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Dennis Tubbergen Writes About the World Drowning in Debt

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Grand Rapids, MI -- (SBWIRE) -- 06/07/2013 -- For those people who are too busy to stay on top of recent events in the world's economy, financial advisor Dennis Tubbergen lends a hand.

Tubbergen is a financial advisor, author, radio show host and CEO of PLP Advisors, LLC. Tubbergen gives brief updates when it comes to some of the latest significant events in U.S. and world economics and politics and how these events may impact the average American.

Whether people enjoy his weekly newsletter at www.moving-markets.com or his blog at www.dennistubbergen.com, Tubbergen can be counted on to share his viewpoints and opinions. On May 30, 2013 his blog was titled Global Debt Levels Massive: The Wall Street Journal.

"The Wall Street Journal ran a story recently that reported on the massive levels of debt that exist worldwide," began Tubbergen.

Below he quotes from the May 11, 2013 article.

$223.3 trillion: The total indebtedness of the world, including all parts of the public and private sectors, amounting to 313% of global gross domestic product.

Advanced economies tend to draw attention for their debt at the government and household levels. But emerging markets are gathering debt at an increasing pace to drive their economic development.

In a comprehensive report on global indebtedness, economists at ING found that debt in developed economies amounted to $157 trillion, or 376% of GDP. Emerging-market debt totaled $66.3 trillion at the end of last year, or 224% of GDP.

The $223.3 trillion in total global debt includes public-sector debt of $55.7 trillion, financial-sector debt of $75.3 trillion and household or corporate debt of $92.3 trillion. (The figures exclude China's shadow finance and off-balance-sheet financing.)

"Increasingly, 'debt' is seen as a dirty word," the ING research team said in a report released this week. "But in most cases, it should not be. Perhaps it is no coincidence that the rise of U.S. indebtedness coincided with improvements in technology and the globalization of trade, human labor and finance. Computers allowed for speedier processing and better and more transparent access to credit risk data."

"Debt can become dirty when the rise of debt service costs exceeds income and a borrower's long-term ability to make payments and often when rapid growth of debt and/or lack of adequate transparency disguises creditworthiness issues," they write.

Global trade has played a leading role in driving debt dynamics as emerging markets increasingly supplied low-cost labor and raw materials in recent decades. But emerging-market debt has grown only slightly faster than economies. A decade ago, total emerging-market debt was $18.8 trillion, or 214% of GDP. (Now it's $66.3 trillion, or 224% of GDP.)

Per-capita indebtedness is still just $11,621 in emerging economies (and rises to $12,808 if you exclude the two largest populations, China and India). For developed economies, it's $170,401. The U.S. alone has total per-capita indebtedness of $176,833, including all public and private debt.

"The article correctly states that debt can become a dirty word when the rise of debt service costs exceeds a borrower's long-term ability to make payments on the debt," explains Tubbergen. "Funny the author of the article didn't automatically come to that conclusion, especially when the author quotes the fact the U.S. alone has per-capita indebtedness of $176,833."

Tubbergen goes on to say that since the U.S. Census Bureau has reported that the per capita income annually is $27,915; that leaves a ratio of indebtedness to income of 6.33. That means that total debt in the U.S. is $6.33 for every dollar earned.

"It's a very deep hole and would make any rational observer come to the conclusion that debt at these levels is indeed a dirty word," Tubbergen concludes.

To read Tubbergen's blog in its entirety go to http://www.dennistubbergen.com and select his May 30, 2013 entry.

Tubbergen’s syndicated radio show can be heard on metro Michigan stations WTKG 1230 AM and WOOD Newsradio1300 AM and 106.9 FM.

About Dennis Tubbergen
Dennis Tubbergen has been in the financial industry for over 25 years and has his corporate offices in Grand Rapids, Michigan. Tubbergen is CEO of PLP Advisors, LLC and has an online blog that can be read at www.dennistubbergen.com. To view Tubbergen’s latest Moving Markets? newsletter, go to www.moving-markets.com.

The opinions expressed herein are those of the writer and not necessarily those of USA Wealth Management, LLC. This update may contain forward-looking statements, including, but not limited to, statements as to future events that involve various risks and uncertainties. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual events or results to differ materially from those that were forecasted. Therefore, no forecast should be construed as a guarantee. Prior to making any investment decision, individuals should consult a professional to determine the risks, costs, benefits and fees associated with a particular investment. Information obtained from third party resources is believed to be reliable but the accuracy cannot be guaranteed.