Trump ally: We’ve become a world reliant on debt

Dubai: In his State of the Union address of February 5, President Donald Trump said that the United States was considered to have the “hottest economy anywhere in the world.”

So the question many have begun asking is, what next?

“I have no idea where we are,” said Tom Barrack, CEO of Colony Capital, adding: “What I can tell you is that all the economies in the world have profited from central bank intervention, something that none of us have ever experienced before.”

Barrack is best known as a close ally of Trump, and a veteran real estate developer.

The US currently has a trillion-dollar budget deficit, in addition to approximately $20 trillion (Dh73.46 trillion) in normal debt.

Globally, the debt-to-GDP ratio exceeded 318 per cent in the third quarter of 2018.

“Debt-to-GDP has increased in most countries by nearly 40 or 50 per cent,” Barrack continued. “The debt buoyancy of solving this problem was an experiment, and everybody navigated pretty well.”

We’ve become a debt-reliant world, he added.

Mohammad Al Abbar, the founder and chairman of Emaar Properties, echoed this statement.

“Every type of debt in the world is flying high,” Alabbar said. “Government debt, private debt, corporate debt, because we were all drugged by low interest rates.”

I think the long-term debt will be more valuable in 10 years than the assets, Barrack added. “Most countries have negative interest rates. How can this be?”

On Trump’s economic success, Barrack said that the president had done a “terrific job.”

“The American economy is rocking. It is. We’re all the beneficiaries of what happened.”

The US is currently enjoying a period of near-full employment.

On whether there was a recession on the horizon, Barrack said that most people felt like the economy was late in its cycle, but added that “we may be late, but maybe the cycle goes for another seven years.”