Debt ratios have reached extreme levels across all major regions of the global economy, leaving the financial system acutely vulnerable to monetary tightening by the US Federal Reserve, the world's top financial watchdog has warned.
The Bank for International Settlements said the wild market ructions of recent weeks
and capital outflows from China are warning signs that the massive
build-up in credit is coming back to haunt, compounded by worries that
policymakers may be struggling to control events.
"We are not seeing isolated tremors, but the release of pressure that
has gradually accumulated over the years along major fault lines," said
Claudio Borio, the bank's chief economist.
The Swiss-based BIS said total debt ratios are now significantly higher
than they were at the peak of the last credit cycle in 2007, just
before the onset of global financial crisis.
More @ The Telegraph
If a rise in rates of.25% causes global panic then something is wrong to begin with.
ReplyDeleteWe'll just print more money! :)
DeleteOut of thin air!
Delete:) The Age of Obama.
DeleteWhat do you mean trigger it? We've been building it since 1971. The systemic nature of two much debt, ie cheap mony is fragility and volatility. The sovereign bond bubble has stretched about as far as can go. Greece is but the smallest of weight craving it down onto the bed of nails the central bankers have built.
ReplyDeleteWell overdue, but it could keep going.
Delete