The world remains mired in debt: Your New Year’s resolutions should include playing close attention to credit risks in your industry
Thursday, December 24, 2009 at 10:27AM By Ron Doyle
Hallelujah, the recession in Canada is over – the GDP grew by 0.1%! However the real question: Is the risk of bad debt losses increasing or decreasing on a global basis?
The number of banks in the USA that have failed in 2009 has reached 140. This is a symptom of weakness in the American banking system. Yet, what is happening with banks in other countries around the world, such as in Mexico, Russia, and the United Kingdom? How many of these banks have exposures to sovereign debt in countries like Dubai or Greece, and how are governments going to finance the expanding deficits?
It appears that because of the deficits, some countries, like the United Kingdom, and even the USA, may find their debt ratings reduced in future, which will increase the cost of borrowing and make it more difficult to find buyers for their ballooning debt.
There is an immense amount of debt held today by individuals, companies and governments, all which will have to be refinanced in coming years.
