Little-Acorn
08-25-2010, 12:08 PM
Looks like the wild party is drawing to its inevitable close. Obama's rampant borrowing and spending will drive the government into default, according to more and more financial institutions - even those the government has paid.
Vice President Biden sais a few days ago that we are "heading in the right direction", echoing the sentiments of Barney Frank, Chris Dodd, and other Democrats a few years ago as their policies drove the housing finance industry into ruin.
Some people just don't know when to quit, I guess.
Maybe we should start electing people who know not to start such policies in the first place?
Or would that now be too little, too late?
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http://www.bloomberg.com/news/2010-08-25/morgan-stanley-says-government-bond-default-is-question-of-how-not-if-.html
Morgan Stanley Says Government Defaults Inevitable
by Matthew Brown - Aug 25, 2010 8:44 AM PT
Investors will face defaults on government bonds given the burden of aging populations and the difficulty of securing more tax revenue, according to Morgan Stanley.
"Governments will impose a loss on some of their stakeholders," Arnaud Mares, an executive director at Morgan Stanley in London, wrote in a research report today. "The question is not whether they will renege on their promises, but rather upon which of their promises they will renege, and what form this default will take." The sovereign-debt crisis is global "and it is not over," the report said.
Borrowing costs for so-called peripheral euro-region nations such as Greece and Ireland surged today, resuming their ascent on concern that governments won’t be able to narrow their budget deficits. Standard & Poor’s downgraded Ireland’s credit rating yesterday on concern about the rising costs to support nationalized banks.
Mares said debt as a percentage of gross domestic product is a false indicator of an economy’s health given it doesn’t reflect governments’ available revenue and is "backward- looking." While the U.S. government’s debt is 53 percent of GDP, one of the lowest ratios among developed nations, its debt as a percentage of revenue is 358 percent, one of the highest, the report said. Conversely, Italy has one of the highest debt- to-GDP ratios, at 116 percent, yet has a debt-to-revenue ratio of 188, Mares said.
Vice President Biden sais a few days ago that we are "heading in the right direction", echoing the sentiments of Barney Frank, Chris Dodd, and other Democrats a few years ago as their policies drove the housing finance industry into ruin.
Some people just don't know when to quit, I guess.
Maybe we should start electing people who know not to start such policies in the first place?
Or would that now be too little, too late?
----------------------------------------
http://www.bloomberg.com/news/2010-08-25/morgan-stanley-says-government-bond-default-is-question-of-how-not-if-.html
Morgan Stanley Says Government Defaults Inevitable
by Matthew Brown - Aug 25, 2010 8:44 AM PT
Investors will face defaults on government bonds given the burden of aging populations and the difficulty of securing more tax revenue, according to Morgan Stanley.
"Governments will impose a loss on some of their stakeholders," Arnaud Mares, an executive director at Morgan Stanley in London, wrote in a research report today. "The question is not whether they will renege on their promises, but rather upon which of their promises they will renege, and what form this default will take." The sovereign-debt crisis is global "and it is not over," the report said.
Borrowing costs for so-called peripheral euro-region nations such as Greece and Ireland surged today, resuming their ascent on concern that governments won’t be able to narrow their budget deficits. Standard & Poor’s downgraded Ireland’s credit rating yesterday on concern about the rising costs to support nationalized banks.
Mares said debt as a percentage of gross domestic product is a false indicator of an economy’s health given it doesn’t reflect governments’ available revenue and is "backward- looking." While the U.S. government’s debt is 53 percent of GDP, one of the lowest ratios among developed nations, its debt as a percentage of revenue is 358 percent, one of the highest, the report said. Conversely, Italy has one of the highest debt- to-GDP ratios, at 116 percent, yet has a debt-to-revenue ratio of 188, Mares said.