#79. “Don’t you know there’s an excuse on?”


The Second World War was a time of enormous hardship for the British public. But there were some people for whom it was manna from heaven, and I’m not talking about black-marketeers. Poor service in a restaurant? “Don’t you know there’s a war on?” Shoddy workmanship? “Don’t you know there’s a…….” There seemed to be hardly anything that couldn’t be blamed on the war.

“Brexit” – the ugly label for the voters’ decision to leave the European Union (EU) – is being used similarly, as a stock excuse for any and all weaknesses in the British economy.

Behind the Brexit bluster, what is really happening in Britain is the culminating failure of a faulty economic model. The theory of “neoliberal” economics has been openness to foreign investment even in strategic areas, the adoption of mantras of deregulation and privatisation, and a willingness to surrender decision-making to the market. The practical outcome has been sluggish growth, an escalation in debt, widening inequality and a dangerous dependency on foreign creditors. If Brexit tells us anything, it is that critical scrutiny of the British economy has revealed some dangerous weaknesses.

When British voters defied the establishment by voting to leave the EU, then they were doing more than simply rejecting supposed European incursions on their sovereignty – they were rejecting an economic system whose failures have been manifested in the British economy.

Brexit caveats

Though regrettable, the use of Brexit as a catch-all excuse is understandable. Brexit, after all, is the first decision in decades to be taken directly by the public, rather than on their behalf by politicians. No-one grounded in reality would expect politicians to miss such a golden opportunity for wholesale blame-shifting.

This being so, we should be wary about “the Brexit excuse”. We should remember that America, Japan, China and others trade perfectly satisfactorily with the EU without being members of it. We should also note that many of Britain’s glaring economic weaknesses long pre-date the EU referendum.

Of course, there has been at least one direct result of Brexit – a sharp fall in the value of Sterling. Even here, though, politics has influenced markets. Overwhelmingly, government, big business, finance and the mainstream media urged a “remain” vote, so the voters’ “leave” decision was a ringing rejection of an arrogant establishment. It also, of course, created immediate uncertainty, with the departure of premier David Cameron and chancellor George Osborne.

Consequently, markets have had to recalibrate political risk, recognising that the British are not, after all, grumbling-but-resigned followers of their leaders’ diktats. Despite an electoral system (known as “first past the post” or FPTP) designed to entrench the incumbency, the public proved themselves far from supine when given a first-in-a-generation directly proportional consultation.

From a global standpoint, you might think that Britain doesn’t matter all that much in the grand scheme of things. But we do need to note two significant points. First, Britain remains important enough – particularly in finance – for her travails to influence global developments.

The demise of a paradigm

Second, the UK, even more than the United States, has been the poster-child for neoliberal economics – not for nothing is this called “the Anglo American model” – so Brexit may accelerate the demise of an increasingly discredited orthodoxy.

For three decades and more, the UK has championed an extreme variant of “laissez faire”. Britain has welcomed overseas investment even where that has meant strategic industries, protected in most other countries, falling into foreign hands. The UK has supported the deregulation of finance, championing the now-derided “light touch” regulatory system which helped lay the foundations for the 2008 banking crisis. Privatisation, though it began with industry, has now penetrated deep into public services, and few restraints have been exercised over immigration. To a significant extent, British failure constitutes the failure of an economic philosophy as well.

Mind the gap

The critical metric for the British economy is the current account, where the deficit has widened alarmingly – to 5.2% of GDP last year, from 1.2% in 2005. It hit 7% in the final quarter of 2015.

Within this, the trade shortfall has been a relatively stable component, being somewhat better in 2015 (at 2.0% of GDP) than in 2005 (2.7%).

The slump in the current account has instead reflected a collapse in the net flow of income. Back in 2005, this flow was positive, contributing £20bn (1.5% of GDP) to the current account, and usefully offsetting the trade gap. In 2015, however, income was in deficit to the tune of £60bn (3.2% of GDP), a sharp and dangerous reversal in a comparatively short time.

The disturbing connection here is that current account shortfalls have become a vicious circle. Each deficit, when met by asset sales or borrowing from overseas, sets up increased future outflows in the form of profits and interest.

To this extent, Britain has been trashing her balance sheet to sustain consumption in excess of current output. British GDP and, with it, British viability, has become increasingly dependent on what central bank chief Mark Carney has dubbed “the kindness of strangers”.

This is a misnomer, of course, because lending and investment are determined by calculation, not altruism – and here lies the immediate problem. The slump in Sterling means that those who lent to or invested in Britain last year are now sitting on losses of about 20%. If they decide that putting further capital into Britain would amount to “throwing good money after bad”, the UK will be in very, very deep trouble. The harsh reality is that about 6% of British GDP, or £120bn, comes courtesy of foreign creditors.

Deep in the hole

If selling assets and taking on debt to subsidise consumption looks feckless (which it is), further evidence to the same effect can be found in Britain’s aggregates of debt and quasi-debt.

Between 2000 and 2007 – but expressed at constant 2015 values – growth of £354bn in GDP came at a debt cost of £1.34 trillion, or £3.80 of borrowing for each £1 of growth. Since then, the ratio has worsened dramatically, with £127bn in net growth requiring £1.24 trillion of new debt, a borrowing-to-growth ratio of £9.70 per £1 (see chart). Even these numbers exclude borrowing in the “financial” or inter-bank sector.


Of course, this very strongly suggests that “growth” has really amounted to nothing more than the very inefficient spending of borrowed money.

This addiction to borrowing has ravaged the British balance sheet. Whilst a 268% ratio of debt to GDP (1) may not look too serious, inclusion of the banking sector (2) increases this to around 450%. On top of this, the most recent, knee-jerk cut in policy rates worsened the deficit in private pension provision to £945bn (52% of GDP) (3), whilst unfunded public sector pension commitments are generally put at £1,000bn (55%).

This has three disturbing implications for the British economy. First, it is becoming ever clearer that past irresponsibility has undermined Britain’s future financial security. Second, it has turned Britain increasingly into a supplicant for the goodwill of China and others.

Third, the UK is in no condition to cope with increases in interest rates, yet such rises may become inevitable if international markets continue to take a tougher stance on British risk.

No quick fix

Some believe that the slump in Sterling might itself start to improve things, making imports more expensive whilst boosting the competitiveness of British exports.

One obvious snag with this is that a weaker currency increases the cost of essential imports, which include food, raw materials, components, the consumer iFads to which many in Britain seem addicted and, thanks to serious policy failures, rapidly increasing quantities of energy. A second is that it is by no means clear what Britain has to export – or that exporters will use a cheaper pound to boost volumes, rather than simply pocketing fatter margins.

Above all, of course, the British external problem does not lie in her trade deficit so much as in a rapidly-worsening income balance – and this will continue to worsen, until and unless the UK ceases relying on foreign creditors to subsidise consumption.

Two things are clear. The first is that, as exemplified by Britain, neoliberalism has failed, widening inequalities whilst sacrificing the balance sheet on the altar of immediate self-gratification.

The second is that Britain must reform to survive, specifically by shifting incentives from speculation to innovation. In short, innovation has weakened – and productivity with it – because riding state-backed inflated asset markets has been made into a surer and less risky route to prosperity than developing new products and services.

Here, some of the early statements of new PM Theresa May are encouraging, but the really tough calls – such as increasing capital gains taxation, and extending it to all property gains, in order to reduce the tax burdens on small and medium enterprises (SMEs) – still lie in the future.

She may be helped in this, ironically enough, by the very same “baby boomer” generation which hitherto has ridden the wave of asset inflation and demographic unfairness.

Boomers, sitting complacently on inflated property values, might soon begin to wonder to whom they are going to sell their property when they need to turn it into cash. Well, they won’t be selling to a younger generation that they have helped to impoverish. That they might have to monetise it at all has been made much more likely, and more imminent, by the undermining of pension investment.

Historically, the impetus for reform has seldom come from smugly comfortable beneficiaries of the system. This time, though, might just be different.



  1. Source: BIS data for end-2015
  2. Based on financial sector debt of 183% of GDP as at mid-2014
  3. Source: FT



30 thoughts on “#79. “Don’t you know there’s an excuse on?”

  1. Tim,

    Thanks for this but what is your prescription? I don’t see a coherent strategy for the future of the UK Economy, however I do see the possibility of the break up of the UK, and/or significant economic disruption followed potentially by social disorder.


    • Well, obviously there can be no quick fix, but certain weaknesses need to be addressed.

      It seems necessary to redress the balance, away from speculation and in favour of enterprise. I’d recommend exempting SMEs from Business Rates (thus favouring enterprise) and funding this with higher rates of Capital Gains Tax (thus weakening the incentives for speculation). A tougher stance on competition could improve the climate for SMEs in sectors dominated by corporate giants. I would institute a big programme of building council houses – local authority-owned homes at affordable rents – to promote building activity and help young people priced out of the housing market (and often paying out 40% of their income in rent).

      Social unrest often results from impoverishment, combined with perceptions of unfairness. Average wages have risen by 25% since 2005, but the cost of essentials has risen by 48% – so there is impoverishment. As for unfairness, the wealthy are perceived, rightly or wrongly, to be favoured by policy – they have certainly benefited from asset market inflation, and the authorities seem keener on prosecuting benefits cheats than tax evaders.

    • IMO, the quickest fix would be to switch to understanding how the real economy works and letting those who do “get” it make the changes. So, 1]reverse Neo-liberalism and 2] get familiar with the real economy, the one described by MMT.

      We actually live in an MMT economy but mainstream economics has distorted the scene so thoroughly we can’t see a way out of it. Because Britain joined the EU and signed the Lisbon treaty it is only able to spend if it sells gilts to match. Well it’s still MS enough to create the funds it needs. The gilts are just a paper operation and of no merit. It’s not a debt that costs resources to repay, just book keeping entries. The government, while equally free to borrow, actually has no need, not is there any need to save. Neither does a MS government have to use commercial baks to pay for its works, it can pay its bills without incurring interest [which is why banks so oppose the idea] It can buy the costs of free education, full pensions and decent welfare with no comeback while ever the fiscal space exists. That limit is an economy motoring along so well it would be on the verge of runaway inflation.

      How far away would you say that is? Trillions of pounds. lastly taxation does not fund federal expenditure. The books are cooked to make it appear so but in truth the government can spend even if taxes fell to zero.

      I have seen you have reservations Tim. But believe me this is reality.

    • @John Doyle:

      So how does MMT account for Venezuela’s problems, or Zimbabwe’s hyperinflation trouble, or the Weimar Republic, or even the bankruptcy of ancient Rome?

      Were they just mistaken in their book-keeping?

      Can every monetary sovereign country in the world simply use this process to create money that is “not a debt that costs resources to repay” and be rich beyond their wildest dreams?

      To misquote Ace Rimmer from Red Dwarf:

      Print me a kipper, I’ll be back in the morning.

    • Easy one: Zimbabwe , contrary to MMT advice, lost its full faith and credit in its government.. Having done that, hyperinflation was sure to follow. Weimar ran out of resources to back up its currency, so away it went. Ancient Rome devalued its currency as soon as its empire stopped expanding, but it wasn’t an overnight event. We face the same situation. Not enough resources for our appetite. Will it be an overnight event? Watch this space!

  2. I find myself in agreement with large elements though not necessarily all of your analysis, but one paradox you omit to mention is that the cheer leaders for Brexit included the large contingent of free market laissez-faire ideologues – Redwood, Lawson, Minford et al. TM to her credit does not seem to belong in that camp.
    An interesting question, soon, will be exactly who has been taken for a ride by whom.

  3. Well, as corporatism has weakened competition, I’d say that the many have been taken for a ride by the few!

    The laissez-faire ideologues oppose EU membership based mainly on advocacy of a minimalist state. For me, this fails to recognise that a vigilant state is an essential safeguard for competitive capitalism. Left to themselves, markets will undermine competition through concentration, and through predatory behaviour. So I – and I would enlist Adam Smith in this! – emphasise competition and good practice, protected by a vigilant state, over any mantra of “state involvement is always bad” and “private ownership is always bad”. A privately-owned monopoly is every bit as bad as a state-owned one.

  4. (With UK leaving the EU I suppose we all have to learn French? Åh nej, oh no!)
    However, I miss the energy component – money the tokenization of energy – in your article. But it seems to me that you will eventually combine your observations with that crucial aspect. So please, go on, I am listening!

    • Energy is indeed the critical component of the real economy – and I plan to write a lot more about this, particularly as my model is now performing extremely well.

      Part of my thesis is that, as well as the “real” economy, there is a parallel “financial” economy of money and credit. This financial economy is increasingly under strain as we get ever deeper into denial over the real economy, and try to fake “growth as ususual” through monetary manipulation. Britain is a prime example of where the strains are showing.

      Perhaps this divergence – between the real and the financial economies – will be my next subject.

      I also feel a strange sense of suspended animation – waiting for the crash……

    • Not much chance of that! Basic attitude is “don’t ask a question unless you know you’re going to like the answer” (Cameron forgot this when calling the referendum, of course – and Mr Renzi in Italy may face something similar on 4th December).

      Interesting link, thanks.

  5. Given that the Scottish Independence Referendum came close to going ‘the wrong way’ I fail to understand how Cameron managed to muck up the Brexit referendum in the way he did.

    • Especially after gaining nothing at all in his “reform” talks!

      EU leaders seemed pretty miffed, as they needed to discuss other issues (including migration and the economy), not have their time wasted on self-serving negotiations when there was no evidence of major lobbying for a referendum. I think Cameron must have reached that dangerous point at which politicians ‘start believing their own press-releases’……

    • ” gaining nothing at all in his reform talks” have you forgotten Cameron’s tampon tax triumph!

    • Cameron, like almost all politicians these days, was not an intellectual heavyweight of any sorts.
      His offer of a referendum on Brexit was simply his knee-jerk response to his fear of ukip in the run-up to the G Election. As it turned out, the british fptp system swung in his favour, and ukip came in dead last, despite taking 10% of the vote. His “re-negotiating” British terms with the EU was not taken seriously by anybody, not even by himself, so it was doomed to failure. However, the Eu also mis-read the situation, because by now I am sure that they wished they had taken the threat of brexit more seriously. Brexit will have repercussions within Europe, other nations may follow quite soon !
      With ref. to the original post above, The Scottish indy-ref not only came “close to going the wrong way”, it in fact “DID GO THE WRONG WAY ! ”
      Next time, the Establishment propaganda machine will have a much more difficult task in persuading the Scottish people to stay within this failing Union. Scottish pensioners will be much more concerned about hanging on to their free bus passes, than they will be on “not having a lender of last resort !”

  6. Thanks to Dr Morgan for another most engaging read.

    This ties into my own ‘gut feeling’ that we are living through a period of economic unreality based upon an economic ponzi scheme.
    In a balanced world two weeks of average earnings in Britain shouldn’t buy a week in the 5star Costa del Sol with all the food and drink you can eat thrown in. We had it right in the old days when it was something special you had to save up for. That’s an old idea ‘saving up’… I havent heard that mentioned for years.
    Make do and mend is dead and buried, we spend a fortune on new technology that becomes obsolete overnight, what was once considered a ‘treat’ has now become the norm.
    We have had the stone age, bronze age…this is the spoiled me me me age.

    How is it that we seem so much wealthier than we did in the 1980’s and 90’s? ..yet many of us can’t wire a plug anymore or be bothered to cook a meal from scratch . Have we become cleverer and more hard working…or has this improved lifestyle been paid for with borrowing and cheap credit. Are we now in a state of collective denial – basically we don’t want to admit were not quite as good as we think we are.

    Mentioning any of this is no way to win friends ..most people just don’t want to know prefering to keep their heads in the sand. It’s all rather depressing.

    Why isn’t all the cheap credit available bening converted into new busines start ups and real wealth generation ?. Is brexit going to be the excuse the politicians need to deliver a much needed dose of reality ?

    • Good points, Ken. We live in an age of instant gratification – which might be OK if we could afford it……

      …but we can’t! My figures show that the world has borrowed almost $3 for each $1 of “growth” since 2007, so the “growth” is really just the spending of borrowed money. In Britain, my figures are showing almost £10 of borrowing for each £1 of growth since 2005 – which is crazy. You can see this “living beyond our means” phenomenon in the current account deficit, of course. This began in the 1990s, when all and sundry started offering us credit through junk-mail and phone calls.

      Over the last 10 years, when average UK wages have risen by 27%, the cost of essentials is up 48% – despite the fall in oil prices since 2014. So we have less “spare” or “discretionary” spending capacity, yet we spend more – on credit. Some justify this on grounds of inflated housing equity, yet I can see at least two reasons why house prices might fall. And essentials will cost more now that the £ has slumped.

      So really it is an attitude problem – induced by the ideology of consumerism. At some point, something has to unwind this debt – which will not be pleasant.

    • Thanks Dr Morgan.
      There does seem to be a mutually beneficial relationship between politicians that don’t want to face up to the ponzi they have created….and those deluded individuals that really believe some kind of miracle has happened and their modest pile of rotten old bricks is really worth £1,000,000.
      I’m generally met with disbelief when discussing these issues with friends or suggestions that ‘the statistics are all made up anyway’.
      Maybe human beings are hard wired not to understand or ignore the exponential growth function ?.
      I’m interested in how the debt is going to be wound back – can it just be bought back buy the treasury and then cancelled?. But doesn’t this just destroy the real value of money ?
      So if money becomes worthless we are left with gold – but why would anyone need a decorative metal with limitied uses at a time of social unrest and food shortages….

  7. Dear Dr. Morgan,
    Thank you for sharing your insights, and for an excellent double-header in October. I always look forward to reading your work.
    You say that Brexit was the public voting to: ” .. to reject a failed economic system whose failures have been manifested into the british economy”. When you read the British gutter press, that covers about most newspapers printed in Britain today, then immigration was the reason behind Brexit, and not the economy. In my view, Brexit was just a backlash against the Establishment from a population who have suffered under globalisation. People are becoming increasingly aware of their declining living standards, and they just wanted to lash out at something. The whole immigration issue is just a red herring; taking “control of our borders” is a bit to late now. The immigration elephant in the room is not an issue of Polish plumbers, it is an issue of several millions of ex-colonial nations like Pakistan, Bangladesh, India, Jamaica et al. It is immigration from these nations which have diluted and reshaped British society, The few white, Polish, Christians on the other hand, can hardly be blamed for having much effect on British culture.
    The resulting Brexit vote, was in my mind taken by an ill-informed and totally mislead British public, and it was taken for all the wrong reasons. I really do wish that you were right when you say it was the public rejecting a failed economic model, but I really do not believe that the British public are bright enough to be able to see that.

    • Thank you for your comments. Let me comment on why the “leave” camp won over Brexit, as I see it.

      Immigration has concerned people – because they have never been asked about it since large-scale immigration began in the 1950s. Political correctness has angered people.

      Living standards are a bigger issue. Over ten years, average wages have risen by 25%, but the cost of household essentials, which I track, has risen by 48%. The perception is that the rich keep getting richer – and bankers get rescued whilst steelworkers and retail employees don’t. Young people are understandably angry – skilled jobs are hard to find, job security is low, student fees have soared and debt with it, houses have been priced out of their reach, and they often pay 40% of their income in rent. Yet the government is seen to do more for pensioners than for the young.

      The sense I get in Britain is one of pent up anger, like people are on a hair-trigger, ready to over-react to the tiniest slight, real or imagined. I find it depressing. Where I blame neoliberalism is for enshrining values of greed, one-upmanship, excessive competitiveness and an obsession with status.

      Finally, expert opinion was treated with scepticism – not too surprising, since many of the same experts wanted Britain to adopt the euro!

    • Dear Dr Morgan,
      Thank you for your response. I fully agree with you that falling living standards is the bigger issue. In your latest post #80, you explain very succinctly the overlying reasons why this is so, it is a very interesting read.
      I also feel the pent-up anger in Britain and I really do feel for this young generation, and as you say it is very depressing. However, I believe that their anger is being misplaced because the Polish plumber is not the enemy, the true enemy is Neo-liberalism – the enemy within.
      I do not think that very many in Britain realise this yet, so they lash out at anything.

      On an other note, maybe for a future article, I would be interested in your thoughts as to what you think is in store for the UK.
      The UK economy, being a net energy and food importer with a decimated industrial sector and an overweight financial sector and public sector, where can it go from here ?

      ( PS. I need to amend my origin post and thank you for a “triple-header” in October ! )

    • Neoliberalism is indeed the problem, and the explanation for many issues that you and others have raised.

      Corporates are far too close to politicians. It is interesting how often banks pay former Presidents, PMs etc huge sums to make speeches, sometimes as much as $500,000 or more. Since they cannot glean insights of this value from these people – I wouldn’t pay $5 to hear Bush or Brown – these sums can only be messages to those currently in office.

      It really should be stopped – by limiting politicians post-retirement incomes to, say, $250,000 per year.

    • ‘The few white, Polish, Christians on the other hand, can hardly be blamed for having much effect on British culture’.

      Really ?. Net migration to the Uk was in the ‘tens of thousands’ before the single market opened the Uk border to millions of poor Eastern Europeans. The British people are bright enough to recognise the current situation is totally unsustainable.

      Yours is the fashionable opinion shared amongst the chattering classes.

      In the real world, tradesmen have found their wages stagnating, children have found it more difficult to get into the best schools and maternity units are full.
      I believe you are ill informed if you believe almost a million Poles moving to the Uk can be described as ‘A few white Polish Christians’.
      Just the people of Boston, Lincolnshire were the population has doubled in a decade.

    • Thank you for your views on this Ken. I take on board what you are saying, however I do stand by my original point.
      As much as I would like to discuss this with you further, I will not use Dr. Morgans forum here to do so.
      I am sorry that you interpret my comment as fashionable chatter, I was trying to indicate to the forum here, that the Brexit result was in my view, more of a mindless reaction to immigration, than it was of a deliberated and educated response to “failed economic policies”.
      My underlying meaning here, being that the majority of the British public are not bright enough to understand fully what is going on.
      Yes, they feel that something is not right, but they don’t know what it is.

    • I feel I ought to say just something here, accepting first that both are valid points of view.

      1. Question: “are the British stupid?” I don’t feel the British are the sharpest tools in the box, and are certainly not given to philosophy in the way characterised by France. The British have always preferred being doers to being thinkers. Every country has its “idiocy of choice”, the British one being an obsession with status. But education, the media, and propaganda from many directions, all feed into this. I’ve discerned a “dumbing down” process going on for a long time.

      2. Question: “were the British stupid to support Brexit?” Their choice was based on anti-establishment thinking, so the question changes to: “were the British stupid to reject the advice/wishes of the establishment?

      Here, I’d have to say they were not stupid – they were justified in opposing the wishes of an establishment that has become arrogant, hypocritical, self-serving, sanctimonious and, frankly, oppressive.

      So the establishment invited the Leave vote by its treatment of the public. A system that rescues bankers, but does not rescue steel-workers or shop employees – and which prosecutes benefits cheats, but all too often lets rich tax-evaders get away with it – is inviting a popular backlash.

      3. We have to distinguish between immigration and not being consulted about immigration. The establishment has never consulted the public since mass immigration began in the late 1950s. It has also tried to label discontent as racism. If immigration played a role in the Brexit vote, then a failure to consult, or to encourage a national conversation on the issue, carries a lot of the blame.

      In other words, it wasn’t anger against immigrants, but anger at being patronised, ignored and not consulted, that was in play.

      In short, the establishment invited a backlash, and Brexit was where and when it happened.

  8. Dear Tim
    Having followed your posts for a few years along with many others bemoaning our debt for growth model I wonder at how robust the system that keeps the plates spinning seems to be. I’ve long since stopped spouting my own views on debt for growth to anyone who will listen, poor things normally glaze over very quickly.
    My question is this, when did debt for growth get out of hand and the financial economy as you note override the real economy? Has this been creeping up since the post war years and bar any number of black swan events, can it not just carry on indefinitely?
    For my part, I am moving home knocking off my mortgage debt and buying something less nice for less money, I don’t want to hold any debt?
    Kind regards

    • Hi Mark

      Putting a precise date on this isn’t possible or essential, but I use 2000. Between 2000 and 2007, world debt rose from $87trn to $142trn. If you leave the interbank sector out, it rose from $67trn to $105trn. That increase, of $38trn, was $2.20 for each dollar of growth (growth was $17trn).

      That was bad enough, and triggered the global financial crisis. So bad was this debt that trying to pay interest would have broken the system – hence zero interest rate policies (ZIRP).

      From 2007 to 2014, the figures get worse – not better, despite the shock. Debt rose from $142trn to $199trn. Leaving out interbank debt again, the increase was from $105trn in 2007 to $154 trn in 2014. That increase, of $49trn, was worse than 2000-07 ($38trn). It equated to $2.90 (up from $2.20) for each $1 of growth. As of today, the figures are higher still – in China alone, debt is well over $30trn (maybe $35trn), up from $2trn in 2000, $7trn in 2007 and $28trn in 2014.

      Sorry to bombard you with numbers but it seems the best way of answering your question! Bottom lines are:

      – “growth” since 2000 has really been faked – it is just the spending of borrowed money

      – this is abnormal, because we cannot afford to pay interest on global debt (hence ZIRP)

      – ZIRP itself is proving harmful – look at pension fund deficits

      – when does this crash? To quote Keynes, “markets can remain irrational longer than you can remain solvent”. So it could be a while yet – but the longer the delay, the worse it is likely to be.

    • Many thanks for the reply and the numbers! I wonder how many billions of NPL’s there are particularly in China right now amongst all this debt.
      Once again thank you for the reply.

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