Skip to main content

A global crisis on the horizon?

Whilst the price of oil tumbles, China's economy isn't traveling all that well and share markets are seemingly in meltdown, this piece "Toxic Loans Around the World Weigh on Global Growth" from The New York Times paints a sobering picture of what looks like a possible global crisis emerging again.

"Beneath the surface of the global financial system lurks a multitrillion-dollar problem that could sap the strength of large economies for years to come.

The problem is the giant, stagnant pool of loans that companies and people around the world are struggling to pay back. Bad debts have been a drag on economic activity ever since the financial crisis of 2008, but in recent months, the threat posed by an overhang of bad loans appears to be rising. China is the biggest source of worry. Some analysts estimate that China’s troubled credit could exceed $5 trillion, a staggering number that is equivalent to half the size of the country’s annual economic output.

Official figures show that Chinese banks pulled back on their lending in December. If such trends persist, China’s economy, the second-largest in the world behind the United States’, may then slow even more than it has, further harming the many countries that have for years relied on China for their growth.

But it’s not just China. Wherever governments and central banks unleashed aggressive stimulus policies in recent years, a toxic debt hangover has followed. In the United States, it took many months for mortgage defaults to fall after the most recent housing bust — and energy companies are struggling to pay off the cheap money that they borrowed to pile into the shale boom.

In Europe, analysts say bad loans total more than $1 trillion. Many large European banks are still burdened with defaulted loans, complicating policy makers’ efforts to revive the Continent’s economy. Italy, for instance, announced a plan last week to clean out bad loans from its plodding banking industry."

Comments

Popular posts from this blog

Oh yer?

Credited to Nick Anderson

Donald T: First seduced..... then betrayed!

All those supporters of Trump - who, heaven's only knows, got him headed for the White House - are in a for more than a rude awakening and shock.   Whatever Trump "promised" is just not going to happen....as Paul Krugman so clearly spells out in his latest op-ed piece "Seduced and Betrayed by Donald Trump" in The New York Times.

"Donald Trump won the Electoral College (though not the popular vote) on the strength of overwhelming support from working-class whites, who feel left behind by a changing economy and society. And they’re about to get their reward — the same reward that, throughout Mr. Trump’s career, has come to everyone who trusted his good intentions. Think Trump University.

Yes, the white working class is about to be betrayed.

The evidence of that coming betrayal is obvious in the choice of an array of pro-corporate, anti-labor figures for key positions. In particular, the most important story of the week — seriously, people, stop focusing on Trum…

Snooping..... at its worst

The Brits have just brought in legislation which allows for unprecedented "snooping" in a Western democracy - says Edward Snowden.   Let truthdig explain....

"On Tuesday, the United Kingdom instated the Investigatory Powers Act 2016, a piece of legislation described by whistleblower Edward Snowden as “the most extreme surveillance in the history of western democracy.”

The law, informally known as the “Snooper’s Charter,” spent over a year in Parliament before it was passed. The Guardian reported:

"The new surveillance law requires web and phone companies to store everyone’s web browsing histories for 12 months and give the police, security services and official agencies unprecedented access to the data.

It also provides the security services and police with new powers to hack into computers and phones and to collect communications data in bulk. The law requires judges to sign off police requests to view journalists’ call and web records, but the measure has been descri…