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CIO BLOG

The End Game

Mouhammed Choukeir, Chief Investment Officer, Kleinwort Benson

"How will it end?" This is the question on all investors' minds. It has been nearly five years since the credit crisis broke in 2007, and the world is still no closer to putting this chapter of economic history behind us. It would be an understatement to say we live in uncertain times, and it is impossible to predict what exactly will happen next. Still, historical evidence suggests the end game must involve bringing debt back to sustainable levels for both the private and public sectors.

In the US, the household debt-to-GDP ratio hit 100 per cent in 2007 versus an average of 40 to 50 per cent during the post war period. This left many households stretched, leading to foreclosures and ultimately triggering the sub-prime debt crisis. Since then, households have begun to repair their balance sheets by de-leveraging: household debt now stands closer to 90 per cent of GDP. However, there is still much to be done. In order to return to pre-crisis levels of approximately 70 per cent of GDP, households need to eliminate approximately $3 trillion more of debt...

Mouhammed Choukeir

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Kleinwort Benson is the brand name of Kleinwort Benson Bank Limited. Kleinwort Benson is authorised and regulated by the Financial Services Authority (FSA)firm reference number 119269 and is a member of the London Stock Exchange. The FSA does not regulate tax business. Kleinwort Benson is a company incorporated in England and Wales with company number 2056420 and VAT number 991 2295 95. Registered Office 14 St. George Street London W1S 1FE. Telephone +44 (0) 20 3207 7000. Telephone calls may be recorded.

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