Tuesday, December 25, 2018

The Invisible Debt

I was reading an article about how a small town in China spent precious amount of money to erect a statue in order to lure tourist but it has become an eyesore and source of increasing debt which the town has to pay since the possible lure of tourists did not pay off as was envisioned. Although it was just one story but it is being increasingly replicated all around China, as it desperately tries to keep the momentum of increased economic activity in the face of a global slowdown of world economy and its increasing although invisible effect on the debt situation in China. And it is not only in China but increasing around the world that the situation of these invisible debts are not known to the public and if know can bring disaster to countries where these companies and cities are located.
And sometimes these debts are not even mentioned in the debt books and are treated as off balance sheet items hidden from investors who are not aware of how much debt they are taking on. A recent study stated that everybody in this world has almost USD 86,000.00 debt without even knowing what they essentially owe. Even the debts reflected in the official books of the western countries does not show the true hidden debt that the government owes to its citizen and everyone seems to believe that the debt reflected is the only one that are true and based on these statistics the price of the government securities are lower than they should be. Even the auditors who are supposed to keep track on these invisible debt are clueless about how much debt is out there or are they hiding these from the public. A true Mystery indeed.

No comments:

Post a Comment