Tag Archives: Developed country

Who’s Debt Are You? – Latest Statistics

There’s been some buzz in the markets lately, concerning the health of America’s sovereign debt. The nation owes other countries about USD 5,7 trillion, and about 3 trillion is due this year. Investors are worried that the US won’t be able to borrow much more, at least not to the same low price,  and that big buyers of US Treasuries, like China and Russia, may start dumping their bonds to put USA in a financial squeeze. Well, I wouldn’t worry too much. You see, most countries who are lending money to the American government are receiving huge loans from US banks. The next victim of the debt crisis is probably not USA, nor the EU.

“Claims on advanced economies contracted by $342 billion between end-December 2012 and end-March 2013, mostly due to reduced claims on banks and related offices. This marked the sixth consecutive quarterly decline in interbank positions on advanced economies and brought the cumulative reduction since end-September 2011 to $1.9 trillion. In contrast, claims on borrowers in emerging economies increased by $265 billion between end-December 2012 and end-March 2013.”

Bank of International Settlements – BIS
The Bank of International Settlements (BIS) recently realised new data and statistics on global debt, an interesting oversight on who-owes-who in a world ridden by fear of economic collapse and social unrest. The numbers reveal a picture slightly different from what most people see.
F.ex: European countries owe foreign nations twice as much as the United Nations owe others. And there seem to be several groups of nations, connected through the same banks, but for some reason it is not the countries with the largest debt who are in most trouble.
We already know the US numbers, and the Americans owe most of the money to themselves, anyway… (Federal Reserve, that is.). The 5,7 trillion debt to foreign countries is a relatively small sum compared to the grand total of about 14 trillion.
Elsewhere, the sovereign debt, with all its derivatives, represent a much higher risk.
Europe’s Fab Four
Consolidated foreign claims of 24 reporting banks – immediate borrower basis.
United Kingdom – USD 3,2 trillion.
Germany – USD 1,8 trillion.
France – USD 1,6 trillion
 Netherlands – USD 1,9 trillion.
And who do they borrow from?
United Kingdom:
  1. Other EU bank: 1,5 trillion.
  2. France: 200.200 million.
  3. Australia: 121.577 million.
  4. Canada: 102.963 million.
  1. Other EU banks: 1,1 trillion.
  2. France: 198.000 million.
  3. Austria: 37,914 million.
  4. Canada: 23.838 million.
  1. Other EU banks: 714,235 million.
  2. Canada: 24,612 million.
  3. Belgium: 23,536 million.
  4. Austria: 13,442 million.
  1. Other EU banks: 577,427 million.
  2. France: 156,857 million.
  3. Belgium: 22,746 million.
  4. Canada: 13,722 million.
And who have most money outstanding?
  1. United Kingdom – USD 2,6 trillion.
  2. Germany – USD 1,5 trillion.
  3. France – USD 1,2 trillion.
  4. Netherlands – USD 0,8 trillion.
Is there a pattern here?….somewhere?
The BIS writes:

“The latest international banking statistics show diverging trends in credit to advanced economies and emerging markets. Claims on advanced economies contracted by $342 billion between end-December 2012 and end-March 2013, mostly due to reduced claims on banks and related offices. This marked the sixth consecutive quarterly decline in interbank positions on advanced economies and brought the cumulative reduction since end-September 2011 to $1.9 trillion. In contrast, claims on borrowers in emerging economies increased by $265 billion between end-December 2012 and end-March 2013. The expansion was driven mostly by credit to emerging economies in Asia, especially China. In recent years, BIS reporting banks’ exposure to Asian credit risk has increased even more rapidly than their lending to Asian borrowers because lending has been accompanied by a reduction in net credit risk transfers out of the region.”

That means we now have a USD 30 trillion (+) debt bubble in transit between different parts of the world! (At the same time the richest people in the world has more than 20 trillion stacked away in places like Claman Island to avoid taxes.).

Just great….


The Asians now owe other countries – mostly European – close to USD 2 trillion, with China‘s debt closing in on USD 600,000 million.

The rest is as follows:

South Korea: 309,363 million,

India: 304,920 million.

Chinese Taipei: 161,404

Malaysia: 155,500 million

Thailand: 102,299 million

Indonesia:  100,770 million.



Statistics at end-March 2013 are preliminary and subject to change.

Data are available on the BIS website, via the BIS WebStats query tool, or in a single PDF indetailed annex tables. Developments in the latest data are highlighted in the Statistical release.

Revised data and an analysis of recent trends will be released in conjunction with the forthcoming BIS Quarterly Review, to be published on 16 September 2013. Data at end-June 2013 will be released no later than 23 October 2013.


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China: "Mother of All Black Swans"

According to Director of Research at Investment Management Associates Inc., Chinese government intervention, corruption and political capital-allocation decisions take things to a new level of financial insanity. If, or when, its economy slows down, China will be the Mother of all Black Swans, Mr. Katsenelson warns.

“The Chinese government lies. The government cares deeply about ideology: it censors media and internet, sends people to jail for writing anti-government articles. Making up GDP numbers is just one of many tools.”

Vitaliy Katsenelson

Chinese late-stage growth obesity have resulted in significant overcapacity, according to the report.  The economy grew at 10% (real growth) for 10 years. When now building new plants,  assumptions are made that the past growth will  continue into the future.

Mr. Katsenelson points out that the natural demand for its goods from the developed world now is lower as the global economy is still contracting.

But demand is driven, in large part, by heavy borrowing by US and European consumers – China provided the financing.

“Similar to Lucent financing dotcoms that were buying Lucent’s equipment.”

“Future growth will be significantly lower– China’s customers (the US and Europe) are overleveraged and are deleveraging.”

Chinese analysis can be divided into three periods, the researcher writes:

1.Pre-crisis –1998-2008 – (Late-Stage Growth Obesity).

2.During crisis –2008 (Q4) -2009 (Q2) – (You Lie!).

3.Post-crisis –2009 (Q2) -today – (SuperSteroids-R-Us).

Will do anything to grow its economy

“Farmers moved to cities in search for jobs. No social safety net – lose a job, no unemployment insurance, hospital only accepts cash. This explains the high savings rate.”

“Hungry people don’t complain, they riot – government is afraid of political unrest.”

“Chinese chose growth at any cost, even if it was profitless, with bad loans and uneconomical projects.”

“Once you look at what’s taking place in the Chinese economy through this lens, the decisions of its leaders start making sense, or at least become understandable.”

“Analyzing the Chinese economy while it is growing at superfast rates is like analyzing a bank during an economic expansion– all you see is reward. But the defaults –the risk – are masked by constantly increasing new business that is profitable at first (or did not have a chance, yet, to default). The true colors of that growth only appear after the economy slows down and new accounts mature.”

Consequences Of A Bust

So, what will happen if (or when) the Chinese bubble bursts? Investment Management Associates paints a pretty ugly picture:

“What happens in China doesn’t stay in China (not any more); it spills over to the rest of the world.”

“China will turn from a windin the sails of the global economy to its anchor.The impact will be felt in many, and unsuspected, places.”

“It will tank the commodity markets, commodity producers, and commodity-exporting nations.(Incremental demand from China collapses, oil prices follow, taking the Russianand Middle Eastern oil-centric economies with it). According to GaveKal Research, China accounts for 15% of Brazil’sexports (up from 1.5% a decade ago).”

“Demand for industrialgoods will fall off the cliff.China consumes a lot of those goods –$550 billion worth annually (according to GaveKal Research).”

“Chinese appetite for our fine currency will diminish, driving the dollar lower against the renminbi and boostingour interest rates higher. No more 5% mortgages and 6% car loans.”

“Political instability in China is a possible outcome from a significantly weakening economy.”

A Chinese Snapshot

“There’s currently 30 billion square feet of Chinese real estate in the works, which would work out to a 5×5 cubicle for every man, woman, and child in the country.”

(Jim Chanos)

Check out the full China-report from Investment Management Associates Inc.

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2010 Analysis: Warns Against Social Unrest

According to The Economist Intelligence Unit’s the world economy is on the road to recovery, but the outlook for 2010 is still highly uncertain. EIU maintain that the crisis has already inflicted its deepest wounds, but its impact will continue to be felt throughout 2010. Moreover, downside risks to economic stability still abound.

“An increase in the frequency and intensity of social and political unrest, given increased unemployment, weak growth and impending fiscal austerity measures in many countries.”

Economist Intelligence Unit

(Article partly in Norwegian, link to summary in English)

Protesters throw stones towards policemen during riots in the northern Greek town of Thessaloniki December 2008. Hundreds of protesters clashed with police for a third day in several Greek cities in riots fuelled by growing economic hardship and triggered by the shooting of a teenager on Saturday night.

Verdensøkonomien er på bedringens vei, men utsiktene er veldig usikre, skriver Economist Intelligence Unit i sin analyse for 2010.

“The cyclical economic upswing in the developed world will continue into the early part of 2010 and, apart from eastern Europe, developing countries will recover relatively quickly from the 2008-09 financial and economic crisis. But according to 2010: country by country, just published by the Economist Intelligence Unit, the pick-up reflects the impact of unprecedentedly aggressive fiscal and monetary stimulus. In 2010 governments will face the very difficult task of trying to restore fiscal discipline while also ensuring that withdrawals of stimulus measures do not kill off nascent economic recoveries. The Middle East and Africa will be the best-performing regions of the world, with growth supported by increased oil production and investment in infrastructure. However, China and India will once again be the world’s fastest-growing major economies.”

Economist Intelligence Unit mener følgende tre forhold utgjør den største trusselen mot økonomien i 2010:

* Riskiko for dannelse av nye økonomiske bobler som følge av myndighetenes løse penge- og finanspolitikk.

* Deflasjonspress i land med stor statsgjeld.

* Mer sosial og politisk uro med økende intensitet som følge av høy arbeidsledighet, svak økonomisk vekst og strenger finanspolitikk.

Det tre hurtigst voksende økonomiene i 2010 vil være Qatar, Turkmenistan og Azerbaijan, mens de tre svakeste økonomiene vil være Litauen, Venezuela og Latvia.

Her et sammendrag av rapporten.

(Norsk Google-oversettelse )

Tidligere analyser:

John Williams – shadowstats.com

Antal E. Fekete – San Francisco School of Economics

David Rosenberg – Gluskin Sheff

Goldman Sachs

Sosiété Générale


Danske Bank

Deutsche Bank

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