Although White retired from the BIS at age 65, he continued his career at another prestigious organization. This Canadian native is now chairman of the Economic and Development Review Committee at the OECD, an international economic organization of 34 countries. At the annual "happy, go very lucky" get-together at the World Economic Forum in Davos, he was interviewed by the British The Telegraph, and this is what he told The Telegraph's international editor, Ambrose Evans-Pritchard:
"The situation is worse than it was in 2007. Our macroeconomic ammunition to fight downturns is essentially all used up...
" Debts have continued to build up over the last eight years and they have reached such levels in every part of the world that they have become a potent cause for mischief...
"It will become obvious in the next recession that many of these debts will never be serviced or repaid, and this will be uncomfortable for a lot of people who think they own assets that are worth something...
"The only question is whether we are able to look reality in the eye and face what is coming in an orderly fashion, or whether it will be disorderly. Debt jubilees have been going on for 5,000 years, as far back as the Sumerians.....
He ends this fascinating interview by saying:
"It was always dangerous to rely on central banks to sort out a solvency problem when all they can do is tackle liquidity problems. It is a recipe for disorder, and now we are hitting the limit."
Although quite a few analysts and pundits have been offering similar views over the last few years, here is someone who comes from the heart of the economic and monetary community, and has been right before. If we don't take his views seriously, whose views do we?
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