According to the European head of Goldman Sachs Asset Management, the world is getting greyer whilst sinking more and more into debts; situation that is becoming today the biggest risk to the global economy.
With life expectancy increasing, it is thought it will be difficult for the future youth ‘minority’ to sustain the debt-driven economies of the world.
For the banking and finance world, there is hope for countries with high debt burdens. “The demographics shift means that we have to look for more creative policies to perhaps include immigration and workforce expansion. The reason behind is to find ways to obviously pay down debts.
The oil producing countries despite their exports revenues, have also incurred debts. They could do with some legislation change towards the serious incorporation of their expatriate work force into their respective societies.
Europe, America and South-East Asia burdened by too much debt and an ageing population means these countries’ debt piles are in danger of growing out of control.
The demographics in these countries are therefore the issue and pose the question as to how the incurred debt burdens are to be paid.
Perhaps the best and wisest way to go about it, will be to first understand the debt process as a social phenomenon and then conjure up ways of its eradication.
Of the 2 levels that are distinct but nevertheless interrelated it is at the street level where it could be difficult to proceed out of this vicious circle.
Recently the World Bank / Gallup survey asked 150,000 adults in 143 countries how they access financial services. It’s not the first time people have been polled about whether they have a bank account or savings but this year’s survey was the first time there was a focus on how people would normally raise money and most interestingly in the specific case of disaster.
When asked: “Imagine you had an emergency – if you had to raise an amount next month, where would you go?”
It’s perhaps unsurprising that few people would turn to banks for an emergency loan. In fact, in 31 countries, less than 1% of people would borrow from a bank but rather fall onto the family.
This is most likely because in many developing countries physical bank branches are few and far between but what about the developed countries?
In effect, borrowing from family in an emergency proved to be the most popular option in Latin America, North America, South-East Asia, Russia and Eastern Europe with more than 50% of adults in Niger, Mauritania, Bhutan, Turkmenistan, Azerbaijan, Moldova, Macedonia and Montenegro saying they would head first to family for emergency funds.
But if you’re from the US, Northern Europe, China or Australia, you don’t need to rely on your family. This is probably because you have savings, making you more financially resilient if a medical emergency or natural disaster strikes.
The problem is that at this conjecture, the savings are thinner on the ground than ever and the “western divide” as it were is no more between these 2 groups of countries.