Wednesday, August 31, 2011

Ominous (obvious?) overview...

"At moderate levels, debt improves welfare and can enhance growth. But high levels can be damaging. When does the level of debt go from good to bad?... beyond a certain level, debt is bad for growth. ...The immediate implication is that countries with high debt must act quickly and decisively to address their fiscal problems. ...Up to a point, corporate and household debt can be good for growth. But when corporate debt goes beyond 90% of GDP, our results suggest that it becomes a drag on growth. And for household debt, we report a threshold around 85% of GDP, although the impact is very imprecisely estimated.".
Parts of the abstract of "The real effects of debt", from the Bank for International Settlements, BIS. Full document pdf HERE. Look at Table 1, page 6: one country is WAY way out from the crowd in terms of changes in household, corporate and government debt as a percentage of nominal GDP between 2000 and 2010. The balls and brownstuff is smothered over the bed and the UK has to lie in it. Also, we may soon know more of the reasons why: Darling on the "brutal and volcanic" Brownstuff.

Update: and obviously the UK isn't the only one that will be 'changing the sheets'; Ruth Lea on the EU's woes.

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Paul said...

I hope you are sitting down when you read this but the Fox News blog about China this week made interesting reading and should worry people a lot more than it currently is.

We are certainly out front in terms of change but we are at least at the median point for 2010!

Span Ows said...

You survived reading the blog then! ;-)

Which story? How they own America, Africa and now Europe? have just read about Chinese air force display numbers/ training and also spy stories/banned social networks on the internet.

Paul said...

The one about how China is concealing the real level of its debt through off Balance Sheet dealings (just like your friend Gordon did).

Span Ows said...

When you look at all that they're doing/buying/investing etc you have to believe exactly that!