 16%.
@ISIDEWITH3mos3MO
@ISIDEWITH3mos3MO
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