End ‘extend and pretend’

Enough of 'extend and pretend', says John Stepek, we need to deal with our bad debts now. It's time for a clean break.

The biggest threat to the global economy today can be summed up in one word: debt'. There's Europe of course, where the list of countries on the hit-list gets longer by the day. Never mind Greece or Portugal, the cost of Italian borrowing is now rising inexorably into the danger zone.

But it's not just Europe. In the US, politicians are turning a debate over their artificial debt ceiling into a potential disaster for the US Treasury market. Even China, the superpower-in-waiting, has a wodge of bad loans to sweep under the carpet. As the central bank tries to tackle inflation by raising interest rates, China's commercial banks are sitting on lots of infrastructure loans made during the investment binge of recent years, which are now likely to turn bad.

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John Stepek

John Stepek is a senior reporter at Bloomberg News and a former editor of MoneyWeek magazine. He graduated from Strathclyde University with a degree in psychology in 1996 and has always been fascinated by the gap between the way the market works in theory and the way it works in practice, and by how our deep-rooted instincts work against our best interests as investors.

He started out in journalism by writing articles about the specific business challenges facing family firms. In 2003, he took a job on the finance desk of Teletext, where he spent two years covering the markets and breaking financial news.

His work has been published in Families in Business, Shares magazine, Spear's Magazine, The Sunday Times, and The Spectator among others. He has also appeared as an expert commentator on BBC Radio 4's Today programme, BBC Radio Scotland, Newsnight, Daily Politics and Bloomberg. His first book, on contrarian investing, The Sceptical Investor, was released in March 2019. You can follow John on Twitter at @john_stepek.