COVID19| Global Debt Crisis| July 2020
•Download as PPTX, PDF•
0 likes•208 views
In the past, there have been concerns about debt, especially if interest rates were to rise. Interest rates are still an issue. The bigger issue is cash flow with govt, business, and personal. Sales and wages could see significant shrinkage as part of the COVID19 recovery.
Recommended
Recommended
More Related Content
What's hot
What's hot (20)
Similar to COVID19| Global Debt Crisis| July 2020
Similar to COVID19| Global Debt Crisis| July 2020 (20)
More from paul young cpa, cga
More from paul young cpa, cga (20)
Recently uploaded
Recently uploaded (20)
COVID19| Global Debt Crisis| July 2020
- 1. WOODGROVE BANK DEBTISSUES–CANADA ANDTHEWORLD– ANALYSIS By: Paul Young, CPA, CGA July 20, 2020
- 2. WOODGROVE BANK PAULYOUNG - BIO • CPA, CGA • Financial Solutions • SME – Business Process Changes • SME – Risk Management • SME – Close, Consolidate and Reporting • SME – Public Policy • SME – Financial Solutions • SME – Supply Chain Management • Academia – Advance Accounting, Public Finance and Advanced Management Systems Contact information: Paul_Young_CGA@Hotmail.com
- 3. WOODGROVE BANK • This presentation is one perspective on Debt. It is not the only view. People are more than welcome to visit other sites like BEA, Stats Canada, OECD, Banks, etc.
- 4. WOODGROVE BANK AGENDA • What is debt • Types of debt • Market Forecast • Government Debt • Corporate Debt • Bank Stress Testing • Safest banking systems in the world • Consumer Debt • City/Local Government • Global TV / Canada Debt • Canada bonds downgraded • Fintech • Shenzhen China • COVID19 / Bankruptcies • Training and Development
- 5. WOODGROVE BANK WHAT IS DEBT • Debt is an amount of money borrowed by one party from another. Debt is used by many corporations and individuals as a method of making large purchases that they could not afford under normal circumstances. A debt arrangement gives the borrowing party permission to borrow money under the condition that it is to be paid back at a later date, usually with interest.
- 7. WOODGROVE BANK GLOBAL FORECAST What drives an Economy? • Consumer Spending • Exports • Government Spending Source - http://www.scotiabank.com/ca/en/about/global- economics/economics-publications.html
- 8. WOODGROVE BANK DEBTAND CANADA/ COVD19 8 http://www.cbc.ca/news/politics/canada-election-2015-justin-trudeau-affordable- housing-1.3220479 Rebuttal 1. RRSP Borrowing - http://business.financialpost.com/personal- finance/retirement/rrsp/forget-tfsas-and-resps-debt-now-the-biggest-challenger- to-rrsps-when-it-comes-to-where-to-stash-your-money. So, JT supports Harper’s expanding RRSP, but yet JT has said people are not saving enough for retirement - http://ralphgoodale.ca/blog/canadian-middle-class-disappointed-frustrated/. Does this not contradict Goodale’s statement? 2. Commitment for $20B over 10 years for social housing. It seems there are land issues in cities like Toronto/Vancouver as such how will that additional money provide more affordable housing and not drive out real estate prices more in those cities? What about the waste? http://www.torontosun.com/2015/06/07/former- to-social-housing-boss-lands-in-chicago 3. Justin Trudeau asked the experts? Who are these experts? McCallum/Brison/Goodale? https://www.central1.com/sites/default/files/uploads/files/analysis_report/report _file/Housing%20myths.pdf Summary: It is funny how both the NDP and LPC throw out new policies including new moneys, but do not deal with issues facing various policies. It seems to me that the statements are narrow minded that do not look at all angle of policies. Household debt was a 2015 election
- 9. WOODGROVE BANK GOVERNMENT DEBT • COVID19 has led to fiscal management issues for all levels of the government - https://www.slideshare.net/paulyoungcga/canada-and- provinces-fiscal-and-economic-management or https://www.slideshare.net/paulyoungcga/canada- municipal-and-local-government-whats-needs-to-be- done • China debt with countries • Developing countries - https://www.straitstimes.com/opinion/china-lent-billions-to- poor-countries-they-cant-pay-it-back • Government Default • Record defaults / 2020 - https://www.fitchratings.com/research/sovereigns/sovereign -defaults-set-to-hit-record-in-2020-12-05-2020-1 • Many government have Debt to GDP ratios 92% or above • Government Debt (Bonds) • Yields are based on credit ratings • Government debt • Deficits • New debt financing (Infrastructure, operating requirements, etc.)
- 10. WOODGROVE BANK CORPORATE DEBT • The corporate debt of non-financial firms across major emerging markets rose sharply from about $4 trillion in 2004 to well over $18 trillion in 2014 - (Source – IMF) • In the past six years,” the report stated, “the global economy has enjoyed a benign default environment as accommodative monetary policies have fueled the corporate debt market with abundant liquidity, allowing many low-rated issuers to refinance when needed. The party is likely coming to an end soon as the global default rate is expected to approach the historical average mark by the end of 2016.” The default rate for all corporate debt is expected to rise to 2.1%, Moody’s said. That is up from 0.9% in 2014 and 1.7% in 2015. It also would be the highest default rate since the 2008- 2009 crisis. If the rate is realized, it would translate to 138 defaults this year, up from 109 in 2015 (a 30% increase) and 55 in 2014. (Source – Moodys) • New corporate debt - https://www.axios.com/corporate- debt-issuance-1-trillion-2020-b813ca2e-2a29-459b- afa5-41299c987d12.html • Cash Management - https://hbr.org/2020/01/why-are- companies-sitting-on-so-much-cash
- 12. WOODGROVE BANK STRESS TESTING BANKS 12Source - https://www.gfmag.com/magazine/november-2019/worlds-safest-banks-2019
- 13. WOODGROVE BANK SAFEST BANKING SYSTEMS IN THE WORLD 13 Source - https://passportsymphony.com/countries-with-the-safest-banks/ 1. Finland 2. Canada 3. Hong Kong 4. Norway 5. Singapore 6. Germany 7. Switzerland 8. Luxembourg 9. Sweden 10. Guatemala 11. Chile 12. Panama 13. South Africa 14. Belize 15. Vanuatu • Government debt issues • Zambia - https://www.bloombergquint.com/business/zambia-s-debt- burden-hinders-access-to-imf-coronavirus-funds • Banks taken loans provisions • Canada write-downs - https://www.wsj.com/articles/canadas-banks- take-earnings-hit-from-loan-loss-provisions-11590779182 • Tax Havens • Luxembourg is Ranked #12 • Source - https://www.businessinsider.com/tax-havens-for- millionaires-around-the-world-2019-11#12-luxembourg-4
- 14. WOODGROVE BANK HOUSEHOLD DEBT Source: OECD Household debt has risen markedly since the turn of the century and stands at a historically high level in most OECD countries. It examines the vulnerabilities associated with high household debt for households, the financial system and the wider economy. Finally, it describes the challenges faced by policymakers at the current juncture and outlines responses in terms of monetary, micro and macro-prudential, and housing policies.
- 15. WOODGROVE BANK CANADA AND USA– HOUSEHOLD DEBT Source - https://economics.td.com/impact-pandemic-financial • CMHC new debt policies - https://www.ratespy.com/breaking-cmhc- rumoured-to-tighten-its-mortgage-rules-impacting-first-time-buyers- 060414150 • BOC warns about business and household debt - https://nationalpost.com/pmn/news-pmn/canada-news-pmn/bank-of- canada-warns-of-excess-business-household-debt-from-covid-19
- 16. WOODGROVE BANK CONSUMER CREDIT 16 Source – Scotiabank
- 17. WOODGROVE BANK HOUSING AFFORDABILITY INDEX Source - https://www.numbeo.com/property-investment/rankings_by_country.jsp 2019 2015
- 18. WOODGROVE BANK USA – STATE AND LOCAL GOVERNMENT 18 • State Government – https://www.slideshare.net/paulyoungcga/fiscal-management-united-states-individual-states- performance • Pension crisis - https://www.slideshare.net/paulyoungcga/performance-of-pension-is-there-a-pension-crisis • Provincial Govt - https://www.slideshare.net/paulyoungcga/fiscal-management-provinces-canada • Chicago fiscal mess - https://www.chicagotribune.com/opinion/commentary/ct-opinion-mayor-lightfoot-budget-greising- 20190627-ucfjr2ye2fgarilf2jklcpqmo4-story.html • San Francisco - https://www.bloomberg.com/news/articles/2019-12-17/san-francisco-faces-budget-gap-as-6-billion-can-t- meet-costs • NYC Fiscal Mess • https://www.crainsnewyork.com/economy/report-new-york-sitting-debt-bomb - NYC Debt • Deficits - https://nypost.com/2019/03/09/new-york-city-is-edging-toward-financial-disaster-experts-warn/ - NYC was already running a deficit • 2019 budget deficit - https://www.nydailynews.com/news/politics/nyc-faces-3-8b-budget-gap-2019-bigger-mayor-claim-article- 1.2648797
- 19. WOODGROVE BANK CANADA BOND RATING 19Source – RBC and Fitch
- 20. WOODGROVE BANK BANKING SECTOR – RISK ANALYTICS(FINTECH) 20
- 21. WOODGROVE BANK 21 SHENZHEN/ DEBT Source - Moody's • Tahoe Development defaults - https://www.caixinglobal.com /2020-07-08/drowning-in- debt-property-developer- tahoe-defaults-again- 101577286.html • Default Debt Issues – China - https://financialpost.com/pmn /business-pmn/chinas- corporate-debt-defaults- uncover-hidden-soft-spots • China growing corporate debt defaults - https://www.hindustantimes.c om/business-news/china-s- growing-dollar-bond- defaults-reveal-depth-of- stress/story- onRQK2FExlIvGHB8AHbj WI.html
- 22. WOODGROVE BANK 22 BANKRUPTCIES • 24 retailers and restaurant chains have filed for bankruptcy and liquidation - https://www.businessinsider.com/retailers-filed-bankruptcy-liquidation-closing- stores-2020-2 • Chapter 11 bankruptcies rose 26% for the first half of 2020 https://www.wsj.com/articles/chapter-11-business-bankruptcies-rose-26-in-first-half- of-2020-11593722250 • Bankruptcies in the USA for June 2020 are up 43% from June 2019 - https://nymag.com/intelligencer/2020/07/major-companies-filing-for-bankruptcy-due- to-coronavirus.html • IMF warns small to medium-size bankruptcies may tripe - https://economictimes.indiatimes.com/small-biz/sme-sector/imf-warns-small-and- mid-sized-business-bankruptcies-may-triple/articleshow/76992460.cms • Mortgage issues - https://www.housingwire.com/articles/foreclosure-threat-grows-as- covid-19-surges-fed-says/ • Housing market will face many issues over the next few years - https://www.slideshare.net/paulyoungcga/latest-news-housing-canada-june-2020 • Changes in business operational model could lead to changes in commercial and office - https://www.ibisworld.com/global/market-research-reports/global- commercial-real-estate-industry/
- 23. WOODGROVE BANK EDUCATION AND PROFESSIONAL DEVELOPMENT • If you like to learn more about trade and/or other subjects as part of your professional learning and development then feel free to review my material on https://www.udemy.com/ (search Paul Young CPA CGA
- 24. WOODGROVE BANK RISKS – WHAT NEEDS TO HAPPEN • Systemic issues with housing - https://www.slideshare.net/paulyoungcga/latest-new-housing-market-canada- april-2020 or https://www.slideshare.net/paulyoungcga/urban-and-rural- planning-whats-next-236315321 • Restructuring of government - https://www.slideshare.net/paulyoungcga/canada-and-provinces-fiscal-and- economic-management or https://www.slideshare.net/paulyoungcga/canada- municipal-and-local-government-whats-needs-to-be-done or https://www.slideshare.net/paulyoungcga/how-to-reform-local-and-municipal- government • The new reality of economy post-covid will see many issues facing businesses - https://www.slideshare.net/paulyoungcga/state-of-the-world-economy-june- 2020 or https://www.slideshare.net/paulyoungcga/key-macro-and-micro- indicators-canada-april-2020-and-may-2020 • Cheap Debt cannot last forever • Corporate debt https://www.forbes.com/sites/ezequielminaya/2020/06/16/indicator-points- toward-slowdown-in-us-corporate-debt/#150a98cf43a5 • Restructuring of many businesses - https://www.slideshare.net/paulyoungcga/canada-hospitality-sector-whats- next-236439916 or https://www.slideshare.net/paulyoungcga/retail-sales- united-states-may-2020 • Hike in mortgage or personal credit rates • More consumer default • Lower Credit rating for government • Higher bond yields means higher interest rates and higher debt coverage
Editor's Notes
- 1. http://www.investopedia.com/terms/d/debt.asp
- 1. Forecast - http://www.gbm.scotiabank.com/English/bns_econ/forecast.pdf
- https://data.oecd.org/gga/general-government-debt.htm http://www.statcan.gc.ca/daily-quotidien/151214/dq151214a-eng.pdf
- http://www.imf.org/external/pubs/ft/survey/so/2015/POL092915B.htm http://blogs.wsj.com/moneybeat/2016/03/01/the-partys-over-for-corporate-bonds-as-moodys-warns-of-rising-defaults/
- 1. http://www.oecd.org/officialdocuments/publicdisplaydocumentpdf/?cote=ECO/WKP(2016)1&docLanguage=En
- http://www.mortgagebrokernews.ca/news/canadian-household-debttoincome-ratio-at-165-3-in-q1-2016-209017.aspx http://www.bnn.ca/News/2016/2/18/Pattie-Lovett-Reid-Why-are-so-many-Canadians-in-debt-.aspx