Wednesday, November 23, 2011

The Debt Nuke and When It Detonates

Nice, short summary:

When does debt go from good to bad? We address this question using a new dataset that includes the level of government, non-financial corporate and household debt in 18 OECD countries from 1980 to 2010. Our results support the view that, beyond a certain level, debt is a drag on growth. For government debt, the threshold is around 85% of GDP. 

Great.  According to this source, we're WAY past 85%.

HT:  Peter

4 comments:

  1. The cherry bomb on that "frosted" crap cake - earlier today, Germany couldn't sell over a third of its scheduled 10-year bonds (of course, they weren't willing to part with more han a 2% nominal interest rate and a 1.98% yield).

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  2. ECB could buy them up.....but they won't.

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  3. Because overtly soaking up the debt would be an admission the Euro is a miserable failure (never mind it already is a miserable failure).

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  4. Then liquidate.

    The Germans take massive losses in their banking system as periphery nations devalue and readjust their trade imbalances while exiting the Euro which should put a few million Germans out of work in the process over the next couple of years

    That's a choice.

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