World Debt Crisis?

The Jubilee Research Foundation is doing some amazing work, bringing to light realities of the international financial world often hidden from view. Nobelist Joseph Stiglitz, along with many other famous economists are contributers. They offer the best alternative view to the official IMF's bi-ennial report on the global economy. I strongly recommend you check out this site seriously:

The coming first world debt crisis
Ann Pettifor

The reckless financial policies of leading western powers in the last two decades make it likely that the next seismic debt crisis will be in America, not Argentina. It can be avoided, says Ann Pettifor of the Real World Economic Outlook, only by serious efforts to bring regulation and balance to the international economy.

The report predicts that a giant credit bubble, created by central bankers and finance ministers (the engineers of decades of “easy money”) has now reached a “tipping point”. This point – at which the “bubble” of financial assets exceeds GDP by nine times – has triggered financial crisis elsewhere. Another “tipping point” would be a rise in interest rates – not unlikely for economies like the US and UK which have massive foreign deficits.

The financial system: unbalanced, unfair, unsustainable

On a global level, there is $100 trillion of debt outstanding, but only $33 trillion of income with which to repay those debts. Even the drastic recent stock market falls have barely dented the credit superstructure. When this credit bubble bursts in the United States and Britain, it will be middle-class consumers that will first bear the brunt of the financial crash. ......

....A cycle of illusions

How did we get into this mess? Real World Economic Outlook challenges standard explanations for the launch of the “globalisation” experiment. We contest the view that deregulation of capital flows – the very core of the globalisation project – was brought about by a form of “spontaneous combustion” caused by new technology. Nor do we share the view of many activists that globalisation is “corporate-driven”.

Instead, we argue, globalisation was triggered by elected politicians, and central bankers, in both the US and the UK. In the post-Vietnam war era, led by Richard Nixon and later Ronald Reagan, these politicians sought ways to avoid making the “structural adjustments” necessary to the American economy if debts incurred by foreign wars were to be repaid by US taxpayers. Rather, these politicians preferred to disband the existing system of paying off debts by exchanging gold, and opening up capital markets, so that the US could borrow to pay off its debts. ...{article link continued}