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$30 trillion increase from $70 trillion between mid-2007 and mid-2013 sends global debt over $100 trillion

By Catholic Online (NEWS CONSORTIUM)
3/10/2014 (3 years ago)
Catholic Online (www.catholic.org)

Governments borrowing in order to pull their economies out of recession one of leading causes

Everyone at some point seems to 'rob Peter to pay Paul' - especially international governments. During the European debt crisis, many nations borrowed money to keep their governments solvent. As a result, global debt increased by $30 trillion from the original amount between 2007 and the middle of last year, sending global debt over $100 trillion. A whopping 40 percent increase in what the world owes - what next?

The bank is owned by 60 central banks and hosts the Basel Committee on Banking Supervision, a group of regulators and central bankers that sets global capital standards.

The bank is owned by 60 central banks and hosts the Basel Committee on Banking Supervision, a group of regulators and central bankers that sets global capital standards.

Highlights

By Catholic Online (NEWS CONSORTIUM)
Catholic Online (www.catholic.org)
3/10/2014 (3 years ago)

Published in Business & Economics

Keywords: Bank for International Settlements, BIS, global debt


LOS ANGELES, CA (Catholic Online) - According to the Bank for International Settlements, or BIS, the $30 trillion increase from $70 trillion between mid-2007 and mid-2013 compares with a $3.86 trillion decline in the value of equities to $53.8 trillion in the same period. According to data compiled by Bloomberg, the jump in debt was measured by the Basel, Switzerland-based BIS in its quarterly review is almost twice the U.S.'s gross domestic product.

Yields on all types of bonds, from governments to corporations and mortgages, average about two percent. This is down from more than 4.8 percent in 2007, according to the Bank of America Merrill Lynch Global Broad Market Index.

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"Given the significant expansion in government spending in recent years, governments (including central, state and local governments) have been the largest debt issuers," analyst Branimir Gruic, and Andreas Schrimpf, an economist at the BIS say.

The bank is owned by 60 central banks and hosts the Basel Committee on Banking Supervision, a group of regulators and central bankers that sets global capital standards.

According to U.S. Treasury data compiled by Bloomberg, marketable U.S. government debt outstanding has surged to a record $12 trillion, up from $4.5 trillion at the end of 2007. Corporate bond sales globally jumped during the period, with issuance totaling more than $21 trillion, Bloomberg data proves.

Concerned that high debt loads would cause international investors to avoid their markets, many nations resorted to austerity measures of reduced spending and increased taxes. These nations belatedly try to restore the fiscal order they discarded in order to fight the worldwide recession.

Adjusting budgets to ignore interest payments, the International Monetary Fund said late last year that the so-called primary deficit in the Group of Seven countries reached an average 5.1 percent in 2010 when also smoothed to ignore large economic swings. The measure will fall to 1.2 percent this year, according to predictions.

The unprecedented retrenchments between 2010 and 2013 amounted to 3.5 percent of U.S. gross domestic product and 3.3 percent of euro-area GDP, according to Julian Callow, chief international economist at Barclays Plc in London.

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