To further escalate the fears over an increasingly unstable stock market, a leading monetary theorist has suggested a huge wave of debt defaults are set to wreak havoc across the globe.
William White is the former Chief Economist of the Bank for International Settlements (BIS) and is also the chairman of the Organisation for Economic Co-operation and Development (OECD), both of which are major international financing companies. He believes that the lack of ability for global authorities to manage debt write-offs could be what sparks a major economical, social, and political crisis. According to Mr White, debts have continued to mount up over the last eight years, or since the start of the last recession, thanks to a rising number of people looking for loans quickly. White believes that the majority of the debts will never be serviced or repaid, which is an obvious cause for concern. To put it into perspective, major European banks have already admitted to $1 trillion non-performing loans existing. To heighten concern even further, Mr White was one of the minority who highlighted the instability of Western finance between 2005 and 2008 in the run-up to the global recession.
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So, how do we solve all of this? White states that “…it would be a good start for governments to stop depending on central banks to do their dirty work”. Of course, it’s debateable that this will actually occur. It’s a case of major governments and financing companies facing reality head on, or causing even more disorder by failing to do so.