What is the end state of all the financial turmoil?

Is there an end to the turmoil?

The Dow is plumbing the depths as are most of the markets, in emerging or developed economies. There are various commentators with different perspectives.

The commentaries that interested me are shared here.

BBC and Robert Peston

To summarise here are some interesting factoids from that file:

UK Borrowing/GDP > 300%

UK Gross foreign current liabilities/GDP > 300%

UK Banking funding gap (at Dec 2008) ~ £780 b – may go over £1000b

To put things in context globally, worth having some of the global (rounded estimates) GDP figures to hand:

  1. US GDP  = $14 t (trillion)
  2. UK GDP  = $3t
  3. Japan GDP = $4.4t
  4. China GDP = $3.3t
  5. Germany GDP = $3.5t
  6. Italy GDP = $2.5t
  7. India GDP = $1.1t
  8. France GDP = $2.7t
  9. Brazil GDP = $1.3t

Overall Global total = $60-80 t.

So if you just look at US and UK, there is a total borrowing of over $50t in the economy – at approx 3x GDP – Wow! That is a large number to get your head around.

And who is going to be paying that debt down?

Either taxation in those countries (ie Mr Joe Taxpayer himself) or inflation (Mr Banker floods local cash into the market). Either way the future looks dire. Brace yourself – hopefully this is just a roller coaster and not a runaway train ….

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1 Comment

Filed under Economy

One response to “What is the end state of all the financial turmoil?

  1. I would like to float a proposal for an economic stimulus plan past you for your consideration. The basics of the idea are in an article at http://tinyurl.com/dknr3c . Please review this article and let me know what you think. This will be the basis for a more in depth paper on the concept.

    Thank you for assisting with this project.

    Robert K. Minniti, CPA, CFE, Cr.FA, CFF, MBA

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