Investment Week: Is Another Global Credit Crisis Looming?

March 27, 2019

Article by Mike Sheen in Invstment Week

S&P Global Ratings published a report last week that made some worrying observations about the state of the world economy.

It is tempting to say the findings of Next Debt Crisis: “Will Liquidity Hold?” reveal strong parallels to the period preceding the 2008 Global financial crisis.

However, the sheer scale of global debt at present - as well as brand new risks - suggest the current state of affairs could be more severe.

S&P found global debt has surged by around 50% since the last crisis, while global debt-to-GDP ratios have risen to more than 231%, compared with 208% in June 2008.

In absolute terms, the US is the most indebted at a country level after ballooning its debt by $10.6trn over the past decade, while China has grown its credit levels by $5trn and the eurozone is $2.8trn more in debt.

More than 60% of corporations now have what S&P describes as "aggressive or highly leveraged financial risk profiles". 

To read this article in Investment Week in its entirely, click here.

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