The Bank for International Settlements (BIS) – the ‘central bank for the world’s central banks’ – released its Annual Economic Report this week.
Overall the report strikes a hopeful tone despite a downturn in global growth, pointing to services and labor markets as positive forces for the near-term. It also outlines a few negative trends to monitor, including the growing tendency of central bankers to favor short-term growth at the expense of long-term stability and a sharp increase in corporate debt in the United States.
Specifically, and in an unsettling parallel to Great Recession, the BIS cites the ‘remarkable’ growth of leveraged loans packaging the corporate debt of below-investment-grade companies.
Are these the mortgage-backed securities of the next financial crisis?