I know many of my readers aren't economists, and don't like to wade through turgid reams of economic documentation. Nevertheless, I want to highlight the importance of the 16th Geneva Report, titled 'Deleveraging? What Deleveraging?' (link is to an Adobe Acrobat document in .PDF format), produced by the International Center for Monetary and Banking Studies.
I mentioned it on Sunday, and I've been going through the 125-page report since then. It makes truly appalling reading. I don't propose to quote from it at length. It really needs to be read in full and in context to make sense. However, I will put up half a dozen graphics from the report, reduced in size to fit here. If a picture tells a story, these are a horror movie.
As the Telegraph headlined its analysis (yesterday) about the report: 'Mass default looms as world sinks beneath a sea of debt'. Go read the Telegraph's perspective for a concise view, or (highly recommended) make the time to download the full report and read the whole thing. It's worth it.
I'll give the Telegraph the last word. Bold print is my emphasis.
The only way the world can keep growing, it would appear, is by piling on debt. Not good, not good at all.
There are those that say it doesn’t matter, or that rising debt is merely a manifestation of economic growth. And in the sense that all debt is notionally backed by assets, this may be partially true. But when rising asset prices are merely the flip side of rising levels of debt, it becomes highly problematic. Eventually, it dawns on the creditors that the debtors cannot keep up with the payments. That’s when you get a financial crisis.