The note was titled "Worst-case debt scenario". It says that overall debt is still far too high in almost all rich economies as a share of GDP (350% in the U.S.), whether public or private. It must be reduced by the hard slog of "deleveraging", for years. State rescue packages over the last year have simply transferred private liabilities onto sagging sovereign shoulders, creating a fresh set of problems.
"As yet, nobody can say with any certainty whether we have in fact escaped the prospect of a global economic collapse," said the 68-page report, headed by asset chief Daniel Fermon. It is an exploration of the dangers, not a forecast. Under the French bank's "Bear Case" scenario (the gloomiest of three possible outcomes), the dollar would slide further and global equities would retest the March lows. Property prices would tumble again. Oil would fall back to $50 in 2010.
Governments have already shot their fiscal bolts. Even without fresh spending, public debt would explode within two years to 105% of GDP in the UK, 125pc in the US and the eurozone, and 270pc in Japan. Worldwide state debt would reach $45 trillion, up two-and-a-half times in a decade".