Posted on 23 February 2014 with 1 comment from readers
A reminder that the big macro issues of the global economy are far from solved. The huge debts that brought us the last global financial crisis have only gotten bigger since then.
Kevin Doran, senior fund manager at Brown Shipley, and David Bloom, global head of foreign exchange strategy at HSBC, discuss the global economic outlook and the chance the US, UK and Japan could default on their debt. You sometimes wonder if the eurozone’s problems are really so bad!
With countries having the highest public debt to the GDP, the search for a solution to get past the sticky area and pave way for steering a growth embedded economy lies within the power and the trust of the people in the nations which could save the economy from getting eroded. Since it is difficult to foresee the near future of how the dynamics of political fallout could impact the financial, trade and other sectors could react to such grave measures and austerity in times of crisis.
The complacency of a government to understand of how the percentage of debt stands in the country, in case where more than 95 % were held by individuals and institutions it would be alarming for them to see a very low GDP when compared to other countries, this content could well be translated in terms of numbers to get a view that Japan is far better off placed in terms of lending rates, as it is absorbing all the savings and could require refinancing from other countries. However there are no unrealistic yields projected in the economy what the scenario looks like is they are in quite a deep debt service costs which are hampering the economy and the public sentiments.
The crisis from the European zone and the increasing debts of Japan, change is certain but the way to get all the debts off the record is to except the additional loans from other developed economies which are still depurating from the ripple effect of the shouldering the losses and debts from other countries. With a greater sense of integration and cooperation there is nothing like working together to get the economies away from the crisis and continue to get a challenging growth , sustainable economy and EU serves to be a great example in tiding of the debt situation with reserve currencies for situations like a crisis looming at large.