Tuesday, September 15, 2015



Debt levels have soared so high that any fluctuation in interest rates could trigger a global debt maelstrom, according to the Bank for International Settlements (BIS).

Worse, the BIS worries that the U.S. Federal Reserve and other central banks are losing control of interest rates as investors begin reading the handwriting on the wall.

The BIS effectively endorsed the forecasts now being provided by many: The massive and patently unpayable debts amassed by the world's governments are now dangerously close to imploding.

"We are not seeing isolated tremors, but the release of pressure that has gradually accumulated over the years along major fault lines," said Claudio Borio, the bank's chief economist.

The BIS said that total debt ratios are now significantly higher than they were at the peak of the last credit cycle in 2007, just before the beginning of the most severe recession since the Great Depression.

Worse: Because China and other emerging markets have accumulated massive debts since 2009, they will not be able to act as "shock absorbers" as they did after the failure of Lehman.

This time around, no government or region in the world has the resources required to bail out indebted nations or to halt a debt collapse.

The concern is that, due to investor concerns, interest rates will rise regardless of what the U.S. Federal Reserve does — an event that could trigger an avalanche of defaults worldwide.

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