Since the Lehman failure $18 of debt was needed to make $1 dollar of GDP growth in G7 countries-Zero Hedge

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9/13/13, "What A Difference A Decade Makes," Zero Hedge

"Even as the popular press focused on the 5 year anniversary of Lehman, we decided to go back double that period, and take a look at what happened to the developed world economy in the past decade, starting with 2003. What we found was interesting....

*Until 2003, every $3.6 dollars in debt generated $1 dollar in GDP growth.

*In the past ten years, it took $6.7 dollars of debt to create $1 dollar of economic "growth."

*Furthermore, as we showed yesterday, in just the past five years, or since the Lehman failure, this ratio has exploded, and some $18 dollars of debt were required for every $1 dollar of GDP, with only $1 trillion in nominal GDP having been created among the G7 countries in the past five years matched by $18 trillion in debt.

• Total G7 debt/GDP at the end of 2012 was 450%.

To summarize: economists may debate whether Reinhart and Rogoff were wrong about 90% sovereign debt/GDP representing a cutoff threshold to a country's growth. What however is clear, is that when consolidated debt/GDP is five times that, growth, well, is a pleasant fiction."


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