Friday, April 2, 2010

sovereign Debt Explosion

On its April 1st edition, The Financial Times reported the following:

"By the end of this year, OECD sovereign debt will have exploded by nearly 70 per cent from 44 per cent of GDP in 2006 to 71 per cent. According to the Bank of International Settlements, it would take fiscal tightening of 8-10 per cent of GDP in the US, the UK and Japan every year for the next five years to return debt levels to where they were in 2007."

I don't immediately recall any OECD country that has undergone such drastic cuts in public expenditures. We know for a fact that as far as the U.S. goes, government deficit will increase as far as eye can see.

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