Central Banks

Warning: $57 Trillion In Global Debt Has Been Added Since 2008

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In 2008, the most prestigious financial agency in the world – the Bank for International Settlements (BIS), often described as the “central bank for central banks” – said that failing to force companies to write off bad debts “will only make things worse”.

In even more dramatic fashion, the BIS slammed “the use of gimmicks and palliatives”, and said that anything other than (1) letting asset prices fall to their true market value, (2) increasing savings rates, and (3) forcing companies to write off bad debts “will only make things worse”.

Contrary to widely held beliefs, the world has not yet begun to de-lever and the global debt to GDP ratio is still growing, BREAKING NEW HIGHS!

The BIS is out with a WARNING

Not holding back, just like in 2008, “The world will be unable to fight the next global financial crash as central banks have used up their ammunition trying to tackle the last crises”, the Bank of International Settlements has warned.

The so-called central bank of central banks launched a BRUTAL critique of global monetary policy in its annual report. The BIS claimed that central banks have backed themselves into a corner after repeatedly cutting interest rates to shore up their economies.

These low interest rates have in turn fuelled economic booms, encouraging excessive risk taking. Booms have then turned to busts, which policymakers have responded to with even lower rates.

Claudio Borio, head of the organization’s monetary and economic department, said: “Persistent exceptionally low rates reflect the central banks’ and market participants’ response to the unusually weak post-crisis recovery as they fumble in the dark in search of new certainties.”

They are doing everything they can to (2) prop up asset prices by trying to blow a new bubble by giving banks trillions, (2) re-write accounting and reporting rules to let the big banks and other giants keep bad debts on their books (or other “second sets of books”) and to hide the fact that they are bad debts, and (3) encourage consumers to spend spend spend!

Global debt has grown by $57 trillion to reach $199 trillion in the seven years following the financial crisis – a 40.1% rise, according to a new report. All major economies are now recording higher levels of borrowing relative to gross domestic product (GDP) than they did in 2007.

Chart provided by: McKinsey Global Institute

 

  • Michael Smith

    The big banks were bankrupt in ’08. The FED bought all their garbage debt in ’09. They also changed/suspended accounting rules. Bankruptcy is not allowed! That’s what turned the market up at 666 in March. The continual devaluation of the dollar(lower standard of living) is how this garbage gets payed off.

  • B Wilds

    The world might soon witness a major shift in the value of one investment over another as investor seek firmer ground. Derivatives, currencies, plunging stock prices, air rushing out of a bond market bubble, how debts are structured, and the timing or direction from which problems arise are all elements that must be considered. Several factors determine just how much influence can be applied to how current economic policies unfold.

    Using the metaphor of “let the chips fall where they may,” things like the size of the chips, the rate or speed at which they fall, and the number of chips in the air may make them uncontrollable. We could find ourselves up to our neck in chips in a blink of an eye, at that time all bets are off as to how successful efforts to stem a catastrophe might be. The financial overlords may be losing control and this means during the final
    stage of the global shakedown events will be chaotic and become very wild. More below on how violent the crash might be.

    http://brucewilds.blogspot.com/2015/08/the-final-shakedown-will-be-uncontrolled.html

  • Bill Smith

    $57 Trillion in new global debt has been added since 08. Any disruption will cause a massive deflationary collapse. It’s a scheme. The debt has to grow in exponential form or the scheme collapses. Don’t listen, it’s mis-direction. http://banksterbubble.com/debt-explosion-199-trillion-global-debt-disaster/