OECD's William White: In Terms of Debt, the Situation Is Way Worse than 2007

Financial Sense ^ | 24 February 2016

[Lorianne]

William White, chairman of the Economic and Development Review Committee at the OECD and former chief economist at the Bank for International Settlements (BIS), says the risks posed by global debt levels are greater today than they were in 2007 and that central banking monetary policy has lost its effectiveness. He also explains the crucial differences between modern macroeconomic modeling and complexity theory (or viewing the economy as a complex adaptive system) and the key lessons this has for policymakers, both fiscal and monetary.

Here's a portion of his recent interview with Financial Sense airing Friday on the Newshour page:

"If you think about a crisis period as a period of deleveraging, in fact this has not happened and we've gone in the very opposite direction. Now, on the household side, clearly there have been some improvements made but on the corporate side in the US, things have gotten significantly worse—the debt ratios for corporations have gone up very substantially as has government debt...

More importantly—again, when I say the situation is worse today than it was in 2007—in 2007 this debt problem was essentially confined to the advanced market economies. Since then, the debt ratios—the private debt ratios in particular—have exploded in the emerging market countries and so we now have in a sense a global problem ...

[griswold3]

Imagine that!
Trying to fix a credit crisis with more debt doesn’t work? Whodathunkit?

“The greatest shortcoming of the human race is the inability to understand the exponential function”

[Organic Panic]

Oh Pshaw... Obama said he cut the deficit in half while only doubling our national debt.