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The full report, titled “Global Waves of Debt,” is available at https://openknowledge.worldbank.org/bitstream/handle/10986/32809/9781464815454.pdf https://openk
by cs702 7y ago
The full report, titled “Global Waves of Debt,” is available at https://openknowledge.worldbank.org/bitstream/handle/10986/32809/9781464815454.pdf https://openknowledge.worldbank.org/bitstream/handle/10986/3... -- it is easy to read and follow. Do yourself a favor and read at least the Foreword and Overview. I also find the advance reviews from prominent economists in the initial pages of the report illuminating.
The report documents four major waves of debt accumulation in emerging and developing countries since 1970:
* The first such debt wave ended in the Latin American debt crisis of the 1980s.[a]
* The second such debt wave ended in the the Asian financial crisis of the late 1990s.[b]
* The third such debt wave ended in the global financial crisis of 2007-2009.[c]
* The fourth such debt wave started in 2010, and is the fastest rising as well as the largest.
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[a] https://en.wikipedia.org/wiki/Latin_American_debt_crisis https://en.wikipedia.org/wiki/Latin_American_debt_crisis
[b] https://en.wikipedia.org/wiki/1997_Asian_financial_crisis https://en.wikipedia.org/wiki/1997_Asian_financial_crisis
[c] https://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%9308 https://en.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80...
- nullspace 7y agoJust a +1 comment, but thanks for sharing this, it’s very much worth reading, the foreword and overview is very much written in layman language. I might try and dig into the rest of material as well. For an even simpler but informative intro to debt cycles check out this video by Ray Dalio, it’s the best layperson explanation of debt I’ve ever seen: https://youtu.be/PHe0bXAIuk0 https://youtu.be/PHe0bXAIuk0
- elfexec 7y ago> The fourth such debt wave started in 2010, and is the fastest rising as well as the largest. It's largest because unlike the first 3 regional debt waves, this one is global. US, EU, China, Japan and every major economy just printed money to kickstart growth since 2009. Should be interesting to see how this one resolves itself.
- onlyrealcuzzo 7y agoWell, anything later should be larger just because of time and inflation. Is it larger proportionally, and if so, how much?
- ksec 7y ago>Is it larger proportionally.... It is hard to measure, if you only measure Debt Per GDP Ratio, you ignore the interest rate which may be very low or even zero. May be Interest per GDP Ratio would be a better metric, which I have yet to see any numbers of figures given out. ( And I cant be bothered to work it out myself ) Then there is the Debt Per Asset. For example while China has on the surface a huge debt problem, they also have much more asset ( on paper, assuming it can be trusted ) in their book. There are also other things like those previous Debt Crisis were trigged by bubble, which was the result of people taking debt into those bubble and bursted. We dont have a bubble right now. Everything is ridiculously stable in relative terms, growth is low compared to previous decade, and nothing much to bet against. S/P 500 P/E are still in 20s despite it being in record high. Most companies have very decent cash flow. And most of those cooperate debt were if money if so cheap why not take it. Apple has 150B debt, people didn't freak out because they are still 100B Net Cash positive. I just dont see another crisis happening yet.
- gogopuppygogo 7y agoIf by interesting you mean devastating then I concur.
- memn0nis 7y agoAlso read Bridegwater / Dalio on long term debt cycles [1] [1] https://economicprinciples.org/downloads/ray_dalio__how_the_economic_machine_works__leveragings_and_deleveragings.pdf https://economicprinciples.org/downloads/ray_dalio__how_the_...