INSIGHT FROM OUR CHIEF RISK OFFICER
I have been asked to provide words of wisdom on the current state of debt and leverage in the world... It's a difficult task, since the prevailing wisdom from the vast majority of the world's elite economists and politicians over the last 30 years has been that debt and leverage are misunderstood when viewed through the old New England/Scottish lens of "less is more"... and that spending and leverage are all supportable by potential future growth. In fact, any that questioned this logic were dismissed... and frequently chastised. Well, I am here to say that the worm is turning... because even the silliest prognosticator of future growth is now forced to confront the awe-inspiring growth in global debt over the past 18 years. Remember that in 2000, the U.S. government actually ran a budget surplus... And that while corporate debt was on the rise, people were still grounded in the memories of what had occurred in the late '80s and early '90s when the price was paid for the excesses of the previous decade. A frequently heard phrase from real estate investors, emerging market participants, corporate lenders, investment bankers, and investors was... "Please god, let there be another bubble and I promise that I will not piss it all away this time."
How have we done? Let's review...
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November 2018
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