Morgan Stanley Says Government Defaults Inevitable

Morgan Stanley Says Government Defaults Inevitable
Published on 08-25-2010 Email To Friend Print Version


Source: Bloomberg

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. The yield on Greek
debt rose to more than 900 basis points above that of Germany today,
the most since the European Union and International Monetary Fund
created a 750 billion euro ($948 billion) bailout package in May.

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 as a percentage of GDP is 53 percent, one of the
lowest ratios among developed nations, its debt as a percentage of
revenue is 358 percent, one of the highest levels, the report said.

Double Dip

“Outright sovereign default in large advanced economies remains an extremely unlikely outcome, in our view,” the report said. “But current yields and break-even inflation rates provide very little protection
against the credible threat of financial oppression in any form it might
take.”

Mares didn’t identify which nations may default. He once worked at the U.K.’s Debt Management Office and is a former senior vice-president at credit-rating company Moody’s Investors Service.

“Note that a double-dip recession would not invalidate this conclusion,” Mares’ report said. “It would cause yet further damage to the governments’ power to tax, pushing them further in negative equity
and therefore increasing the risks that debt holders suffer a larger
loss eventually.”

Yields on German and U.S. benchmark securities sank today as investors sought the safest assets. Greece’s so-called yield spread over German debt was at 932 basis points as of 2:18 p.m. in London, short of the 973 basis point record set on May 7.

“The conflict that opposes bondholders to other government stakeholders is more intense than ever, and their interests are no longer sufficiently well-aligned with those of influential political
constituencies,” such as elderly voters and their claims on pensions and
health insurance, Mares wrote.

.

Views: 42

Comment

You need to be a member of 12160 Social Network to add comments!

Join 12160 Social Network

"Destroying the New World Order"

TOP CONTENT THIS WEEK

THANK YOU FOR SUPPORTING THE SITE!

mobile page

12160.info/m

12160 Administrators

 

Latest Activity

Doc Vega commented on Doc Vega's blog post Is this proof that the story about Charlie Kirk's assassination is false?
"Less Prone as usual the official version of the truth does not match the evidence and is labeled…"
23 hours ago
Less Prone commented on Doc Vega's blog post This Memorable Anthem Given by Nick Freitas Hit the Nail on the Head Please Listen!
"Charlie Kirk was getting very critical against Israel and had turned down a lucrative deal from the…"
yesterday
Doc Vega's blog post was featured

The Army of Government Launched Psychopaths

They walk among us in most college towns. They seem relatively reasonable until political…See More
yesterday
Less Prone favorited Doc Vega's blog post Is this proof that the story about Charlie Kirk's assassination is false?
yesterday
Less Prone commented on Doc Vega's blog post Is this proof that the story about Charlie Kirk's assassination is false?
"Have to sign in to YT for this. So. What I do is to go to https://ytdown.io/en/ and download…"
yesterday
Doc Vega commented on Doc Vega's blog post Was a Planned Civil War Averted?
"cheeki kea, you are spot on. The old guard is about to collapse! "
Thursday
Doc Vega commented on Doc Vega's blog post Alligator Creek and a Japanese Massacre
"cheeki kea, the Japanese thought they could expand their empire and exact enough damage on the US…"
Thursday
Michelle Reichert favorited Burbia's video
Wednesday
cheeki kea posted a video

NEW DOCUMENTARY - Dissent Into Madness

TRANSCRIPT AND SOURCES: https://www.corbettreport.com/dissent-into-madness/What if the delusions of the dissidents are in fact real? What if their paranoid f...
Wednesday
cheeki kea commented on Doc Vega's blog post Alligator Creek and a Japanese Massacre
"Japan served themselves up no favours by inching out into the South Pacific as they soon found out.…"
Wednesday
cheeki kea commented on Doc Vega's blog post Was a Planned Civil War Averted?
"Their plans did not work out because we are the news now, and the old news is the enemy. "
Wednesday
Doc Vega posted a blog post

Alligator Creek and a Japanese Massacre

The year is 1942 just a few months after the Pearl Harbor disaster. Despite losses suffered by the…See More
Tuesday
Doc Vega commented on Burbia's video
Thumbnail

CHARLIE KIRK WAS CNP! JOSH REEVES 9-11-25

"With all due respect this guy comes off as a drunken asshole and he didn't even  know who…"
Sep 29
Doc Vega posted a blog post

Was a Planned Civil War Averted?

We are living in sadly historic times where good and evil are in battle all the time. Not that this…See More
Sep 28
Sandy posted a photo
Sep 28
Less Prone posted a video

President Trump addresses U.N. General Assembly - FULL SPEECH

President Donald Trump speaks at the United Nations General Assembly in New York City.Full video here: https://www.c-span.org/event/white-house-event/preside...
Sep 28
Burbia posted a video

2 MIN AGO: Western Provinces MAJOR New WEXIT Announcement - Canada EXPLODES!

In a stunning turn of events, Western provinces just made a major new WEXIT announcement — and it’s shaking the foundations of Canadian unity. Is Western sep...
Sep 27
Doc Vega posted a blog post

How You Provoke a Civil War

In the world of counter intelligence which is simply one aspect of many pertaining to asymmetrical…See More
Sep 26
Burbia commented on Burbia's video
Thumbnail

CHARLIE KIRK WAS CNP! JOSH REEVES 9-11-25

"I don't follow as much with Josh Reeves than I use to. He seems to be a documentary producing…"
Sep 25
Burbia posted a video

CHARLIE KIRK WAS CNP! JOSH REEVES 9-11-25

DONATE-paypal-dayglow76@yahoo.comCashapp-reevesradioVenmo-Josh-Reeves-61FILMS AND AUDIOBOOKS DOWNLOAD STORE-https://store.payloadz.com/results/242828-josh-re...
Sep 25

© 2025   Created by truth.   Powered by

Badges  |  Report an Issue  |  Terms of Service

content and site copyright 12160.info 2007-2019 - all rights reserved. unless otherwise noted