In the year 2000, total global debt to GDP was 246%, before the crisis in 2007 it was 269%, 2014 286% and since then, in just 2 years and 1 quarter the figure has soared to 325% Q3 of last year.
In spite of this huge debt build, GDP growth world wide has been weak. Some of the recent jump is probably due to the dollar strengthening (other countries borrowing in $), but that isn't all of it. Governments especially has been growing their debt at a worrisome and definitely unsustainable rate. The US for example has been running the largest deficit since the 2nd world war and it can't go on for long before we see credit downgrades.
This at a time when the large baby boomer generation is about to retire which is kind of a double whammy, lower tax income and higher pension spending for the government.
So we have government spending cuts and boomer retiring coming up soon, 2 significant deflationary pressures. With what I assume is the most leveraged economy in history, even the central banks have huge balance sheets. I don't think the stocks are terribly overvalued right now, but they certainly aren't cheap either. I don't know if we will get a hard landing or a Japanese style lost decade, but the party can't go on like this.
Submitted June 03, 2017 at 09:37AM by GeniusInv http://ift.tt/2rvUPLP
