Regardless of whether there is another Greek “saveâ€, preventing the actual default that still seems inevitable, the fact remains that adding debt to try and solve a debt crisis is a stupid approach when your interest costs already exceed your tax revenues (as is currently the case in Greece).
And it doesn’t stop there. There was roughly $4.5 trillion in new debt issued in 2010, three times the normal rate for mature economies.
The problem is that while the world is awash in debt that was designed to stimulate growth as many countries emerged from recession, the bang for our buck to Gross Domestic Product growth rates has plummeted versus previous generations. A prime example is the United States which accounts for large portion of global debt, however GDP has remained stagnant.
With so much debt added into the world, how is the world economy getting better. It’s not it is getting worse as Jim Rogers and others pointed out. That said, it will be very interesting at the end of this year to see how much world debt has been added again in 2011.
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