AEP: Third leg of global depression?

[Winehole23]

The third leg of the world's intractable depression is yet to come. If trade economists at the United Nations are right, the next traumatic episode may entail the greatest debt jubilee in history.


It may also prove to be the definitive crisis of globalized capitalism, the demise of the liberal free-market orthodoxies promoted for almost forty years by the Bretton Woods institutions, the OECD, and the Davos fraternity.


"Alarm bells have been ringing over the explosion of corporate debt levels in emerging economies, which now exceed $25 trillion. Damaging deflationary spirals cannot be ruled out," said the annual report of the UN Conference on Trade and Development (UNCTAD).http://www.telegraph.co.uk/business/2016/09/21/un-fears-third-leg-of-the-global-financial-crisis-with-epic-debt/

[Winehole23]

UNCTAD says corporate debt in emerging markets has risen from 57pc to 104pc of GDP since the end of 2008, and much of this may have to written off unless there is a world policy revolution.

"If the global economy were to slow down more sharply, a significant share of developing-country debt incurred since 2008 could become unpayable and exert considerable pressure on the financial system," it said.


"There remains a risk of deflationary spirals in which capital flight, currency devaluations and collapsing asset prices would stymie growth and shrink government revenues. As capital begins to flow out, there is now a real danger of entering a third phase of the financial crisis which began in the US housing market in late 2007 before spreading to the European bond market," it said.

[Winehole23]

The combined US subprime and 'Alt-A' property exposure before the Lehman crisis was just $2 trillion, and Greece's debts were trivial. What UNCTAD is talking about is an order of magnitude larger.

[Splits]

Bend over, I'll give you a third leg.

[Winehole23]

I had a feeling someone would fasten on that

[Winehole23]

Wherein Michael Hudson talks about Bronze Age debt jubilees and even more curiously, gives an economic gloss of the Gospels:

http://www.tribes.org/web/2018/4/24/rnspxcs0ymjmrxaoukaemjfinepamh

[boutons_deux]

Donald Trump and the Next Crash: Making the Fed an Instrument for Disaster (https://www.counterpunch.org/2018/04/27/donald-trump-and-the-next-crash-making-the-fed-an-instrument-for-disaster/)


https://uziiw38pmyg1ai60732c4011-wpengine.netdna-ssl.com/wp-content/dropzone/2018/04/collusionprins.jpg

At a time when inequality,

economic hardship (https://www.federalreserve.gov/2015-report-economic-well-being-us-households-201605.pdf), and

household and personal debt (https://www.cnbc.com/2018/02/13/total-us-household-debt-soars-to-record-above-13-trillion.html) levels are escalating and

wages are not (https://www.bloomberg.com/news/articles/2018-03-01/america-s-wage-growth-remains-slow-and-uneven),

why should any of this matter to the rest of us?

The answer is simple enough: because the Fed sets the level of interest rates and so the cost of money. This, in turn, indirectly impacts the value of the dollar, which means everything you buy.

https://www.counterpunch.org/2018/04/27/donald-trump-and-the-next-crash-making-the-fed-an-instrument-for-disaster/

[CosmicCowboy]

When did it change where the President controls the Fed?