Debt crisis shows up the strains from Ukraine to UAE

* username: rupertbu

Debt is becoming the big issue of the day. Thanks to concerted action by governments, and the dynamism of the Asian economies, the world has hitherto managed to avoid the worst of a global recession. But the bills still have to be paid, and the strain of doing so is putting enormous pressure on economies from Dubai to Dublin.

The economists call it “deleveraging”. To you and me, it is a case of living within new and tighter financial disciplines: lower credit card limits, fewer overdraft facilities and tighter mortgage conditions.

For national economies, it is a similar painful process, but has geopolitical repercussions. Nouriel Roubini, the economist who “called” the credit crisis and remains one of the great pessimists on the global economy, recently grouped the type of indebtedness threatening economic recovery, into three classes: property-related debt, with which the USA, Britain, Spain and Ireland are struggling; financial debt, which affects many EU countries, Russia and other former Soviet countries; and quasi-sovereign debt, a factor in Ukraine, and Dubai.