kathimerini.gr
BIS Warns of Global Economic Crisis Due to Soaring Public Debt
The Bank for International Settlements (BIS) warns of a potential global economic crisis due to rising public debt, projected to reach \$130 trillion by 2028, urging immediate policy action.
- How do factors such as US tax cuts and rising US Treasury yields contribute to the rising risk of financial market instability?
- The BIS highlights the risk of a global economic crisis due to soaring global debt, now projected to rise to \$130 trillion by 2028. This increase, partly fueled by policies like US tax cuts, raises concerns about market stability. The rising US Treasury yield, currently around 4.22%, reflects investor anxieties and influences borrowing costs worldwide.
- What is the immediate risk posed by the projected surge in global public debt, and what specific actions should policymakers take to mitigate it?
- The Bank for International Settlements (BIS) warns of rising global debt, potentially destabilizing financial markets. A third increase in public debt by 2028, reaching \$130 trillion, is projected by the Institute of International Finance (IIF). This surge could trigger market turmoil as investors react to perceived fiscal irresponsibility, potentially leading to a global economic crisis.
- What are the potential long-term implications of inaction, and what critical perspectives are often overlooked in assessing the global debt situation?
- The BIS emphasizes the need for immediate policy adjustments to prevent a potential market crisis stemming from rising global debt. Delayed action increases the risk of significant economic repercussions, as markets react to increased debt levels. The current market liquidity, while offering temporary protection, could amplify the impact of any sudden yield spike.
Cognitive Concepts
Framing Bias
The article frames the situation as a serious threat with an emphasis on the potential for market instability and economic damage. The use of phrases such as 'rising global debt,' 'potential for market disruption,' and 'global economic damage' contribute to this alarmist framing. While presenting the views of BIS, it doesn't offer counterpoints from other economic viewpoints equally.
Language Bias
The language used is largely neutral but leans slightly towards alarmist. Phrases like 'ektinaksi' (surge/explosion), 'apestaheropoihshs' (destabilization), and 'pagkosmia oikonomiki zimi' (global economic damage) carry strong negative connotations. More neutral alternatives could be used to convey the information without creating unnecessary alarm.
Bias by Omission
The article focuses primarily on the warnings from the BIS and the potential risks of rising public debt. While it mentions the US debt increase spurred by Trump's tax cuts and fiscal expansion in Japan, it omits detailed analysis of other countries' debt situations and their contributing factors. This omission limits a comprehensive understanding of the global debt crisis.
False Dichotomy
The article doesn't present a false dichotomy, but it implies a looming crisis if action isn't taken, without fully exploring alternative scenarios or less extreme outcomes.
Sustainable Development Goals
The article highlights the risk of rising public debt destabilizing financial markets and potentially exacerbating global economic inequality. A disproportionate impact on vulnerable populations and developing nations is implied, hindering progress towards reducing inequality. The increase in global debt could lead to decreased investment in social programs and increased borrowing costs for developing countries, further widening the gap between rich and poor.