Officials: Larry Elliott and Imf

officials: The IMF noted that the stimulus provided by central banks in both developed and developing countries had the side-effect of encouraging firms to borrow more, even though many would have trouble paying it back, according to The Guardian. IMF haunted by fears that history might be about to repeat itself Larry Elliott Read more Officials at the Washington-based organisation fear that the buildup of debt makes the global financial system highly vulnerable and are telling member states not to repeat the mistake of the early 2000s, when warning signs of a possible market meltdown were ignored. In its half-yearly update on the state of the world's financial markets, the IMF said that almost 40% of the corporate debt in eight leading countries the US, China, Japan, Germany, Britain, France, Italy and Spain would be impossible to service if there was a downturn half as serious as that of a decade ago. The IMF said share prices in the US and Japan appeared to be overvalued, while the credit spreads in bond markets the compensation demanded by investors against risk seemed to be too low, given the state of the global economy. In a blogpost published alongside the GFSR, Adrian and Natalucci noted Corporations in eight major economies are taking on more debt and their ability to service it is weakening. Tobias Adrian and Fabio Natalucci, two senior IMF officials responsible for the Global Financial Stability Report, said A sharp, sudden tightening in financial conditions could unmask these vulnerabilities and put pressures on asset price valuations. (news.financializer.com). As reported in the news.