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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Despite bdg profit margins, businesses in the developed economies have significantly reduced their investment in new machinery and equipment. Countries need to start now to prepare for the coming era of labor scarcity.

Bismarck lived until 83, but such longevity was the exception financr the time. We recommend that independent professional advice is obtained before you make any investment or trading decisions.

BCG argues that there are steps that can be taken to reduce the risk of this global financial car-wreck.

Last but not least, the developed world needs to prove Robert Endinf wrong.

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The biggest, however, is still ongoing: Public spending on social welfare will have to be cut, even as spending in new areas of social investment will have to be increased. As he puts it: Rather, he argues that the space for truly fundamental innovations that result in step-change improvements in living standards is getting smaller and smaller. Inflating housing prices enables more private household debt to be taken on, perpetuating the scam.

In addition, the BIS has shown that the impact is similar for nonfinancial 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. According to another BIS study, even in a benign scenario in which current deficits were reduced to precrisis levels and age-related spending was frozen at current levels of GDP, public debt would continue growing at a significant rate.


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. Nearly five years after the financial crisis, the leaders of the developed world are far too complacent. In Germany, the old-age dependency ratio that is, the number of persons age 65 or above per persons of working age was 14 percent in ; it is 31 percent today.

Uneven Progress on the Path 1. The paper starts with the Origins of the Ponzi Scheme we call modern economies It would be different if the money was being invested productively, but too much of it is just being spent.

Perhaps the most direct statement in the BCG report:. Only logged in users are allowed to post comments. McKinsey report Debt and De-leveraging: World Stock Market Indices: This may seem strange given that many advanced economies are currently suffering from high unemployment.

BCG – Ending the Era of Ponzi Finance Economist American Debt

There are signs, however, that the rate of improvement in productivity is in decline. Public spending on social welfare will have to be cut, even as spending in new areas of social investment will have to be increased. The developed world faces a day of reckoning. Or and Russia will also finande their workforce shrink by Unless these performance differences are addressed, it will be increasingly difficult for members of the next generation to compete with the rest of the world and with each other—let alone pay for the retirement of the current generation of baby boomers.


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The Step Plan To End The Era Of Ponzi Finance | Zero Hedge

Addressed by a political class or generation that prefers War and Circuses to Bread and Circuses, the sheer size of the economic breakdown threat is forcing them to act less irresponsibly.

According to a study by the Bank for International Settlements BISthe combined debt of governments, private households, and nonfinancial companies in the 18 core countries of the Ppnzi rose from percent of GDP in to percent in But the broken growth model is also due to long-term demographic trends and other changes.

Others are new social investments, both public and private, that endung needed in order to return to a sustainable growth path. Efa the government-and-bank Ponzi scheme of the developed nations, enring, the BCG report states that actual and real, continually accruing but well-hidden debts of governments are increasing.

Competition among countries will become more intense in the years to come. A recent Goldman Sachs report argues that Europe has witnessed a decade of underinvestment, starting before the financial crisis and intensifying since then. It will require a combination of several measures to bring these unfunded liabilities under control.