Goldman Sachs Warns "Too Much Debt" Threatens World Economy

Goldman Sachs Warns "Too Much Debt" Threatens World Economy

- Debt load of many countries is an economic risk
- Ageing populations in developed world to put pressure on economies
- Goldman proposes "creative" social policy to deal with looming crisis
- Entire debt-based monetary system needs reform

The debt burden – particularly in "developed" countries – along with ageing populations pose a risk to the economies of those countries, Goldman Sachs has warned. Andrew Wilson, Goldman Sachs Asset Management's chief executive in Europe said, "There is too much debt and this represents a risk to economies. Consequently, there is a clear need to generate growth to work that debt off but, as demographics change, new ways of thinking at a policy level are required to do this."

Japan, as an example of a major economy, now has a government debt-to-GDP ratio of over 200%, which Wilson says is "not sustainable over the long term." Other countries with very high debt loads include the U.S., most of Europe and Brazil.

Among those countries on the other end of the scale are Russia, other central Asian countries and most of the Gulf states demonstrating the latent and as yet widely unacknowledged strength of the emerging Eurasian Economic Union and its ties to the Chinese New Silk Road project.

Wilson is particularly focussed on the issue of an ageing population:

"The demographics in most major economies – including the US, in Europe and Japan – are a major issue – and present us with the question of how we are going to pay down the huge debt burden. With life expectancy increasing rapidly, we no longer have the young, working populations required to sustain a debt-driven economic model in the same way as we've managed to do in the past."

Goldman proposes that society should bend to the needs of the financial and monetary system rather than reform of that system. "The demographic shift means that we need to look to more creative policy, including immigration and workforce expansion in order to find ways to pay down debt." He lauds prime Minister Shinzo's drive to increase female labour participation and efforts to boost inflation in Japan.

Peter Sutherland, who retired as head of Goldman Sachs International earlier this month after 20 years, has shown great interest in migrant affairs in recent years.

According to the Financial Times, "His main activity in retirement will be his role as a special representative of the Secretary-general of the UN for Migration and Development. Mr Sutherland recently spoke on Irish national radio about his support of EU proposals that would share the burden of migrants more broadly across the continent."

Sutherland was quoted as saying, “The fundamental issue here is saving people who are drowning in the Mediterranean...this is not about getting into battles about quotas when we are facing a humanitarian crisis.”

ENDS

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