Following the 2008 financial crash and subsequent recession, the U.S. has undergone an arduously slow recovery. And yet, without any substantial institutional changes to the worlds financial organizations following the crash, the question arises: To what degree is the ongoing recovery a delusion?
“Forbes” contributor and economic analyst, Jesse Colombo, coined the term Bubblecovery to describe what he viewed as a, a bubble driven economic recovery.
In other words, the improvements we are experiencing are merely temporary, and without the undertaking of major institutional reforms that address the plethora of credit bubbles that underlie all major financial systems, 2008 is due to repeat itself in the near future. More importantly, as Colombo goes on to explain, the next bubble-induced crisis is likely to be even more severe than the last one because the global economy is in a much weaker state than it was in before the last crisis started.
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Numbers dont do this unsustainable paradigm justice, but they do offer a glimpse at the troubling reality behind the post-2008 financial recovery:
(1)$17 trillion (thats 1139 miles of thousand dollar bills )
According to the U.S Department of the Treasury, this is the current size of the U.S. national debt, which has grown at a rate of one trillion dollars per year over the past ten years.
(2)$59 trillion (thats 3953 miles )
Take government, corporate, and consumer debt into account and youll get this figure: the cumulative amount of debt in the U.S. financial system. According to the Federal Reserve Bank of St. Louis, this number was barely over two trillion just four decades ago.
(3)$71 trillion (4757 miles )
From an international perspective, this number constitutes the estimated size of global GDP. In other words, it represents all of the officially recognized goods and services produced in the entire world over the past year.
(4)$100 trillion (thats the distance between Shanghai and Newfoundland in miles )
Meanwhile, as Bloomberg Businessweek reports, the total amount of global government debt has crossed the 100 trillion dollar threshold and significantly outnumbers the aforementioned figure for global GDP.
(5)$223 trillion (14,941 miles!!!)
Finally, and perhaps most worrisome of all, the “Wall Street Journal” reports that, The total indebtedness of the world [stands at $223.3 trillion], including all parts of the public and private sectors, amounting to 313% of global gross domestic product [GDP].
However, the figures are not all gloom and doom as a report carried out by economists at ING does offer an alternative perspective on the subject. As the report explains, Increasingly, debt is seen as a dirty word, but in most cases, it should not be.
Perhaps its no coincidence that the rise of U.S. indebtedness coincided with improvements in technology and the globalization of trade, human labor and finance. Ultimately, while debt has grown at an unprecedented rate over the past three decades, its growth has also paralleled the economic development of emerging nations and has bankrolled massive technological advancements during that same span of time.