Tuesday, January 10, 2012
Hypo Venture Capital Headlines: Warning of global stall may come too late to avoid crash
http://hypoventurecapital-news.com/2011/10/hypo-venture-capital-headlines-warning-of-global-stall-may-come-too-late-to-avoid-crash/
Unresolved debt leaves frustratingly slow growth as the best likely outcome, writes Satyajit Das.
In 2008, panicked governments and central banks injected huge amounts of money into their economies, in the form of government spending, tax concessions, ultra-low interest rates and “non-conventional” monetary strategies – code for printing money.
The actions prevented the Great Depression 2.0 temporarily, converting it into a deep recession. The US economy shrank by 8.9 per cent in 2008.
As individuals and companies reduced debt as banks cut off the supply of credit, governments increased their borrowing, propping up demand to keep the game going for a little longer. Governments gambled on a return to growth, solving all the problems.
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That bet has failed and high levels of government debt in some developed nations have become the central problem. Greece is Patient Zero in the global sovereign crisis, highlighting deep problems in public finances of developed nations.
Unresolved debt leaves frustratingly slow growth as the best likely outcome, writes Satyajit Das.
In 2008, panicked governments and central banks injected huge amounts of money into their economies, in the form of government spending, tax concessions, ultra-low interest rates and “non-conventional” monetary strategies – code for printing money.
The actions prevented the Great Depression 2.0 temporarily, converting it into a deep recession. The US economy shrank by 8.9 per cent in 2008.
As individuals and companies reduced debt as banks cut off the supply of credit, governments increased their borrowing, propping up demand to keep the game going for a little longer. Governments gambled on a return to growth, solving all the problems.
Advertisement: Story continues below
That bet has failed and high levels of government debt in some developed nations have become the central problem. Greece is Patient Zero in the global sovereign crisis, highlighting deep problems in public finances of developed nations.
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