A World Of Problems, All Related To Debt
Posted By thestatedtruth.com on January 16, 2010
Eurozone central-bank president Jean-Claude Trichet yesterday described the idea that Greece will be forced to quit the monetary union because of its huge budget deficits and weakening government bonds.
Greece today submits a new budget to the European Commission, aimed at cutting its debts from 113% of annual economic output.
“These internal strains are independent of the external value of the Euro,” says US banking giant Citigroup in a forex report, “but will in turn continue to undermine it.”
“It is not a Greek problem but a problem inherent in the whole system,” warns Steven Barrow, chief currency strategist at South Africa’s Standard Bank in London. “Greece is only the focus.”
Repeating his call for the Euro to trade as high as $1.60 as the Dollar weakens to end-2010, “we see Euro/Dollar falling to $1.35 at least by the summer,” Barrow says.
“The increase in interconnections…means a higher level of systemic risk than ever before,” says Switzerland’s independent, not-for-profit World Economic Forum today in its Global Risk Report 2010.
Citing a slowdown in the Chinese economy, government fiscal crises and a new asset-price collapse as the greatest and most costly risks for 2010, the WEF also warns on food-price volatility, a potential oil-price spike and retrenchment from globalization, both amongst developed and emerging economies.
“While sudden shocks can have a huge impact…the biggest risks facing the world today may be from slow failures or creeping risks,” says the report.
“Because they emerge over a long period of time, their potentially enormous impact and long-term implications can be vastly underestimated.”
The International Energy Agency in Paris today forecast a strong bounce in global oil demand, taking daily consumption back towards 2007 levels.
Management consultants McKinsey meantime warned that the major economy most exposed to excessive debt is the United Kingdom, where public plus private borrowing now stands at 449% of annual GDP – greater by more than a quarter from the start of last decade.
“Even excluding the liabilities of foreign banks based in the UK,” says the Financial Times, “the [UK’s] ratio still runs at 380% – higher than any country except Japan and closely followed by Spain, where debt has also spiraled dramatically.”
Adrian Ash
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