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PONZI’S WORLD: 7 Countries Most Vulnerable To A Debt Crisis

21st Century Wire says…

Ask any banker, and they will tell you, “It’s all fine. The markets have never been more robust.” Yes, these are the famous last words before every major market implosion. 

The big question seems to be “when”, and no longer “if”. Even mainstream experts now commonly admit that today’s system of finance is just one big Ponzi scheme. It’s almost laughable how the establishment mainstream media made such a meal out of the Panama Papers, while they turn a blind eye to government currency rackets and and outright central banking fraud to the tune of trillions – robbing average workers of their purchasing power, and stealing the past sweat of pensioners – by the day.

By applying the United States ‘fiscal model’ of just increasing debt indefinitely, and with absolutely no intention of ever pairing it down in the foreseeable future (what, over the next 50 years or so), Europe is hoping to inflate its currency and rack-up more debt too, perhaps to $18-20 trillion by 2020. How else are they going to pay for the police state upgrades and new wars?

And why not? It’s working for the Americans! So they say…

MR. PONZI, HARD AT WORK: By Boston Library-NYT (Image Source: Wikicommons)

Steve Keen

For decades, some of the most important data about market economies was simply unavailable: the level of private debt. You could get government debt data easily, but (with the outstanding exception of the USA—and also Australia) it was hard to come by.

That has been remedied by the Bank of International Settlements, which now publishes a quarterly series on debt—government & private—for over 40 countries. This data lets me identify the seven countries that, on my analysis, are most likely to suffer a debt crisis in the next 1-3 years. They are, in order of likely severity: China, Australia, Sweden, Hong Kong (though it might deserve first billing), Korea, Canada, and Norway.

I’ve detailed the logic behind my argument too many times to count, and I won’t repeat it here (if you want to check it out, try this Forbes post on Krugmanthis one on moneythis one on the Fed, or this one on our dysfunctional monetary system). The bottom line is that private sector expenditure in an economy can be measured as the sum of GDP plus the change in credit, and crises occur when (a) the ratio of private debt to GDP is large; (b) growing quickly compared to GDP.

When the growth of credit falls—as it eventually must, as growing debt servicing exhausts the funds available to finance it, new borrowers baulk at entry costs to house purchases, and numerous euphoric and Ponzi-based debt-financed schemes fail—then the change in credit falls, and can go negative, thus reducing demand rather than adding to it…

Continue this story at Forbes

READ MORE FINANCIAL NEWS AT: 21st Century Wire Financial Files



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