Free Republic

They were able to delay the U.S. economy’s day of reckoning, but they were not able to put it off indefinitely. During the pandemic, the Federal Reserve pumped trillions of dollars into the financial system and our politicians borrowed and spent trillions of dollars that we did not have. All of that money caused quite a bit of inflation, but it also created a “sugar rush” for the economy. In other words, economic conditions were substantially better than they would have been otherwise. Unfortunately, there will be a great price to be paid for such short-term thinking. From the federal...

In their crystal ball analysis of major developed bond markets (sorry, Japan, you’re not in the spotlight this time), Goldman Sachs is waving the flag of concern. The math here is simple: for every one percentage point rise in the public debt-to-GDP ratio, expect medium-term yields to jump at least two basis points throughout the decade. And oh, they conveniently exclude government bonds currently cozying up in central banks’ pockets, implying a broader impact on global financial markets.

The chief executive of the Institute of International Finance warned Tuesday that policymakers need to swiftly address record levels of global debt, describing the brewing crisis as a “huge fiscal problem.” IIF CEO Tim Adams sounded the alarm on rising levels of debt while speaking to CNBC’s Silvia Amaro at the World Economic Forum in Davos, Switzerland. His comments come at a time when the issue has largely been overshadowed at the WEF’s annual meeting, which runs through to Friday, with the rise of artificial intelligence and conflicts in the Middle East and Ukraine high on the forum’s agenda. “We...

That’s creating new tensions with the U.S. and its Western allies The ascendance of China in developing country finance threatens to add to the broader trend of “decoupling” that is unraveling trade and technology ties with the West. The debt China is owed by poor countries only consolidates its influence in Africa and other regions. “We are moving to more of a bipolar system with a very significant creditor to a great many countries bent on doing things bilaterally with its own rules,” said Carmen Reinhart, who served as the World Bank’s chief economist until last year and has directly...

WALL Street executive Edward Dowd alleges the Covid crisis was manufactured to solve governments’ out of control debt crises. His 20 years’ experience with high-profile financial crashes alerted him to a potential underlying fraud being used to wipe the books clean. Dowd watched the 1990s internet dotcom bubble burst and witnessed the 2008 global recession caused by fraudulent trading in the US property market, so has a nose for these things. And with governments still saddled with debt from both those disasters (the UK’s public debt is £2.1trillion, double pre-2008, while the US debt had tripled at $30trillion) something mighty...

For years central banks had been keeping rates near 0%, or below, and at the same time printing over a hundred billion dollars’ worth of fiat currencies each and every month to purchase bonds and stocks. That is all changing now. ... fourteen major global central banks are either in the process right now, or have indicated that they be will next year, in the process of raising interest rates. At the same time, QE on a global net basis will plunge from $180 billion per month at its peak during 2017, to $0 by December…and will then go negative...

Ten years have passed since the 2008 subprime mortgage crisis, the worst financial panic since the Great Depression.  Now it seems that some of the lessons learned back then are being forgotten.  Growing debt burdens in emerging markets are igniting new fears of a crisis that could shake economies everywhere. This time, the debt is not mortgages or deficit spending.  The new crisis involves corporate debt and bonds. What is setting off alarms is the recent collapse of the Turkish lira, which has lost more than forty percent of its value.  Turkish banks and companies borrowed heavily over the past few years to finance infrastructure...

The world is swimming in a record $152 trillion in debt, the IMF said on Wednesday, even as the institution encourages some countries to spend more to boost flagging growth if they can afford it. Global debt, both public and private, reached 225 percent of global economic output last year, up from about 200 percent in 2002, the IMF said in its new Fiscal Monitor report. The IMF said about two thirds of the 2015 total, or about $100 billion, is owed by private sector borrowers, and noted that rapid increases in private debt often lead to financial crises. While...

The central bank experiment with negative interest rates—where governments charge you to buy their debt—is reaching a tipping point. Fierce political backlash is emerging against a policy that hurts savers and small businesses, all of which could have ramifications for U.S. markets. The bulk of negative-yielding debt is concentrated in Japan and Europe. Globally, the total is now $10.4 trillion, according to Fitch Ratings. In Japan, where politicians are preparing for the next election cycle, negative rates have become a hotbed issue. The chief policy architect of Japan’s new Democratic Party, Shiori Yamao, just came out publicly against the Bank...

The world's credit boom is beginning to show dangerous signs of unraveling, ushering in a period of fresh turmoil for the over-indebted global economy, the Bank of International Settlements has warned. The globe's top financial watchdog called time on the world's debt binge, noting that debt issuance and cross border flows in emerging economies slowed for the first time since the aftermath of the global credit crunch at the end of last year. With financial markets thrown into fresh paroxysms in 2016, oscillating between extremes of "hope and fear", the over-leveraged world was finally approaching a day of reckoning, said...

The global financial system has become dangerously unstable and faces an avalanche of bankruptcies that will test social and political stability, a leading monetary theorist has warned. "The situation is worse than it was in 2007. Our macroeconomic ammunition to fight downturns is essentially all used up," said William White, the Swiss-based chairman of the OECD's review committee and former chief economist of the Bank for International Settlements (BIS). "Debts have continued to build up over the last eight years and they have reached such levels in every part of the world that they have become a potent cause for...

John Maynard Keynes obit 21 April 1946 Franz Kafka obit 03 June 1924 Here’s an astonishing statistic; more than 30pc of all government debt in the eurozone – around €2 trillion of securities in total – is trading on a negative interest rate. With the advent of European Central Bank quantitative easing, what began four months ago when 10-year Swiss yields turned negative for the first time has snowballed into a veritable avalanche of negative rates across European government bond markets. In the hunt for apparently “safe assets”, investors have thrown caution to the wind, and collectively determined to pay...

WASHINGTON (AP) -- Foreign demand for U.S. Treasury securities rose to a record level in February, indicating that international investors remain confident in U.S. debt despite budget wrangling in Washington.The Treasury Department said Monday that foreign holdings of U.S. Treasury securities increased 0.3 percent in February from January to a record $5.66 trillion. It was the 14th straight monthly increase.

The Greek government on Sunday agreed to drastic austerity measures in the hopes of securing a 130 billion euro bailout from international creditors — the second bailout in two years. The measures include dramatic cuts in pay, pensions and government services. The creditors, which include the European Commission, the International Monetary Fund and the European Central Bank, demanded that by Wednesday Greece show clear evidence of how it will make 325 million euro of the 3.3 billion euro cuts. Greece, which has among the worst debt in the world, faces default as early as March if it does not get...

Breakdown of how each region’s external debt around the world has evolved through the decades, starting back in 1970, all the way until today. We all read about the U.S. national debt, and whether we should be concerned that it’s in the $12 trillion range these days. But the United States isn’t the only country carrying a huge amount of debt. In fact, it seems that operating just about any country is a money losing proposition. According to the CIA’s Worldbank data, the majority of countries carry huge sums of national debt. And for most countries – although there are...

Societe Generale has mapped out the world by each country's place in the global debt cycle. The cycle starts with countries paying down debt, followed by growth with little debt, then a rapid increase in leverage, closing with the bubble bursting. Every major developed country fits on a part of the chart. Right now, the U.S. is starting over, paying down debt and a long way from the growth portions of the cycle. At the opposite end of the spectrum are Brazil and China, ramping up growth and increasing debt.

STRESA, Italy, Sep 12, 2003 (AP Online via COMTEX) -- France and Germany faced mounting pressure Friday to cut their budget deficits as their smaller euro-zone partners feared the big two's expanding debt risks destabilizing the currency bloc. "We cannot have divisions whereby some obey the rules and others don't, because in the end we'll all have to pay a price for that," said Austrian Finance Minister Karl-Heinz Grasser. The worsening dispute over deficits and more gloomy data on the European economy were expected to dominate two days of talks among European Union finance ministers opening in this picturesque lakeside...