The global economy is straining under the weight of more than just public sector debt. In the developed world, consumers, financial institutions, and other corporations have each accumulated unprecedented levels of debt -- and how that total debt is managed will ultimately determine the economic fate of the global economy going forward.
The most recent Greek bailout appears to be successful. As a result, worries about the European financial crisis have diminished somewhat. Indeed, European Central Bank president Mario Draghi has said that the worst is over for the Euro currency zone. Such optimism may be premature, however. Not only does Greece remain a long-term financial concern, but in addition Portugal is on track to become a second big problem.
That’s the $64,000 question, particularly for the U.S. presidential elections – if things keep improving, it’s only good news for Obama. The economy has been on a roll this year, with unemployment down, consumer and business confidence up, inflation falling, and monetary policy still loose.
A strange thing has happened as the debt crisis in Europe has gotten worse: The U.S. economy has, surprisingly, improved.
Woe to the unfortunate souls still exposed to European debt. The smart money (read: people like Warren Buffett and the world’s more successful hedge funders) got out of it a year and a half ago
In September, consumers spent more but made less than expected. As a result, the national savings rate dropped to 3.6%, which is the lowest level it’s been since the beginning of the recession. And that has some nervous. The popular economics blog Calculated Risk blog had this to say: Spending is growing faster than incomes [...]
There’s been a lot of talk this week in China about whether it should swoop in to save the eurozone. Loading up on Italian debt is one possibility, which could keep Europe’s overall bailout tab in check and boost market confidence. Another idea is to create an EU-China bond. Unlike an EU-only bond (a concept [...]
So here’s my prediction: America’s debt is going to be downgraded and the ramifications of that will be worse than many think. And don’t count me as a debt worrier. I don’t actually think the U.S.’s debt is a problem, at least not yet. But to those people who do fret about the debt, which [...]
