The debt bubble of 2008 will forever affect the way we view the destructive power of the overuse of credit; from the US banking industry’s misuse of mortgage securities that swamped the world markets, to our own personal misuse of credit cards. Debt has destroyed countless jobs, toppled icons of the industrial age such as Chrysler; brought banks to insolvency and zero market value, while displacing homeowners by the thousands.

We may not enter a period as dire as the Great Depression, yet the current economic crisis will probably mark the end of reckless affluence—if we learn anything from this fiasco. Peer Steinbrück, the German finance minister said, “the United States will lose its status as the superpower of the global financial system.” The Americans were the symbol of wealth—the fat-cats of the world, debt-ridden, over-consuming, and under-producing; an empire of idyllic fantasy. At the same time Americans are also the symbol of debt while together the populace owes more personal debt than the annual gross national product (GDP). Consider that this has risen over 300% since the 70s.

Debt Devastates Wealth

It is as if a horde of locusts have blanketed the giants of industry. Will debt-bloated, insolvent General Motors (GM) be eaten up in bankruptcy, as have many of the leading brokerage houses, banks and newspapers?

The crash of 1873 also began as a banking debt crisis encumbered by insolvent mortgages and complex financial vehicles akin to what started our current dilemma. Yes debt was the culprit back then, but did we learn from history? That crisis rapidly spread to the economy, incurred mass unemployment of up to 25 percent and lasted to 1896.

Many believe that we are entering a shake-down of the old ways of business as we enter a new era brought on chiefly by expanding new world economic super-powers such as China. The West rose in economic power in Europe in the 15th century, and North America in the 19th century. The sub-prime lending crisis has revealed how debt also affects Europe, and Asia, and how China is very dependent on American business partnerships. Peeling back the layers of many worldwide balance sheets the companies that are hurting the most are laden with debt and interest payments leaving them insolvent if they can’t arrange more debt to pay the old debts; which is really ongoing corporate debt consolidation.

The World’s Power Centres of Finance

At one time Amsterdam was the world’s financial center in the 17th century; then London in the early 19th century, followed by New York in the 20th which has seen its powers wobble on Wall Street as 17,000 jobs in the financial centre no longer exist—yes due to the bursting of the worlds largest ever known debt bubble that has taken billions of bail out dollars world-wide to calm. Though London and New York are the largest of the world’s capital centers, there are other major financial centers such as Toronto, Tokyo, Hong Kong, and Singapore—all feeling the pain cause by debt as global stock markets unilaterally plummeted and have lost over one third the value of their capitalization.

Your Own Personal Financial Power Centre

Are you getting blue? Where is your financial centre of power? Individually it is in your own personal financial management—your financial plan designed by you and your financial advisor that must focus on your own personal goals, and above all avoid amassing debt.