Systemic Crisis: The Fish Always Rots From the Head
The economy, the financial markets, sovereign debts, and private debts, are all fundamental links that constitute a very complex system that can remain stable for a long time, then literally tip over in a very sudden and brutal way.
The post Systemic Crisis: The Fish Always Rots From the Head appeared first on LUXUO.
The stars have aligned and the potential for severe turbulences that will affect both the global financial system and the budgetary stability of many states has never been so high. Various indicators have pointed to extreme fragility that has arisen from the continuous worsening of corporate, household and government debt. While all of these players accumulated a debt of 250 per cent of global GDP in 2008, the ratio has now reached 360 per cent as per the Institute of International Finance. Such levels have never been reached in times of peace.
While the quantity of debt has ballooned, the qualitative side is also a cause for concern as the unprecedented concentration of wealth greatly exceeds that of the national GDP. For a long time, various wealth measurement indices were used to track the progress of economic activities but today a fundamental divergence has occurred. While these tracking methods remain, production has remained stagnant and this goes in counter with economic growth as real wealth has not improved.
READ MORE: Opinion: America?s Superpower Remains Unfazed
A study by McKinsey found that the deterioration in the quality of debtors...
The post Systemic Crisis: The Fish Always Rots From the Head appeared first on LUXUO.
The stars have aligned and the potential for severe turbulences that will affect both the global financial system and the budgetary stability of many states has never been so high. Various indicators have pointed to extreme fragility that has arisen from the continuous worsening of corporate, household and government debt. While all of these players accumulated a debt of 250 per cent of global GDP in 2008, the ratio has now reached 360 per cent as per the Institute of International Finance. Such levels have never been reached in times of peace.
While the quantity of debt has ballooned, the qualitative side is also a cause for concern as the unprecedented concentration of wealth greatly exceeds that of the national GDP. For a long time, various wealth measurement indices were used to track the progress of economic activities but today a fundamental divergence has occurred. While these tracking methods remain, production has remained stagnant and this goes in counter with economic growth as real wealth has not improved.
READ MORE: Opinion: America?s Superpower Remains Unfazed
A study by McKinsey found that the deterioration in the quality of debtors...
| -------------------------------- |
|
|
