The "debt crisis" is real. It's global. And it's far from over.
You've likely heard of the P.I.I.G.S. -- an acronym for the debt-ridden nations of Portugal, Ireland, Italy, Greece, and Spain.
But the problem of too much debt goes beyond a handful of nations in Europe. Over borrowing is also crippling private enterprises.
Consider, for example, the startling findings of a recent business survey in Ireland. As Irish citizens sat at their kitchen tables and opened up the Irish Examiner (8/30), they read this:
"MORE than a third of the 100,000 business assessed in a survey are at risk of collapsing.
"The study from company records agency, vision-net.ie, found more than 38,000 or 36% of Irish companies are classified as 'high-risk' and showing signs consistent with business failure.
"High-risk businesses are those that are performing badly on a number of key business ratios such as deteriorating liquidity, reduced or negative cash flows, lower sales or profits, over reliance on debt versus equity, significant interest repayment burdens and poor stock control.
"...companies who appear to be normal are in fact in trouble."
EWI's monthly Global Market Perspective recently addressed Europe's debt problems and financial "austerity." Banks which made business loans before the debt crisis are unable to do so now:
"Irish, Spanish and Portuguese banks are now effectively shut out of credit markets and now depend upon European Central Bank liquidity. Money has retreated from the periphery of Europe to its economic center, Germany, a trend that is unlikely to change over the coming months."
The alarming data in the Irish survey of businesses (over one-third of all the companies in Ireland are at "high risk") raise the questions:
What other country or countries have tens of thousands of companies "who appear to be normal" but are "in fact in trouble?"
Is the debt-ridden global economic "house of cards" getting ready to collapse?
We already know from recent experience how quickly "the rug can be pulled out from under us" economically.