How Dangerous Is The World’s Debt Problem?
- High debt can lead to financial crisis. Since debt levels have risen in many countries, there is considerable reason for concern.
- However, big financial crises, while economically enormously harmful, are rare events needing outsized asset bubbles financed by debt, we don’t see that in the developed world yet.
- We have to distinguish between public and private debt, and debt denominated in domestic and foreign currency.
- We do see two dangerous situations: eurozone peripheral public debt and emerging market private debt denominated in US dollars.
Source: How Dangerous Is The World’s Debt Problem? | Seeking Alpha
Tags: Financial crisis · World Economy