How Debt Can Lead To Global Collapse .... With Wars Usually Following

Explosion of debt: Japan's public debt could reach as much as 270pc of GDP in the next two years. A bullet train is pictured speeding past Mount Fuji in Fuji city, west of Tokyo Photo: Reuters

Société Générale Tells Clients How To Prepare For Potential 'Global Collapse' -- The Telegraph

Société Générale has advised clients to be ready for a possible "global economic collapse" over the next two years, mapping a strategy of defensive investments to avoid wealth destruction.

In a report entitled "Worst-case debt scenario", the bank's asset team said state rescue packages over the last year have merely transferred private liabilities onto sagging sovereign shoulders, creating a fresh set of problems.

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.

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My Comment: Some of my more devoted friends and readers have always squinted their eyes when I posted stories on the financial crisis in this blog .... a blog that is 98% dedicated to military/intelligence/international affairs/war news.

But this should not be a surprise .... history has shown that economic growth and development has always been instrumental in maintaining peace and stability between countries. If this stability in growth should stop, the subsequent political turmoil has always translated into internal conflicts followed by wars and conflicts between neighboring states.

I will never forget a paper that I read which described the Weimer Republic in Germany during the early 1930s and what they went through when they experienced hyper inflation.

Paraphrasing ..... debt lead to a collapse in the value of money that resulted in a period of hyper inflation .... an economic tsunami that impacted everyone in Germany. The buildings still stood untouched. No windows were broken. There was no rioting in the streets The trains ran on time. But there were millions of victims. Two years later in a national election these same victims gave a mandate to Adolf Hitler to save them from their economic malaise.

So yeah .... I do pay attention to economic trends and their impact on nations. And articles like the above do get my attention, because they are usually a harbinger of things to come.