DEBT, is the most dangerous four letter word in the financial world today. If you look at the third chart above, the credit creation vs the world industrial growth has grown out of proportion. Any we have not even brought in the weapon of the world destruction, DERIVATIVES yet. Ultimately, it all comes down to this 4 letter word, DEBT. Debt is wonderful, if it is wisely used. Many corporations and countries gone into bankruptcies and social upheaval due to over gearing. The temptation of DEBT is real. It did not only happens to the ASIANs in 1997s, but, look at the PIIGS now, same old thing, what about USA? China? Australia?
What happen when corporations overgeared, they have to deleverage, period. So, the next few decades, the world is going to be deleveraging. That is why Gary Shilling called his book Age of Deleveraging (he was referring more on USA and Europe).
Many will suffers, period.
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