If anyone has any doubts about Goldman being more than happy to work against the best interests of its clients, the Greece swap situation is the latest bit of evidence. At some point, this behavior will catch up to them. The bigger issue is that Greece is just the canary in the coal mine of sovereign debt. The global recession has hurt the finances of almost every government. Those that were troubled before the crisis are now in danger of sovereign debt crises. I expect a few minor or medium-sized countries to default or be bailed out in the next 2 years, with relatively mild repercussions.
What concerns me most is Japan. The combination of a shrinking population, deflation, and debt of around 200% of GDP (highest among OECD countries) has more than a few people worried. A sudden increase in those worries - similar to what just happened to Greece seemingly out of nowhere - could be catastrophic.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment