Sovereign debt crisis at 'boiling point', warns Bank for International Settlements

Telegraph ^ | 04/08/10 | Ambrose Evans-Pritchard

[TigerLikesRooster]

Sovereign debt crisis at 'boiling point', warns Bank for International Settlements

The Bank for International Settlements does not mince words. Sovereign debt is already starting to cross the danger threshold in the United States, Japan, Britain, and most of Western Europe, threatening to set off a bond crisis at the heart of the global economy.

By Ambrose Evans-Pritchard, International Business Editor

Published: 6:31AM BST 08 Apr 2010

Bond investors are waiting for Governments to lay out clear plans for deficit reduction

"The aftermath of the financial crisis is poised to bring a simmering fiscal problem in industrial economies to the boiling point", said the Swiss-based bank for central bankers -- the oldest and most venerable of the world's financial watchdogs. Drastic austerity measures will be needed to head off a compound interest spiral, if it is not already too late for some.

The risk is an "abrupt rise in government bond yields" as investors choke on a surfeit of public debt. "Bond traders are notoriously short-sighted, assuming they can get out before the storm hits: their time horizons are days or weeks, not years or decade. We take a longer and less benign view of current developments," said the study, entitled "The Future of Public Debt", by the bank's chief economist Stephen Cecchetti.

"The question is when markets will start putting pressure on governments, not if. When will investors start demanding a much higher compensation for holding increasingly large amounts of public debt? In some countries, unstable debt dynamics -- in which higher debt levels lead to higher interest rates, which then lead to even higher debt levels -- are already clearly on the horizon."

[Carry_Okie]

Translation: "If we don't get to print a global currency (aka "carbon credits") we'll run out of ways to swipe, "monetize" your assets."

[Carry_Okie]

Translation: "If we don't get to print a global currency (aka "carbon credits") we'll run out of ways to swipe, "monetize" your assets."

[Carry_Okie]

Sorry for the double post. I don’t know how that happened.

[Carry_Okie]

BUMP! 535 rotating criminals in the legislature, the rotating executive branch of criminals, many lifetime judicial criminals, their propagandists & sycophants have really done a number on this nation. The states, counties and cities are the stomping grounds for socialists.

I don't think Soros is hurting. The same bankers screaming about bonds have quietly advocated leftist policies that created this debt. This class of investors makes their money on regulatory favors for their performing assets.

[Oceander]

I think you point out the big problem with trying to "inflate away" our problems. Social security is automatically indexed for inflation, and therefore the unfunded liability for SS would simply keep pace with any democrat/liberal-induced inflation.

[Buckeye McFrog]

so if we all go down together at the same time we can forget about it and have one big Global Socialist Party (which was no doubt the plan all along)

[LuvFreeRepublic]

no doubt the plan all along

I too think that was the plan all along. Can't have the evil US be the superpower. Need to bring us down to their level. What is not being considered is what the REAL EVIL will do once we are no longer a superpower and we are in total chaos.

[PGalt]

I figure that before they can start the hyperinflation route, they will need to change that situation from “whatever care you need, subject to death panel approval” to a certain lifetime dollar amount — which then can also be hyperinflated away.

No need to hyperinflate. MANDATE...forced payment by threat of imprisonment...ability to loot savings accounts by the IRS...death by with-holding care after your assets have been drained...can all work out for the totalitarians. Monetary drains (Medicare/Medicaid/Social Security) will be turned into monetary gains. Solution: Dead Americans...get rid of the useless eaters. (Terry Schiavo anyone?)

[pb929]

Don’t worry, Obama will fix it all.

[PGalt]

I don't think Soros is hurting. The same bankers screaming about bonds have quietly advocated leftist policies that created this debt. This class of investors makes their money on regulatory favors for their performing assets.

Absolutely...(taking us back to the topic of the post). Orchestrated chaos/misery from the financial totalitarians of the left. Result: More Control.

[jiggyboy]

Ah but SSI &c are indexed for government-calculated inflation, which is always lower than real inflation. They'll make it up eventually.

[Oceander]

Fair enough; however, leaving aside the fact that, as we all know all too well thanks to the shenanigans with the CBO "scoring" of the Obastardcare disaster, they are still indexed to some measure of inflation, which means that it is next to impossible to inflate our way out of the unfunded liabilities for Social Security.

[darth]

I have a relative in the nursing home biz.

She says that “Death By Medicare/Medicaid” is accelerating now.

When you can’t work anymore, you are of no use to the State, so they kill you.

[NeoCaveman]

So let’s just declare sovereign bankruptcy and start over!

The whole world is going to do that in the next two years.

[GOPJ]

"The question is when markets will start putting pressure on governments, not if. "

Hopefully Obama's team won't be able to draw this out until "ruin" in the only option.

[day21221]

Obama’s take over of America banks

[day21221]

freedomneedsyou
http://freedomneedsyou.blogspot.com/

[GOPJ]

Interesting - thanks.

[Doe Eyes]

She says that “Death By Medicare/Medicaid” is accelerating now.

More profitable to kill them off now before Obama Care kicks in.

[javachip]

Social security is automatically indexed for inflation, and therefore the unfunded liability for SS would simply keep pace with any democrat/liberal-induced inflation.

Unless government officials fudge the numbers to under report inflation. If the reported number is less than reality, Socialist inSecurity would not keep pace with inflation.