We're Gonna See a Bunch of Sovereign Defaults - Former IMF Economist

Harvard and former IMF economist Kenneth Rogoff Sees ‘Bunch of Sovereign Defaults’ :

Several countries are likely to default on their debt in coming years and investors will force the U.S. to pare spending, said Kenneth Rogoff, an economics professor at Harvard University.

Following banking crises, “we usually see a bunch of sovereign defaults, say in a few years. I predict we will again,” Rogoff, a former chief economist at the International Monetary Fund, said at a forum in Tokyo today.

He said financial markets will eventually drive interest rates higher, and European countries such as Greece and Portugal will “have a lot of troubles.” Global scrutiny of sovereign debt has risen as nations including Greece reveal fiscal deficits that have swollen in the wake of the worst global financial crisis since the Great Depression.

“It’s very, very hard to call the timing, but it will happen,” Rogoff, 56, said in the speech. “In rich countries - - Germany, the United States and maybe Japan -- we are going to see slow growth. They will tighten their belts when the problem hits with interest rates. They will deal with it.”

Concern about Greece’s ability to fund its debt have roiled financial markets since the government said it had a budget shortfall of 12.7 percent last year, the highest ratio in the 27-member European Union.

Rogoff said Japanese fiscal policy is “out of control.” Japan has the world’s largest public debt, with gross liabilities that are approaching twice the size of the economy.

Boy Japan is just getting the shits. So glad we followed their bank bail out model.

Angry Bear did a post analyzing how much Toyota's exports are Japan's GDP and Zero Hedge details meeting minutes from the Bank of Japan, worried about sovereign risk.

Naked Capitalism (h/t) has some commentary about Rogoff's prediction including some of the details on EU.

So we have multiple EU countries in trouble and a very obvious finger pointing to Japan.

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Japan

Japan did go about addressing its banking crisis the wrong way but how long has its fiscal policy been "out of control" and where is inflation? Japan is mired in deflation and inflation hasn't been an issue in over 20 yrs.

And how long have we been hearing about imminent "default"?

Japan is a sovereign government that has control over its monetary and fiscal policy and issues debt in its own currency very very different than Greece. If Japan defaults, it is because of its own choosing, not because they were forced to do so.

Again, more neoliberal scare tactics to prevent change in fiscal policy. The true 'class war' is over economic policy. Change the policy to redirect income back down.

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the true class war is economic policy

Never a truer word was said on this site. This is the reason I want us and others to dig deep into economic policy, write about it, explain it in better layman's terms and see the brazen theft and screw jobs going on here against the American people. But to see it, you've got to understand it.

It's very clear the American people know something is horribly wrong and it is against them. The problem is they do not understand how it all works, hence we get various pundits spinning the outrage to promote more "theft of the middle class" solutions. (FAUX news just as an example).

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