By the end of last year, Deutsche reported a total notional credit exposure — a gross measure of all outstanding derivatives positions — of €42tn from derivatives trading.
Soto said companies aren’t pleased with the changes partly because they come just as the tax year is coming to an end, and haven’t had time to prepare for new rules retroactive for the entire 2016 tax year.
Brussels is particularly concerned about Italy’s public debt, which has risen to more than 132 per cent of gross domestic product, the highest in the eurozone after Greece’s.
China’s total debt hit 168.48 trillion yuan ($25 trillion) at the end of last year, equivalent to 249 percent of national GDP, the Chinese Academy of Social Sciences, a top government think tank, has estimated.
The highly leveraged state company, which has had to slash its budgets as a result of the drop in oil prices, expects to end 2016 with debt of $97 billion, he added.
But Major at HSBC argues that the huge overhang of global debt depresses growth and therefore keeps real natural interest rates low. Central bank balance sheets will remain bloated, and quantitative easing stimulus will continue, he argues.
At this rate, the BOJ could run out of bonds to buy by the end of 2017 and is on track to becoming the largest shareholder in more than half of all companies in the Nikkei 225
According to the latest BOJ data, the monetary base at the end of last month, comprising cash in circulation and the balance of current account deposits held by financial institutions at the bank, stood at 412.84 trillion yen (4.04 trillion U.S. dollars), up 22 percent compared to the same time a year earlier.
Global inflation rates fell for a second straight month in August and to their lowest levels in almost seven years, a period when the world economy was in the throes of a downturn that followed the financial crisis.
The QE for People campaign just released a new policy paper entitled Citizens’ Monetary Dividend – Upgrading the ECB’s Toolkit, which aims at demonstrating that the ECB can and should be able to distribute newly created money directly to citizens in case its usual tools do not work.
He added: “Our argument is that NIMs (net interest margins) for banks, and the solvency of insurance companies and pension funds with long dated and underfunded liabilities, have been negatively affected and that ultimately, the continuation of current monetary policies will lead to capital destruction as opposed to capital creation.”
This corporate debt bubble isn’t limited to the United States. Corporate debt in emerging markets has grown to $25 trillion, according to the UN Conference on Trade Development. This is 104 percent of emerging-market GDP, up from 57 percent at the end of 2008.
Italy’s debt sale comes as borrowing costs in developed nations have sunk to historic lows this year amid tepid global growth and inflation and unprecedented central bank bond-buying. Investors reaching for returns have bought bonds as long as a century and from countries with lower credit ratings.
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