Tags: Kenneth | Rogoff | Sovereign | Debt | Crisis | Coming

Rogoff: Global Sovereign Debt Crisis Is Coming

Thursday, 10 Feb 2011 10:07 AM

A global sovereign debt crisis is coming sooner or later, says Harvard University economist Kenneth Rogoff. Historically, debt crises often come in wake of banking crises, which have taken place not only in the United States but also in Europe and elsewhere.

"If you look at southern and eastern Europe, many countries have external debts that far exceed 60 percent of GDP. Historically, that’s a very high number and many countries start resisting debt repayment at significantly lower levels," Rogoff tells The Wall Street Journal.

"The U.S., of course, is on an unsustainable path of its own. We have only, perhaps, five to 10 years to make a significant correction in our fiscal policies. But the timing of crises is very difficult to call."

 AP02041802388-(1).jpg
 Kenneth Rogoff
Governments aren't wrong to get involved in economic ups and downs in order to smooth out boom-bust cycles, especially during the good times by not keeping a better eye on low interest rates.

"Smoothing cycles is good, but unfortunately regulatory policy in the U.S. and elsewhere often did just the opposite. Regulation got easier as the boom continued, which is exactly the opposite of what you need to do."

While unemployment might not have been super low during the boom, it wouldn't have remained high for so long during the bust.

Fed Chairman Ben Bernanke recently told lawmakers that the economy is improving but unemployment will remain high for time to years come.

Bernanke's speech "further reinforces the market's view that the Fed will not be hiking interest rates this year," Michael Woolfolk, a currency strategist with Bank of New York Mellon, tells the Associated Press.

© 2017 Newsmax Finance. All rights reserved.

 
1Like our page
2Share
StreetTalk
A global sovereign debt crisis is coming sooner or later, says Harvard University economist Kenneth Rogoff. Historically, debt crises often come in wake of banking crises, which have taken place not only in the United States but also in Europe and elsewhere. If you look...
Kenneth,Rogoff,Sovereign,Debt,Crisis,Coming
272
2011-07-10
Thursday, 10 Feb 2011 10:07 AM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved