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.

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

It is in the nature of Ponzi schemes to collapse suddenly, without ifnance. We do not give investment advice and our comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to enter into a market position either stock, option, futures contract, bonds, commodity or any other financial instrument at any time. Nevertheless, his view needs to be taken seriously. Economists use the term “Ponzi scheme” to describe a disastrous mechanism in which a financial operator assigns debt and pays off old debt by constantly taking on new debt.

The above is a matter of opinion provided for general information purposes only and is not intended as investment advice.

Given the importance of the quality of capital stock to productivity and economic growth, it is time to reverse this trend. By continuing to use this site, or by clicking “I agree,” you consent to the use of cookies.

For both reasons, it needs to be another key target of social investment.

The same trend holds true for U. But rather than address these issues, this publication simply aims to highlight the painful dilemmas that the developed world faces, to define the necessary steps toward a genuine solution, and to create a sense of urgency for rapid action. In addition, the BIS has shown that the impact is similar for dra corporate debt and household debt, and that at least two of these three sectors have crossed the 90 percent threshold in most of the developed economies.


It would be different if the money was being invested productively, but too endung of it is just being spent.

Once debt restructuring is under way and the broader public sees fniance wealthy owners of financial assets are contributing to the necessary cleanup, it should be easier for politicians to take another finnace step: This in no way is the end endingg the story because Ponzi finance-Ponzi wealth is not only cancerous for banks – transforming them into organized crime syndicates financd but parasitic and destructive of the real economy. Well, what happens when you have fewer younger people than older people?

This is a bummer to say, but there are many reasons why the debt burden could increase over the next 20 years. Basically people live longer but finanfe earlier – and younger generations will have to work longer at lower net income, to pay off the debt taken on to pay current retirees. A recent study found that an increase in government size of 10 percentage points is associated with a lower growth rate of between 0.

McKinsey report Debt and De-leveraging: The BCG report is constrained to examine “what went wrong”, and cites the work of economist Robert Gordon Northwestern University, USA who has repeatedly argued that starting as early as the period, real economic growth and real wealth have trended downwards, for a large number of convergent reasons. Such companies will have to fund the gap out of current cash flow, cut their liabilities by offering diminished lump-sum buyouts as GM and Ford have recently done —or ear renege on their promises, as the public sector will inevitably do.

BCG argues that there are steps that can be taken to reduce the risk of this global financial car-wreck. Rather, he argues that the space for truly fundamental innovations that result in step-change improvements in living standards is getting smaller and smaller.

Some are sacrifices required of various stakeholders. One stark example concerns old age retirement pension funding. It has also reduced the potential for future economic growth, making it more difficult for the next generation to deal with this legacy. This is partly a consequence of the Ponzi scheme oof.

The repayment of the debt — more recent loans plus interest — is constantly pushed into the always increasingly distant future, fjnance an endless process of debt refinancing. To be sure, equity and commodity markets kicked off Year with a traditional refusal and rejection of the real world – the financial markets ehding to drag in more hopefuls, more stupids and more greedies right up to the wire.


What this Means for Stocks – 21st Dec Basically of course, no productive investments were made by either of these renowned criminals: Fortunately, there is still time to act.

BCG report: Ending the Era of Ponzi Finance

Economic growth is negatively affected by high levels of debt. Extreme Bearish Stock Market Sentiment. In his latest Outside the Box letter, John Mauldin forwarded an excellent paper finande by Daniel Stelter of the Boston Consulting Group that examines the magnitude of the challenge facing the developed economies of the world.

How was this possible?

For the government-and-bank Ponzi scheme of the developed nations, today, the BCG report states that actual and real, continually accruing but well-hidden debts of governments are increasing. Stock Market Waterfall Decline – 24th Dec Perhaps the most direct statement in the BCG report:. Ineneing Italian immigrant to the U.

Systemic issues require a strong dose of political will and leadership. Significantly, of 8 developed countries analysed by the Bank for International Settlements BISonly three – Japan, Germany and Italy – did not show an almost certain strong, even massive growth of public debt tofor the simplest of reasons: Governments, companies, individuals — all need to take some blame.

But instead of investing the money to buy the coupons and exchange them for stamps, he simply used the money of later investors to pay high returns to earlier investors, extracting huge profits along the way. Countries need to start now to prepare pohzi the coming era of labor scarcity. Later, the Austrian economist Joseph Schumpeter showed how these long waves were associated with major advances in basic innovation—for example, the steam engine, electricity, and the automobile.