Tags: Citigroup | Global | Public | Finances

Citigroup: Global Public Finances in Worst Shape Since 1900

By    |   Friday, 28 May 2010 08:02 AM

The government finances of developed countries have deteriorated to the worst condition in more than 100 years, says Citigroup Chief Economist Willem Buiter.

“The public finances in the majority of advanced industrial countries are in a worse state today than at any time since the industrial revolution, except for wartime episodes and their immediate aftermaths,” he wrote in a recent report for clients.

“Most of the richest industrial nations . . . are on unsustainable fiscal-financial trajectories.”

Naturally the fiscal woes will have a negative impact on countries’ economies.

“Restoring fiscal balance will be a drag on growth for years to come,” Buiter said.

The numbers aren’t pretty. Last year the budget deficit totaled 13.6 percent of GDP in Greece, 11.5 percent in the United Kingdom and 11.2 percent in the United States.

“Unsustainable public finances are not just an issue for Greece, the other countries of the southwest euro area, the euro area (as a whole) or the European Union,” Buiter wrote.

“The overall fiscal position of the euro area is stronger than that of the U.K., Japan and the U.S.”

Many say the United States is headed for trouble.

“When Washington is compelled by the bond market to finally confront the full force of a sovereign debt crisis, it may prove as impotent in the face of global market forces as the euro zone,” financial author Sheldon Filger wrote on The Huffington Post.

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The government finances of developed countries have deteriorated to the worst condition in more than 100 years, says Citigroup Chief Economist Willem Buiter. The public finances in the majority of advanced industrial countries are in a worse state today than at any time...
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2010-02-28
Friday, 28 May 2010 08:02 AM
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