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Tuesday, March 20, 2018

Global debt threatens the end of the financial world

Por Nina

The global economy is about to lead to a crisis because of the high debt burden of governments, companies and the population. The problems of the banking sector in certain countries create risks for the global financial system, whose debt has already exceeded 233 billion dollars, writes the columnist Igor Naumov in Sputnik.

Countries such as China, Hong Kong and Canada are today among the most affected by the risks of indebtedness. According to the study by the Equifax credit reporting agency, Canadian citizens owe more than $ 1.8 trillion to banks, excluding mortgages. In other words, there are $ 22,800 of debt per person. The Bank for International Settlements believes that high debt ratios create serious risks for Canada's banking system. In the worst case, the country's economy will face a crisis in the coming years. Credit bubbles threaten the economies of other developed countries, such as Belgium, South Korea, Australia and, of course, the United States, whose public debt reaches 21 trillion dollars.

"A deliberately provoked inflation or simple debt forgiveness can trigger a global financial catastrophe," warn analysts at the Russian financial services company BCS. The pessimistic scenario does not seem to be so unreal, explains the author of the article. The global debt, which includes all the debts of governments, banks, corporations and households on the planet, has already exceeded surpassed the 233 trillion. This index was 87 trillion dollars in the year 2000. In other words, in the last 17 years the global debt has tripled.

The financial crisis is traditionally born in the United States. The decisions of the Federal Reserve are not the only culprit. US President Donald Trump's initiative to lower the tax burden on businesses will only contribute to increasing the US budget deficit, he adds. "Already in this year the deficit will reach record levels and will exceed one trillion dollars, so that it will continue to grow between 150,000 and 200,000 million dollars a year," the former vice president of the Bank of Russia, Konstantin Korischenko, told Sputnik.

Naúmov predicted that Russia will also be affected by the economic turbulence, but the effect will be much more muted. The external debt of the Russian Federation, according to the data of the Russian Central Bank for January 1, 2018, is estimated at 529,100 million dollars. Most of the debt corresponds to the corporate and banking sectors. According to specialists, such debt will not exert critical pressure on the Russian financial system.