Global Debt Surges 50%: Here's S&P Global Ratings' Assessment (and Ours)

Global debt has climbed 50% since the financial crisis about 10 years ago.

Even so, S&P Global Ratings says the next financial crisis will not pose the same level of systemic risk versus a decade ago.

Here's an excerpt from a March 12 CNBC article:

Global debt has jumped since the financial crisis, though one ratings agency thinks that it poses significantly less danger than the last time around.

Corporate, government and household indebtedness rose to $178 trillion as of June 2018, a 50 percent increase from a decade ago, according to figures S&P Global Ratings released [March 12]. The expansion was especially acute at the government level, which stood at $62.4 trillion, or 77 percent higher than it did before the public borrowing binge began.

"Global debt is certainly higher and riskier today than it was a decade ago, with households, corporates, and governments all ramping up indebtedness," [an] S&P Global Ratings credit analyst said in a statement. "Although another credit downturn may be inevitable, we don't believe it will be as bad as the 2008-2009 global financial crisis."

However, Robert Prechter's Conquer the Crash (2002) warned that investors cannot always rely on the credit rating agencies:

The most widely utilized rating services are almost always woefully late in warning you of problems within financial institutions. They often seem to get news about a company around the time that everyone else does, which means that the price of the associated stock or bond has already changed to reflect that news. In severe cases, a company can collapse before the standard rating services know what hit it.

Plus, the January 2019 Elliott Wave Financial Forecast offered a special section on debt, and mentioned an even higher debt figure than what was stated in the above March 12 article excerpt:

The amount of debt that now courses through world economies is almost unfathomable. According to The Wall Street Journal's year-end "Review and Outlook," total global debt hit a record high of $250 trillion in 2018. We cannot list all the record amounts here, but they exist in stock market margin debt as well as student loans, pension obligations, corporate debt and consumer debt. Moreover, the quality of the debt is deteriorating rapidly despite a strong U.S. economic expansion. Covenant-lite loans now constitute over 80% of all new loans. In 2008, the United States had roughly $3 trillion in U.S. corporate bonds outstanding. Today there is a larger amount just in bonds rated BBB or lower. Bonds that are rated BBB are just two grades removed from junk. The U.S. Congressional Budget Office estimates that by 2023, the interest on outstanding debt will be larger than the entire U.S. defense budget.... [The economy is in a] steady march toward outright deflation, which will upend many unsuspecting creditors and borrowers in the next crisis.

You are encouraged to read the free report, What You Need to Know Now About Protecting Yourself from Deflation."

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