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One of SocGen’s in-house uber-bears Dylan Grice (Albert Edwards is the other one), has a warning for countries around the world.<\/p>\n
If it can happen in Greece, it can happen anywhere.<\/p>\n
FT Alphaville<\/a> has the report, which essentially boils down to the fact that a country’s rate of interest payments must equal its nominal growth rate :<\/p>\n If it does, the incremental government revenue generated by the economic growth will pay for the coupons on the debt. If it doesn’t, a shortfall develops between incremental revenues and incremental coupon payments and in the absence of further austerity, more debt is required to finance the deficit.<\/p>\n He warns:<\/p>\n But it’s not just about getting this year out of the way. If it can happen in Greece, it can happen everywhere else too, because Greece just isn’t that different<\/strong>. Read the whole report at FT Alphaville ><\/strong><\/a><\/p>\n
OK, so it misrepresented the size of its liabilities \u0085 but so too do most other governments; its real fiscal problems are hidden off-balance sheet in the enormous welfare obligations it can’t afford to pay \u0085 and so are most other governments; its debt maturity isn’t notably different from the rest of the OECD’s (at about eight years it’s actually longer than those of the US and of Japan); and its projected budget deficit is lower than those projected in the UK and the US (third chart inside).<\/p>\n