Okay, don’t listen to me… I admit that I don’t know spit about sunshine. But when it comes to universal economic implosion, I’ve ranted about David Walker, Glen Beck, and Lou Dobbs forever. I’m pretty sure I’ve put up at least eight rants on this issue.
Fine… Don’t listen to me or any of us for that matter. But at least consider what France’s Société Générale bank had to say.
Overall debt is still far too high in almost all rich economies as a share of GDP (350pc in the US), whether public or private. It must be reduced by the hard slog of “deleveraging”, for years.
“As yet, nobody can say with any certainty whether we have in fact escaped the prospect of a global economic collapse,” said the 68-page report, headed by asset chief Daniel Fermon. It is an exploration of the dangers, not a forecast.
Under the French bank’s “Bear Case” scenario (the gloomiest of three possible outcomes), the dollar would slide further and global equities would retest the March lows. Property prices would tumble again. Oil would fall back to $50 in 2010.
Governments have already shot their fiscal bolts. Even without fresh spending, public debt would explode within two years to 105pc of GDP in the UK, 125pc in the US and the eurozone, and 270pc in Japan. Worldwide state debt would reach $45 trillion, up two-and-a-half times in a decade.
(UK figures look low because debt started from a low base. Mr Ferman said the UK would converge with Europe at 130pc of GDP by 2015 under the bear case).
The underlying debt burden is greater than it was after the Second World War, when nominal levels looked similar. Ageing populations will make it harder to erode debt through growth. “High public debt looks entirely unsustainable in the long run. We have almost reached a point of no return for government debt,” it said.
Remember when I wrote that I had a terrible feeling about the future? Remember what a stack of a trillion dollars would look like? How about the silver dollar highway to the moon? Well forget about all that. But just consider what that French bank is saying.