Rising tide of debt to hit rich countries’ budgets

Thrugelmir

Clouds on the horizon.

Rising tide of debt to hit rich countries!!!8217; budgets, warns OECD

Low interest rates had sustained high levels of government debt up until now, but it !!!8220;may not be a permeant feature of financial markets!!!8221;, they said.

They warned government budgets would be faced with !!!8220;significant challenges!!!8221; as developing countries face a rising tide of crippling debt.

The total stock of the 35 OECD members!!!8217; sovereign debt has rocketed from $25trillion (£17.9trn) in 2008 to more than $45trn (£32trn) this year.

Member nations of the OECD, a economics intergovernmental organisation, have now been warned to prepare to refinance 40 per cent of their total debt stock in the next three years as the debt accumulated from the financial crisis ratchets up in the coming years.

https://www.express.co.uk/news/world/923028/world-economic-news-finance-latest-government-debt-OECD-interest-rates

economic

I wonder how much of the total debt of say the UK or US is purely from interest accumulated/rolled into the debt. I imagine its something like 60-70% as a wild guess?

stator

economic wrote: »

I wonder how much of the total debt of say the UK or US is purely from interest accumulated/rolled into the debt. I imagine its something like 60-70% as a wild guess?

I wouldn't have thought so, most of the UK debt was accrued in the last ten years. Interest rates are silly low

economic

stator wrote: »

I wouldn't have thought so, most of the UK debt was accrued in the last ten years. Interest rates are silly low

That graph is exactly why rates will stay low for a very long time.

economic

Is that graph just the total stock of GILTS? or does it also include things like unfunded liabilities etc?

GreatApe

Excluding self harm induced by the FED or BOE real rates will be and should be negative.

Why should bank depositors earn a real return on their 'investment' especially since it has a government guarantee of return of capital

In nature crows and squirrels seem to be willing to accept -50% real rates of return. They forget the location of about half the seeds and nuts they burry for winter.

I would go so far as to say cash depositors should expect negative 5% annual return with shares and property around negative 3% annual for a long term 30-50 year horizon. Won't be a stright line

economic

Once shelter and food is sorted out, everything else is optional. Food is cheap and can get cheaper. Shelter is cheap or expensive depending where you live but even london it is cheap if you rent. Healthcare especially in later age is one area where there is a lot of scope to get cheaper as it is quite expensive.

You do not need much money as you think you do to live a decent comfortable life. Technology including automation, improvement in healthcare, amazon, etc etc is making all our lives good and comfortable.

So whilst some maybe scared of negative real interest rates, actually it is not as bad as you think. technology is here to save the day.