Gravitas: This giant tsunami of debt could trigger the next financial crisis

Global debt surged to a record $226 trillion last year. This is the largest one-year surge since World War II. Can this trigger the next financial crisis? Palki Sharma tells you about the risks.

Meanwhile the virus from china continues to plague the world not just the omicron variant which is spreading like wildfire as we speak but the fallout of the pandemic in general the impact will be felt for a long time to come here’s one of the things it is causing a giant tsunami of debt the world over borrowing has gone out of control we are staring at a giant

Pile of debt how big is this pile 226 trillion dollars in total 226 trillion you heard that right global debt has surged let me repeat to 226 trillion dollars this is the biggest surge since the second world war who was this debt all kinds of people governments households corporates everyone but the biggest surge comes from public debt that’s the money that

Governments borrow their loans are now equal to 99 of the global gdp the numbers are staggering why are governments borrowing so much because they have no choice the pandemic has forced them to do this countries worldwide spent big to keep their economies afloat they had to support their citizens with all kinds of things free food medical care vaccines health infras

Infrastructure and all of this needed money so governments have no option but to borrow and meet expenses the result is this leading economies are severely indebted let me show you a list the united states has the highest level of government debt almost 20 trillion dollars that’s more than 100 of its gdp japan situation is alarming the country has borrowed more

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Than 9 trillion that’s more than 230 percent of japan’s gdp china more than five trillion dollars in national debt more than 50 percent of its gdp and beijing’s untamed borrowing is only adding to the problem global debt surge by 28 trillion dollars advanced economies in china accounted for more than 90 percent of that borrowing what is china’s share in the global

Debt surge 26 more than a quarter this could have dire consequences for the world you see whenever countries have accumulated so much debt it has always led to a financial crisis allow me to take you back in time from 1970 to 1989 many latin american countries accumulated huge amounts of debt at the end of 1970 the region’s outstanding debt was 29 billion dollars

In the years that followed latin american governments could not manage these loans by the 1980s debt levels in this region reached 327 billion dollars from 29 to 327 billion it’s an increase of more than 11 times here is what happened next in 1982 mexico defaulted on its sovereign debt argentina and brazil had to weaken their currencies a global financial crisis

Began a total of 27 countries had to reschedule their debts 16 of these were from latin america the story repeated itself in 2007 banks in the united states gave out a lot of bad loans it was a systemic failure u.s household debt was allowed to reach well over 10 trillion dollars that was more than 40 percent of the gdp many of these loans failed major banks in the

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United states collapsed in 2008 the result was this two trillion dollars were wiped off from the global market u.s and european banks lost more than one trillion dollars they had placed a bet on toxic assets now join the dots whenever countries have accumulated massive levels of debt they found themselves in financial crises if the current debt is not controlled

Now the world will be forced to deal with another financial nightmare this giant tsunami of debt could trigger the next financial crisis veon is now available in your country download the app now and get all the news on the move

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Gravitas: This giant tsunami of debt could trigger the next financial crisis By WION