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Tag: Debt

Why Debt Is Like Russian Roulette

Why Debt Is Like Russian Roulette

Since the mid-1950s, global indebtedness has exploded to record levels. At the beginning of 2019, the IMF reported global debt reached an all-time high of $184 trillion in nominal terms at the end of 2018, equivalent to 225% of 2017 GDP. On a per capita basis, the world’s debt now exceeds $86,000, which according to the IMF is “more than 2½ times the average income-per-capita.” Further data show that the private sector’s debt has tripled since 1950 making it “the…

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China Saved the World in 2008 but now it’s About to do the Opposite

China Saved the World in 2008 but now it’s About to do the Opposite

China is getting the world’s attention again. Unfortunately, this time it’s for all the wrong reasons. Earlier this month, shock waves rippled through the financial market after the Chinese overnight interbank lending rate – Shibor – surged to 8.29% from 5.98% literally overnight. Shibor is a useful proxy for liquidity in the Chinese credit markets and like Libor in Western markets, a sudden spike signals a reluctance between banks to lend to each other.  This could be for a multitude…

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