The article above, and subsequent comments beneath it, have described the deteriorating economic conditions around the world. Years or decades from now, this period in world history will be characterized as the “Great Depression II,” or by other similar nomenclature.

See, e.g., The Economic Tsunami Continues Its Relentless And Unforgiving Advance Globally, The Pygmy Putin Rules Over A Third World Country, Russia, China’s Speculative Bubble, and New View Into Fed’s Response to Crisis.

In an article entitled, “Global Markets’ Strength Doesn’t Reflect Economic Outlook, Central Banks Say,” the Wall Street Journal notes:

Buoyant financial markets are out of kilter with the shaky global economic and geopolitical outlook, the Bank for International Settlements said in its annual report published Sunday.

The warning from the BIS, a consortium of the world’s top central banks, comes as financial markets—from stocks to bonds to commodities—have been enjoying a broad-based rally in the first half of 2014, reflecting investor optimism over expansionary central-bank monetary policies.

“Overall, it is hard to avoid the sense of a puzzling disconnect between the markets’ buoyancy and underlying economic developments globally,” the report read.

Investor jubilation stems partly from the commitment by the world’s largest central banks, such as the U.S. Federal Reserve and European Central Bank, to keep interest rates low while economies continue to recover from recession. Markets have been resilient in the face of uneven growth in the U.S. and Europe, as well as political and economic unrest in Ukraine, the Middle East and elsewhere.

“Financial markets are euphoric, in the grip of an aggressive search for yield . . . and yet investment in the real economy remains weak while the macroeconomic and geopolitical outlook is still highly uncertain,” said Claudio Borio, the head of the BIS’s monetary and economic department.

Central bankers meet around every two months at the BIS’s headquarters in Basel, Switzerland. The group doesn’t set policy, but rather serves as a forum for central bankers to exchange views about financial markets and the global economy.

While global growth has firmed, the BIS said, it is still below its precrisis levels. The world economy was up 3% in the first quarter of 2014 compared with a year earlier—weaker than the 3.9% average growth rate between 1996 and 2006. In some advanced economies, output, productivity and employment remain below their precrisis peak.

But Mr. Borio said the effectiveness of policies aiming to boost domestic demand—and therefore growth—has been stunted by large overhangs of debt.

Governments in advanced economies have made progress in reducing their fiscal deficits since the crisis but debt levels are higher than ever and still rising. It cited data that showed 2014 debt exceeding 100% of gross domestic product in most major economies, including Italy, Spain, France, the U.S. and the U.K.

In a speech on Sunday, BIS General Manager Jaime Caruana warned that increased debt levels make borrowers’ ability to repay more sensitive to a fall in income and interest-rate increases. “Thus, higher debt translates into greater financial fragility and financial cycles that may become increasingly disruptive,” he said.

The organization cautioned that while low interest rates may keep service costs low for some time, they don’t solve the problem of high debt levels because “by encouraging rather than discouraging the accumulation of debt they amplify the effect of the eventual normalization [of interest rates].”

The BIS voiced concerns that though central banks have signaled they will normalize monetary policy—after six years of low rates—investors may still be unprepared for the consequences.

But the risk of central banks normalizing too late and too gradually, the BIS said, shouldn’t be underestimated, mainly due to the policy’s diminished effectiveness over time.

“Tellingly, growth has disappointed even as financial markets have roared: The transmission chain seems to be badly impaired,” the report said, referring to the“unusually” weak levels of global growth even after six years of extremely accommodative policy.

This is partly because nominal rates are near zero, the report said, meaning central banks cannot reduce them further to boost economic growth. Deleveraging as economic actors try to reduce debts—a so-called balance-sheet recession—has also meant that the financial sector hasn’t been boosting its lending to the real economy despite successive interest-rate cuts.

What’s more, keeping up ultra-accommodative monetary policy can be a source of turmoil for other economies. Some emerging-market economies and small, open advanced economies have gone through bouts of market turbulence because of loose monetary policy in major advanced countries.

[...]

Returning to normal monetary policy too slowly could also be dangerous for government finances, the BIS warned. “Keeping interest rates unusually low for an unusually long period can lull governments into a false sense of security that delays the needed consolidation,” it said, as the glut of cash encourages cheap government borrowing.

Full article: http://online.wsj.com/articles/global-markets-strength-doesnt-reflect-economic-outlook-central-banks-say-1404037802 (emphasis added)

Hold on tight. Things will get very ugly and scary between now and the end of this decade—economically, militarily, and socially!