Thursday, May 29, 2008
The worst is yet to come
The Telegraph: US and European debt markets flash new warning signals
The debt markets in the US and Europe have begun to flash warning signals yet again, raising fears that the global credit crisis could be entering another turbulent phase.
Posted by sold 2 rent 1 @ 11:31 AM (236 views) Add Comment
1 Comment
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1. Icarus said...
Scary. In the US & UK very little of the debt that has been created over the last several years is self-liquidating (used for income-producing purposes so that the debt is paid off from the income). In the absence of much GDP growth it's been necessary to create more debt so that borrowers can keep paying principal+interest. The amount of new debt created now is getting smaller relative to those payments and the system is seizing up. Debtors cannot pay and they are liquidating. They cannot mobilise savings (too little) or current account surpluses (none) to offset the debt. Defaults will cascade.