Every six months, the International Monetary Fund (IMF) analysts publish a report on global financial stability. In the report published on October 15, he revised downward his forecast of the expansion of the world economy. Experts analyze the attempts of countries to stimulate economic development.
In conditions of economic slowdown, the central banks of the United States, the European Union and Japan force investors to invest in increasingly risky projects in the hope of stimulating the economy.
IMF forecast expert: "This is one of the worst economic years to remember"
In practice, it turns out that a significant part of this money goes to the so-called 'zombie companies', which can only exist in debt, cannot make money and develop, and, most likely, they will never be able to pay the loans taken.
During the last crisis of 2008, the epicenter of financial problems was in the area of toxic mortgage loans granted in the United States to borrowers who did not have the opportunity to pay off these debts.
Now a similar problem applies to virtually the entire world economy, says the IMF report.
The only difference is that debtors with no ability to pay are no longer poor and unemployed Americans, but rather companies - sometimes very large - with numerous assets and employees, but without benefits and with a large credit burden.
The IMF plan for whales? and the world economy
"The global financial system is more tense, unstable and dangerous than on the eve of the Lehman Brothers bank crisis," said Ambrose Evans-Pritchard, the Telegraph newspaper analyst.
"The vulnerabilities of the business sector are already high in several economies of systemic importance as a result of the increase in the debt burden and the weakening of the debt service capacity," the IMF warns in the report.
IMF economists have calculated the risks based on the hypothesis that the economic slowdown will be "half as serious" as the global financial crisis of 2008.
"Corporate debt at risk of default could increase to $ 19 trillion, or almost 40% of total debt in major economies," the agency warned.
Corporate defaults, even in part of this gigantic debt iceberg, will become a cemetery not only for economic growth, but also for the world economy or its significant parts, Ivan Danilov wrote his article for the Russian version of Sputnik .
Cash
Commercial war: IMF puts a price on Trump's 'nonsense'
"Nineteen billion dollars is an astronomical sum," he said, comparing it to the official US debt that constitutes about 22 billion dollars.
"The governments of the main countries of the world have in their hands a debt bomb, whose detonation can be compared with the US default," he said.
In this context the possibilities that companies that have accumulated these debts, among which are Uber, Tesla, WeWork, begin to obtain sufficient benefits to pay them "are microscopic," DanÃlov said.
More and more analysts are calling on central banks to stop financing unproductive companies. Experts warn that zero or negative interest rates will cause "tremendous damage" to the long-term economy, and add that addiction to cheap money has become a problem, because central banks around the world set rates of interest increasingly low.
Credits: a bubble about to burst?
"The zero interest rate, or negative interest rates, is causing tremendous damage to the long-term economy. To begin with, zero interest rates poison the business environment," said Yuwa Hedrick-Wong, a professor at the University of Singapore and former MasterCard chief economist.
In this way the tool of central banks to lower interest rates in order to stimulate the economy leaves financial systems increasingly vulnerable and could have a long-term negative effect.
"The International Monetary Fund gave us a gothic horror show. Quantitative relaxation [ie, support for markets with printed money], zero interest rates and financial repression have pushed investors around the world to assume increasing risks. We have created a monster, "said Ambrose Evans-Pritchard.
No comments:
Post a Comment