Global Debt Bomb Continues Ticking Into 2017

Japan, already carrying the highest debt to GDP ratio of all OECD countries, has approved a record spending bonanza of 97.5 trillion yen in its 2017 budget, even while the Japanese birth rate has collapsed to 1899 levels, prompting questions as to how its mounting debt could ever be retired.

Italy, carrying the third-highest debt to GDP ratio and having been mired in recession for eight consecutive years, plans to nationalize four failing banks, borrowing at least 20 billion euros to do so. Since taxpayer bailouts were ostensibly banned by Europe in 2015, an exception to the rule will be invoked to enable the Italian bailout. But who would lend to the already massively indebted Italian government to fund its acquisition of zombie banks, especially after the IMF’s recent warning that Italy is on course to remain in recession for another decade, the government’s recent collapse after a failed referendum to increase executive powers, and in light of the half-dozen active Italian secession movements? Well, likely the same sort of institutional investors who recently bought 16.5 billion euros’ worth of 50-year Italian government debt, expecting to be able to flip it to the European Central Bank in a hypothetically-expanded bond-buying program down the road.

Sweden, facing a debt bubble and soaring housing prices, with mortgage loans now averaging between 105 and 140 years amortization, has seen its central bank’s board requiring a tie-breaker vote to continue its negative interest rate policy and bond-buying program.

European Union officials have decided to force Apple Computer to pay a retroactive 13 billion euros in tax to the Irish state for the activities of Apple’s Irish subsidiaries, which employ around 6000 individuals. The Irish government, not wishing to see an economic golden goose killed if Apple were to pack up and leave Ireland, insisted that it had not given Apple any special treatment warranting the tax and did not want the ordered transfer. The EU budgets cash it ‘earns’ from fines as a normal revenue item, so if Ireland refuses to collect the tax it may be transformed into an EU fine under competition rules instead.

Every day provides increased evidence that developed-world sovereign debt is quite literally “a bubble in search of a pin”, as Peter Schiff put it in his 2011 book ‘Crash Proof’.