Monday, September 14, 2015

US interest rate rise could trigger global debt crisis

Via avordvet

 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

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.

6 comments:

  1. If a rise in rates of.25% causes global panic then something is wrong to begin with.

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  2. What 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.

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