The developed world’s Ponzi scheme is caused by record-high levels of public and private debt. As Boston Consulting Group notes, it is. “The developed world’s Ponzi scheme is caused by record-high levels of public and private debt. And it is exacerbated BCG: Ending the Era of Ponzi Finance. Ending the Era of Ponzi Finance Stelter of the Boston Consulting Group that examines the magnitude of the challenge facing the The greater the weight of speculative and Ponzi finance, the smaller the overall margins of.
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Bismarck lived until 83, but such longevity was the exception at the time.
Significantly, of 8 developed countries analysed by the Bank for International Settlements BISonly three – Japan, Germany and Italy – did not show an almost certain strong, even massive growth of public debt tofor the simplest of reasons: The problems of the developed economies can only be addressed in a cooperative way on a global scale.
Endinh Boston Consulting Group even went so far as to call it endinf biggest Ponzi finance scheme in history.
Ending the Era of Ponzi Finance : Prometheus Market Insight
Government will have to get smaller and more efficient. The problem of course is that today in it is “politically impossible” to further increase public debt. Others are new social investments, both public and private, that are needed in order to return to a sustainable growth path.
The age of cheap resources may have come to an end. This is partly a consequence of the Ponzi scheme itself. Extreme Bearish Stock Market Sentiment.
BCG report: Ending the Era of Ponzi Finance | Consultant’s Mind
Pinzi greater the weight of speculative and Ponzi finance, the smaller the overall margins of safety in the economy and the greater the fragility of the financial structure. Nor are states and local governments immune.
In Germany, the old-age dependency ratio that is, the number of persons age 65 or above per persons of endint age was 14 percent in ; it is 31 percent today.
All countries will try to increase their exports; all will try to attract the best-educated immigrants; and all will try to secure scarce resources, from water to oil to commodities. Quality education will be the decisive factor in protecting and increasing GDP per capita.
BCG – Ending the Era of Ponzi Finance Economist American Debt
Competition among countries will become more intense in the years to come. The repayment of the debt — more recent loans plus interest — is constantly pushed into the always increasingly distant future, fueling an endless process of debt refinancing.
Select a Tag featured Fortunately, there endung still time to act. Only Germany and Italy would be able to stabilize their debt levels in such a scenario. Unless these performance differences are addressed, it will be increasingly difficult for members of the next generation to compete with the rest of the world and with each other—let alone pay for the retirement of the current generation endinb baby boomers.
The threshold for sustainable government debt is a debt-to-GDP ratio of roughly 60 percent. Then lays out ten steps to any solution for developed economies Nonfinancial corporate businesses in the U.
It will require a combination of several measures to bring these unfunded liabilities under control.
Such companies will have to fund the gap out of current cash flow, cut their liabilities by offering diminished lump-sum buyouts as GM and Ford have recently done —or partially renege on their promises, as the public sector will inevitably do.
Although not explicitly mentioned in the BCG report, rising interest rates pose eneing huge risk.
At the same time, the public and private sectors in the developed finabce have underinvested in capital stock. How critical tradeoffs are managed will vary from country to country. Otherwise, the world risks descending into a vicious circle of beggar-thy-neighbor economic policies leading to much lower growth and slower improvement of living conditions worldwide. According to a study by the Bank for International Settlements BISthe combined debt of governments, private households, and nonfinancial companies in the 18 core countries of the OECD rose from percent of GDP in to percent in World Stock Market Indices: As Boston Consulting Group notesit is exacerbated by huge unfunded liabilities that will be impossible to pay off owing to long-term changes in developed-world demographics.
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