Quadrillion Dollar Debt: Deflation ‘Day of Reckoning’ Looms

Thursday, July 22, 2010
By Paul Martin

By: EWI
Market Oracle
Jul 22, 2010

What Will Happen as $1,000,000,000,000,000 in Global Debt Winds Down?
The biggest balloon in the world is deflating.

This balloon had been inflated with a quadrillion (1015) dollars, which is to say: This balloon was filled not with air but with debt from around the globe.

What will happen as this global debt winds down? In two words: Deflationary Depression — the likes of which could be unprecedented in history.

A thousand trillion in debt can’t be wished away or swept under the rug. No one can “forgive” the debt. The consequences of unwinding this debt could be as massive as the dollar figure itself.

We’ve heard plenty about the debt problems of Greece, Spain, Portugal and Italy.

But how about the world’s second largest economy? Consider this fact reported in the Japan Times (July 8):

“Japan’s government debts are the highest the world has ever seen, at 219 percent of gross domestic product, according to the International Monetary Fund.”

Then there’s the world’s sixth largest national economy. In January 2009, Robert Prechter wrote this in the Elliott Wave Theorist:

“British banks have amassed $4.4 trillion worth of foreign liabilities, twice Britain’s annual GDP. … England, moreover, ‘has not defaulted since the Middle Ages.’ The possibility that it may do so again is yet another indication that the bear market is of … (larger) degree, exactly as Elliott wave analysts have predicted all along.”

The Rest…HERE

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