Tags: BlackRock | Sovereign | Default | Catastrophic

BlackRock: Sovereign Default Would Be Catastrophic

Friday, 01 Jul 2011 09:07 AM

Sovereign defaults in developed economies would be catastrophic to global markets due to the sheer exposure many investors have to such countries that are still viewed as low risk, the BlackRock Investment Institute says.

"People thought that sovereign risk was something that was reserved for developing markets, and this was something you could see in most portfolio allocations, if you look at the hedge fund industry and pension funds, you can see that they have massive exposures to developed markets and to developed market government bonds," Benjamin Brodsky, managing director in fixed income allocation at BlackRock, tells CNBC.com.

unclesamtax200gtty.jpg
(Getty Images photo)
BlackRock has begun studying new methodologies to gauge the possibilities and fallout of sovereign defaults in industrial nations such as the U.S., where lawmakers have failed to agree on whether or not to lift a debt ceiling, or in Europe, which is vulnerable to debt woes in Greece, a country that has run up debts way beyond limits imposed by monetary authorities.

In the U.S., the Senate has cancelled its July 4 recess to work on lifting the debt $14.3 trillion debt ceiling.

Failure to do so by Aug. 2 will throw the country into default.

"The work we're doing to cut the deficits and create jobs is too important, the obstacles too steep and the time too short to waste even a moment," says Democratic Senate Majority Leader Harry Reid, according to CNNMoney.

"There's still so much to do to put American back to work and cut our deficits."

© 2017 Newsmax Finance. All rights reserved.

   
1Like our page
2Share
StreetTalk
Sovereign defaults in developed economies would be catastrophic to global markets due to the sheer exposure many investors have to such countries that are still viewed as low risk, the BlackRock Investment Institute says. People thought that sovereign risk was something...
BlackRock,Sovereign,Default,Catastrophic
251
2011-07-01
Friday, 01 Jul 2011 09:07 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