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Page added on May 25, 2015

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The world is drowning in debt

Business

The world is sinking under too much debt and an ageing global population means countries’ debt piles are in danger of growing out of control, the European chief executive of Goldman Sachs Asset Management has warned.

Andrew Wilson, head of Europe, Middle East and Africa (EMEA), said growing debt piles around the world posed one of the biggest threats to the global economy.

“There is too much debt and this represents a risk to economies. Consequently, there is a clear need to generate growth to work that debt off but, as demographics change, new ways of thinking at a policy level are required to do this,” he said.

“The demographics in most major economies – including the US, in Europe and Japan – are a major issue – and present us with the question of how we are going to pay down the huge debt burden. With life expectancy increasing rapidly, we no longer have the young, working populations required to sustain a debt-driven economic model in the same way as we’ve managed to do in the past.”

Mr Wilson used Japan, where gross government debt has climbed above 200pc of gross domestic product (GDP), as an example of where the ageing population could demographics were working against them. “[This] is evidently not sustainable over the long term,” he said.

The Organisation of Economic Co-operation and Development (OECD) has also sounded out a warning about Japan’s growing debt pile. The Paris-based think-tank said gross government debt was on course to balloon to more than 400pc by 2040 if the government did not carry out reforms.

Angel Gurria, the OECD’s secretary-general, said monetary stimulus and stronger growth alone would not be enough to haul the economy out of its two-decade malaise.

“Japan’s future prospects depend on ensuring fiscal sustainability over the long term. With a budget deficit of around 8pc of GDP, the debt ratio is set to rise further into uncharted territory,” he said.

Others have warned privately that Japan’s debt mountain is unsustainable. “The crunch point is when it starts to run a current account deficit,” said one senior banker. “When they stop running a current account surplus and they need our money to survive, we’re not going to lend to them at 30 or 40 basis points.”

Mr Wilson said there was hope for countries with high debt burdens. “The demographic shift means that we need to look to more creative policy, including immigration and workforce expansion in order to find ways to pay down debt.

This is happening in Japan in the form of [prime minister] Shinzo Abe’s drive to increase female labour participation and via efforts to boost inflation.”

The Goldman chief also said that warnings about liquidity shortages in the market were being “overplayed”, especially with regards to the corporate bond market. He also said that bouts of volatility when the US Federal Reserve starts to raise interest rates were to be be expected.

High profile executives including Jamie Dimon, the head of JP Morgan, and Tim Adams, the head of the Institute of International Finance have warned that the raft of regulation introduced in the wake of the 2008 crisis could potentially cause huge volatility in the markets.

While Mr Wilson said the European Central Bank’s €60bn a month bond-buying progamme meant it was hard to judge how liquid the market was, he added: “We should expect some growth in volatility – but I do not view that as a negative. In fact, I would view this as getting back to a more normal world. Moving out of an environment where there is a huge amount of government and central bank policy designed to provide certainty and liquidity and to dampen volatility is a healthy sign, not an unhealthy one.”

Telegraph



45 Comments on "The world is drowning in debt"

  1. Makati1 on Mon, 25th May 2015 10:04 pm 

    “It Is Mathematically Impossible To Pay Off All Of Our Debt”

    “Did you know that if you took every single penny away from everyone in the United States that it still would not be enough to pay off the national debt? Today, the debt of the federal government exceeds $145,000 per household, and it is getting worse with each passing year….”

    I owe nothing to no one. I pay no taxes, outside of sales tax, anywhere. I will my “UFSA Debt” to anyone who wants to pay it. I don’t. No one asked me if I wanted “wars for profit” so I do not feel obligated. Enough said.

    http://theeconomiccollapseblog.com/archives/it-is-mathematically-impossible-to-pay-off-all-of-our-debt

  2. simonr on Tue, 26th May 2015 12:14 am 

    Hi Mak

    I just read that the debt of the philipines is

    106,021 million dollars

    the population is

    100 Million

    this means ……. doh

    your broke, I am not sure where you could go and not owe money

    Simon

    Wikipedia for the population

    http://countryeconomy.com/national-debt/philippines

    for the debt

  3. Northwest Resident on Tue, 26th May 2015 1:15 am 

    I guess drowning in debt is better than the alternative — total economic collapse. Excessive debt is how the governments of the world are stretching out the inevitable for a little while longer. The “inevitable” is the result of diminishing energy available to the economy combined with the waste buildup in our biosphere, the depletion of all natural resources, and the exploding global population.

    Enjoy these last few twilight hours of the age of oil while they last. It won’t be for a lot longer. Consequences are lined up like Dominoes. Rapid descent is dead ahead.

  4. dolanbaker on Tue, 26th May 2015 1:41 am 

    With near zero interest rates on loans from the central banks, various flavours of QE and negative interest on savings.

    This could go on for ever!

  5. GregT on Tue, 26th May 2015 1:48 am 

    simonr,

    US national debt alone is approaching 15 trillion dollars, and OTC derivatives are said to be over 800 trillion dollars.

    I wouldn’t be pointing fingers if I were you.

  6. simonr on Tue, 26th May 2015 2:15 am 

    Greg

    This would assume I am American

    Simon

  7. Perk Earl on Tue, 26th May 2015 2:53 am 

    Ya see, this is how it works:

    Up comes a bubblin crude
    Black gold
    Texas T
    Profits come easy
    Lots of net energy
    Build em skyscrapers
    Later comes depletion
    Lower net energy
    Borrow away the future
    Swamped in debt
    Teetering on the brink
    Splat!

  8. Dredd on Tue, 26th May 2015 5:51 am 

    The models underestimate liquid debt (The Evolution of Models – 10) which is leading to bankruptcy.

  9. Davy on Tue, 26th May 2015 7:06 am 

    Thanks Simon for mentioning reality to the anti-American propagandist the Makster. Objectivity is hard for Mak to stomach. He is over in America visiting mom now. This is why the site has been quiet lately from the normal excessive and one-sided anti-Americanism. It has been a welcome relief for me. There is still plenty of anti-American talk but it is balanced and fair. Mak is off the chart agendist and for that reason a curse to this site.

  10. Makati1 on Tue, 26th May 2015 7:36 am 

    simonr, I am not a Philippine citizen. I pay VAT tax on the things I buy and no other tax. Nor do I owe the UFSA any taxes. I suggest that you redo your math:

    “According to the last data point published, Philippines per capita debt in 2014 was 1,067 dollars per inhabitant.” (37.23% of GDP.)

    http://countryeconomy.com/national-debt/philippines

  11. Makati1 on Tue, 26th May 2015 7:49 am 

    Davy, I have returned from the UFSA and Observed it’s continuing decline from close up. Objectivity is lacking in the UFSA as they are under a pile of BS that keeps getting deeper and deeper everyday. The infrastructure decays more and more and the living wage jobs continue to evaporate.

    You seem to refuse to see it or even consider that there are better places in the world to ride out the future. So be it. Most Americans are blind, deaf, and dumb about the world outside their neighborhood and that is how their masters want it. Their Wylie Coyote moment is fast approaching…Beep! Beep!

  12. Makati1 on Tue, 26th May 2015 7:59 am 

    simonr,

    Philippine National debt:
    $106,021,000,000. (106 BILLION)

    Population: ~103,000,000 people

    US National Debt:

    $18,465,000,000,000.+ (18,465 BILLION)

    Population: ~ 314,000,000 people

    But then, the US education system is falling into 3rd world levels. Math is no longer important.

  13. Davy on Tue, 26th May 2015 8:00 am 

    Yawn, Mak, if you would read my posts you would see fairness and balance. You have one agenda that is the glorification of Asia and the diminishment of the West in particular the US. You dwell in an insignificant overpopulated Asian country that will be a mad max country once the global system breaks down.

    OK, Makster, here is where you need to get the qTips and clean that wax out. The US will likewise be in a state of mad max but we are not severely overpopulated like the Philippines. This guarantees you will be in an awful collapse. Good luck Makster you should have remained in North America with you family instead you choose to go follow a delusional idea of safety in Asia. You are deserting your family for your own selfish reasons. You are a coward.

  14. simonr on Tue, 26th May 2015 8:34 am 

    Makati

    I do apologise if the results of your formula do not equal the results of mine.
    I did not actually mention GDP it was a simple formula

    Let
    X = Population
    Y = National Debt

    The figure I derived was
    Y/X

    now you may have a more complex formula, and that makes me happy for you, however in a grownups world, you either take umbrage at the relevance of my formula or the workings thereof, rather than having a pop at America.

    Also you have assumed I am American, and that dear sir makes an ASS out of both U and ME

    Simon

  15. GregT on Tue, 26th May 2015 9:02 am 

    simonr:

    According to your “formula”:

    Philippine per capita debt = 1067
    US per capita debt=54,748

    Other than targeting Makati1, what exactly is your point? Perhaps you would be willing to end all assumptions, and let us all know what country you are from.

  16. simonr on Tue, 26th May 2015 9:29 am 

    Nah that would be no fun.

    point is we are all deeply in debt, and if we needed to pay it back, it matters not where you are from, it is just not happening.

  17. penury on Tue, 26th May 2015 9:37 am 

    The debt is not intended to be paid. For an example look at the U.S. Do the debts owed equal more than the debts owned? We do not receive payment in most cases for the military equipment and assistance we give other countries the end up owing us in dollars. This is a method of assuring cooperation fro these countries. Last figure I saw (two weeks ago) the U.S. Debt to other countries was 20 trillion. EM countries owed the U.S 19 trillion (all figures us$, Now tell me how can this debt be re-paid?

  18. Davy on Tue, 26th May 2015 9:46 am 

    Greg, I can vouch for Simon. I know what country is from and his lifestyle. I will respect is privacy on the issues. He is one of us pursuing a lifestyle you would approve of. He has given me several pointers on horse husbandry. He is utilizing horses on his small farm. Simon is also well versed in BAU being highly educated.

    He like me disapprove of idiots coming on this site and disrespecting regulars. Makster and I should be friends we are both doomers and preppers but for Mak hate and resentment is more important. I will dedicate my efforts to combating this negativity every chance I can. I have told Mak repeatedly all it takes for us to be friends is to tone down his trashing and bashing of the U.S. in an unfair and unbalanced way.

    I am all for anti-American conversation. Like Ape Man says it goes with the territory. The U.S. Is in a position to receive the lions share of criticism yet that does not mean unfair and unbalance. That just leads to distortion of the truth. That is not why most of us are here.

  19. penury on Tue, 26th May 2015 11:24 am 

    Really talking about national debts is rather pointless as the issue is not a real concern. I see the comments on debt of the P.I. and think, “Who does the PI owe the money to? And what was most of the money used for? The money is “borrowed in dollars and must be repayed in dollars. How many Piso to the dollar when the money was borrowed? How many Piso to the dollar now? Does the P.I. really need the military that the U.S. wants them to have? I only mention P.I as an example we have about 130 countries in the same position. The debt of the world will not and cannot be repaid. It can be used for international trade and relationships but, it should never be taken seriously.

  20. GregT on Tue, 26th May 2015 11:34 am 

    Davy,

    I see nothing in Makati1s first post above that is out of line. He quoted an article from a US source, and added that he has no interest in the US oligarchs ‘wars for profit’. I would have to agree with him. I do not support these unjust military adventures either. I don’t believe in murdering other people for personal gain.

  21. GregT on Tue, 26th May 2015 11:49 am 

    The debt is owned to the central banking cartels. The same people that are in control of our governments, and the people that are hell bent on global domination. The same people that are going to, once again, force the world into war.

  22. Davy on Tue, 26th May 2015 11:50 am 

    Greg, I was referring to Simon not the Makster. I know you and Mak are friends. I respect that and do not intend to get in the middle of that.

    You are well aware the above comment is part of the Makster repetitive and redundant message of hate and resentment for the U.S. It is the overall message I have issue with and will fight.

  23. GregT on Tue, 26th May 2015 12:11 pm 

    I see it more of hate and resentment for the people that have hijacked a once great country Davy. I believe that you are confused as to the difference between a nation of people, and the corruption that is in control of them.

  24. Jerry McManus on Tue, 26th May 2015 12:27 pm 

    What people don’t seem to understand, including the author of this piece, is that under our current system debt is money.

    Let me say that again: Debt is money.

    It is a well documented fact that over 95% of our money supply is debt created out of thin air by private banks and lent at interest to beneficiaries of their choice.

    It is also a well documented fact that over 95% of the population have no clue that this is how the world works and no clue that their lives are ruled not by democratically elected governments but by a handful of bloodthirsty bankers.

    And so we get idiots who loudly proclaim that we should “get rid of debt” which is exactly the same as saying “crash the economy by getting rid of all our money”

    Don’t get me wrong, crashing our rapacious, bloodthirsty, and yes, unsustainable economy by getting rid of all the debt based money would be extremely beneficial in the long run, specially if it means stringing all the bankers up from the nearest lamp pole.

    Unfortunately something tells me they are not going to go down without a fight, which could get pretty ugly.

  25. Lawfish1964 on Tue, 26th May 2015 12:43 pm 

    See Weimar Republic in the 1920’s. That’s how all that debt gets “repaid.” Borrow in dollars with the ability to print dollars, voila! All debts payable through the printing press!

  26. justeunperdant on Tue, 26th May 2015 12:51 pm 

    Debt is now money. I agree with that

    Real estate woes: The secret lives of house-poor Canadians
    A couple talk candidly about living ‘hand to mouth’ in their dream home

    http://www.cbc.ca/news/business/real-estate-woes-the-secret-lives-of-house-poor-canadians-1.3086793

    After reading the article above, you will notice that Canadian own nothing and the bank own everything. The Canadian banks are just creating debt as money and give it to the people.

    Very soon, you will be able to borrow money with the expectation that he will not be repay back. Wait until social revolution start in a country like Greece and debt will become money and given for free or a minimum income guarantee program will be put in place.

    Who have to lose the most, people that have nothing except debts, or the bank that own these debts. Demanding repayment of debts is basically demanding the collapse of the banking system because people have no money.

  27. Adonis on Tue, 26th May 2015 1:22 pm 

    phillipines sounds alot safer than usa when the shtf good move makati im even safer down under in mad max territory

  28. justeunperdant on Tue, 26th May 2015 1:22 pm 

    What will happen in Greece will tell us what will happen to the future of debt

    Forcing Greece to repay its debts when it is has no money, is forcing a collapse of Greece and Europe banking system and the start of social revolution.

  29. Davy on Tue, 26th May 2015 1:27 pm 

    Sure Adonis,100MIL people in an area the size of Arizona. What a crock of shit. You are comparing a continental size country to a small insignificant third word country like they were apples to apples. Try again mate.

  30. Davy on Tue, 26th May 2015 1:31 pm 

    Nope Greg, that is the way it is with you and me. With the Makster it is total hatred of everything American. The Makster epitomizes the anti-American in its ugliest form. This resentment comes from a 70 years of a failed life in the USA.

  31. Adonis on Tue, 26th May 2015 1:42 pm 

    we need a global cashless system that is the next step in order to keep the system going & multiple bail-ins from every private citizen to save the system. What do you guys think, is this fair ?

  32. Northwest Resident on Tue, 26th May 2015 1:47 pm 

    “phillipines sounds alot safer than usa when the shtf”

    It depends on where you are. If you live in one of the thousands of slums or shanty towns close-in to a big city, then you’re in a horrible place and when tshtf, your previously miserable life is likely to end in starvation and disaster of all kinds.

    If you live up in the mountains, on a plot of land where you can grow your own food (or have fruit bearing trees), your chances of survival will be much better.

    My girlfriend is from the Philippines. Her family lives in Cagayan de Oro. Her family knows that it isn’t safe in that city, which isn’t even all that big compared to other cities. The people are packed in like sardines. A recent flood killed hundreds of people living in shanties and squalor along the river. Now that the flood is receded, new dirt-poor people are moving in to take the place of the ones that got swept away.

    WAY to crowded in the Philippines. Probably 80 – 90 percent of the population lives in or around the big cities. They are toast when tshtf.

  33. Adonis on Tue, 26th May 2015 1:54 pm 

    Davy when tne shtf say for example no energy to heat or cool our mcmansions at least in the phillipines the weather wont affect u as much asin usa

  34. Apneaman on Tue, 26th May 2015 2:01 pm 

    Lots of drowning in our future.
    ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,

    After The Flooding Rains, Weather Pattern Government Will Recess, But Will It Adjourn?

    “The weather pattern — we’ve named it ‘Government’ because it moves so slowly — that has plagued the plains, midwest , and southeast for several weeks with tornadoes, hail, flooding rain, and lightning, has reached a crescendo with historic flooding in Texas and Oklahoma.”

    http://www.decodedscience.com/flooding-rains-weather-pattern-government-will-recess-will-adjourn/54351

  35. Apneaman on Tue, 26th May 2015 2:03 pm 

    Epic Rains, Disastrous Floods Plague Texas, Oklahoma

    http://www.wunderground.com/blog/JeffMasters/comment.html?entrynum=2997

  36. Davy on Tue, 26th May 2015 2:21 pm 

    Adonis, my point is the U.S. Is too big to compare to the Philippines.

    N/R is correct with his interpretation of P’s cities. You are correct in regards to the large U.S. Cities when energy is in shortage. But many parts of the U.S. are mild. Many are rural and burn wood. I will have now problem heating my place. I have wood stoves and I don’t have a McMansion. I live in a 12×40 cabin.

  37. Adonis on Tue, 26th May 2015 2:24 pm 

    thanks Northwest resident for enlightening me phillipines sounds like somewhere you may not want to be with the population all crammed in like that

  38. Adonis on Tue, 26th May 2015 2:30 pm 

    your right Davy usa does appear more favourable , what was i thinking lol

  39. Hubbert on Tue, 26th May 2015 2:48 pm 

    I seriously doubt America will be able to pay off it’s debt.

    Difficult to say that that really means.

  40. Northwest Resident on Tue, 26th May 2015 2:54 pm 

    Is there no way out of this dilemma?

    Almost all governments are bankrupt. Supposedly, with the economic contraction we had you would think the world would deleverage. But there’s a lot more debt globally now than even at the peak of 2007. In the United States for example, the present value of all future liabilities is something like $70 Trillion. if you add up all the future payments to Medicare, Medicaid, Social security and government pensions. That’s more than the net worth of the United States. So there’s no way that money can get repaid. You would need something like 10% growth in income every year. And that’s just not going to happen. That’s why we are going to have a bad time when we realize that the emperor is naked: All the money that the central banks have created is worth nothing.

    http://www.fuw.ch/article/a-global-recession-is-inevitable/

  41. Adonis on Tue, 26th May 2015 3:08 pm 

    it does sound hopeless Northwest Resident the money will never be repaid not in our lifetime unless a cheap new clean energy miraculously appears to save us that is our only hope

  42. GregT on Tue, 26th May 2015 3:10 pm 

    Ordo Ab Chao

    The central bankers will use the planned ‘collapse’ to gain even larger control of the world’s finances. The same as they did during the last ‘great depression’. The only things remaining in their way are the BRICS. It will be very different this time though, there won’t be nearly as many people living above the poverty line as there is today.

  43. Northwest Resident on Tue, 26th May 2015 3:32 pm 

    Adonis — Even if a cheap new clean energy came along that could seamlessly replace gas/diesel’s role of transportation fuel, we’d still be in deep doo-doo. Too many people placing far too many demands on depleted resources of all kinds — lumber, fish, soil, fresh water, you name it. But it isn’t hopeless, if you look at it in the right way. If your hope is to continue BAU forever, then sure, that is hopeless. But if your hope is to be a survivor and to play a role in whatever a post-bottleneck world might bring, then in that case, there is still hope, but only if you’re really lucky or if you’ve diligently prepared, or both of the above. To maintain hope in the face of so many unsolvable problems requires an attitude adjustment and a realigning of one’s desires with what is realistic. Sadly, not many people are going to do that.

  44. Cassie on Tue, 26th May 2015 3:38 pm 

    “we need a global cashless system that is the next step in order to keep the system going & multiple bail-ins from every private citizen to save the system. What do you guys think, is this fair ?”

    No. Do you, really? Are you rich, or heavily invested in the stock market? I think it would be best to not have a cashless system at all. No imaginary money at all.

    No derivatives or other forms of wealth extraction and concentration, and while there are central bank idiots (did I say “Idiots”?) and government tax collectors or spies (a kind of thief, no?) who want all transactions recorded, I suspect most of us are uncomfortable with government recording of our dildo and lubricant purchases. “They” say “we” are the government, but “they” won’t let me rummage through the files I supposedly own. You may feel differently of course.

  45. HARM on Tue, 26th May 2015 11:07 pm 

    You guys all missed the most humorous part of this story: the “warning” came from non other than GOLDMAN SACHS.

    “The world is drowning in debt, warns Goldman Sachs”

    In other news…

    “The world is drowning in drugs, warns Sinaloa cartel”
    “The government is drowning in bribes, warns D.C. lobbyists”
    “The farm is experiencing epidemic levels of hen deaths, warns foxes”

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