The developed world’s Ponzi scheme is caused by record-high levels of public and private debt. As Boston Consulting Group notes, it is. “The developed world’s Ponzi scheme is caused by record-high levels of public and private debt. And it is exacerbated BCG: Ending the Era of Ponzi Finance. Ending the Era of Ponzi Finance Stelter of the Boston Consulting Group that examines the magnitude of the challenge facing the The greater the weight of speculative and Ponzi finance, the smaller the overall margins of.

Author: Zurg Bragal
Country: Madagascar
Language: English (Spanish)
Genre: Travel
Published (Last): 24 June 2011
Pages: 172
PDF File Size: 10.9 Mb
ePub File Size: 9.53 Mb
ISBN: 420-1-94033-692-3
Downloads: 76969
Price: Free* [*Free Regsitration Required]
Uploader: JoJolabar

It will require a combination of several measures to bring these unfunded liabilities under control. To be sure, equity and commodity markets kicked off Year with a traditional refusal and rejection of the real world – the financial markets need to drag in more hopefuls, more stupids and more greedies right up to the wire.

To the degree that politicians and other leaders fail to address the structural challenges described in this paper, the odds of economic paralysis go up. In Germany, the old-age dependency ratio that is, the number of finwnce age 65 or above per persons of working age was 14 percent in ; it is bct percent today.

Endingg is a bummer to say, but there are many reasons why the debt burden could increase over the next 20 years.

BCG – Ending the Era of Ponzi Finance Economist American Debt | Consultant’s Mind

This trend is not limited to the developed world. For private households in the straight majority of developed countries, thw, the continued “appreciation” of their housing is taken as basic and certain. In the current environment, it is highly unlikely that larger investment returns will automatically solve the problem.

By investing in a growing erq highly productive workforce and making it easier for engineers and technologists to innovate and for entrepreneurs to start new businesses, the developed economies need to unleash a new Kondratiev wave of global economic development.


BCG – Ending the Era of Ponzi Finance Economist American Debt

In Japan, it will drop by 30 percent to It may seem harsh or exaggerated to liken the current troubles of the developed economies to a Ponzi scheme. In conclusion, the availability of cheap natural resources, which for more than a century has been an enabler of productivity improvement, may be ending. Healthcare costs are rising faster than inflation. Unfortunately, there is no such buyer in sight. In addition, the BIS has shown that the impact is similar for nonfinancial corporate debt and household debt, wnding that at least two of these three sectors have crossed the 90 percent threshold in most of the developed economies.

Fortunately, there is still time to act. A precondition to addressing the fallout of the unsustainable policies of recent decades is a fast cleanup of the debt overhang. Basically of course, no productive investments were made by either of these renowned criminals: The financial operators running the scheme are the private banks. Addressing these challenges at any time would be difficult. As long as it does, however, economic uncertainty will remain high.

McKinsey report Debt and De-leveraging: At the same time, globalization is leading to increasing inequalities in income and wealth within countries, as some groups such as investors benefit more from increased globalization than others such as manufacturing workers. Wnding will have to get smaller and more efficient.

Real change has to come, not Ponzi-style loose change. Despite record-high profit margins, businesses in the developed economies have significantly endinng their investment in new machinery and equipment. Some are sacrifices required of various stakeholders. The problems of the developed economies can only be addressed in a cooperative way on a global scale. How much money are we talking about?

The average asset age increased to A recent study found that an increase in government size of 10 percentage points is associated with a lower growth rate of between 0. All countries will try to increase their exports; all will try to attract the best-educated immigrants; and all will try to secure scarce resources, from water to oil to commodities. Others are new social investments, both public and private, that are needed in order to return to a sustainable growth path.


For private employers, starting with the largest employer companies in sectors such as the car industry, the simplest readout is to limit recruitment to the maximum, on a continuing basis, and encourage employees to quit work, if or when deals can be struck with labour unions, on one side, and government on the other to limit the costs of “voluntary” labour shedding and no new net job creation.

What this Means for Stocks – 21st Dec Economic growth is negatively affected by high levels of debt. He attracted investors by promising extraordinarily high returns—50 percent within 45 days.

In the case of the U. Public spending on social welfare will have to be cut, even as spending in new areas of social investment will have to be increased.

The average life expectancy then was 37 years for men and 40 years for women, while insurance was paid only from the age of 70 onwards. Most of these are political no-no items, which as the report says will almost certainly result in the continuation of what we have now: Inflating housing prices enables more private household debt to be taken on, perpetuating the scam.

By contrast, the share of government spending in developing countries is between 20 and 40 percent. In previous papers, my colleagues and I have discussed the various options for doing so.