USA Today (August 7)
“The United States’ unquestioned AAA credit rating is gone, for the first time ever.” S&P’s downgrade was not a surprise, instead it “merely confirmed what anyone with their eyes open for the past decade or two already knew: The U.S. has a huge and growing debt problem that it is resolutely unwilling to solve.” USA Today points out one silver lining. The U.S. is not incapable of solving this problem, merely unwilling. Another silver lining is that two major agencies (Moody’s and Fitch) still assign the highest rating to U.S. debt, which continues to be highly sought by investors worldwide.
Boston Globe (August 2)
In the U.S., Republicans and Democrats have been battling down to the wire over a debt deal. The final deal, “like all compromises…is not a win for either side.” It could have been better, especially if it created additional revenue, but it did avoid a disastrous default. The debt deal also has some positive aspects. The cuts are “spread across federal programs—including defense.” Moreover, the deal “delays any serious cuts for two years, to give the economy more time to recover.”
In the U.S., Republicans and Democrats have been battling down to the wire over a debt deal. The final deal, “like all compromises…is not a win for either side.” It could have been better, especially if it created additional revenue, but it did avoid a disastrous default. The debt deal also has some positive aspects. The cuts are “spread across federal programs—including defense.” Moreover, the deal “delays any serious cuts for two years, to give the economy more time to recover.”
Tags: Compromise, Congress, Debt, Democrats, Economy, Republicans, U.S.
The New York Times (July 30)
Just when “the economy needs more spending,” everyone is focused on the debt limit and spending cuts. “The premature budget tightening of 1937… reignited the Depression,” and increasingly we look posed to make the same mistakes. The Times does not argue for unlimited spending. “Budget cuts are unavoidable — but they are not urgent. With the economy weak and interest rates low, austerity makes no sense.”
New York Times (July 15)
The U.S. keeps “blundering toward recession” and haggling over the debt limit is only part of the problem. The deficit is a serious, but not immediate, problem. “It can be solved over time, with spending cuts and tax increases, as the economy recovers.” The immediate problem is job creation. “It is time for the government to step up. If it doesn’t, the weakening economy is bound to become even weaker.”
The Economist (July 7)
“Deleveraging will dominate the rich world’s economies for years. Done badly, it could wreck them.” The countries that most ballooned their debt are now struggling to reduce it. This is having a major impact on spending and economies. Moreover, citing analysis by the McKinsey Global Institute, attempts to reduce debt have only just begun. For example, “the ratio of total debt to GDP in both America and Britain has fallen by just over ten percentage points from its peak—a fraction of the scale of debt reduction in a typical deleveraging period.”
Tags: Debt, Deleveraging, McKinsey, U.S., UK
The Economist (June 30)
Markets breathed a sigh of relief when Greece passed recent austerity measures, but the “new plan to cut Greece’s debt looks doomed to fail.” The plan is both too draconian and too light on real reform. “It does too little to prevent the epic folly of Greece’s railways and other ruinous schemes. It will screw down too hard on ordinary Greeks, with new taxes, spending cuts and a rushed privatisation scheme. And it will almost certainly condemn Greece to recession, strife and an eventual debt default.”
Time (June 28)
The deadline is nearing for the Greek parliament to decide whether to accept mandatory austerity measures and receive an EU bailout…or risk defaulting on sovereign debt. The unions are voicing their opinion with a strike. “Workers across Greece walked off the job Tuesday at the start of a 48-hour general strike as lawmakers debate a new round of austerity reforms designed to win the country additional rescue loans needed to avoid bankruptcy.” There won’t be long to wait. The vote is due on Thursday at the latest.
Financial Times (June 22)
“Bond investors are already pricing Greece’s government debt as though it has defaulted.” The Financial Times presents the four scenarios most likely to play out in the ongoing Greek saga: Disorderly default, Orderly default, Staggering on and Leaving the euro. None of them are pretty and the actual course will likely be revealed in the next few weeks.
“Bond investors are already pricing Greece’s government debt as though it has defaulted.” The Financial Times presents the four scenarios most likely to play out in the ongoing Greek saga: Disorderly default, Orderly default, Staggering on and Leaving the euro. None of them are pretty and the actual course will likely be revealed in the next few weeks.
Time (June 16, 2011)
A year of austerity has left many Greeks nearly broke or unemployed, “and the debt-ridden country no better off.” Greece now has the ignominy of holding the world’s lowest debt rating, following S&P’s most recent downgrade on June 13. Athen’s Syntagma Square (Constitution Square) has become the daily scene of protests and riots. The government appears near dead, with neither major party able to offer leadership. It’s difficult “to see any clear champion for the millions of Greeks struggling to get by.”
A year of austerity has left many Greeks nearly broke or unemployed, “and the debt-ridden country no better off.” Greece now has the ignominy of holding the world’s lowest debt rating, following S&P’s most recent downgrade on June 13. Athen’s Syntagma Square (Constitution Square) has become the daily scene of protests and riots. The government appears near dead, with neither major party able to offer leadership. It’s difficult “to see any clear champion for the millions of Greeks struggling to get by.”
Tags: Debt, Downgrade, Government, Greece, S&P, Unemployment
The Economist (June 9)The Economist (June 9)
By postponing difficult decisions about “the Greek mess,” Europe’s leaders are only creating future problems. “The rescuers think buying time reduces the risk of contagion from a Greek debt restructuring to other euro-zone countries. But the pall of an unsolved Greek mess will continue to hang over the euro zone, just as it has done for the past year.” Instead they should begin “an orderly restructuring of Greek debt now. That remains the only solution.”
By postponing difficult decisions about “the Greek mess,” Europe’s leaders are only creating future problems. “The rescuers think buying time reduces the risk of contagion from a Greek debt restructuring to other euro-zone countries. But the pall of an unsolved Greek mess will continue to hang over the euro zone, just as it has done for the past year.” Instead they should begin “an orderly restructuring of Greek debt now. That remains the only solution.”
Tags: Debt, Europe, Greece, Restructuring
