Tags: Treadway | debt | crisis | Cyprus

Author Treadway: Debt Crisis Coming to Developed Economies

By Dan Weil and Kathleen Walter   |   Sunday, 31 Mar 2013 02:10 PM

Developed economies have a sovereign debt crisis to look forward to, including defaults, says Peter Treadway, author and principal at Historical Analytics.

So how bad will this debt crisis be?

“We’ll have to see, but we’re already seeing the early stages in Europe,” Treadway tells Newsmax TV in an exclusive interview. “The major countries all have high levels of debt now, and they’re facing a real tsunami of entitlement obligations that have yet to hit.”

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And a declining birth rate won’t help either.

“So the countries will be desperate for money, and they will be targeting investors,” Treadway explains, as a way to offset “increasingly unfavorable worker-to-beneficiary ratios.”

“We’re already seeing that starting in the United States and in Europe," says the co-author of the new book, “Investing in the Age of Sovereign Defaults: How to Preserve Your Wealth in the Coming Crisis.”

Editor’s note: To order ‘Investing in the Age of Sovereign Defaults’ at a great price — Click Here Now.

"The Cyprus situation is a little bit peculiar, but you can see there it’s the rich who are [being portrayed as] the bad guys, the rich Russians in this case who are getting targeted … the Russian savers who put money into the Cyprus banks.”

The bottom line is that “It’s very unfair. … [And] it’s going to be an uncomfortable time,” Treadway says.

The Cyprus crisis will have an impact on the United States. “[E]veryone is writing that now your bank deposits aren’t really safe,” he notes, adding that Cyprus is “an example of what governments will do when they’re desperate.”

“[Cyprus] said if you’ve got money, and they’re really desperate, they’re going to go after you. And so investors in the United States have to appreciate what can happen.”

Is the Cyprus crisis going to spread throughout Europe?

“All European banks have a lot of government debt, and the governments are nearly insolvent,” Treadway says. “Europe’s in recession outside of Germany, and the situation is pretty grim.”

But bank failures are unlikely in the larger countries, “because the problem’s too big,” he explains. “They have to bail out the banks. … That’s indirectly what they’ve been doing. … The banks are in the major countries.”

There are some places that are still good for investors.

“Investors should put some money in countries which will be less affected by this: Singapore, Hong Kong, Switzerland, possibly Canada, Australia,” Treadway suggests. He’s not bullish on gold in the near term, because we’re not in an inflationary period.

There will be some positives coming out of the crisis, and they will be “all in the private sector,” Treadway predicts. The development of technology is one of them. “Major corporations are all beneficiaries of that as users of technology.”

And even some of the negatives can turn into positives. For example, “the decline in birth rates and the aging of populations offer an opportunity for investments,” Treadway says. Asia also represents a strong investment choice because of the wealth creation happening there, he adds.

Editor’s note: To order ‘Investing in the Age of Sovereign Defaults’ at a great price — Click Here Now.

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