Morgan Stanley Says Government Defaults Inevitable

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Oct 10, 2009
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Morgan Stanley Says Government Defaults Inevitable
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.
 
Well. Duh.

Either the Government INFLATES the holy Heebejeebus out of our currency in order to repay the debts with cheaper currency (not really an option right now)...or they default on obligations.

The treatment of the GM bondholders was both a test case and a warning.
 

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