debt
Image: © CreditRepairExpert / Steven Millstein via Flickr

You know that big financial crisis we just had? Prepare for round two.

The IMF says there’s too much debt in the world economy and another crisis is super likely.

What it means: The International Monetary Fund (IMF) is an organisation whose job is help out countries who have money troubles by giving them advice and lending them cash. It has just announced that it’s worried that we’re all about to have a repeat of the 2008 financial crash, mainly because we didn’t bother to fix the problems from last time.

One of the things the IMF is concerned about is global debt, which is currently £139 trillion. That’s higher than it has ever been before, and 60 percent bigger than it was in 2008. Debt is a really tricky subject for economists. Plenty think it can be a good thing if it allows companies and people to invest in things now that will have big payoffs later. A business that borrows money to build a new factory might then be able to make more stuff, earn more money and hire more staff, for example.

But debt also needs to be paid back, and sometimes borrowers don’t have the money to do so. This becomes even more of a problem because you almost always have to pay interest on your debt (interest is a percentage of the loan that you pay back on top of the amount you borrowed). Interest rates incentivize people with money to lend it to people without. But it also makes unpaid debts grow bigger and bigger, which makes them more and more difficult to pay back.

The IMF is worried that lots of companies and people that have borrowed money in the last decade won’t have the funds when it comes to repayment. That’s partly because the IMF thinks global economic growth (basically, the world getting richer by making more stuff) is slowing down. Lots of economists think lower economic growth will also mean lower wages for individuals and lower profits for companies, meaning less money with which to pay back their huge debts.

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Reader Comments

  • RW

    Your right to a degree. You mentioned “the wandering Jew”.

    I elaborate that the Jewish people, historically have tended to migrate almost exclusively to locations that are economically and culturally vibrant already. I would speculate that Jews have thrived in these places and have often improved the bounds of their economies and knowledge base.

    You can also ask; how many massive entertainment conglomerates, Nobel winners or billionaires has Isreal developed? If Jews are so capable, why isn’t Tel Aviv the Rome of our time?

    Jews are successful because they value education, maintain a strong social cohesive, they actively monitor and have a good sense for Zeitgeist wherever they are and they carefully choose the places they settle and congregate themselves heavily in these choice locations.

    But most importantly (haulocaust increased the importance of this aspect), they actually designed their culture for success. They not only attend Harvard, they use what they learned to better the group as a whole. With as much, they studied intricate networking systems, adapted to it and in many cases improved upon them. (See how Japan acquired Aegis warships and made them better).

    Of course there is nothing wrong with any of this. It’s when you elaborately gain disproportionate power in any society where you would stand out, you must take care when attempting to make a society better (Civil Rights movement) and rewriting that society all together (mass immigration). Ask blacks in China, Mexico, Philippines or India how much opportunity they have? Go to businesses owned by their American diaspora and see how many blacks they hire. Go to Silicon Valley and see how many East or South Asian tech workers wish they could work with more black people. California might work as a state, but as a nation, I think your rolling the nuclear dice here. I hope we can succeed as a tolerant pluralistic superpower but at this stage in human societal development, it’s a pipe dream.

    And if Jews really are the icon for success, they would see that fundamental human successes happen over generations. Just look at the rest of the planet? Are we ready?