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Two decades after the Asian crisis, emerging markets have high levels of corporate debt and especially more dollar denominated debt. This makes them quite vulnerable to external shocks to earnings, currency movements and changes in interest rates. On the whole though, we haven’t reached the dangers of two decades ago, but one shouldn’t get too […]

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There is an alarming rise of public and private debt ratios in much of the world; this simply cannot continue like this. The situation is greatly complicated by low growth and low inflation as we need high nominal GDP growth to stabilize debt ratios. We look at the sustainability and alternatives to deal with the […]

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Because US assets are higher-yielding although riskier than US liabilities, we still earn more from our investments than we pay on our liabilities. In the aggregate, America is a bit like a hedge fund that borrows to make risky investments; that’s arguably not a good thing, but it’s not a story of living beyond our […]

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We had this as risk no.2 here. It is simple really. If supply of newly issued Treasuries is bigger than the demand for them, real interest rates will go up. And that’s definitely a risk..

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