Developed world debt higher than GFC

Posted | 13/09/2013 / Views | 1470
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Nearing the 5 year anniversary of Lehman’s starting the GFC (an outcome of chronic over leveraging/debt), it is interesting (scary) to look at where the G7 nations are now.  In those 5 years they have added about $18 trillion of consolidated debt taking it to $140 trillion.  For context these same 7 leading developed world countries added a paltry $1 trillion in GDP and about $5 trillion in central bank balance sheet expansion.  So not only is debt now higher than the GFC at 440% of GDP, but they took out $18 of debt (28% from their own central banks) to generate only $1 of growth.  What we touched on yesterday is when the Fed start tapering and bond yields rise, how will they service this?  Deutsche Bank themselves said “at best we are stabilising the ratio at record highs” and “if rates were to rise notably from these ultra low levels, this could be just such a shock”.  They are talking about the shock that sees all of this unwind to something bigger than the GFC.