Bubbles, bubbles everywhere

International Monetary Fund's Global Financial Stability Report published in April. It shows that global banks have nearly $5 trillion of debt maturing in the next 36 months. Can you see what this means?



The problem for the banks - and for sovereign governments - is that there borrowing needs exceed the capacity of global savers to fund. The alternatives are deleveraging for the private sector and debt monetisation for the public sector. In other words, the banks will have to reduce the amount of debt and new credit issued in the economy (which leads to lower real growth rates) and central banks will have to buy debt issued by governments who cannot fund their deficits in public bond markets.