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IMF: Tomorrow everyone will feel extremely bad

The International Monetary Fund (IMF) has expressed extreme concern about the global astronomical debt which has reached the ‘boiling point’.

This was reported by economist Nick Beams from the World Socialist WS portal, who attended the press conference of the IMF's Fiscal Affairs director Vitor Gaspar. According to him, within 8 years after the global crisis of 2008, the conditions for an even more devastating debt crisis once again matured in the world.

This finding was recorded in the three reports prepared by the International Monetary Fund at the annual meeting, which took place on October 7, at Washington. In particular, the negative role of central banks is emphasized in occurred instability. Regulators pumped their national economy with tens of trillions of dollars, breaking the balance of the global financial system.

Against this background, the internal contradictions of Western countries are enhanced, accompanied by the growth of protectionist measures between the United States and the European Union. It is referred to, above all, payment of additional taxes by Apple in the EU treasury and the US's ‘payback’ in the form of a fine for the “Deutsche Bank” in the amount of $14 billion. Next, transatlantic trade and investment partnership promoted by America fell under German counterattack.

The IMF said that, while there is no consensus between the EU and the US, it is difficult to wait for the resolution of questions on debts that have reached a dangerous limit. In short, liabilities of considerable number of private borrowers on servicing of the credits began to exceed their solvency. And these ‘bad’ loans mostly accumulated in the private sector of the advanced economies. In general, this type of debt has increased by 35% of GDP in the industrialized countries after 2008. The situation is exacerbated by “low wages, forcing to increase the volume of new loans, as well as an increase in housing prices, generating additional credit expansion.”

The report notes that the total state loan, which is one-third of total world debt, also grew. After 2008, it increased from 70% of global GDP to 85%, which was the result of low nominal growth of sovereign economies. Even financial moguls are suffering losses. Tiny, or even negative deposit rates have reached the chapel, after which banks lose any attraction for investors. This had a particularly negative impact on the Western pension funds and insurance companies, which depend on investments in long-term government bonds. For them it basically means death.


  • November 2, 2016 11:04 AM MSK