World has a debt problem not Greece alone

Greece has been criticized over and over for its debt level that stands at 175% of the GDP.

• In 2009 world leaders agreed to reduce the unsustainable levels of debt. US chose the path to reduce the level by increasing growth and limited austerity whereas European leaders chose the path of hard austerity.

• In spite of the effort latest facts from Bank of International Settlements (BIS) showed the world's love affair with debt is far from over but worsened.

Hard facts -

• Global debt has risen from $ 87 trillion in 2000 to above $ 200 trillion by 2014. Current debt level stands at 286% of the world GDP.

• Government debts increased from $ 22 trillion to $ 58 trillion for the same period.

• Corporate debt increased more than two folds to $ 56 trillion for the same period.

• Households and Financials' debt is currently standing at $ 40 trillion and $ 45 trillion.

• Debt growth since 2007 has outpaced the growth in GDP. Debt increased by a massive $ 57 trillion.

• Household and financials' debt has risen at a much sustainable pace below 3% (compounded annually) since the financial crisis whereas governments at a much higher rate of 9.3%.

Impact -

• In the short and medium terms investors will continue to pose doubt over the levels of debt that would get reflected in the countries or companies' borrowing rates, stock price or currency value. This is happening with Greece, Venezuela, shale oil companies to name a few.

• Situation can get worse in the future if bond holders lose faith in ability to repay without rampant printing, fiat currency may lose its faith and result in return of Gold.