So says Morgan Stanley over at 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…
Mr. Mares is correct – this, though, is just Establishment types playing catch up with the real world. That noted financial expert, Mark Noonan, talked up this very issue here, here, here and here.
The only thing we have control over is whether or not we’ll prevent this from happening here. We still have a (rapidly shrinking) window of opportunity to get our own fiscal house in order. If we balance the budget and institute policies which will encourage wealth creation, we can weather the storm. It will still be hard – don’t get me wrong; there is no easy fix…no easy way out of this. But we can prevent, I believe, the worst-case scenario of an American default. But only if we act swiftly – and that, my fellow Americans, will require a lot of new people in DC.
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